TORTS 69 Respondent Court of Appeals gravely erred in absolving the private respondents from liability by faulting the petitioner
Respondent Court of Appeals gravely erred in absolving the private respondents from liability by faulting the petitioner for
G.R. No. 96126 August 10, 1992
ESTERIA F. GARCIANO, petitioner,
vs.
THE HON. COURT OF APPEALS, EMERITO LABAJO, LUNISITA MARODA, LALIANA DIONES, CANONISA
PANINSORO, DIONISIO ROSAL, REMEDIOS GALUSO, FLORDELUNA PETALCORIN, MELCHIZEDECH
LOON, NORBERTA MARODA and JOSEPH WIERTZ, respondents.
GRIÑO-AQUINO, J.:
This is a petition for review of the decision of the Court of Appeals dismissing the complaint for damages filed by the petitioner
against the private respondents.
The petitioner was hired to teach during the 1981-82 school year in the Immaculate Concepcion Institute in the Island of
Camotes. On January 13, 1982, or before the school year ended, she applied for an indefinite leave of absence because her
daughter was taking her to Austria where her daughter was employed (Exh. B). The application was recommended for approval
by the school principal, Emerito O. Labajo, and approved by the President of the school's Board of Directors (Exh. B-1).
On June 1, 1982, Emerito Labajo addressed a letter to the petitioner through her husband, Sotero Garciano (for she was still
abroad), informing her of the decision of Fr. Joseph Wiertz, the school's founder, concurred in by the president of the Parent-
Teachers Association and the school faculty, to terminate her services as a member of the teaching staff because of: (1) the
absence of any written contract of employment between her and the school due to her refusal to sign one; and (2) the difficulty of
getting a substitute for her on a temporary basis as no one would accept the position without a written contract (Exhs. C and 1).
Upon her return from Austria in the later part of June, 1982, she received the letter informing her that her services at the
Immaculate Concepcion Institute had been terminated. She made inquiries from the school about the matter and, on July 7, 1982,
the members of the Board of Directors of the school, with the exception of Fr. Joseph Wiertz, signed a letter notifying her that
she was "reinstated to report and do your usual duties as Classroom Teacher . . . effective July 5, 1982," and that "any letter or
notice of termination received by you before this date has no sanction or authority by the Board of Directors of this Institution,
therefore it is declared null and void . . ." (Exhs. D and 2).
On July 9, 1982, the president, vice president, secretary, and three members of the Board of Directors, out of a membership of
nine (9), resigned their positions from the Board "for the reason that the ICI Faculty, has reacted acidly to the Board's
deliberations for the reinstatement of Mrs. Esteria F. Garciano, thereby questioning the integrity of the Board's decision" (Exh.
E).
On September 3, 1982, petitioner filed a complaint for damages in the Regional Trial Court, Cebu, Branch XI, against Fr.
Wiertz, Emerito Labajo, and some members of the faculty of the school for discrimination and unjust and illegal dismissal.
After trial, the lower court rendered a decision on August 30, 1985, ordering the defendants jointly and severally to pay her
P200,000 as moral damages, P50,000 exemplary damages, P32,400 as lost earnings for nine years, and P10,000 as litigation
expenses and attorney's fees.
The defendants (now private respondents) appealed to the Court of Appeals (CA-G.R. CV No. 10692), which on August 30,
1990 reversed the trial court's decision thus:
WHEREFORE, the decision appealed from is reversed, the complaint is dismissed, and defendants-appellants are absolved
from any liability to plaintiff-appellee. With costs against plaintiff-appellee. (p. 13, Rollo.)
The plaintiff-appellee (now petitioner) filed a motion for reconsideration which the Court of Appeals denied on October 26,
1990. Hence, this petition for review wherein the lone error assigned by petitioner reads:
Page 1 of 46 TORTS MEETING 7
her failure to report back to her work. (p. 6, Rollo.)
After a careful perusal of the petition and the respondents' comments, the Court resolved to deny the petition for lack of merit.
The board of directors of the Immaculate Concepcion Institute, which alone possesses the authority to hire and fire teachers and
other employees of the school, did not dismiss the petitioner. It in fact directed her to report for work. While the private
respondents sent her a letter of termination through her husband, they admittedly had no authority to do so. As the Court of
Appeals aptly observed:
We agree with defendants-appellants, however, that they should not have been held liable to plaintiff-appellee for damages.
Defendants-appellants had no authority to dismiss plaintiff-appellee and the latter was aware of this. Hence, the letter of
termination sent to her through her husband (Exhs. C and 1) by defendants-appellants had no legal effect whatsoever. It did
not effectively prevent her from reporting for work. What is more, it was subsequently repudiated by the Board of Directors
which directed her to report for work. (Exhs. D and 2) There was, therefore, no reason why she did not continue with her
teaching in the school. No evidence had been presented to show that defendants-appellants prevented her from reporting for
work. The fact that defendants-appellants had "acidly" received the action of the Board of Directors repudiating their
decision to terminate plaintiff-appellee is not proof that defendants-appellants had effectively and physically prevented
plaintiff-appellee from resuming her post. It was nothing more than a reaction to what defendants-appellants perceived as an
affront to their collective prestige. It would appear, therefore, that plaintiff-appellee voluntarily desisted from her teaching
job in the school and has no right to recover damages from defendants-appellants. (p. 13, Rollo.)
Liability for damages under Articles 19, 20 and 21 of the Civil Code arises only from unlawful, willful or negligent acts that are
contrary to law, or morals, good customs or public policy.
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone
his due, and observe honesty and good faith.
Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for
the same.
Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for the damage.
The Court of Appeals was correct in finding that petitioner's discontinuance from teaching was her own choice. While the
respondents admittedly wanted her service terminated, they actually did nothing to physically prevent her from reassuming her
post, as ordered by the school's Board of Directors. That the school principal and Fr. Wiertz disagreed with the Board's decision
to retain her, and some teachers allegedly threatened to resign en masse, even if true, did not make them liable to her for
damages. They were simply exercising their right of free speech or their right to dissent from the Board's decision. Their acts
were not contrary to law, morals, good customs or public policy. They did not "illegally dismiss" her for the Board's decision to
retain her prevailed. She was ordered to report for work on July 5, 1982, but she did not comply with that order. Consequently,
whatever loss she may have incurred in the form of lost earnings was self-inflicted. Volenti non fit injuria.
With respect to petitioner's claim for moral damages, the right to recover them under Article 21 is based on equity, and he who
comes to court to demand equity, must come with clean hands. Article 21 should be construed as granting the right to recover
damages to injured persons who are not themselves at fault (Mabutas vs. Calapan Electric Co. [CA] 50 OG 5828, cited in
Padilla, Civil Code Annotated, Vol. 1, 1975 Ed., p. 87). Moral damages are recoverable only if the case falls under Article 2219
in relation to Article 21 (Flordelis vs. Mar, 114 SCRA 41). In the case at bar, petitioners is not without fault. Firstly, she went on
an indefinite leave of absence and failed to report back in time for the regular opening of classes. Secondly, for reasons known to
herself alone, she refused to sign a written contract of employment. Lastly, she ignored the Board of Directors' order for her to
report for duty on July 5, 1982.
The trial court's award of exemplary damages to her was not justified for she is not entitled to moral, temperate or compensatory
damages. (Art. 2234, Civil Code).

In sum, the Court of Appeals correctly set aside the damages awarded by the trial court to the petitioner for they did not have any
legal or factual basis.

WHEREFORE, the petition is DISMISSED for lack of merit and the decision of the Court of Appeals is AFFIRMED.

SO ORDERED.

Page 2 of 46 TORTS MEETING 7

TORTS 70 Petitioner denied that Petrophil officials were out to starve Dr. Cruz's drivers for their support of her. They professed that the
hauling trips were reduced not because Dr. Cruz was being punished, but because the company was assigning hauling trips on
the basis of compartmentation and not on a first-come first-serve. Additionally, witnesses for Petrophil testified that on April 25,
G.R. No. 122796 December 10, 2001
1987, there was a strike at the Pandacan terminal and Dr. Cruz and her husband were at the picket line. They refused to load
petroleum products, resulting in the disruption of delivery to service stations in Metro Manila and in the provinces, which in turn
PETROPHIL CORPORATION, petitioner, resulted in loss of sales and revenues. Because of Dr. Cruz's refusal to load, the management terminated the hauling contract.
vs.
COURT OF APPEALS, DR. AMANDA TERNIDA-CRUZ, JESSIE DE VERA, MARCIAL MULIG, ANTONIO
The trial court on May 29, 1991 rendered a decision that reads:
CUENCA, and RUFINO CUENCA, respondents.

WHEREFORE, judgments are rendered as follows:

QUISUMBING, J.:

1. In Civil Case No. 87-40830 (sic), the defendant Petrophil Corporation is ordered to pay plaintiff Dra. Amanda Ternida-
This petition seeks to annul and set aside the decision1 dated September 26, 1995, of the Court of Appeals, affirming with
Cruz the sum of P309,723.65 as unearned hauling charges and P20,000.00 as attorney's fees and expenses of suit, without
modification the decision of the Regional Trial Court of Manila, Branch 52, in Civil Case No. 87-40930 for specific performance
prejudice to indemnification from its officials and employees responsible for the damage, and making the preliminary
with preliminary injunction and Civil Case No. 88-43946 for damages. It likewise seeks to annul the resolution2 dated November
injunction permanent.
16, 1995 denying petitioner's motion for reconsideration.

2. In Civil Case NO. 88-43949 (sic), ordering the defendants therein, jointly and severally, to pay each of plaintiffs Jessie de
On December 27, 1970, petitioner Petrophil Corporation (Petrophil) entered into contract with private respondent Dr. Amanda
Vera and Rufino Cuenca the sums of P64,390.00 and P5,000.00 as unearned income and attorney's fees, respectively.
Ternida-Cruz, allowing the latter to haul and transport any and all packages and/or bulk products of Petrophil. The contract
provided among others, that Petrophil could terminate the contract for breach, negligence, discourtesy, improper and/or
inadequate performance or abandonment. Dr. Cruz was also required to reserve the use of at least two (2) units of tank trucks Costs in each case against the respective defendants.
solely for the hauling requirements of Petrophil. Paragraph 11 of the contract also stipulated that the contact shall be for an
indefinite period, provided that Petrophil may terminate said contract at any time with 30 days prior written notice. 3
SO ORDERED.9

Annexed to the contract was the Penalty Clause which contained calibrated penal sanctions for infractions that may be
In Civil Cases Nos. 87-40930 and 88-43946, Dr. Cruz alleged that the trial court erred in not awarding actual damages from loss
committed by Dr. Cruz and/or her employees.4 Petrophil also required the formation of a Hearing Committee that will hear the
of income during the illegal and arbitrary suspension of the hauling contract. She asked that Petrophil be ordered to pay her the
offenses committed by hauling contractors or their employees, to give an erring party opportunity to be heard prior to the
sum of P309,723.65, representing the unearned hauling charges that ended in 1990 and until said amount is paid and settled; and
imposition of any penalty.5
to award compensatory, exemplary, and moral damages.10

In a letter dated May 21, 1987, Petrophil, through its Operations Manager, advised Dr. Cruz that it was terminating her hauling
On September 26, 1995, the Court of Appeals affirmed with modification the decision of the trial court. It held:
contract in accordance with paragraph 11 thereof.6 Dr. Cruz appealed to Petrophil for reconsideration but said appeal was denied
on June 5, 1987.
WHEREFORE, the appealed decision is hereby AFFIRMED, with the modification that the amount of P309,723.65,
awarded as unearned hauling charges should earn legal interest from May 29, 1991 until fully paid.
On June 23, 1987, Dr. Cruz filed with the Regional Trial Court of Manila, a complaint docketed as Civil Case No. 87-40930,
against Petrophil seeking the nullity of the termination of the contract and declaring its suspension as unjustified and contrary to
its terms and conditions.7 SO ORDERED.11

On March 11, 1988, the other private respondents herein, Jessie de Vera, Marcial Mulig, Antonio and Rufino Cuenca, all tank
truck drivers of Dr. Cruz, also filed a complaint docketed as Civil Case No. 88-43946 for damages against Petrophil Operations
Manager Antonio Santos, Pandacan Terminal Manager Crispino A. de Castro, and Pandacan Terminal Superintendent Jaime
Tamayo.8
The Court of Appeals sustained the trial court declaring that the termination of the contract was "for cause", and that the
procedures set forth in petitioner's policy guidelines should be followed.
In this petition for review, Petrophil alleges that the Court of Appeals erred in rendering a decision that:

The two cases were consolidated and jointly tried.

I. . . UNLAWFULLY SET ASIDE A VALID AND EXISTING CONTRACTUAL STIPULATION BETWEEN THE
PARTIES.
During the hearing, Dr. Cruz testified that she had been in the gasoline business as dealer, operator and hauling contractor for the
last 26 years. She claimed that the termination of her hauling contract was a retaliation against her for allegedly sympathizing
II. . . IMPOSED TORTIOUS LIABILITY WHERE THE REQUISITES PRESCRIBED BY LAW FOR SUCH LIABILITY
with the then striking Petrophil employees and for informing the PNOC president of anomalies perpetrated by some of its
officers and employees. WERE NOT ESTABLISHED AT ALL BY THE EVIDENCE.12

Driver Jessie de Vera corroborated these allegations and said that the termination of Dr. Cruz's contract was intended to silence
her. Further, he testified that before the termination of the contract, Petrophil officials reduced their hauling trips to make life
harder for them so that they would resign from Dr: Cruz's employ, which in turn would result in the closure of her business.
On the first assigned error, petitioner contends that the courts' a quo finding that the contract was terminated "for cause" was a
superfluity because petitioner was after all not contractually bound to use the mode, "for cause" under par. 7, nor prohibited from
using the other mode, "without cause", under par. 1 l. It could use either. Petitioner avers these two modes were not mutually
exclusive. The hauling contract did not state that the existence of conditions for the exercise of one, precluded the exercise of the

Page 3 of 46 TORTS MEETING 7

other. Petitioner says it chose to terminate the contract under paragraph 11, whose language was very clear and required no suffices that a person suffers damage as a consequence of a wrongful act of another in order that indemnity could be demanded
interpretation. Petitioner insists that Article 1377 of the Civil Code, 13 applicable to contracts of adhesion, does not apply in this from the wrongdoer.20The appellate court did not err, given the circumstances of this case, in awarding damages to respondent-
case. drivers.

Private respondents, on the other hand, claim that the contract did not envision a situation where the contract can be rescinded or WHEREFORE, the petition is DENIED. The decision and resolution of the Court of Appeals dated September 26, 1995 and
terminated after the occurrence of ambivalent acts which may qualify as cause for termination. The contract's vagueness, November 16, 1995, respectively, are hereby AFFIRMED.
according to private respondents, needed an interpretation. Further, they contend that even granting arguendo that petitioner had
all the right to terminate the contract even "without cause", petitioner would still be liable to answer for damages under Article
Costs against petitioner.
19 of the Civil Code14 on abuse of right for terminating the contract without reason but out of sheer whim and caprice.

SO ORDERED.
Two questions must initially be resolved: (1) whether or not the hauling contract needed interpretation, and (2) whether
petitioner was guilty of arbitrary termination of the contract, which would entitle Dr. Cruz to damages.

On the first issue, we agree with petitioner that the contract clearly provided for two ways of terminating the contract, and, one
mode does not exclude the other. Although the contract provided for causes for termination, it also stated in paragraph 11 that
the contract was for an indefinite term subject to the right of Petrophil to terminate it any time after a written notice of 30 days.
When the language of a contract is clear, it requires no interpretation. 15 Thus, the finding that the termination of the contract was
"for cause", is immaterial. When petitioner terminated the contract "without cause", it was required only to give Dr. Cruz a 30-
day prior written notice, which it did in this case.

However, we differ with petitioner on the second issue. Recall that before Petrophil terminated the contract on May 25, 1987,
there was a strike of its employees at the Pandacan terminal. Dr. Cruz and her husband were seen at the picket line and were
reported to have instructed their truck drivers not to load petroleum products. At the resumption of the operation in Pandacan
terminal, Dr. Cruz's contract was suspended for one week and eventually terminated. Based on these circumstances, the Court of
Appeals like the trial court concluded that Petrophil terminated the contract because of Dr. Cruz's refusal to load petroleum
products during the strike. In respondent court's view, the termination appeared as a retaliation or punishment for her
sympathizing with the striking employees. Nowhere in the record do we find that petitioner asked her to explain her actions.
Petrophil simply terminated her contract. These factual findings are binding and conclusive on us, especially in the absence of
any allegation that said findings are unsupported by the evidence, or that the appellate and trial courts misapprehended these
facts.16 In terminating the hauling contract of Dr. Cruz without hearing her side on the factual context above described, a
petitioner opened itself to a charge of bad faith. While Petrophil had the right to terminate the contract, petitioner could not act
purposely to injure private respondents. In BPI Express Card Corporation vs. CA, 296 SCRA 260, 272 (1998), we held that there
is abuse of a right under Article 19 if the following elements are present: 1) there is a legal right or duty; 2) which is exercised in
bad faith; 3) for the sole purpose of prejudicing or injuring another. We find all these three elements present in the instant case.
Hence, we are convinced that the termination by petitioner of the contract with Dr. Cruz calls for appropriate sanctions by way of
damages.

Petitioner likewise contends that the lower court erred when they applied the procedures set forth in the Policy Statement and
Guidelines17 and penalty clause.18 Petitioner argues that the offenses in the penalty clause refer to product theft or pilferage or
gross violation of company policies on credit, security and the like, as required in tank truck deliveries. Dr. Cruz claims, in turn,
that there was no showing that her alleged act was covered by the said offenses, hence petitioner erred when it imposed the
procedure in her case. However, this is the first time that petitioner raises this issue. Well-established is the rule that matters not
brought out in the proceedings below but raised for the first time on appeal will ordinarily not be considered by a reviewing
court.19 Given no compelling reason, we shall not now deviate from this familiar rule.

On the second assigned error, petitioner contends that the Court of Appeals erred when it imposed a tortious liability where the
requisites therefor were not established by the evidence. According to petitioner, aside from the hearsay and inadmissible
testimony of Jessie de Vera, there is no other evidence that the termination of the contract was done with deliberate intent to
harm or for the sole purpose of prejudicing the respondent-drivers. Petitioner adds that the termination was an exercise of a right
and directed primarily at Dr. Cruz.

Article 20 of the Civil Code provides that every person who, contrary to law, willfully or negligently causes damage to another,
shall indemnify the latter for the damage done. Petitioner might not have deliberately intended to injure the respondent-drivers.
But as a consequence of its willful act directed against Dr. Cruz, respondent-drivers lost their jobs and ,consequently suffered
loss of income. Note that under Article 20, there is no requirement that the act must be directed at a specific person, but it
Page 4 of 46 TORTS MEETING 7
TORTS 71
G.R. No. 81262 August 25, 1989
GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS, respondents.
CORTES, J.:
Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and Radio Corporation (GLOBE
MACKAY) in a dual capacity as a purchasing agent and administrative assistant to the engineering operations manager. In 1972,
GLOBE MACKAY discovered fictitious purchases and other fraudulent transactions for which it lost several thousands of pesos.
According to private respondent it was he who actually discovered the anomalies and reported them on November 10, 1972 to
his immediate superior Eduardo T. Ferraren and to petitioner Herbert C. Hendry who was then the Executive Vice-President and
General Manager of GLOBE MACKAY.
On November 11, 1972, one day after private respondent Tobias made the report, petitioner Hendry confronted him by stating
that he was the number one suspect, and ordered him to take a one week forced leave, not to communicate with the office, to
leave his table drawers open, and to leave the office keys.
On November 20, 1972, when private respondent Tobias returned to work after the forced leave, petitioner Hendry went up to
him and called him a "crook" and a "swindler." Tobias was then ordered to take a lie detector test. He was also instructed to
submit specimen of his handwriting, signature, and initials for examination by the police investigators to determine his
complicity in the anomalies.
On December 6,1972, the Manila police investigators submitted a laboratory crime report (Exh. "A") clearing private respondent
of participation in the anomalies.
Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G. Fernandez, who on December 10,
1972, submitted a report (Exh. "2") finding Tobias guilty. This report however expressly stated that further investigation was still
to be conducted.
Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending Tobias from work preparatory to the
filing of criminal charges against him.
On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document Examiner, after investigating other
documents pertaining to the alleged anomalous transactions, submitted a second laboratory crime report (Exh. "B") reiterating
his previous finding that the handwritings, signatures, and initials appearing in the checks and other documents involved in the
fraudulent transactions were not those of Tobias. The lie detector tests conducted on Tobias also yielded negative results.
Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact that the report of the private
investigator, was, by its own terms, not yet complete, petitioners filed with the City Fiscal of Manila a complaint for estafa
through falsification of commercial documents, later amended to just estafa. Subsequently five other criminal complaints were
filed against Tobias, four of which were for estafa through Falsification of commercial document while the fifth was for of
Article 290 of' the Revised Penal Code (Discovering Secrets Through Seizure of Correspondence).lâwphî1.ñèt Two of these
complaints were refiled with the Judge Advocate General's Office, which however, remanded them to the fiscal's office. All of
the six criminal complaints were dismissed by the fiscal. Petitioners appealed four of the fiscal's resolutions dismissing the
criminal complaints with the Secretary of Justice, who, however, affirmed their dismissal.
Page 5 of 46 TORTS MEETING 7
In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners that his employment has been
terminated effective December 13, 1972. Whereupon, Tobias filed a complaint for illegal dismissal. The labor arbiter dismissed
the complaint. On appeal, the National Labor Relations Commission (NLRC) reversed the labor arbiter's decision. However, the
Secretary of Labor, acting on petitioners' appeal from the NLRC ruling, reinstated the labor arbiter's decision. Tobias appealed
the Secretary of Labor's order with the Office of the President. During the pendency of the appeal with said office, petitioners
and private respondent Tobias entered into a compromise agreement regarding the latter's complaint for illegal dismissal.
Unemployed, Tobias sought employment with the Republic Telephone Company (RETELCO). However, petitioner Hendry,
without being asked by RETELCO, wrote a letter to the latter stating that Tobias was dismissed by GLOBE MACKAY due to
dishonesty.
Private respondent Tobias filed a civil case for damages anchored on alleged unlawful, malicious, oppressive, and abusive acts
of petitioners. Petitioner Hendry, claiming illness, did not testify during the hearings. The Regional Trial Court (RTC) of Manila,
Branch IX, through Judge Manuel T. Reyes rendered judgment in favor of private respondent by ordering petitioners to pay him
eighty thousand pesos (P80,000.00) as actual damages, two hundred thousand pesos (P200,000.00) as moral damages, twenty
thousand pesos (P20,000.00) as exemplary damages, thirty thousand pesos (P30,000.00) as attorney's fees, and costs. Petitioners
appealed the RTC decision to the Court of Appeals. On the other hand, Tobias appealed as to the amount of damages. However,
the Court of Appeals, an a decision dated August 31, 1987 affirmed the RTC decision in toto. Petitioners' motion for
reconsideration having been denied, the instant petition for review on certiorari was filed.
The main issue in this case is whether or not petitioners are liable for damages to private respondent.
Petitioners contend that they could not be made liable for damages in the lawful exercise of their right to dismiss private
respondent.
On the other hand, private respondent contends that because of petitioners' abusive manner in dismissing him as well as for the
inhuman treatment he got from them, the Petitioners must indemnify him for the damage that he had suffered.
One of the more notable innovations of the New Civil Code is the codification of "some basic principles that are to be observed
for the rightful relationship between human beings and for the stability of the social order." [REPORT ON THE CODE
COMMISSION ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to
remedy the defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit, incorporated certain
fundamental precepts which were "designed to indicate certain norms that spring from the fountain of good conscience" and
which were also meant to serve as "guides for human conduct [that] should run as golden threads through society, to the end that
law may approach its supreme ideal, which is the sway and dominance of justice" (Id.) Foremost among these principles is that
pronounced in Article 19 which provides:
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone
his due, and observe honesty and good faith.
This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must
be observed not only in the exercise of one's rights but also in the performance of one's duties. These standards are the following:
to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial
limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right,
though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality.
When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to
another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a
rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for
its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper.
Article 20, which pertains to damage arising from a violation of law, provides that:
 Art. 20. Every person who contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for
the same.
However, in the case at bar, petitioners claim that they did not violate any provision of law since they were merely exercising
their legal right to dismiss private respondent. This does not, however, leave private respondent with no relief because Article 21
of the Civil Code provides that:
Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for the damage.
This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even
though they have actually suffered material and moral injury" [Id.] should "vouchsafe adequate legal remedy for that untold
number of moral wrongs which it is impossible for human foresight to provide for specifically in the statutes" [Id. it p. 40; See
also PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247].
In determining whether or not the principle of abuse of rights may be invoked, there is no rigid test which can be applied. While
the Court has not hesitated to apply Article 19 whether the legal and factual circumstances called for its application [See for e.g.,
Velayo v. Shell Co. of the Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra; Grand Union Supermarket, Inc. v. Espino, Jr.,
G.R. No. L-48250, December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No. L-46558, July 31,1981,106 SCRA 391; United
General Industries, Inc, v. Paler G.R. No. L-30205, March 15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911, August 21,
1987, 153 SCRA 183] the question of whether or not the principle of abuse of rights has been violated resulting in damages
under Article 20 or Article 21 or other applicable provision of law, depends on the circumstances of each case. And in the instant
case, the Court, after examining the record and considering certain significant circumstances, finds that all petitioners have
indeed abused the right that they invoke, causing damage to private respondent and for which the latter must now be
indemnified.
The trial court made a finding that notwithstanding the fact that it was private respondent Tobias who reported the possible
existence of anomalous transactions, petitioner Hendry "showed belligerence and told plaintiff (private respondent herein) that
he was the number one suspect and to take a one week vacation leave, not to communicate with the office, to leave his table
drawers open, and to leave his keys to said defendant (petitioner Hendry)" [RTC Decision, p. 2; Rollo, p. 232]. This, petitioners
do not dispute. But regardless of whether or not it was private respondent Tobias who reported the anomalies to petitioners, the
latter's reaction towards the former upon uncovering the anomalies was less than civil. An employer who harbors suspicions that
an employee has committed dishonesty might be justified in taking the appropriate action such as ordering an investigation and
directing the employee to go on a leave. Firmness and the resolve to uncover the truth would also be expected from such
employer. But the high-handed treatment accorded Tobias by petitioners was certainly uncalled for. And this reprehensible
attitude of petitioners was to continue when private respondent returned to work on November 20, 1972 after his one week
forced leave. Upon reporting for work, Tobias was confronted by Hendry who said. "Tobby, you are the crook and swindler in
this company." Considering that the first report made by the police investigators was submitted only on December 10, 1972 [See
Exh. A] the statement made by petitioner Hendry was baseless. The imputation of guilt without basis and the pattern of
harassment during the investigations of Tobias transgress the standards of human conduct set forth in Article 19 of the Civil
Code. The Court has already ruled that the right of the employer to dismiss an employee should not be confused with the manner
in which the right is exercised and the effects flowing therefrom. If the dismissal is done abusively, then the employer is liable
for damages to the employee [Quisaba v. Sta. Ines-Melale Veneer and Plywood Inc., G.R. No. L-38088, August 30, 1974, 58
SCRA 771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L-21871, September 27,1966, 18 SCRA 107] Under the
circumstances of the instant case, the petitioners clearly failed to exercise in a legitimate manner their right to dismiss Tobias,
giving the latter the right to recover damages under Article 19 in relation to Article 21 of the Civil Code.
But petitioners were not content with just dismissing Tobias. Several other tortious acts were committed by petitioners against
Tobias after the latter's termination from work. Towards the latter part of January, 1973, after the filing of the first of six criminal
complaints against Tobias, the latter talked to Hendry to protest the actions taken against him. In response, Hendry cut short
Tobias' protestations by telling him to just confess or else the company would file a hundred more cases against him until he
landed in jail. Hendry added that, "You Filipinos cannot be trusted." The threat unmasked petitioner's bad faith in the various
actions taken against Tobias. On the other hand, the scornful remark about Filipinos as well as Hendry's earlier statements about
Tobias being a "crook" and "swindler" are clear violations of 'Tobias' personal dignity [See Article 26, Civil Code].
Page 6 of 46 TORTS MEETING 7
The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime in October 1974, stating that
Tobias had been dismissed by GLOBE MACKAY due to dishonesty. Because of the letter, Tobias failed to gain employment
with RETELCO and as a result of which, Tobias remained unemployed for a longer period of time. For this further damage
suffered by Tobias, petitioners must likewise be held liable for damages consistent with Article 2176 of the Civil Code.
Petitioners, however, contend that they have a "moral, if not legal, duty to forewarn other employers of the kind of employee the
plaintiff (private respondent herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim that "it is the accepted moral
and societal obligation of every man to advise or warn his fellowmen of any threat or danger to the latter's life, honor or
property. And this includes warning one's brethren of the possible dangers involved in dealing with, or accepting into
confidence, a man whose honesty and integrity is suspect" [Id.]. These arguments, rather than justify petitioners' act, reveal a
seeming obsession to prevent Tobias from getting a job, even after almost two years from the time Tobias was dismissed.
Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias. Petitioners contend that there is
no case against them for malicious prosecution and that they cannot be "penalized for exercising their right and prerogative of
seeking justice by filing criminal complaints against an employee who was their principal suspect in the commission of forgeries
and in the perpetration of anomalous transactions which defrauded them of substantial sums of money" [Petition, p. 10, Rollo, p.
11].
While sound principles of justice and public policy dictate that persons shall have free resort to the courts for redress of wrongs
and vindication of their rights [Buenaventura v. Sto. Domingo, 103 Phil. 239 (1958)], the right to institute criminal prosecutions
can not be exercised maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 5871.]
Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2 SCRA 337, the Court held that the right to file
criminal complaints should not be used as a weapon to force an alleged debtor to pay an indebtedness. To do so would be a clear
perversion of the function of the criminal processes and of the courts of justice. And in Hawpia CA, G.R. No. L-20047, June 30,
1967. 20 SCRA 536 the Court upheld the judgment against the petitioner for actual and moral damages and attorney's fees after
making a finding that petitioner, with persistence, filed at least six criminal complaints against respondent, all of which were
dismissed.
To constitute malicious prosecution, there must be proof that the prosecution was prompted by a design to vex and humiliate a
person and that it was initiated deliberately by the defendant knowing that the charges were false and groundless [Manila Gas
Corporation v. CA, G.R. No. L-44190, October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit by itself, does not
render a person liable for malicious prosecution [Inhelder Corporation v. CA, G.R. No. 52358, May 301983122 SCRA 576]. The
mere dismissal by the fiscal of the criminal complaint is not a ground for an award of damages for malicious prosecution if there
is no competent evidence to show that the complainant had acted in bad faith [Sison v. David, G.R. No. L-11268, January
28,1961, 1 SCRA 60].
In the instant case, however, the trial court made a finding that petitioners acted in bad faith in filing the criminal complaints
against Tobias, observing that:
xxx
Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six (6) criminal cases, five (5) of which
were for estafa thru falsification of commercial document and one for violation of Art. 290 of the Revised Penal Code
"discovering secrets thru seizure of correspondence," and all were dismissed for insufficiency or lack of evidence." The
dismissal of four (4) of the cases was appealed to the Ministry of Justice, but said Ministry invariably sustained the dismissal
of the cases. As above adverted to, two of these cases were refiled with the Judge Advocate General's Office of the Armed
Forces of the Philippines to railroad plaintiffs arrest and detention in the military stockade, but this was frustrated by a
presidential decree transferring criminal cases involving civilians to the civil courts.
xxx
To be sure, when despite the two (2) police reports embodying the findings of Lt. Dioscoro Tagle, Chief Document
Examiner of the Manila Police Department, clearing plaintiff of participation or involvement in the fraudulent transactions
complained of, despite the negative results of the lie detector tests which defendants compelled plaintiff to undergo, and
although the police investigation was "still under follow-up and a supplementary report will be submitted after all the
 evidence has been gathered," defendants hastily filed six (6) criminal cases with the city Fiscal's Office of Manila, five (5)
for estafa thru falsification of commercial document and one (1) for violation of Art. 290 of the Revised Penal Code, so
much so that as was to be expected, all six (6) cases were dismissed, with one of the investigating fiscals, Asst. Fiscal de
Guia, commenting in one case that, "Indeed, the haphazard way this case was investigated is evident. Evident likewise is the
flurry and haste in the filing of this case against respondent Tobias," there can be no mistaking that defendants would not but
be motivated by malicious and unlawful intent to harass, oppress, and cause damage to plaintiff.
Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of the Civil Code provides that "[i]n
quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence," the Court, in Zulueta v. Pan
American World Airways, Inc., G.R. No. L- 28589, January 8, 1973, 49 SCRA 1, ruled that if gross negligence warrants the
award of exemplary damages, with more reason is its imposition justified when the act performed is deliberate, malicious and
tainted with bad faith. As in the Zulueta case, the nature of the wrongful acts shown to have been committed by petitioners
against Tobias is sufficient basis for the award of exemplary damages to the latter.

xxx WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals in CA-G.R. CV No. 09055 is
AFFIRMED.
[RTC Decision, pp. 5-6; Rollo, pp. 235-236].
SO ORDERED.
In addition to the observations made by the trial court, the Court finds it significant that the criminal complaints were filed
during the pendency of the illegal dismissal case filed by Tobias against petitioners. This explains the haste in which the
complaints were filed, which the trial court earlier noted. But petitioners, to prove their good faith, point to the fact that only six
complaints were filed against Tobias when they could have allegedly filed one hundred cases, considering the number of
anomalous transactions committed against GLOBE MACKAY. However, petitioners' good faith is belied by the threat made by
Hendry after the filing of the first complaint that one hundred more cases would be filed against Tobias. In effect, the possible
filing of one hundred more cases was made to hang like the sword of Damocles over the head of Tobias. In fine, considering the
haste in which the criminal complaints were filed, the fact that they were filed during the pendency of the illegal dismissal case
against petitioners, the threat made by Hendry, the fact that the cases were filed notwithstanding the two police reports
exculpating Tobias from involvement in the anomalies committed against GLOBE MACKAY, coupled by the eventual dismissal
of all the cases, the Court is led into no other conclusion than that petitioners were motivated by malicious intent in filing the six
criminal complaints against Tobias.

Petitioners next contend that the award of damages was excessive. In the complaint filed against petitioners, Tobias prayed for
the following: one hundred thousand pesos (P100,000.00) as actual damages; fifty thousand pesos (P50,000.00) as exemplary
damages; eight hundred thousand pesos (P800,000.00) as moral damages; fifty thousand pesos (P50,000.00) as attorney's fees;
and costs. The trial court, after making a computation of the damages incurred by Tobias [See RTC Decision, pp. 7-8; Rollo, pp.
154-1551, awarded him the following: eighty thousand pesos (P80,000.00) as actual damages; two hundred thousand pesos
(P200,000.00) as moral damages; twenty thousand pesos (P20,000.00) as exemplary damages; thirty thousand pesos
(P30,000.00) as attorney's fees; and, costs. It must be underscored that petitioners have been guilty of committing several
actionable tortious acts, i.e., the abusive manner in which they dismissed Tobias from work including the baseless imputation of
guilt and the harassment during the investigations; the defamatory language heaped on Tobias as well as the scornful remark on
Filipinos; the poison letter sent to RETELCO which resulted in Tobias' loss of possible employment; and, the malicious filing of
the criminal complaints. Considering the extent of the damage wrought on Tobias, the Court finds that, contrary to petitioners'
contention, the amount of damages awarded to Tobias was reasonable under the circumstances.

Yet, petitioners still insist that the award of damages was improper, invoking the principle of damnum absque injuria. It is
argued that "[t]he only probable actual damage that plaintiff (private respondent herein) could have suffered was a direct result
of his having been dismissed from his employment, which was a valid and legal act of the defendants-appellants (petitioners
herein).lâwphî1.ñèt " [Petition, p. 17; Rollo, p. 18].

According to the principle of damnum absque injuria, damage or loss which does not constitute a violation of a legal right or
amount to a legal wrong is not actionable [Escano v. CA, G.R. No. L-47207, September 25, 1980, 100 SCRA 197; See also
Gilchrist v. Cuddy 29 Phil, 542 (1915); The Board of Liquidators v. Kalaw, G.R. No. L-18805, August 14, 1967, 20 SCRA 987].
This principle finds no application in this case. It bears repeating that even granting that petitioners might have had the right to
dismiss Tobias from work, the abusive manner in which that right was exercised amounted to a legal wrong for which petitioners
must now be held liable. Moreover, the damage incurred by Tobias was not only in connection with the abusive manner in which
he was dismissed but was also the result of several other quasi-delictual acts committed by petitioners.

Petitioners next question the award of moral damages. However, the Court has already ruled in Wassmer v. Velez, G.R. No. L-
20089, December 26, 1964, 12 SCRA 648, 653, that [p]er express provision of Article 2219 (10) of the New Civil Code, moral
damages are recoverable in the cases mentioned in Article 21 of said Code." Hence, the Court of Appeals committed no error in
awarding moral damages to Tobias.

Page 7 of 46 TORTS MEETING 7

TORTS 72 On February 8, 1991, public respondent judge issued an Order 8 denying petitioners' Motion to Dismiss. In the same Order,
petitioners were required to file their answer to the complaint within fifteen (15) days from receipt of the Order.
G.R. No. 107019 March 20, 1997
Petitioners moved for a reconsideration of the Order of denial, but the same was likewise denied by respondent Judge in another
Order dated May 14, 1991.9 The subsequent Order reiterated that petitioners file their responsive pleading within the prescribed
FRANKLIN M. DRILON, AURELIO C. TRAMPE, GREGORIO A. ARIZALA, CESAR M. SOLIS and FERDINAND
reglementary period.
R. ABESAMIS, petitioners,
vs.
COURT OF APPEALS, HON. GEORGE C. MACLI-ING, in his capacity as Presiding Judge of Branch 100 of the Instead of filing their answer as ordered, petitioners filed on June 5, 1991 a petition for certiorari under Rule 65 before the Court
Regional Trial Court of Quezon City, and HOMOBONO ADAZA, respondents. of Appeals, docketed as CA-G.R. No. 25080, alleging grave abuse of discretion on the part of the respondent Judge in ruling that
sufficient cause of action exists to warrant a full-blown hearing of the case filed by Adaza and thus denying petitioners' Motion
to Dismiss.
HERMOSISIMA, JR., J.:

In its Resolution promulgated on January 31, 1992, the appellate court dismissed the petition for lack of merit and ordered
Petitioners seek the reversal of the Resolutions of respondent Court of Appeals in CA-G.R. SP No. 25080 dated January 31,
respondent Judge to proceed with the trial of Civil Case No. Q-90-6073. 10 A Motion for Reconsideration having been
1992 and September 2, 1992 affirming the Orders, dated February 8, 1991 and May 14, 1991, of respondent Judge George C.
subsequently filed on February 28, 1992, the court a quo denied the same in a Resolution dated September 2, 1992. 11
Macli-ing which denied herein petitioner's Motion to Dismiss the complaint filed in Civil Case No. Q-90-6073 by respondent
Homobono Adaza.
Hence, this petition, dated October 9, 1992, pleading this Court to exercise its power of review under Rule 45 of the Revised
Rules of Court.
The facts are not in dispute.

On January 13, 1993, however, this Court, thru the Second Division, dismissed the petition for failure to comply with Revised
In a letter-complaint to then Secretary of Justice Franklin Drilon1 dated March 20, 1990, General Renato de Villa,2who was then
Circular No. 1-88, particularly the requirement on the payment of the prescribed docketing fees. 12
the Chief of Staff of the Armed Forces of the Philippines, requested the Department of Justice to order the investigation of
several individuals named therein, including herein private respondent Homobono Adaza, for their alleged participation in the
failed December 1989 coup d'etat. The letter-complaint was based on the affidavit of Brigadier General Alejandro Galido, On March 8, 1993, 13 we reinstated the petition and required the respondents to comment on the aforesaid petition. In the same
Captain Oscarlito Mapalo, Colonel Juan Mamorno, Colonel Hernani Figueroa and Major Eduardo Sebastian. Resolution, a temporary restraining order was issued by this Court enjoining respondent Judge from further proceeding with
Civil Case No. Q-90-6073 until further orders from this Court.
Gen. de Villa's letter-complaint with its annexes was referred for preliminary inquiry to the Special Composite Team of
Prosecutors created pursuant to Department of Justice Order No. 5 dated January 10, 1990. Petitioner then Assistant Chief State The petition has merit.
Prosecutor Aurelio Trampe,3 the Team Leader, finding sufficient basis to continue the inquiry, issued a subpoena to the
individuals named in the letter-complaint, Adaza included, and assigned the case for preliminary investigation to a panel of
In his Comment, 14 dated March 23, 1993, respondent Adaza maintains that his claim before the trial court was merely a suit for
investigators composed of prosecutors George Arizala, as Chairman, and Ferdinand Abesamis and Cesar Solis as members. The
damages based on tort by reason of petitioners' various malfeasance, misfeasance and nonfeasance in office, as well as for
case was docketed as I.S. No. DOJ-SC-90-013.
violation by the petitioners of Section 3 (e) of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices
Act. It was not a suit for malicious prosecution.
On April 17, 1990, the panel released its findings, thru a Resolution, which reads:
Private respondent is taking us for a ride. A cursory perusal of the complaint filed by Adaza before respondent Judge George
PREMISES CONSIDERED, we find and so hold that there is probable cause to hold herein respondents for trial for the Macli-ing reveals that it is one for malicious prosecution against the petitioners for the latter's filing of the charge against him of
crime of REBELLION WITH MURDER AND FRUSTRATED MURDER. Hence we respectfully recommend the rebellion with murder and frustrated murder. An examination of the records would show that this latest posture as to the nature
filing of the corresponding information against them in court.4 of his cause of action is only being raised for the first time on appeal. Nowhere in his complaint filed with the trial court did
respondent Adaza allege that his action is one based on tort or on Section 3 (e) or Republic Act No. 3019. Such a change of
theory cannot be allowed. When a party adopts a certain theory in the court below, he will not be permitted to change his theory
The above Resolution became the basis for the filing of an Information, 5 dated April 18, 1990, charging private respondent with
on appeal, for to permit him to do so would not only be unfair to the other party but it would also be offensive to the basic rules
the crime of rebellion with murder and frustrated murder before the Regional Trial Court of Quezon City, with no
of fair play, justice and due process. 15 Any member of the Bar, even if not too schooled in the art of litigation, would easily
recommendation as to bail.6
discern that Adaza's complaint is no doubt a suit for damages for malicious prosecution against the herein petitioners.
Unfortunately, however, his complaint filed with the trial court suffers from a fatal infirmity — that of failure to state a cause of
Feeling aggrieved by the institution of these proceedings against him, private respondent Adaza filed a complaint for action — and should have been dismissed right from the start. We shall show why.
damages,7 dated July 11, 1990, before Branch 100 of the Regional Trial Court of Quezon City. The complaint was docketed as
Civil Case No. Q-90-6073 entitled, "Homobono Adaza, plaintiff versus Franklin Drilon, et al., respondents." In his complaint,
The term malicious prosecution has been defined in various ways. In American jurisdiction, it is defined as:
Adaza charged petitioners with engaging in a deliberate, willful and malicious experimentation by filing against him a charge of
rebellion complexed with murder and frustrated murder when petitioners, according to Adaza, were fully aware of the non-
existence of such crime in the statute books. One begun in malice without probable cause to believe the charges can be sustained (Eustace v. Dechter, 28 Cal. App.
2d. 706, 83 P. 2d. 525). Instituted with intention of injuring defendant and without probable cause, and which terminates
in favor of the person prosecuted. For this injury an action on the case lies, called the action of malicious prosecution
On October 15, 1990, petitioners filed a Motion to Dismiss Adaza's complaint on the ground that said complaint states no
(Hicks v. Brantley, 29 S.E. 459, 102 Ga. 264; Eggett v. Allen, 96 N.W. 803, 119 Wis. 625). 16
actionable wrong constituting a valid cause of action against petitioners.

Page 8 of 46 TORTS MEETING 7

In Philippine jurisdiction, it has been defined as:
An action for damages brought by one against whom a criminal prosecution, civil suit, or other legal proceeding has
been instituted maliciously and without probable cause, after the termination of such prosecution, suit, or other
proceeding in favor of the defendant therein. The gist of the action is the putting of legal process in force, regularly, for
the mere purpose of vexation or injury (Cabasaan v. Anota, 14169-R, November 19, 1956). 17
The statutory basis for a civil action for damages for malicious prosecution are found in the provisions of the New Civil Code on
Human Relations and on damages particularly Articles 19, 20, 21, 26, 29, 32, 33, 35, 2217 and 2219 (8). 18 To constitute
malicious prosecution, however, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate
a person, and that it was initiated deliberately by the defendant knowing that his charges were false and groundless. Concededly,
the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution. 19 Thus, in
order for a malicious prosecution suit to prosper, the plaintiff must prove three (3) elements: (1) the fact of the prosecution and
the further fact that the defendant was himself the prosecutor and that the action finally terminated with an acquittal; (2) that in
bringing the action, the prosecutor acted without probable cause; and (3) that the prosecutor was actuated or impelled by legal
malice, that is by improper or sinister motive. 20 All these requisites must concur.
Judging from the face of the complaint itself filed by Adaza against the herein petitioners, none of the foregoing requisites have
been alleged therein, thus rendering the complaint dismissible on the ground of failure to state a cause of action under Section 1
(g), Rule 16 of the Revised Rules of Court.
There is nothing in the records which shows, and the complaint does not allege, that Criminal Case No. Q-90-11855, filed by the
petitioners against respondent Adaza for Rebellion with Murder and Frustrated Murder, has been finally terminated and therein
accused Adaza acquitted of the charge. Not even Adaza himself, thru counsel, makes any positive asseveration on this aspect that
would establish his acquittal. Insofar as Criminal Case No. Q-90-11855 is concerned, what appears clear from the records only is
that respondent has been discharged on a writ of habeas corpus and granted bail. 21 This is not, however, considered the
termination of the action contemplated under Philippine jurisdiction to warrant the institution of a malicious prosecution suit
against those responsible for the filing of the information against him.
The complaint likewise does not make any allegation that the prosecution acted without probable cause in filing the criminal
information dated April 18, 1990 for rebellion with murder and frustrated murder. Elementarily defined, probable cause is the
existence of such facts and circumstances as would excite the belief, in a reasonable mind, acting on the facts within the
knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. It is well-settled that
one cannot be held liable for maliciously instituting a prosecution where one has acted with probable cause. Elsewise stated, a
suit for malicious prosecution will lie only in cases where a legal prosecution has been carried on without probable cause. The
reason for this rule is that it would be a very great discouragement to public justice, if prosecutors, who had tolerable ground of
suspicion, were liable to be sued at law when their indictment miscarried. 22
In the case under consideration, the decision of the Special Team of Prosecutors to file the information for rebellion with murder
and frustrated murder against respondent Adaza, among others, cannot be dismissed as the mere product of whim or caprice on
the part of the prosecutors who conducted the preliminary investigation. Said decision was fully justified in an eighteen (18)-
page Resolution dated April 17, 1990. 23 While it is true that the petitioners were fully aware of the prevailing jurisprudence
enunciated in People v. Hernandez, 24 which proscribes the complexing of murder and other common crimes with rebellion,
petitioners were of the honest conviction that the Hernandez Case can be differentiated from the present case. The petitioners
thus argued:
Of course we are aware of the ruling in People vs. Hernandez, 99 Phil. 515, which held that common crimes like
murder, arson, etc. are absorbed by rebellion. However, the Hernandez case is different from the present case before us.
In the Hernandez case, the common crimes of murder, arson, etc. were found by the fiscal to have been committed as a
necessary means to commit rebellion, or in furtherance thereof. Thus, the fiscal filed an information for rebellion
alleging those common crimes as a necessary means of committing the offense charged under the second part of Article
48, RPC.
Page 9 of 46 TORTS MEETING 7
We, however, find no occasion to apply the Hernandez ruling since as intimated above, the crimes of murder and
frustrated murder in this case were absolutely unnecessary to commit rebellion although they were the natural
consequences of the unlawful bombing. Hence, the applicable provision is the first part of Article 48 of the RPC. 25
While the Supreme Court in the case of Enrile v. Salazar, 26 addressing the issue of whether or not the Hernandez doctrine is still
good law, in a 10-3 vote, did not sustain the position espoused by the herein petitioners on the matter, three justices 27 felt the
need to re-study the Hernandez ruling in light of present-day developments, among whom was then Chief Justice Marcelo
Fernan who wrote a dissenting opinion in this wise:
I am constrained to write this separate opinion on what seems to be a rigid adherence to the 1956 ruling of the Court.
The numerous challenges to the doctrine enunciated in the case of People vs. Hernandez, 99 Phil. 515 (1956), should at
once demonstrate the need to redefine the applicability of said doctrine so as to make it conformable with accepted and
well-settled principles of criminal law and jurisprudence.
To my mind, the Hernandez doctrine should not be interpreted as an all-embracing authority for the rule that all
common crimes committed on the occasion, or in furtherance of, or in connection with, rebellion are absorbed by the
latter. To that extent, I cannot go along with the view of the majority in the instant case that "Hernandez remains
binding doctrine operating to prohibit the complexing of rebellion with any other offense committed on the occasion
thereof, either as a means necessary to its commission or as an unintended effect of an activity that constitutes rebellion"
(p. 9, Decision).
The Hernandez doctrine has served the purpose for which it was applied by the Court in 1956 during the communist-
inspired rebellion of the Huks. The changes in our society in the span of 34 years since then have far-reaching effects on
the all-embracing applicability of the doctrine considering the emergence of alternative modes of seizing the powers of
the duly-constituted Government not contemplated in Articles 134 and 135 of the Revised Penal Code and their
consequent effects on the lives of our people. The doctrine was good law then, but I believe that there is a certain aspect
of the Hernandez doctrine that needs clarification. 28
Apparently, not even the Supreme Court then was of one mind in debunking the theory being advanced by the petitioners in this
case, some of whom were also the petitioners in the Enrile case. Nevertheless, we held in Enrilethat the Information filed therein
properly charged an offense — that of simple rebellion — 29 and thereupon ordered the remand of the case to the trial court for
the prosecution of the named accused 30 in the Information therein. Following this lead, the Information against Adaza in
Criminal Case No. Q-90-11855 was not quashed, but was instead treated likewise as charging the crime of simple rebellion.
A doubtful or difficult question of law may become the basis of good faith and, in this regard, the law always accords to public
officials the presumption of good faith and regularity in the performance of official duties. 31 Any person who seeks to establish
otherwise has the burden of proving bad faith or ill-motive. Here, since the petitioners were of the honest conviction that there
was probable cause to hold respondent Adaza for trial for the crime of rebellion with murder and frustrated murder, and since
Adaza himself, through counsel, did not allege in his complaint lack of probable cause, we find that the petitioners cannot be
held liable for malicious prosecution. Needless to say, probable cause was not wanting in the institution of Criminal Case No. Q-
90-11855 against Adaza.
As to the requirement that the prosecutor must be impelled by malice in bringing the unfounded action, suffice it to state that the
presence of probable cause signifies, as a legal consequence, the absence of malice. 32 At the risk of being repetitious, it is
evident in this case that petitioners were not motivated by malicious intent or by a sinister design to unduly harass private
respondent, but only by a well-founded belief that respondent Adaza can be held for trial for the crime alleged in the
information.
All told, the complaint, dated July 11, 1990, filed by Adaza before Branch 100 of the Regional Trial Court against the petitioners
does not allege facts sufficient to constitute a cause of action for malicious prosecution. Lack of cause of action, as a ground for a
motion to dismiss under Section 1 (g), Rule 16 of the Revised Rules of Court, must appear on the face of the complaint itself,
meaning that it must be determined from the allegations of the complaint and from none other. 33 The infirmity of the complaint
in this regard is only too obvious to have escaped respondent judge's attention. Paragraph 14 of the complaint which states:
 xxx xxx xxx

14. The malicious prosecution, nay persecution, of plaintiff for a non-existent crime had severely injured and
besmirched plaintiff's name and reputation and forever stigmatized his stature as a public figure, thereby causing him
extreme physical suffering, serious anxiety, mental anguish, moral shock and social humiliation. 34

is a mere conclusion of law and is not an averment or allegation of ultimate facts. It does not, therefore, aid in any wise the
complaint in setting forth a valid cause of action against the petitioners.

It is worthy to note that this case was elevated to the public respondent Court of Appeals and now to this Court because of
respondent Judge Macli-ing's denial of petitioners' motion to dismiss the Adaza complaint. The ordinary procedure, as a general
rule, is that petitioners should have filed an answer, go to trial, and if the decision is adverse, reiterate the issue on appeal. 35 This
general rule, however, is subject to certain exceptions, among which are, if the court denying the motion to dismiss acts without
or in excess of jurisdiction or with grave abuse of discretion, in which case certiorari under Rule 65 may be availed of. The
reason is that it would be unfair to require the defendants (petitioners in this case) to undergo the ordeal and expense of trial
under such circumstances, because the remedy of appeal then would then not be plain and adequate. 36 Judge Macli-ing
committed grave abuse of discretion in denying petitioners' motion to dismiss the Adaza complaint, and thus public respondent
Court of Appeals should have issued the writ of certiorari prayed for by the petitioners and annulled the February 8, 1991 and
May 14, 1991 Orders of respondent Judge. It was grievous error on the part of the court a quo not to have done so. This has to be
corrected. Respondent Adaza's baseless action cannot be sustained for this would unjustly compel the petitioners to needlessly go
through a protracted trial and thereby unduly burden the court with one more futile and inconsequential case.

WHEREFORE, the petition is GRANTED. The Resolutions of respondent Court of Appeals dated January 31, 1992 and
September 2, 1992 affirming the February 8, 1991 and May 14, 1991 Orders of respondent Judge George C. Macli-ing are all
hereby NULLIFIED AND SET ASIDE. Respondent Judge is DIRECTED to take no further action on Civil Case No. Q-90-6073
except to DISMISS the same.

SO ORDERED.

Page 10 of 46 TORTS MEETING 7

TORTS 73
G.R. No. 160959 April 3, 2007
ANTONIO DIAZ, Petitioner,
vs.
DAVAO LIGHT AND POWER CO., INC., MANUEL M. ORIG and ELISEO R. BRAGANZA, JR., Respondents.
DECISION
CALLEJO, SR., J.:
This is a Petition for Review on Certiorari of the Decision 1 of the Court of Appeals (CA) in CA-G.R. CV No. 68709, which
affirmed the Decision2 of the Regional Trial Court (RTC) of Davao City, Branch 11, in Civil Case No. 21,655-92.
Antecedents
Antonio G. Diaz was the president of Diaz and Co., Inc. He was also vice-president of Diaz Realty Inc. which, in turn, owned the
Doña Segunda Hotel,3 formerly known as the Davao Imperial Hotel (Imperial Hotel Building),4located along C.M. Recto
Avenue, Davao City. Davao Light and Power Co., Inc. (DLPC), on the other hand, is a public utility duly franchised to provide
light, heat and power to its customers in Davao City and the municipalities of Panabo, Santo Tomas and Carmen, in Davao del
Norte.5 Manuel Orig was the resident manager/vice-president for Administration of DLPC,6 while Eliseo R. Braganza was its in-
house lawyer.7 DLPC supplied the Doña Segunda Building (Imperial Hotel Building) with electricity service8 under Account No.
087-10669 and with Meter No. 36510.9
On July 25, 1983, DLPC sent a Notice of Disconnection10 to Diaz and Co., Inc. informing it that, as of June 13, 1983, the hotel’s
unpaid electric consumption bill amounted to ₱190,111.02.11 It also warned that if the amount was not paid, DLPC would be
impelled to discontinue its service. Since Diaz and Co., Inc. ignored the letter, Meter No. 36510 was disconnected on July 29,
1983.12
DLPC then filed a complaint for collection before the RTC, Cebu City, which case was docketed as Civil Case No. CEB-1049.
Meanwhile, in 1984, the National Food Authority (NFA) established its KADIWA13 store at C.M. Recto Avenue, Davao
City.14 It leased a portion of the ground floor of the Imperial Hotel Building from Diaz and Co., Inc. 15NFA/KADIWA also
applied for electricity service with DLPC, and a contract16 was later executed between the parties. On March 15, 1984, DLPC
connected the area leased by NFA/KADIWA to its electric grid 17 under Account No. 091-12643,18 and installed Meter No.
8473819 to measure NFA/KADIWA’s monthly electric consumption.
In August 1986, the Kadiwa Center IV closed, and NFA/KADIWA vacated the Doña Segunda Building. 20 In a letter21dated
August 11, 1986, NFA/KADIWA Provincial Manager, Roberta R. Melendres, informed DLPC that the light and power
connection of NFA/KADIWA would be left behind; its right to the connection would be transferred to Diaz.22She also informed
DLPC that the ₱1,020.00 deposit of NFA/KADIWA for the power connection had been refunded to it by Diaz.23
In a letter24 dated September 2, 1986, Diaz informed respondent Manuel Orig that he had leased the untenanted portions of the
Doña Segunda Building from Diaz and Co., Inc., and requested that a new electrical connection for the building in his name be
installed, separate from the one assigned to him by NFA.25
On September 15, 1986, DLPC denied the request on the ground that since Diaz and Co., Inc. is a closed family corporation
whose stockholders are the immediate members of the Diaz family, the lease in favor of Diaz could be simulated.26 DLPC,
however, reminded Diaz that it would be too happy to grant his request "if he and/or Diaz and Co., Inc. would pay what is due
and owing to it."27
Page 11 of 46 TORTS MEETING 7
Diaz and Co., Inc. sent a letter28 to DLPC dated September 17, 1986 declaring that it had assumed the electrical bills of
NFA/KADIWA under Account No. 091-12643, and requested that the monthly bills/statements be sent to it. In its reply, DLPC
rejected the request and declared that it was not aware that Diaz and Co., Inc. had refunded the NFA/KADIWA its ₱1,020.00
deposit.29
On September 26, 1986, Diaz filed a petition for mandamus30 before the RTC, Davao City. He alleged that as a holder of a
certificate of public convenience, DLPC is mandated by law to provide him with electric service; the grounds relied upon by
respondent Orig in denying his application are anchored on bias and prejudice, since he (Diaz) is one of the stockholders of Diaz
and Co. Inc., the owner of the Davao Imperial Hotel; and the civil case filed by DLPC is against Diaz and Co., Inc. and not
personally against him.31 The complaint was docketed as Civil Case No. 18,288.
Meanwhile, on September 23, 1986, the portion of the building formerly leased by NFA/KADIWA was leased to Matias
Mendiola.32 Because he needed more electricity than what could be provided by the existing electrical wirings, Mendiola opted
to change the electrical installation from a one-phase meter to a three-phase meter connection.33 Mendiola’s application was
approved by DLPC. On December 19, 1986, DLPC and Mendiola executed a service Contract 34 for electricity service.
On January 7, 1987, Diaz filed an application for preliminary injunction in Sp. Civil Case No. 18,288 35 to enjoin DLPC from
disconnecting the electric connections to Meter No. 84738 under Account No. 091-12643. Also, an Inter-Office Memo36 dated
January 7, 1987, signed by Officer-in-Charge, Rebecca Madrid, was issued to all security guards of the Doña Segunda Building
who were ordered to prevent anyone from disturbing Meter No. 84738.37Because of this, DLPC failed to substitute its single-
phase meter with a three-phase meter. DLPC’s linemen thus installed the three-phase meter without removing the single-phase
meter.381a\^/phi1.net
On March 12, 1987, the RTC in Sp. Civil Case No. 18,288, denied the motion for issuance of a writ of preliminary
injunction39 filed by Diaz. He moved for a reconsideration, which was, however, denied in the Order 40 dated August 20, 1987.
DLPC then removed its single-phase meter on November 20, 1987, which rendered almost half of the building without
power.41 That same day, Diaz went to the DLPC building and threw stones at it, breaking four glass windows in the process.42 He
then bought his own electric meter, Meter No. 86673509, 43 had it calibrated by the Board of Energy, and unilaterally replaced
Meter No. 84738. The electricity in the building was then restored. 44
On November 24, 1987, Diaz filed a Complaint for Damages with Prayer for Preliminary Prohibitory and Mandatory Injunction
and Restraining Order45 before the RTC, Davao City, docketed as Civil Case No. 18,855-87. In the said complaint, Diaz claimed
that DLPC arbitrarily and illegally removed Meter No. 84738 in violation of their business franchise and Article 19 of the New
Civil Code, and had threatened to remove Meter No. 86673509.46
DLPC, for its part, filed a counter-application for preliminary mandatory injunction47 in the same case to compel the removal of
Meter No. 86673509 which Diaz had installed without DLPC’s consent and authority. 48 The RTC issued an Order49 dated March
30, 1988 denying Diaz’s application for prohibitory and mandatory injunction, and granting DLPC’s counter-application for
preliminary mandatory injunction. The RTC ordered Diaz to immediately remove Meter No. 86673509 and disconnect the
electrical wirings he had unilaterally connected to the upper floor rooms. Diaz filed a motion for reconsideration but was
denied.1a\^/phi1.net On June 13, 1998, the sheriff, with the aid of DLPC personnel, caused the removal of Meter No.
86673509.50
Aggrieved, Diaz assailed the orders via petition for certiorari before the CA. The petition was docketed as CA-G.R. SP No.
14909. On October 19, 1988, the CA rendered a Decision 51 granting Diaz’s petition, to wit:
Wherefore, in view of the foregoing, the petition is hereby granted and the orders of the lower court dated March 30, 1988 and
June 1, 1988 are set aside. Private respondents are thus ordered to maintain the status quo ante which existed before the issuance
of the orders complained against, or else to connect its own electric meter to the premises, on the understanding, of course, that
petitioner pays his electric bills and without prejudice to the continuance of the collection case against Diaz and Company.52
DLPC elevated the decision before this Court, via petition for review on certiorari. The petition was docketed as G.R. No.
85445.53
Meanwhile, on December 19, 1998, the parties in Civil Case No. CEB-104954 executed a Compromise Agreement,55 wherein
they stipulated the following:
1. Plaintiff-appellee hereby reduces its total claims in the complaint to only ₱385,000.00 and further waives any claim in
excess of said amount in the same case, and the defendant-appellant shall pay said amount in full immediately upon the
execution of this agreement. The latter also waives its counterclaims against the former in the above-entitled case.
2. Upon receipt of the payment of the aforesaid sum, plaintiff-appellee shall immediately grant and install in favor of
defendant-appellant or Antonio G. Diaz electric service for the Doña Segunda Building, popularly known as Imperial Hotel
Building, or for portions thereof designated by either including the tenants or lessees occupying the same, upon proper
application therefor and the presentation of the requisite electrical permit.
3. the parties agree to the dismissal of Civil Case No. 18,288 of the Regional Trial Court of Davao City, pending in Branch
XVI thereof, entitled "Diaz vs. Davao Light & Power Co., Inc. and Manuel Orig." for Mandamus inclusive of the counter-
claim therein, the same having become moot and academic.
WHEREFORE, it is most respectfully prayed that this Honorable Court approves the foregoing compromise agreement and
render judgment based thereon, and enjoin the parties to comply strictly with the terms thereof.
The RTC, in Civil Case No. CEB-1049, rendered a Decision56 approving the compromise on January 5, 1989.
57
In Sp. Civil Case No. 18,288, the parties also filed a Joint Motion to Dismiss based on the Compromise Agreement, and the
RTC thereafter ordered the dismissal of the case.58
On April 17, 1989, this Court in G.R. No. 85445, issued a Resolution, 59 denying the petition for review on certiorari questioning
the CA decision in CA-G.R. SP No. 14909 for being moot and academic. The resolution reads:
After deliberating on the allegations made, the issues raised, and the arguments advanced in the Petition, the Comment and the
Reply, and it appearing that petitioner is now providing electrical service to private respondent’s entire building, the Court
RESOLVED to DENY the petition for having become moot and academic. The Court makes the admonition, however, that
connections of electrical service and installations of electric meters should always be upon mutual contract of the parties, and
that payments for electrical consumption should also be made promptly whenever due. Contracts lay down the law between the
parties and obligations arising therefrom should be complied with.
Meanwhile, on June 30, 1997, the RTC rendered a Decision 60 in Civil Case No. 18,855-87 dismissing the case filed by Diaz.61
Diaz appealed the decision with the CA in CA-G.R. CV No. 63236,62 which appeal is still pending before the appellate court.
Based on the aforestated facts, on July 11, 1988, DLPC filed a complaint for theft of electricity against Diaz with the City
Prosecutor’s Office, Davao City; respondent Braganza submitted an Affidavit 63 to support the charge. In defense, Diaz alleged
the following: (1) that the complaint was intended to harass him; (2) he was entitled to electric service by virtue of his
subrogation to the right of NFA/KADIWA; (3) the installation of Meter No. 86673509 was made with the knowledge and
consent of DLPC; (4) there is a pending case between the parties regarding Meter Nos. 84738 and 86673509; and (5) the filing
of the action is premature. The complaint was docketed as I.S. No. 593.
On March 21, 1989, Lolito O. Evangelino, 4th Asst. City Prosecutor, City Prosecutor’s Office of Davao City, issued a
Resolution64 recommending the dismissal of the charge. He opined that the correspondence to DLPC Manager Orig negated
DLPC’s claim of lack of consent and knowledge, and since the issue is still pending litigation in court, the determination of
whether there is theft of electricity is premature (Sp. Civil Case No. 18288 and Civil Case No. 18,855-87).
Page 12 of 46 TORTS MEETING 7
DLPC filed a Motion for Reconsideration65 which the City Prosecutor denied on the ground that DLPC failed to establish the
elements of unlawful taking and intent to gain. DLPC appealed the dismissal to the Secretary of Justice, 66 who, however,
dismissed the appeal in a letter67 dated August 2, 1990. The Motion for Reconsideration68filed by DLPC was likewise denied in
the letter69 dated September 6, 1990.
Undaunted, DLPC filed a criminal complaint70 against Diaz for Violation of P.D. 401,71 as amended by B.P. Blg. 87672 with the
City Prosecutor’s Office, Davao City.73 The complaint was docketed as I.S. No. 92-4590. In his counter-affidavit dated
September 19, 1992, Diaz alleged that a similar complaint (I.S. No. 593) had been filed by DLPC against him. 74 In a
Resolution75 dated October 23, 1992, Calixto A. Esparagoza, 2nd Asst. City Prosecutor, dismissed the case. The Public
Prosecutor likewise denied the motion for reconsideration of DLPC on November 26, 1992.
Meanwhile Diaz, Ramos, and Arguellas, as complainants, filed a criminal complaint with the Office of the Provincial Fiscal of
Davao del Norte charging the officers of DLPC with estafa through falsification of public documents. They also alleged that the
officers of DLPC exacted additional and illegal profits from its consumers by devising a deceptive Varying Discount Formula;
based on the alleged misrepresentation of said officers, the Board of Energy (BOE) granted DLPC provisional authority to apply
the formula, thereby resulting in losses of more or less ₱300,000.00 to Diaz, Ramos, and Arguelles. 76 As regards the charge of
falsification, the complainants alleged that DLPC had its properties appraised by the Technical Management Services,
Philippines, Inc. (TAMSPHIL), and included non-existent properties that did not belong to it; it also recorded the TAMSPHIL
appraisal in its books of account even before it had been approved by the BOE; and submitted financial statements containing the
appraisal to the Securities and Exchange Commission and the BOE.77
The Investigating Prosecutor found probable cause against the respondents. An Information was filed before the then Court of
First Instance (CFI) of Tagum, Davao del Norte, docketed as Crim. Case No. 5800. Respondents appealed the resolution of the
public prosecutor finding probable cause against them. The appeal was granted. On motion of the Prosecutor, the RTC dismissed
the case in an Order dated July 13, 1983.78
On August 9, 1983, the officers of DLPC, Eduardo J. Aboitiz, Luis Aboitiz, Jr., Roberto E. Aboitiz, Jon R. Aboitiz, and Edson
H. Canova, as plaintiffs, filed a Complaint against Diaz, Isagani T. Fuentes (Provincial Fiscal of Davao del Norte), Petronilo D.
Ramos (Municipal Mayor of Carmen, Davao del Norte), Gabriel Arguelles (Municipal Attorney of Panabo, Davao del Norte)
before the RTC, Cebu City, for damages and attorney’s fees against the defendants for malicious prosecution.79
The case was docketed as CEB Case No. 1055. After trial on the merits, the RTC rendered a Decision 80 on April 30, 1992,
dismissing the complaint. The fallo of the decision reads:
WHEREFORE, premises considered, plaintiffs’ complaint and defendants’ counterclaim are hereby DISMISSED for lack of
cause of action with costs de oficio.
SO ORDERED.81
Both parties appealed the decision before the CA, docketed as CA-G.R. CV No. 41399.1ªvvphi1.nét
Diaz, et al. relied on the following grounds:
I TRIAL COURT ERRED IN IGNORING PLAINTIFF-APPELLANT’S (SIC) EVIDENCE OF CONSPIRACY AMONG ALL
DEFENDANT-APPELLANTS (SIC) AND IN MAKING NO FINDING THAT THERE WAS A CONSPIRACY TO
PROSECUTE PLAINTIFF-APPELLANTS (SIC) CRIMINALLY FOR USE AS LEVERAGE IN ORDER TO OBTAIN
CONCESSIONS FROM DAVAO LIGHT & POWER CO.
II TRIAL COURT ERRED IN HOLDING THAT PLAINTIFF-APPELLANTS (SIC) HAVE NO CAUSE OF ACTION BY
COMMITTING THE FOLLOWING ERRORS:
(a) IN FINDING THAT THERE WAS NO PROSECUTION AND NO ACQUITTAL;
 (b) IN FINDING THAT THERE WAS PROBABLE CAUSE FOR DEFENDANT-APPELLANT’S (SIC) CHARGE OF DLPC further alleged that Diaz published and disseminated a handbill claiming that there was something irregular and
ESTAFA THROUGH FALSIFICATION; anomalous regarding the Energy Regulation Board’s approval of the appraisal of the properties and equipment of DLPC, because
of which the customers of DLPC could expect a ₱5.00 per kilowatt charge in the future. Diaz allegedly gave identical interviews
with the Mindanao Daily Mirror and the Ang Peryodiko Dabaw reiterating what he said in the handbill.88 In addition, Diaz, in an
(c) BY IGNORING THE FACT THAT THERE WAS NO EVIDENCE LINKING PLAINTIFF-APPELLANTS (SIC) TO
interview with the People’s Daily Forum, claimed that the National Power Corporation sold two (2) generating sets to DLPC for
THE CRIME CHARGED;
only ₱1.00 each.89

(d) BY IGNORING THE CIRCUMSTANCES THAT MANY ALLEGATIONS IN THE JOINT AFFIDAVIT OF
Consequently, DLPC suffered besmirched reputation and public humiliation, and damage to its business standing. The complaint
DEFENDANT-APPELLANTS (SIC) ARE INADMISSIBLE;
contained the following prayer:

(e) BY IGNORING THE FACT THAT DAVAO LIGHT’S USE OF THE VARYING DISCOUNT FORMULA WAS
1) Immediately issue a temporary restraining order ex-parte precluding defendant from committing further acts of tort or
ADMITTEDLY PROVISIONALLY AUTHORIZED BY THE BOE WHICH AUTHORITY WAS IN FORCE DURING
libel against plaintiff, and after the hearing of plaintiff’s application for preliminary injunction, issue such writ after posting
THE FILING AND PENDENCY OF THE CHARGE;
of the required injunction bond;

(f) BY IGNORING THE FACT THAT THE VARYING DISCOUNT FORMULA WAS A FORMULA TO DETERMINE
2) After trial, render judgment in favor of plaintiff and against defendant Antonio Diaz making the injunction permanent,
THE AMOUNT OF DISCOUNT DEDUCTIBLE FROM THE RATES EARLIER FIXED BY THE BOE RESULTING
and ordering the latter to pay the former –
FROM THE COST SAVINGS REALIZABLE FROM THE CHEAPER COST OF ELECTRIC POWER SOLD BY NPC
TO DAVAO LIGHT, AND ITS NEGATIVE ASPECT WAS MERELY AN INCORPORATION INTO SAID FORMULA
OF THE FUEL CLAUSE ADJUSTMENT ALREADY AUTHORIZED IN THE DECISION OF SAID BOARD IN CASE a) The sum of ₱10,000,000.00 as moral damages anddamages to its business standing;
NO. 73-146;
b) The sum of ₱300,000.00 as exemplary damages;
(g) BY BEING OBLIVIOUS OF THE CIRCUMSTANCE THAT THERE WAS NO FRAUD OR DECEIT IN SECURING
SAID PROVISIONAL AUTHORITY, AND THE BOARD MADE NO SUCH FINDING;
c) The sum of ₱500,000.00 as attorney’s fees and expenses of litigation;

(h) BY IGNORING THE UNREBUTTED EVIDENCE THAT APPELLANT FUENTES DISOBEYED THE DIRECTIVE
d) The cost of suit.90
OF HIS SUPERIOR, THE CHIEF STATE PROSECUTOR TO HOLD IN ABEYANCE FURTHER PROCEEDINGS IN
I.S. NO. 82-115, AND THAT HE FILED AN INFORMATION CHARGING PLAINTIFF-APPELLANTS (SIC) WITH
AN OFFENSE DIFFERENT FROM THAT SUBJECT OF HIS PRELIMINARY INVESTIGATION; After trial, the RTC in Civil Case No. CEB-11843 rendered a Decision91 in favor of DLPC and against Diaz, awarding more than
₱1,500,000.00 in damages to DLPC and dismissing the counterclaim of Diaz. The decretal portion reads:
(i) IN FINDING THAT DEFENDANT-APPELLANTS (SIC) DID NOT ACT WITH MALICE AND HAD ACTED IN
GOOD FAITH IN FILING SAID CHARGE. WHEREFORE, premises above set-forth, the Court hereby renders judgment in favor of plaintiff Davao Light & Power Co., Inc.
and against defendant Antonio Diaz ordering said defendant:
III TRIAL COURT ERRED IN NOT AWARDING DAMAGES TO PLAINTIFF-APPELLANTS (SIC).82
1. To pay plaintiff the amount of ₱1,500,000.00 by way of moral damages for besmirched reputation, loss of business
standing and goodwill;
For their part, DLPC, et al. alleged the following:

2. To pay plaintiff the amount of ₱300,000.00 in exemplary damages by way of example or correction for the public good;
I THAT THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANTS APPELLANTS’ COUNTERCLAIMS HAVE
and
NO CAUSE OF ACTION.

3. To pay plaintiff the amount of ₱500,000.00 in attorney’s fees and litigation expenses and to pay the costs.
II THAT THE TRIAL COURT ERRED IN NOT AWARDING DAMAGES AND ATTORNEY’S FEES.83

Defendant takes nothing from his counterclaim.

On October 30, 2001, the CA rendered a Decision 84 affirming the decision of the RTC.

SO ORDERED.92
Diaz, et al. appealed the decision before this Court, docketed as G.R. No. 154378. On November 13, 2002, this Court resolved to
dismiss the petition for lack of merit.85 On April 15, 2003, as per Entry of Judgment,86 the resolution of this Court became final
and executory. Both parties appealed the decision to the CA in CA-G.R. CV No. 65082, which appeal is still pending.

On June 10, 1992, DLPC instituted a civil action for Damages,87 before the RTC, Cebu City, against Diaz for defamatory and On October 30, 1992, Diaz, as plaintiff, filed a complaint for Damages, Injunction with Writ of Preliminary Injunction and
libelous remarks and for abuse of rights. The plaintiff alleged that Diaz, motivated by malice and ill-will, had taken it upon Temporary Restraining Order, Plus Attorney’s Fee93 against DLPC before the RTC, Davao City; the case was docketed as Civil
himself to find fault in DLPC’s acts and oppose all its application with the BOE, using the media to assault its good name by Case No. 21,655-92. Diaz alleged that DLPC’s filing of criminal cases, I. S. No. 593 for theft of electricity and I.S. No. 92-4590
circulating or publishing libelous and false statements in the newspapers. The case was docketed as Civil Case No. CEB-11843. for violation of P.D. 401, as amended by B.P. Blg. 876), were intended to harass and humiliate him before the public and
government authorities and ruin his image;94 he was seriously prejudiced by the filing of an ₱11.6 Million damage suit in Civil
Page 13 of 46 TORTS MEETING 7
Case No. CEB-1055 and a ₱10.8 Million damage suit in Civil Case No. CEB-11843;95 defendants, by their common and joint
acts, were motivated by evident bad faith and intentionally caused injustice to his person in violation of Article 19 of the New
Civil Code.96 Diaz thus prayed:
WHEREFORE, and in view of the foregoing, it is most respectfully prayed of the Honorable Court:
a) Before notice and hearing to issue a temporary restraining order enjoining defendants from committing any unlawful,
illegal, tortiuous (sic) and inequitable act which may affect the individual rights of plaintiff, and after hearing to issue writ of
preliminary injunction for the same purpose upon posting of the bond;
b) After trial on the merits, to make the writ of injunction as permanent;
c) To order defendants to pay plaintiff, jointly and severally, moral damages in the amount of ₱10,000,000.00, attorney’s fee
in the amount of ₱500,000.00, litigation expenses in the amount of ₱100,000.00 and exemplary damage in the amount of
₱100,000.00; and,
d) To grant to plaintiff such other relief proper and equitable under the premises.97
On November 4, 1992, the RTC issued a TRO98 in favor of Diaz, directing DLPC or any person acting for and in its behalf, to
desist and refrain from committing any unlawful, tortuous and inequitable conduct which may affect the former for a period of
twenty (20) days.
During the pre-trial, the parties limited the issue to "whether or not the plaintiff is entitled to damages by virtue of the filing of
the criminal cases against him for theft of electricity and violation of P.D. 401, both of which were already dismissed." Due to
the pendency of various actions before several courts, the trial court opted to segregate the issues. It focused only on the alleged
malicious prosecution with regard to the filing of the criminal action for theft, I. S. No. 593, and for Violation of P.D. 401, as
amended by B.P. Blg. 876, I.S. No. 92-4590. The RTC reasoned in this wise:
The records show that plaintiff’s first cause of action, which is damages for defendant’s refusal to grant him electric service, has
become moot and academic by virtue of the compromise agreement executed by the plaintiff and the defendant in the mandamus
case docketed as Civil Case No. 18288 of this Court. The parties filed a Joint Motion to Dismiss based on the Compromise
Agreement which was granted by this Court and which led to the eventual dismissal of the case with prejudice.
In summary, plaintiff asks for damages for defendant’s alleged malicious prosecution of a criminal case of theft of electricity
against him, for plaintiff’s filing of a charge of violation of P.D. 401 as amended after dismissal of the theft case, the filing of a
damage suit against him before the RTC of Cebu City which was dismissed and the filing of another damage suit before the
same Cebu RTC which is still pending. Damages are also being sought for defendant’s removal of Electric Meter No. 847328
(sic). But this is a subject matter of a case pending before Branch 13 of this Court and therefore said court retains jurisdiction
over the said cause of action. x x x99
On May 22, 2000, the RTC rendered a Decision100 dismissing the complaint. The fallo reads:
In view of all the foregoing, finding no merit in plaintiff’s complaint, judgment is hereby rendered dismissing said complaint
with costs de oficio.
SO ORDERED.101
The RTC held that while the City Prosecutor, and later the Secretary of Justice, concluded that there was no probable cause for
the crime of theft, this did not change the fact that plaintiff made an illegal connection for electricity. 102 A person’s right to
litigate should not be penalized by holding him liable for damages.
Page 14 of 46 TORTS MEETING 7
Diaz appealed the decision to the CA, alleging that:
I ― THE TRIAL COURT ERRED IN HOLDING THAT “WHEN THE DEFENDANTS FILED THE CASES OF THEFT,
THEY DID SO IN HONEST BELIEF THAT PLAINTIFF IS CRIMINALLY LIABLE”.
II ― THE TRIAL COURT ERRED IN DISMISSING THE CASE AT BAR AND WITHOUT GRANTING THE AWARD
OF DAMAGES.103
On October 1, 2003, the CA affirmed the decision of the RTC. 104 It concluded that the evidence on hand showed good faith on
the part of DLPC in filing the subject complaints. It pointed out that Diaz had been using the electrical services of DLPC without
its consent. As to the effect of the compromise agreement, the CA ruled that it did not bar the filing of the criminal action. Thus,
under the principle of damnum absque injuria, the legitimate exercise of a person’s right, even if it causes loss to another, does
not automatically result in an actionable injury.105
Diaz, now petitioner, comes before this Court in this petition for review on certiorari, raising the following errors:
a) "Proof of moral suffering must be introduced, otherwise the award of moral damage is not proper. In this case, the
evidence presented by the appellant is insufficient to overcome the presumption of good faith." (Decision, p. 10)
b) "In view of the foregoing, it is clear that the subject complaints were filed so as to protect appellee DLPC’s interest. In
this regard, it must be borne in mind that no person should be penalized for the exercise of the right to litigate." (Decision, p.
12)106
The issues raised in the present action can be summarized as follows: (1) whether or not the compromise agreement entered into
between DLPC and Diaz barred the former from instituting further actions involving electric Meter No. 84736 or 86673509; (2)
whether or not DLPC acted in bad faith in instituting the criminal cases against Diaz; and (3) whether or not Diaz is entitled to
damages.
The petition is without merit.
Petitioner insists that the compromise agreement as well as the decision of the CA in CA-G.R. SP No. 14909 already settled the
controversies between them; yet, DLPC instituted the theft case against Diaz, and worse, instituted another action for violation of
P.D. 401, as amended by B.P. Blg. 876. Thus, the only conclusion that can be inferred from the acts of DLPC is that they were
designed to harass, embarrass, prejudice, and ruin him. He further avers that the compromise agreement in Civil Case No. CEB-
1049 completely erased litigious matters that could necessarily arise out of either Electric Meter No. 84736 or
86673509.107 Moreover, Diaz asserts that the evidence he presented is sufficient to prove the damages he suffered by reason of
the malicious institution of the criminal cases.
We do not agree.
Article 2028 of the Civil Code defines a compromise as a contract whereby the parties, by making reciprocal concessions, avoid
litigation or put an end to one already commenced. The purpose of compromise is to settle the claims of the parties and bar all
future disputes and controversies. However, criminal liability is not affected by compromise for it is a public offense which must
be prosecuted and punished by the Government on its own motion, though complete reparation should have been made of the
damages suffered by the offended party. A criminal case is committed against the People, and the offended party may not waive
or extinguish the criminal liability that the law imposes for the commission of the offense.108 Moreover, a compromise is not one
of the grounds prescribed by the Revised Penal Code for the extinction of criminal liability.109
As can be inferred from the compromise agreement, Diaz and DLPC merely agreed to (1) reduce the latter’s total claims to only
₱385,000.00; (2) for DLPC to waive its counterclaims against Diaz; and (3) upon receipt of the amount, for DLPC to
immediately install the necessary electric service to the building. The parties likewise agreed to the dismissal of Sp. Civil Case
No. 18,288 for being moot and academic. Nowhere in said agreement did the parties agree that DLPC was barred from difference between the elements of an offense in one law and another law, as in the case at bar, there will be no double jeopardy
instituting any further action involving electric Meter No. 84736 or 86673509. because what the rule on double jeopardy prohibits refers to identity of elements in the two (2) offenses. Otherwise stated,
prosecution for the same act is not prohibited; what is forbidden is prosecution for the same offense.129 Hence, no fault could be
attributed to respondent DLPC when it instituted the two separate actions.
We find that petitioner is not entitled to damages under Articles 19, 110 20[111 and 21,112 and Articles 2217113 and 2219(8)114 of
the New Civil Code.
As earlier stated, a claim for damages based on malicious prosecution will prosper only if the three elements aforecited are
shown to exist. We find that none of the requisites are attendant here.
The elements of abuse of rights are the following: (a) the existence of a legal right or duty; (b) which is exercised in bad faith;
and (c) for the sole intent of prejudicing or injuring another. 115 Thus, malice or bad faith is at the core of the above
provisions.116 Good faith refers to the state of the mind which is manifested by the acts of the individual concerned. It consists of First. Although respondent DLPC initiated before the prosecutor’s office Inv. Sheet No. 593 July/1988 for theft of electricity,
the intention to abstain from taking an unconscionable and unscrupulous advantage of another. 117 Good faith is presumed and he and I.S. No. 92-4590 for Violation of P.D. 401, as amended by B.P. Blg. 876, no information was ever filed in court. The cases
who alleges bad faith has the duty to prove the same. 118 Bad faith, on the other hand, does not simply connote bad judgment to were eventually dropped or dismissed before they could be filed in court. Ultimately, both actions could not end in an acquittal.
simple negligence, dishonest purpose or some moral obloquy and conscious doing of a wrong, a breach of known duty due to
some motives or interest or ill-will that partakes of the nature of fraud. Malice connotes ill-will or spite and speaks not in
Second. It cannot be concluded that respondent DLPC acted without probable cause when it instituted the actions. The events
response to duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad faith or bad motive. 119
which led to the filing of the complaints are undisputed, and respondent DLPC cannot be faulted for filing them. In the early case
of Buchanan v. Esteban,130 this Court had already stressed that "one cannot be held liable in damages for maliciously instituting a
The evidence presented by respondents negates malice or bad faith. Petitioner himself alleged in his complaint that he prosecution where he acted with probable cause." As Justice Moreland explained in that case:
unilaterally installed Meter No. 86673509 to replace Meter No. 84738 after it was removed by DLPC. No less than this Court, in
G.R. No. 85445, admonished petitioner and reminded him that connections of electrical service and installations of electric
Probable cause is the existence of such facts and circumstances as would excite the belief, in a reasonable mind, acting on the
meters should always be upon mutual contract of the parties, and that payments for electrical consumption should also be made
facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. The
promptly whenever due.120 Based on these established facts, petitioner has not shown that the acts of respondent were done with
general rule is well settled that one cannot be held liable in damages for maliciously instituting a prosecution where he acted
the sole intent of prejudicing and injuring him.
with probable cause. In other words, a suit will lie only in cases where a legal prosecution has been carried on without probable
cause. And the reason for the rule as stated by Blackstone, is that it would be a very great discouragement to public justice if
Petitioner may have suffered damages as a result of the filing of the complaints. However, there is a material distinction between prosecutors, who had a tolerable ground of suspicion, were liable to be sued at law when their indictments miscarried.
damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results from the injury;
and damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage without injury in
Thus, the element of malice and the absence of probable cause must be proved. 131 There must be proof that the prosecution was
those instances in which the loss or harm was not the result of a violation of a legal duty. In such cases, the consequences must
prompted by a sinister design to vex and humiliate a person, and that it was initiated deliberately knowing that the charge was
be borne by the injured person alone; the law affords no remedy for damages resulting from an act which does not amount to a
false and baseless to entitle the victims to damages.132 The two elements must simultaneously exist; otherwise, the presence of
legal injury or wrong. These situations are often called damnum absque injuria. 121 Whatever damages Diaz may have suffered
probable cause signifies, as a legal consequence, the absence of malice.133 In the instant case, it is evident that respondent DLPC
would have to be borne by him alone since it was his acts which led to the filing of the complaints against him.
was not motivated by malicious intent or by a sinister design to unduly harass petitioner, but only by a well-founded anxiety to
protect its rights. Respondent DLPC cannot therefore be faulted in availing of the remedies provided for by law.
On the other hand, malicious prosecution has been defined as an action for damages brought by or against whom a criminal
prosecution, civil suit or other legal proceeding has been instituted maliciously and without probable cause, after the termination
In a free society, controversies are heard and settled under the rule of law in the forum of the courts of justice. It is one of the
of such prosecution, suit, or other proceeding in favor of the defendant therein. 122 It is an established rule that in order for
virtues of our system of government that a person who feels aggrieved does not have to take the law into his or her hands or
malicious prosecution to prosper, the following requisites must be proven by petitioner: (1) the fact of prosecution and the
resort to the use of force for the vindication of injury. The courts are there to hear and act on the complaint. The right to litigate
further fact that the defendant (respondent) was himself the prosecutor, and that the action finally terminated with an acquittal;
is an escape valve to relieve the pressures of personal disagreements that might otherwise explode in physical confrontation. It is
(2) that in bringing the action, the prosecutor acted without probable cause; and (3) that the prosecutor was actuated or impelled
necessary not only for upholding one’s claims when they are unjustly denied but also for the maintenance of peace, if not
by legal malice, that is, by improper or sinister motive.123 The foregoing are necessary to preserve a person’s right to litigate
goodwill, among incipient antagonists. Without the right to litigate, conflicting claims cannot be examined and resolved in
which may be emasculated by the undue filing of malicious prosecution cases. 124 From the foregoing requirements, it can be
accordance with one of the primary purposes of government, which is to provide for a just and orderly society.134 Hence, the
inferred that malice and want of probable cause must both be clearly established to justify an award of damages based on
mere act of submitting a case to the authorities for prosecution does not render a person liable for malicious prosecution should
malicious prosecution.125
he or she be unsuccessful, for the law could not have meant to impose a penalty on the right to litigate. 135

The Court notes that respondents initiated two separate criminal actions, one for theft of electricity, Inv. Sheet No. 593
IN LIGHT OF THE FOREGOING, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 68709 is
July/1988, and the other, for Violation of P.D. 401, as amended by B.P. Blg. 876, I.S. No. 92-4590. It must be stressed that theft
AFFIRMED.
of electricity is a felony defined and penalized under the Revised Penal Code, while Violation of P.D. 401, as amended by B.P.
Blg. 876, is an offense punished by a special law. What generally makes the former a felony is criminal intent (dolo) or
negligence (culpa); what makes the latter a crime is the special law enacting it. 126In addition, the elements of the two (2) offenses SO ORDERED.
are different from one another. In theft, the elements are: (1) intent to gain; (2) unlawful taking; (3) personal property belonging
to another; (4) and absence of violence or intimidation against persons or force upon things.127 On the other hand, the crime of
Violation of P.D. 401, as amended by B.P. Blg. 876, is mala prohibita. The criminal act is not inherently immoral but becomes
punishable only because the law says it is forbidden. With these crimes, the sole issue is whether the law has been violated.
Criminal intent is not necessary.128

While the institution of separate criminal actions under the provisions of P.D. 401, as amended by B.P. Blg. 876, and under the
provisions of the Revised Penal Code on theft may refer to identical acts committed by petitioner, the prosecution thereof cannot
be limited to one offense because a single criminal act may give rise to a multiplicity of offenses; and where there is variance or
Page 15 of 46 TORTS MEETING 7
TORTS 74 Respondent appealed to the Court of Appeals alleging that the trial court erred in finding that petitioner did not slander her good
name and reputation and in disregarding the evidence she presented.
G.R. No. 151866 September 9, 2004
The Court of Appeals ruled differently. It opined that Valmonte has clearly established that she was singled out by petitioner as
the one responsible for the loss of her jewelry. It cited the testimony of Serena Manding, corroborating Valmonte’s claim that
SOLEDAD CARPIO, petitioner,
petitioner confronted her and uttered words to the effect that she was the only one who went out of the room and that she was the
vs.
one who took the jewelry. The appellate court held that Valmonte’s claim for damages is not predicated on the fact that she was
LEONORA A. VALMONTE, respondent.
subjected to body search and interrogation by the police but rather petitioner’s act of publicly accusing her of taking the missing
jewelry. It categorized petitioner’s utterance defamatory considering that it imputed upon Valmonte the crime of theft. The court
DECISION concluded that petitioner’s verbal assault upon Valmonte was done with malice and in bad faith since it was made in the
presence of many people without any solid proof except petitioner’s suspicion. Such unfounded accusation entitles Valmonte to
an award of moral damages in the amount of ₱100,000.00 for she was publicly humiliated, deeply insulted, and embarrassed.
TINGA, J.: However, the court found no sufficient evidence to justify the award of actual damages.

Assailed in the instant petition for review is the Decision of the Court of Appeals in C.A.-G.R. CV No. 69537,1promulgated on Hence, this petition.
17 January 2002.2 The appellate court reversed the trial court’s decision denying respondent’s claim for damages against
petitioner and ordered the latter to pay moral damages to the former in the amount ofP100,000.00.
Petitioner contends that the appellate court’s conclusion that she publicly humiliated respondent does not conform to the
evidence presented. She adds that even on the assumption that she uttered the words complained of, it was not shown that she did
Respondent Leonora Valmonte is a wedding coordinator. Michelle del Rosario and Jon Sierra engaged her services for their so with malice and in bad faith.
church wedding on 10 October 1996. At about 4:30 p.m. on that day, Valmonte went to the Manila Hotel where the bride and her
family were billeted. When she arrived at Suite 326-A, several persons were already there including the bride, the bride’s parents
and relatives, the make-up artist and his assistant, the official photographers, and the fashion designer. Among those present was In essence, petitioner would want this Court to review the factual conclusions reached by the appellate court. The cardinal rule
petitioner Soledad Carpio, an aunt of the bride who was preparing to dress up for the occasion. adhered to in this jurisdiction is that a petition for review must raise only questions of law,3 and judicial review under Rule 45
does not extend to an evaluation of the sufficiency of evidence unless there is a showing that the findings complained of are
totally devoid of support in the record or that they are so glaringly erroneous as to constitute serious abuse of discretion.4 This
After reporting to the bride, Valmonte went out of the suite carrying the items needed for the wedding rites and the gifts from the Court, while not a trier of facts, may review the evidence in order to arrive at the correct factual conclusion based on the record
principal sponsors. She proceeded to the Maynila Restaurant where the reception was to be held. She paid the suppliers, gave the
especially so when the findings of fact of the Court of Appeals are at variance with those of the trial court, or when the inference
meal allowance to the band, and went back to the suite. Upon entering the suite, Valmonte noticed the people staring at her. It drawn by the Court of Appeals from the facts is manifestly mistaken. 5
was at this juncture that petitioner allegedly uttered the following words to Valmonte: "Ikaw lang ang lumabas ng kwarto,
nasaan ang dala mong bag? Saan ka pumunta? Ikaw lang and lumabas ng kwarto, ikaw ang kumuha." Petitioner then ordered
one of the ladies to search Valmonte’s bag. It turned out that after Valmonte left the room to attend to her duties, petitioner Contrary to the trial court’s finding, we find sufficient evidence on record tending to prove that petitioner’s imputations against
discovered that the pieces of jewelry which she placed inside the comfort room in a paper bag were lost. The jewelry pieces respondent was made with malice and in bad faith.
consist of two (2) diamond rings, one (1) set of diamond earrings, bracelet and necklace with a total value of about one million
pesos. The hotel security was called in to help in the search. The bags and personal belongings of all the people inside the room
Petitioner’s testimony was shorn of substance and consists mainly of denials. She claimed not to have uttered the words imputing
were searched. Valmonte was allegedly bodily searched, interrogated and trailed by a security guard throughout the evening.
the crime of theft to respondent or to have mentioned the latter’s name to the authorities as the one responsible for the loss of her
Later, police officers arrived and interviewed all persons who had access to the suite and fingerprinted them including Valmonte.
jewelry. Well-settled is the rule that denials, if unsubstantiated by clear and convincing evidence, are negative and self-serving
During all the time Valmonte was being interrogated by the police officers, petitioner kept on saying the words "Siya lang ang
which merit no weight in law and cannot be given greater evidentiary value over the testimony of credible witnesses who testify
lumabas ng kwarto." Valmonte’s car which was parked at the hotel premises was also searched but the search yielded nothing.
on affirmative matters.6

A few days after the incident, petitioner received a letter from Valmonte demanding a formal letter of apology which she wanted
Respondent, however, has successfully refuted petitioner’s testimony. Quite credibly, she has narrated in great detail her
to be circulated to the newlyweds’ relatives and guests to redeem her smeared reputation as a result of petitioner’s imputations
distressing experience on that fateful day. She testified as to how rudely she was treated by petitioner right after she returned to
against her. Petitioner did not respond to the letter. Thus, on 20 February 1997, Valmonte filed a suit for damages against her
the room. Petitioner immediately confronted her and uttered the words "Ikaw lang ang lumabas ng kwarto. Nasaan ang dala
before the Regional Trial Court (RTC) of Pasig City, Branch 268. In her complaint, Valmonte prayed that petitioner be ordered
mong bag? Saan ka pumunta? Ikaw ang kumuha." Thereafter, her body was searched including her bag and her car. Worse,
to pay actual, moral and exemplary damages, as well as attorney’s fees.
during the reception, she was once more asked by the hotel security to go to the ladies room and she was again bodily searched.7

Responding to the complaint, petitioner denied having uttered words or done any act to confront or single out Valmonte during
Sereña Manding, a make-up artist, corroborated respondent’s testimony. She testified that petitioner confronted respondent in the
the investigation and claimed that everything that transpired after the theft incident was purely a police matter in which she had
presence of all the people inside the suite accusing her of being the only one who went out of the comfort room before the loss of
no participation. Petitioner prayed for the dismissal of the complaint and for the court to adjudge Valmonte liable on her
the jewelry. Manding added that respondent was embarrassed because everybody else in the room thought she was a thief. 8 If
counterclaim.
only to debunk petitioner’s assertion that she did not utter the accusatory remarks in question publicly and with malice,
Manding’s testimony on the point deserves to be reproduced. Thus,
The trial court rendered its Decision on 21 August 2000, dismissing Valmonte’s complaint for damages. It ruled that when
petitioner sought investigation for the loss of her jewelry, she was merely exercising her right and if damage results from a
Q After that what did she do?
person exercising his legal right, it is damnum absque injuria. It added that no proof was presented by Valmonte to show that
A Then Leo came out from the other room she said, she is (sic) the one I only saw from the comfort room.
petitioner acted maliciously and in bad faith in pointing to her as the culprit. The court said that Valmonte failed to show that she
Q Now, what exact word (sic) were said by Mrs. Carpio on that matter?
suffered serious anxiety, moral shock, social humiliation, or that her reputation was besmirched due to petitioner’s wrongful act.
A She said "siya lang yung nakita kong galing sa C.R."
Q And who was Mrs. Carpio or the defendant referring to?
Page 16 of 46 TORTS MEETING 7
 A Leo Valmonte.
Q Did she say anything else, the defendant?
A Her jewelry were lost and Leo was the only one she saw in the C.R. After that she get (sic) the paper bag then the jewelry
were already gone.
Q Did she confront the plaintiff Mrs. Valmonte regarding that fact?
A Yes.
Q What did the defendant Mrs. Carpio tell the plaintiff, Mrs. Valmonte?
A "Ikaw yung nakita ko sa C.R. nawawala yung alahas ko."
Q When the defendant Mrs. Carpio said that to plaintiff Mrs. Valmonte were there other people inside the room?
A Yes, sir.
Q Were they able to hear what Mrs. Carpio said to Mrs. Valmonte?
A Yes, sir.
Q What was your thinking at that time that Mrs. Carpio said that to Mrs. Valmonte?
A "Nakakahiya kasi akala ng iba doon na talagang magnanakaw siya. Kasi marami na kaming nandodoon, dumating na
yung couturier pati yung video man and we sir.
Q Who was the person you [were] alleging "na nakakahiya" whose (sic) being accused or being somebody who stole those
item of jewelry?
A "Nakakahiya para kay Leo kasi pinagbibintangan siya. Sa dami namin doon siya yung napagbintangan."
Q And who is Leo, what is her full name?
A Leo Valmonte.
Q Did the defendant tell this matter to other people inside the room?
A Yes, the mother of the bride.
Q And who else did she talk to?
A The father of the bride also.
Q And what did the defendant tell the mother regarding this matter?
A "Nawawala yung alahas ko." Sabi naman nung mother baka naman hindi mo dala tignan mo munang mabuti.
Q Who was that other person that she talked to?
A Father of the bride.9
Significantly, petitioner’s counsel elected not to pursue her cross-examination of the witness on this point following her terse and
firm declaration that she remembered petitioner’s exact defamatory words in answer to the counsel’s question. 10
Jaime Papio, Security Supervisor at Manila Hotel, likewise contradicted petitioner’s allegation that she did not suspect or
mention the name of respondent as her suspect in the loss of the jewelry.11
To warrant recovery of damages, there must be both a right of action, for a wrong inflicted by the defendant, and the damage
resulting therefrom to the plaintiff. Wrong without damage, or damage without wrong, does not constitute a cause of action.12
In the sphere of our law on human relations, the victim of a wrongful act or omission, whether done willfully or negligently, is
not left without any remedy or recourse to obtain relief for the damage or injury he sustained. Incorporated into our civil law are
not only principles of equity but also universal moral precepts which are designed to indicate certain norms that spring from the
fountain of good conscience and which are meant to serve as guides for human conduct.13 First of these fundamental precepts is
the principle commonly known as "abuse of rights" under Article 19 of the Civil Code. It provides that "Every person must, in
the exercise of his rights and in the performance of his duties, act with justice, give everyone his due and observe honesty and
good faith." To find the existence of an abuse of right, the following elements must be present: (1) there is a legal right or duty;
(2) which is exercised in bad faith; (3) for the sole intent or prejudicing or injuring another.14 When a right is exercised in a
manner which discards these norms resulting in damage to another, a legal wrong is committed for which the actor can be held
accountable.15 One is not allowed to exercise his right in a manner which would cause unnecessary prejudice to another or if he
would thereby offend morals or good customs. Thus, a person should be protected only when he acts in the legitimate exercise of
his right, that is when he acts with prudence and good faith; but not when he acts with negligence or abuse.16
Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals or good customs or
public policy shall compensate the latter for the damage.
The foregoing rules provide the legal bedrock for the award of damages to a party who suffers damage whenever one
commits an act in violation of some legal provision, or an act which though not constituting a transgression of positive law,
nevertheless violates certain rudimentary rights of the party aggrieved.
In the case at bar, petitioner’s verbal reproach against respondent was certainly uncalled for considering that by her own account
nobody knew that she brought such kind and amount of jewelry inside the paper bag. 17 This being the case, she had no right to
attack respondent with her innuendos which were not merely inquisitive but outrightly accusatory. By openly accusing
respondent as the only person who went out of the room before the loss of the jewelry in the presence of all the guests therein,
and ordering that she be immediately bodily searched, petitioner virtually branded respondent as the thief. True, petitioner had
the right to ascertain the identity of the malefactor, but to malign respondent without an iota of proof that she was the one who
actually stole the jewelry is an act which, by any standard or principle of law is impermissible. Petitioner had willfully caused
injury to respondent in a manner which is contrary to morals and good customs. Her firmness and resolve to find her missing
jewelry cannot justify her acts toward respondent. She did not act with justice and good faith for apparently, she had no other
purpose in mind but to prejudice respondent. Certainly, petitioner transgressed the provisions of Article 19 in relation to Article
21 for which she should be held accountable.
Owing to the rule that great weight and even finality is given to factual conclusions of the Court of Appeals which affirm those
of the trial court,18 we sustain the findings of the trial court and the appellate court that respondent’s claim for actual damages
has not been substantiated with satisfactory evidence during the trial and must therefore be denied. To be recoverable, actual
damages must be duly proved with reasonable degree of certainty and the courts cannot rely on speculation, conjecture or
guesswork.19
Respondent, however, is clearly entitled to an award of moral damages. Moral damages may be awarded whenever the
defendant’s wrongful act or omission is the proximate cause of the plaintiff’s physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury20in the cases specified or
analogous to those provided in Article 2219 of the Civil Code.21 Though no proof of pecuniary loss is necessary in order that
moral damages may be adjudicated, courts are mandated to take into account all the circumstances obtaining in the case and
assess damages according to their discretion.22 Worthy of note is that moral damages are not awarded to penalize the
defendant,23 or to enrich a complainant, but to enable the latter to obtain means, diversions or amusements that will serve to
alleviate the moral suffering he has undergone, by reason of defendant’s culpable action. In any case, award of moral damages
must be proportionate to the sufferings inflicted.24
Based on the foregoing jurisprudential pronouncements, we rule that the appellate court did not err in awarding moral damages.
Considering respondent’s social standing, and the fact that her profession is based primarily on trust reposed in her by her
clients, the seriousness of the imputations made by petitioner has greatly tarnished her reputation and will in one way or the
other, affect her future dealings with her clients, the award of ₱100,000.00 as moral damages appears to be a fair and reasonable
assessment of respondent’s damages.
WHEREFORE, the instant Petition is DENIED. Costs against petitioner.
SO ORDERED.

Complementing the principle of abuse of rights are the provisions of Articles 20 and 21 of the Civil Code which read, thus:

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

Page 17 of 46 TORTS MEETING 7

TORTS 75 humiliation to Gonzales. Thereafter, on November 5, 1998, Unson sent a demand letter 5 to Gonzales for the PhP 250,000. And
on December 3, 1998, the counsel of Unson sent a second demand letter 6 to Gonzales with the threat of legal action. With his
FCD account that PCIB froze, Gonzales was forced to source out and pay the PhP 250,000 he owed to Unson in cash.
G.R. No. 180257 February 23, 2011

On January 28, 1999, Gonzales, through counsel, wrote PCIB insisting that the check he issued had been fully funded, and
EUSEBIO GONZALES, Petitioner,
demanded the return of the proceeds of his FCD as well as damages for the unjust dishonor of the check.7 PCIB replied on
vs.
March 22, 1999 and stood its ground in freezing Gonzales’ accounts due to the outstanding dues of the loans.8 On May 26, 1999,
PHILIPPINE COMMERCIAL AND INTERNATIONAL BANK, EDNA OCAMPO, and ROBERTO
Gonzales reiterated his demand, reminding PCIB that it knew well that the actual borrowers were the spouses Panlilio and he
NOCEDA,Respondents.
never benefited from the proceeds of the loans, which were serviced by the PCIB account of the spouses Panlilio. 9

DECISION
PCIB’s refusal to heed his demands compelled Gonzales to file the instant case for damages with the RTC, on account of the
alleged unjust dishonor of the check issued in favor of Unson.
VELASCO, JR., J.:
The Ruling of the RTC
The Case
After due trial, on December 10, 2001, the RTC rendered a Decision in favor of PCIB. The decretal portion reads:
This is an appeal via a Petition for Review on Certiorari under Rule 45 from the Decision1 dated October 22, 2007 of the Court
of Appeals (CA) in CA-G.R. CV No. 74466, which denied petitioner’s appeal from the December 10, 2001 Decision2 in Civil
WHEREFORE, judgment is rendered as follows –
Case No. 99-1324 of the Regional Trial Court (RTC), Branch 138 in Makati City. The RTC found justification for respondents’
dishonor of petitioner’s check and found petitioner solidarily liable with the spouses Jose and Jocelyn Panlilio (spouses Panlilio)
for the three promissory notes they executed in favor of respondent Philippine Commercial and International Bank (PCIB). (a) on the first issue, plaintiff is liable to pay defendant Bank as principal under the promissory notes, Exhibits A, B and C;

The Facts (b) on the second issue, the Court finds that there is justification on part of the defendant Bank to dishonor the check,
Exhibit H;
Petitioner Eusebio Gonzales (Gonzales) was a client of PCIB for a good 15 years before he filed the instant case. His account
with PCIB was handled by respondent Edna Ocampo (Ocampo) until she was replaced by respondent Roberto Noceda (Noceda). (c) on the third issue, plaintiff and defendants are not entitled to damages from each other.

In October 1992, PCIB granted a credit line to Gonzales through the execution of a Credit-On-Hand Loan No pronouncement as to costs.
Agreement3 (COHLA), in which the aggregate amount of the accounts of Gonzales with PCIB served as collateral for and his
availment limit under the credit line. Gonzales drew from said credit line through the issuance of check. At the institution of the
SO ORDERED.10
instant case, Gonzales had a Foreign Currency Deposit (FCD) of USD 8,715.72 with PCIB.

The RTC found Gonzales solidarily liable with the spouses Panlilio on the three promissory notes relative to the outstanding
On October 30, 1995, Gonzales and his wife obtained a loan for PhP 500,000. Subsequently, on December 26, 1995 and January
REM loan. The trial court found no fault in the termination by PCIB of the COHLA with Gonzales and in freezing the latter’s
3, 1999, the spouses Panlilio and Gonzales obtained two additional loans from PCIB in the amounts of PhP 1,000,000 and PhP
accounts to answer for the past due PhP 1,800,000 loan. The trial court ruled that the dishonor of the check issued by Gonzales in
300,000, respectively. These three loans amounting to PhP 1,800,000 were covered by three promissory notes. 4 To secure the
favor of Unson was proper considering that the credit line under the COHLA had already been terminated or revoked before the
loans, a real estate mortgage (REM) over a parcel of land covered by Transfer Certificate of Title (TCT) No. 38012 was executed
presentment of the check.
by Gonzales and the spouses Panlilio. Notably, the promissory notes specified, among others, the solidary liability of Gonzales
and the spouses Panlilio for the payment of the loans. However, it was the spouses Panlilio who received the loan proceeds of
PhP 1,800,000. Aggrieved, Gonzales appealed the RTC Decision before the CA.

The monthly interest dues of the loans were paid by the spouses Panlilio through the automatic debiting of their account with The Ruling of the CA
PCIB. But the spouses Panlilio, from the month of July 1998, defaulted in the payment of the periodic interest dues from their
PCIB account which apparently was not maintained with enough deposits. PCIB allegedly called the attention of Gonzales
On September 26, 2007, the appellate court rendered its Decision dismissing Gonzales’ appeal and affirming in totothe RTC
regarding the July 1998 defaults and the subsequent accumulating periodic interest dues which were left still left unpaid.
Decision. The fallo reads:

In the meantime, Gonzales issued a check dated September 30, 1998 in favor of Rene Unson (Unson) for PhP 250,000 drawn
WHEREFORE, in view of the foregoing, the decision, dated December 10, 2001, in Civil Case No. 99-1324 is hereby
against the credit line (COHLA). However, on October 13, 1998, upon presentment for payment by Unson of said check, it was
dishonored by PCIB due to the termination by PCIB of the credit line under COHLA on October 7, 1998 for the unpaid periodic AFFIRMED in toto.
interest dues from the loans of Gonzales and the spouses Panlilio. PCIB likewise froze the FCD account of Gonzales.
SO ORDERED.11
Consequently, Gonzales had a falling out with Unson due to the dishonor of the check. They had a heated argument in the
premises of the Philippine Columbian Association (PCA) where they are both members, which caused great embarrassment and

Page 18 of 46 TORTS MEETING 7

In dismissing Gonzales’ appeal, the CA, first, confirmed the RTC’s findings that Gonzales was indeed solidarily liable with the
spouses Panlilio for the three promissory notes executed for the REM loan; second, it likewise found neither fault nor negligence
on the part of PCIB in dishonoring the check issued by Gonzales in favor of Unson, ratiocinating that PCIB was merely
exercising its rights under the contractual stipulations in the COHLA brought about by the outstanding past dues of the REM
loan and interests for which Gonzales was solidarily liable with the spouses Panlilio to pay under the promissory notes.
Thus, we have this petition.
The Issues
Gonzales, as before the CA, raises again the following assignment of errors:
I - IN NOT CONSIDERING THAT THE LIABILITY ARISING FROM PROMISSORY NOTES (EXHIBITS "A", "B"
AND "C", PETITIONER; EXHIBITS "1", "2" AND "3", RESPONDENT) PERTAINED TO BORROWER JOSE MA.
PANLILIO AND NOT TO APPELLANT AS RECOGNIZED AND ACKNOWLEDGE[D] BY RESPONDENT
PHILIPPINE COMMERCIAL & INDUSTRIAL BANK (RESPONDENT BANK).
II - IN FINDING THAT THE RESPONDENTS WERE NOT AT FAULT NOR GUILTY OF GROSS NEGLIGENCE IN
DISHONORING PETITIONER’S CHECK DATED 30 SEPTEMBER 1998 IN THE AMOUNT OF P250,000.00 FOR
THE REASON "ACCOUNT CLOSED", INSTEAD OF MERELY "REFER TO DRAWER" GIVEN THE FACT THAT
EVEN AFTER DISHONOR, RESPONDENT SIGNED A CERTIFICATION DATED 7 DECEMBER 1998 THAT
CREDIT ON HAND (COH) LOAN AGREEMENT WAS STILL VALID WITH A COLLATERAL OF FOREIGN
CURRENCY DEPOSIT (FCD) OF [USD] 48,715.72.
III - IN NOT AWARDING DAMAGES AGAINST RESPONDENTS DESPITE PRESENTATION OF CLEAR PROOF
TO SUPPORT ACTION FOR DAMAGES.12
The Court’s Ruling
The core issues can be summarized, as follows: first, whether Gonzales is liable for the three promissory notes covering the PhP
1,800,000 loan he made with the spouses Panlilio where a REM over a parcel of land covered by TCT No. 38012 was
constituted as security; and second, whether PCIB properly dishonored the check of Gonzales drawn against the COHLA he had
with the bank.
The petition is partly meritorious.
First Issue: Solidarily Liability on Promissory Notes
A close perusal of the records shows that the courts a quo correctly found Gonzales solidarily liable with the spouses Panlilio for
the three promissory notes.
The promissory notes covering the PhP 1,800,000 loan show the following:
(1) Promissory Note BD-090-1766-95,13 dated October 30, 1995, for PhP 500,000 was signed by Gonzales and his wife,
Jessica Gonzales;
(2) Promissory Note BD-090-2122-95,14 dated December 26, 1995, for PhP 1,000,000 was signed by Gonzales and the
spouses Panlilio; and
Page 19 of 46 TORTS MEETING 7
(3) Promissory Note BD-090-011-96,15 dated January 3, 1996, for PhP 300,000 was signed by Gonzales and the spouses
Panlilio.
Clearly, Gonzales is liable for the loans covered by the above promissory notes. First, Gonzales admitted that he is an
accommodation party which PCIB did not dispute. In his testimony, Gonzales admitted that he merely accommodated the
spouses Panlilio at the suggestion of Ocampo, who was then handling his accounts, in order to facilitate the fast release of the
loan. Gonzales testified:
ATTY. DE JESUS:
Now in this case you filed against the bank you mentioned there was a loan also applied for by the Panlilio’s in the sum of P1.8
Million Pesos. Will you please tell this Court how this came about?
GONZALES:
Mr. Panlilio requested his account officer . . . . at that time it is a P42.0 Million loan and if he secures another P1.8 Million loan
the release will be longer because it has to pass to XO.
Q: After that what happened?
A: So as per suggestion since Mr. Panlilio is a good friend of mine and we co-owned the property I agreed initially to use my
name so that the loan can be utilized immediately by Mr. Panlilio.
Q: Who is actually the borrower of this P1.8 Million Pesos?
A: Well, in paper me and Mr. Panlilio.
Q: Who received the proceeds of said loan?
A: Mr. Panlilio.
Q: Do you have any proof that it was Mr. Panlilio who actually received the proceeds of this P1.8 Million Pesos loan?
A: A check was deposited in the account of Mr. Panlilio.16
xxxx
Q: By the way upon whose suggestion was the loan of Mr. Panlilio also placed under your name initially?
A: Well it was actually suggested by the account officer at that time Edna Ocampo.
Q: How about this Mr. Rodolfo Noceda?
A: As you look at the authorization aspect of the loan Mr. Noceda is the boss of Edna so he has been familiar with my account
ever since its inception.
Q: So these two officers Ocampo and Noceda knew that this was actually the account of Mr. Panlilio and not your account?
A: Yes, sir. In fact even if there is a change of account officer they are always informing me that the account will be debited to
Mr. Panlilio’s account.17
Moreover, the first note for PhP 500,000 was signed by Gonzales and his wife as borrowers, while the two subsequent notes
showed the spouses Panlilio sign as borrowers with Gonzales. It is, thus, evident that Gonzales signed, as borrower, the
promissory notes covering the PhP 1,800,000 loan despite not receiving any of the proceeds.
Second, the records of PCIB indeed bear out, and was admitted by Noceda, that the PhP 1,800,000 loan proceeds went to the
spouses Panlilio, thus:
ATTY. DE JESUS: [on Cross-Examination]
Is it not a fact that as far as the records of the bank [are] concerned the proceeds of the 1.8 million loan was received by Mr.
Panlilio?
NOCEDA:
Yes sir.18
The fact that the loans were undertaken by Gonzales when he signed as borrower or co-borrower for the benefit of the spouses
Panlilio—as shown by the fact that the proceeds went to the spouses Panlilio who were servicing or paying the monthly dues—is
beside the point. For signing as borrower and co-borrower on the promissory notes with the proceeds of the loans going to the
spouses Panlilio, Gonzales has extended an accommodation to said spouses.
Third, as an accommodation party, Gonzales is solidarily liable with the spouses Panlilio for the loans. In Ang v. Associated
Bank,19 quoting the definition of an accommodation party under Section 29 of the Negotiable Instruments Law, the Court cited
that an accommodation party is a person "who has signed the instrument as maker, drawer, acceptor, or indorser, without
receiving value therefor, and for the purpose of lending his name to some other person." 20 The Court further explained:
[A]n accommodation party is one who meets all the three requisites, viz: (1) he must be a party to the instrument, signing as
maker, drawer, acceptor, or indorser; (2) he must not receive value therefor; and (3) he must sign for the purpose of lending his
name or credit to some other person. An accommodation party lends his name to enable the accommodated party to obtain credit
or to raise money; he receives no part of the consideration for the instrument but assumes liability to the other party/ies thereto.
The accommodation party is liable on the instrument to a holder for value even though the holder, at the time of taking the
instrument, knew him or her to be merely an accommodation party, as if the contract was not for accommodation.
As petitioner acknowledged it to be, the relation between an accommodation party and the accommodated party is one of
principal and surety—the accommodation party being the surety. As such, he is deemed an original promisor and debtor from the
beginning; he is considered in law as the same party as the debtor in relation to whatever is adjudged touching the obligation of
the latter since their liabilities are interwoven as to be inseparable. Although a contract of suretyship is in essence accessory or
collateral to a valid principal obligation, the surety’s liability to the creditor is immediate, primary and absolute; he
is directly and equally bound with the principal. As an equivalent of a regular party to the undertaking, a surety becomes liable to
the debt and duty of the principal obligor even without possessing a direct or personal interest in the obligations nor does he
receive any benefit therefrom.21
Thus, the knowledge, acquiescence, or even demand by Ocampo for an accommodation by Gonzales in order to extend the credit
or loan of PhP 1,800,000 to the spouses Panlilio does not exonerate Gonzales from liability on the three promissory notes.
Fourth, the solidary liability of Gonzales is clearly stipulated in the promissory notes which uniformly begin, "For value
received, the undersigned (the "BORROWER") jointly and severally promise to pay x x x." Solidary liability cannot be
presumed but must be established by law or contract.22 Article 1207 of the Civil Code pertinently states that "there is solidary
liability only when the obligation expressly so states, or when the obligation requires solidarity." This is true in the instant case
where Gonzales, as accommodation party, is immediately, equally, and absolutely bound with the spouses Panlilio on the
promissory notes which indubitably stipulated solidary liability for all the borrowers. Moreover, the three promissory notes serve
as the contract between the parties. Contracts have the force of law between the parties and must be complied with in good
faith.23
Second Issue: Improper Dishonor of Check
Having ruled that Gonzales is solidarily liable for the three promissory notes, We shall now touch upon the question of whether
it was proper for PCIB to dishonor the check issued by Gonzales against the credit line under the COHLA.
We answer in the negative.
As a rule, an appeal by certiorari under Rule 45 of the Rules of Court is limited to review of errors of law. 24 The factual findings
of the trial court, especially when affirmed by the appellate court, are generally binding on us unless there was a
misapprehension of facts or when the inference drawn from the facts was manifestly mistaken. 25 The instant case falls within the
exception.
The courts a quo found and held that there was a proper dishonor of the PhP 250,000 check issued by Gonzales against the credit
line, because the credit line was already closed prior to the presentment of the check by Unson; and the closing of the credit line
was likewise proper pursuant to the stipulations in the promissory notes on the bank’s right to set off or apply all moneys of the
debtor in PCIB’s hand and the stipulations in the COHLA on the PCIB’s right to terminate the credit line on grounds of default
by Gonzales.
Gonzales argues otherwise, pointing out that he was not informed about the default of the spouses Panlilio and that the
September 21, 1998 account statement of the credit line shows a balance of PhP 270,000 which was likewise borne out by the
Page 20 of 46 TORTS MEETING 7
December 7, 1998 PCIB’s certification that he has USD 8,715.72 in his FCD account which is more than sufficient collateral to
guarantee the PhP 250,000 check, dated September 30, 1998, he issued against the credit line.
A careful scrutiny of the records shows that the courts a quo committed reversible error in not finding negligence by PCIB in the
dishonor of the PhP 250,000 check.
First. There was no proper notice to Gonzales of the default and delinquency of the PhP 1,800,000 loan. It must be borne in
mind that while solidarily liable with the spouses Panlilio on the PhP 1,800,000 loan covered by the three promissory notes,
Gonzales is only an accommodation party and as such only lent his name and credit to the spouses Panlilio. While not
exonerating his solidary liability, Gonzales has a right to be properly apprised of the default or delinquency of the loan precisely
because he is a co-signatory of the promissory notes and of his solidary liability.
We note that it is indeed understandable for Gonzales to push the spouses Panlilio to pay the outstanding dues of the PhP
1,800,000 loan, since he was only an accommodation party and was not personally interested in the loan. Thus, a meeting was
set by Gonzales with the spouses Panlilio and the PCIB officers, Noceda and Ocampo, in the spouses Panlilio’s jewelry shop in
SM Megamall on October 5, 1998. Unfortunately, the meeting did not push through due to the heavy traffic Noceda and Ocampo
encountered.
Such knowledge of the default by Gonzales was, however, not enough to properly apprise Gonzales about the default and the
outstanding dues. Verily, it is not enough to be merely informed to pay over a hundred thousand without being formally apprised
of the exact aggregate amount and the corresponding dues pertaining to specific loans and the dates they became due.
Gonzales testified that he was not duly notified about the outstanding interest dues of the loan:
ATTY. DE JESUS:
Now when Mr. Panlilio’s was encountering problems with the bank did the defendant bank [advise] you of any problem with the
same account?
GONZALES:
They never [advised] me in writing.
Q: How did you come to know that there was a problem?
A: When my check bounced sir.26
On the other hand, the PCIB contends otherwise, as Corazon Nepomuceno testified:
ATTY. PADILLA:
Can you tell this Honorable Court what is it that you told Mr. Gonzales when you spoke to him at the celphone?
NEPOMUCENO:
I just told him to update the interest so that we would not have to cancel the COH Line and he could withdraw the money that
was in the deposit because technically, if an account is past due we are not allowed to let the client withdraw funds because they
are allowed to offset funds so, just to help him get his money, just to update the interest so that we could allow him to withdraw.
Q: Withdraw what?
A: His money on the COH, whatever deposit he has with us.
Q: Did you inform him that if he did not update the interest he would not be able to withdraw his money?
A: Yes sir, we will be forced to hold on to any assets that he has with us so that’s why we suggested just to update the interest
because at the end of everything, he would be able to withdraw more funds than the interest that the money he would be needed
to update the interest.27
From the foregoing testimonies, between the denial of Gonzales and the assertion by PCIB that Gonzales was properly apprised,
we find for Gonzales. We find the testimonies of the former PCIB employees to be self-serving and tenuous at best, for there was
no proper written notice given by the bank. The record is bereft of any document showing that, indeed, Gonzales was formally
informed by PCIB about the past due periodic interests.
PCIB is well aware and did not dispute the fact that Gonzales is an accommodation party. It also acted in accordance with such
fact by releasing the proceeds of the loan to the spouses Panlilio and likewise only informed the spouses Panlilio of the interest
dues. The spouses Panlilio, through their account28 with PCIB, were paying the periodic interest dues and were the ones
periodically informed by the bank of the debiting of the amounts for the periodic interest payments. Gonzales never paid any of Second. PCIB was grossly negligent in not giving prior notice to Gonzales about its course of action to suspend, terminate, or
the periodic interest dues. PCIB’s Noceda admitted as much in his cross-examination: revoke the credit line, thereby violating the clear stipulation in the COHLA.

ATTY. DE JESUS: [on Cross-Examination] The COHLA, in its effectivity clause, clearly provides:

And there was no instance that Mr. Gonzales ever made even interest for this loan, is it not, it’s always Mr. Panlilio who was 4. EFFECTIVITY — The COH shall be effective for a period of one (1) year commencing from the receipt by the CLIENT of
paying the interest for this loan? the COH checkbook issued by the BANK, subject to automatic renewals for same periods unless terminated by the BANK upon
prior notice served on CLIENT.31 (Emphasis ours.)
NOCEDA:
It is undisputed that the bank unilaterally revoked, suspended, and terminated the COHLA without giving Gonzales prior notice
as required by the above stipulation in the COHLA. Noceda testified on cross-examination on the Offering
Yes sir.29
Ticket32 recommending the termination of the credit line, thus:

Indeed, no evidence was presented tending to show that Gonzales was periodically sent notices or notified of the various periodic
ATTY. DE JESUS: [on Cross-Examination]
interest dues covering the three promissory notes. Neither do the records show that Gonzales was aware of amounts for the
This Exhibit 8, you have not furnished at anytime a copy to the plaintiff Mr. Gonzales is it not?
periodic interests and the payment for them. Such were serviced by the spouses Panlilio.
NOCEDA:
No sir but verbally it was relayed to him.
Thus, PCIB ought to have notified Gonzales about the status of the default or delinquency of the interest dues that were not paid Q: But you have no proof that Mr. Gonzales came to know about this Exhibit 8?
starting July 1998. And such notification must be formal or in written form considering that the outstanding periodic interests A: It was relayed to him verbally.
became due at various dates, i.e., on July 8, 17, and 28, 1998, and the various amounts have to be certain so that Gonzales is not Q: But there is no written proof?
only properly apprised but is given the opportunity to pay them being solidarily liable for the loans covered by the promissory A: No sir.
notes. Q: And it is only now that you claim that it was verbally relayed to him, it’s only now when you testified in Court?
A: Before . . .
Q: To whom did you relay this information?
It is the bank which computes these periodic interests and such dues must be put into writing and formally served to Gonzales if A: It was during the time that we were going to Megamall, it was relayed by Liza that he has to pay his obligations or else it will
he were asked to pay them, more so when the payments by the spouses Panlilio were charged through the account of the spouses
adversely affect the status of the account.33
Panlilio where the interest dues were simply debited. Such arrangement did not cover Gonzales’ bank account with PCIB, since On the other hand, the testimony of Corazon Nepomuceno shows:
he is only an accommodation party who has no personal interest in the PhP 1,800,000 loan. Without a clear and determinate ATTY. DE JESUS: [on Cross-Examination]
demand through a formal written notice for the exact periodic interest dues for the loans, Gonzales cannot be expected to pay for
Now we go to the other credit facility which is the credit on hand extended solely of course to Mr. Eusebio Gonzales who is the
them. plaintiff here, Mr. Panlilio is not included in this credit on hand facility. Did I gather from you as per your Exhibit 7 as of
October 2, 1998 you were the one who recommended the cancellation of this credit on hand facility?
In business, more so for banks, the amounts demanded from the debtor or borrower have to be definite, clear, and without NEPOMUCENO:
ambiguity. It is not sufficient simply to be informed that one must pay over a hundred thousand aggregate outstanding interest It was recommended by the account officer and I supported it.
dues without clear and certain figures. Thus, We find PCIB negligent in not properly informing Gonzales, who is an Q: And you approved it?
accommodation party, about the default and the exact outstanding periodic interest dues. Without being properly apprised, A: Yes sir.
Gonzales was not given the opportunity to properly act on them. Q: Did you inform Mr. Gonzales that you have already cancelled his credit on hand facility?
A: As far as I know, it is the account officer who will inform him.
Q: But you have no record that he was informed?
It was only through a letter30 sent by PCIB dated October 2, 1998 but incongruously showing the delinquencies of the PhP A: I don’t recall and we have to look at the folder to determine if they were informed.
1,800,000 loan at a much later date, i.e., as of October 31, 1998, when Gonzales was formally apprised by PCIB. In it, the Q: If you will notice, this letter . . . what do you call this letter of yours?
interest due was PhP 106,1616.71 and penalties for the unpaid interest due of PhP 64,766.66, or a total aggregate due of PhP A: That is our letter advising them or reminding them of their unpaid interest and that if he is able to update his interest he can
171,383.37. But it is not certain and the records do not show when the letter was sent and when Gonzales received it. What is extend the promissory note or restructure the outstanding.
clear is that such letter was belatedly sent by PCIB and received by Gonzales after the fact that the latter’s FCD was already Q: Now, I call your attention madam witness, there is nothing in this letter to the clients advising them or Mr. Gonzales that his
frozen, his credit line under the COHLA was terminated or suspended, and his PhP 250,000 check in favor of Unson was credit on hand facility was already cancelled?
dishonored. A: I don’t know if there are other letters aside from this.
Q: So in this letter there is nothing to inform or to make Mr. Eusebio aware that his credit on hand facility was already
And way much later, or on May 4, 1999, was a demand letter from the counsel of PCIB sent to Gonzales demanding payment of cancelled?
the PhP 1,800,000 loan. Obviously, these formal written notices sent to Gonzales were too late in the day for Gonzales to act A: No actually he can understand it from the last sentence. "If you will be able to update your outstanding interest, we can apply
properly on the delinquency and he already suffered the humiliation and embarrassment from the dishonor of his check drawn the extention of your promissory note" so in other words we are saying that if you don’t, you cannot extend the promissory note.
against the credit line. Q: You will notice that the subject matter of this October 2, 1998 letter is only the loan of 1.8 million is it not, as you can see
from the letter? Okay?
A: Ah . . .
To reiterate, a written notice on the default and deficiency of the PhP 1,800,000 loan covered by the three promissory notes was Q: Okay. There is nothing there that will show that that also refers to the credit on hand facility which was being utilized by Mr.
required to apprise Gonzales, an accommodation party. PCIB is obliged to formally inform and apprise Gonzales of the defaults Gonzales is it not?
and the outstanding obligations, more so when PCIB was invoking the solidary liability of Gonzales. This PCIB failed to do. A: But I don’t know if there are other letters that are not presented to me now.34

Page 21 of 46 TORTS MEETING 7

The foregoing testimonies of PCIB officers clearly show that not only did PCIB fail to give prior notice to Gonzales about the 1. x x x
Offering Ticket for the process of termination, suspension, or revocation of the credit line under the COHLA, but PCIB likewise
failed to inform Gonzales of the fact that his credit line has been terminated. Thus, we find PCIB grossly negligent in the
2. Violation of the terms and conditions of this Agreement or any contract of the CLIENT with the BANK or any
termination, revocation, or suspension of the credit line under the COHLA. While PCIB invokes its right on the so-called "cross
bank, persons, corporations or entities for the payment of borrowed money, or any other event of default in such
default provisions," it may not with impunity ignore the rights of Gonzales under the COHLA.
contracts.42

Indeed, the business of banking is impressed with public interest and great reliance is made on the bank’s sworn profession of
The above pertinent default clause must be read in conjunction with the effectivity clause (No. 4 of the COHLA, quoted above),
diligence and meticulousness in giving irreproachable service. Like a common carrier whose business is imbued with public
which expressly provides for the right of client to prior notice. The rationale is simple: in cases where the bank has the right to
interest, a bank should exercise extraordinary diligence to negate its liability to the depositors.35 In this instance, PCIB is sorely
terminate, revoke, or suspend the credit line, the client must be notified of such intent in order for the latter to act accordingly—
remiss in the diligence required in treating with its client, Gonzales. It may not wantonly exercise its rights without respecting
whether to correct any ground giving rise to the right of the bank to terminate the credit line and to dishonor any check issued or
and honoring the rights of its clients.
to act in accord with such termination, i.e., not to issue any check drawn from the credit line or to replace any checks that had
been issued. This, the bank—with gross negligence—failed to accord Gonzales, a valued client for more than 15 years.
Art. 19 of the New Civil Code clearly provides that "[e]very person must, in the exercise of his rights and in the performance of
his duties, act with justice, give everyone his due, and observe honesty and good faith." This is the basis of the principle of abuse
Fourth. We find the testimony43 of Ocampo incredible on the point that the principal borrower of the PhP 1,800,000 loan
of right which, in turn, is based upon the maxim suum jus summa injuria (the abuse of right is the greatest possible wrong). 36
covered by the three promissory notes is Gonzales for which the bank officers had special instructions to grant and that it was
through the instructions of Gonzales that the payment of the periodic interest dues were debited from the account of the spouses
In order for Art. 19 to be actionable, the following elements must be present: "(1) the existence of a legal right or duty, (2) which Panlilio.
is exercised in bad faith, and (3) for the sole intent of prejudicing or injuring another."37 We find that such elements are present
in the instant case. The effectivity clause of the COHLA is crystal clear that termination of the COH should be done only upon
For one, while the first promissory note dated October 30, 1995 indeed shows Gonzales as the principal borrower, the other
prior notice served on the CLIENT. This is the legal duty of PCIB––to inform Gonzales of the termination. However, as
promissory notes dated December 26, 1995 and January 3, 1996 evidently show that it was Jose Panlilio who was the principal
shown by the above testimonies, PCIB failed to give prior notice to Gonzales.
borrower with Gonzales as co-borrower. For another, Ocampo cannot feign ignorance on the arrangement of the payments by the
spouses Panlilio through the debiting of their bank account. It is incredulous that the payment arrangement is merely at the
Malice or bad faith is at the core of Art. 19. Malice or bad faith "implies a conscious and intentional design to do a wrongful act behest of Gonzales and at a mere verbal directive to do so. The fact that the spouses Panlilio not only received the proceeds of
for a dishonest purpose or moral obliquity."38 In the instant case, PCIB was able to send a letter advising Gonzales of the unpaid the loan but were servicing the periodic interest dues reinforces the fact that Gonzales was only an accommodation party.
interest on the loans39 but failed to mention anything about the termination of the COHLA. More significantly, no letter was ever
sent to him about the termination of the COHLA. The failure to give prior notice on the part of PCIB is already prima facie
Thus, due to PCIB’s negligence in not giving Gonzales—an accommodation party—proper notice relative to the delinquencies
evidence of bad faith.40 Therefore, it is abundantly clear that this case falls squarely within the purview of the principle of abuse
in the PhP 1,800,000 loan covered by the three promissory notes, the unjust termination, revocation, or suspension of the credit
of rights as embodied in Art. 19.
line under the COHLA from PCIB’s gross negligence in not honoring its obligation to give prior notice to Gonzales about such
termination and in not informing Gonzales of the fact of such termination, treating Gonzales’ account as closed and dishonoring
Third. There is no dispute on the right of PCIB to suspend, terminate, or revoke the COHLA under the "cross default his PhP 250,000 check, was certainly a reckless act by PCIB. This resulted in the actual injury of PhP 250,000 to Gonzales
provisions" of both the promissory notes and the COHLA. However, these cross default provisions do not confer absolute whose FCD account was frozen and had to look elsewhere for money to pay Unson.
unilateral right to PCIB, as they are qualified by the other stipulations in the contracts or specific circumstances, like in the
instant case of an accommodation party.
With banks, the degree of diligence required is more than that of a good father of the family considering that the business of
banking is imbued with public interest due to the nature of their function. The law imposes on banks a high degree of obligation
The promissory notes uniformly provide: to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of banking.44 Had
Gonzales been properly notified of the delinquencies of the PhP 1,800,000 loan and the process of terminating his credit line
under the COHLA, he could have acted accordingly and the dishonor of the check would have been avoided.
The lender is hereby authorized, at its option and without notice, to set off or apply to the payment of this Note any and
all moneys which may be in its hands on deposit or otherwise belonging to the Borrower. The Borrower irrevocably
appoint/s the Lender, effective upon the nonpayment of this Note on demand/at maturity or upon the happening of any of the Third Issue: Award of Damages
events of default, but without any obligation on the Lender’s part should it choose not to perform this mandate, as the attorney-
in-fact of the Borrower, to sell and dispose of any property of the Borrower, which may be in the Lender’s possession by public
The banking system has become an indispensable institution in the modern world and plays a vital role in the economic life of
or private sale, and to apply the proceeds thereof to the payment of this Note; the Borrower, however, shall remain liable for any
every civilized society—banks have attained a ubiquitous presence among the people, who have come to regard them with
deficiency.41 (Emphasis ours.)
respect and even gratitude and most of all, confidence, and it is for this reason, banks should guard against injury attributable to
negligence or bad faith on its part.45
The above provisos are indeed qualified with the specific circumstance of an accommodation party who, as such, has not been
servicing the payment of the dues of the loans, and must first be properly apprised in writing of the outstanding dues in order to
In the instant case, Gonzales suffered from the negligence and bad faith of PCIB. From the testimonies of Gonzales’ witnesses,
answer for his solidary obligation.
particularly those of Dominador Santos46 and Freddy Gomez,47 the embarrassment and humiliation Gonzales has to endure not
only before his former close friend Unson but more from the members and families of his friends and associates in the PCA,
The same is true for the COHLA, which in its default clause provides: which he continues to experience considering the confrontation he had with Unson and the consequent loss of standing and
credibility among them from the fact of the apparent bouncing check he issued. Credit is very important to businessmen and its
loss or impairment needs to be recognized and compensated.48
16. DEFAULT — The CLIENT shall be considered in default under the COH if any of the following events shall occur:

Page 22 of 46 TORTS MEETING 7

The termination of the COHLA by PCIB without prior notice and the subsequent dishonor of the check issued by Gonzales No pronouncement as to costs.
constitute acts of contra bonus mores. Art. 21 of the Civil Code refers to such acts when it says, "Any person who willfully
causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter
SO ORDERED.
for damage."

Accordingly, this Court finds that such acts warrant the payment of indemnity in the form of nominal damages.1avvphi1Nominal
damages "are recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced
no actual present loss of any kind x x x."49 We further explained the nature of nominal damages in Almeda v. Cariño:

x x x Its award is thus not for the purpose of indemnification for a loss but for the recognition and vindication of a right. Indeed,
nominal damages are damages in name only and not in fact. When granted by the courts, they are not treated as an equivalent of
a wrong inflicted but simply a recognition of the existence of a technical injury. A violation of the plaintiff’s right, even if only
technical, is sufficient to support an award of nominal damages. Conversely, so long as there is a showing of a violation of the
right of the plaintiff, an award of nominal damages is proper.50(Emphasis Ours.)

In the present case, Gonzales had the right to be informed of the accrued interest and most especially, for the suspension of his
COHLA. For failure to do so, the bank is liable to pay nominal damages. The amount of such damages is addressed to the sound
discretion of the court, taking into account the relevant circumstances.51 In this case, the Court finds that the grant of PhP 50,000
as nominal damages is proper.

Moreover, as We held in MERALCO v. CA,52 failure to give prior notice when required, such as in the instant case, constitutes a
breach of contract and is a clear violation of Art. 21 of the Code. In cases such as this, Art. 2219 of the Code provides that moral
damages may be recovered in acts referred to in its Art. 21. Further, Art. 2220 of the Code provides that "[w]illful injury to
property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages
are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith." Similarly,
"every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the
same."53 Evidently, Gonzales is entitled to recover moral damages.

Even in the absence of malice or bad faith, a depositor still has the right to recover reasonable moral damages, if the depositor
suffered mental anguish, serious anxiety, embarrassment, and humiliation. 54 Although incapable of pecuniary estimation, moral
damages are certainly recoverable if they are the proximate result of the defendant’s wrongful act or omission. The factual
antecedents bolstered by undisputed testimonies likewise show the mental anguish and anxiety Gonzales had to endure with the
threat of Unson to file a suit. Gonzales had to pay Unson PhP 250,000, while his FCD account in PCIB was frozen, prompting
Gonzales to demand from PCIB and to file the instant suit.

The award of moral damages is aimed at a restoration within the limits of the possible, of the spiritual status quo ante—it must
always reasonably approximate the extent of injury and be proportional to the wrong committed. 55Thus, an award of PhP 50,000
is reasonable moral damages for the unjust dishonor of the PhP 250,000 which was the proximate cause of the consequent
humiliation, embarrassment, anxiety, and mental anguish suffered by Gonzales from his loss of credibility among his friends,
colleagues and peers.

Furthermore, the initial carelessness of the bank’s omission in not properly informing Gonzales of the outstanding interest dues–
–aggravated by its gross neglect in omitting to give prior notice as stipulated under the COHLA and in not giving actual notice of
the termination of the credit line––justifies the grant of exemplary damages of PhP 10,000. Such an award is imposed by way of
example or correction for the public good.

Finally, an award for attorney’s fees is likewise called for from PCIB’s negligence which compelled Gonzales to litigate to
protect his interest. In accordance with Art. 2208(1) of the Code, attorney’s fees may be recovered when exemplary damages are
awarded. We find that the amount of PhP 50,000 as attorney’s fees is reasonable.

WHEREFORE, this petition is PARTLY GRANTED. Accordingly, the CA Decision dated October 22, 2007 in CA-G.R. CV
No. 74466 is hereby REVERSED and SET ASIDE. The Philippine Commercial and International Bank (now Banco De Oro) is
ORDERED to pay Eusebio Gonzales PhP 50,000 as nominal damages, PhP 50,000 as moral damages, PhP 10,000 as exemplary
damages, and PhP 50,000 as attorney’s fees.
Page 23 of 46 TORTS MEETING 7
TORTS 76 Plaintiff manifested on June 15, 1956 that the two weeks given by the court had expired on September 8, 1955 but that defendant
and his counsel had failed to appear.
G.R. No. L-20089 December 26, 1964
Another chance for amicable settlement was given by the court in its order of July 6, 1956 calling the parties and their attorneys
to appear on July 13, 1956. This time. however, defendant's counsel informed the court that chances of settling the case amicably
BEATRIZ P. WASSMER, plaintiff-appellee,
were nil.
vs.
FRANCISCO X. VELEZ, defendant-appellant.
On July 20, 1956 the court issued an order denying defendant's aforesaid petition. Defendant has appealed to this Court. In his
petition of June 21, 1955 in the court a quo defendant alleged excusable negligence as ground to set aside the judgment by
Jalandoni & Jamir for defendant-appellant.
default. Specifically, it was stated that defendant filed no answer in the belief that an amicable settlement was being negotiated.
Samson S. Alcantara for plaintiff-appellee.

BENGZON, J.P., J.:
The facts that culminated in this case started with dreams and hopes, followed by appropriate planning and serious endeavors,
but terminated in frustration and, what is worse, complete public humiliation.
Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of love, decided to get married and set September 4,
1954 as the big day. On September 2, 1954 Velez left this note for his bride-to-be:
Dear Bet —
Will have to postpone wedding — My mother opposes it. Am leaving on the Convair today.
A petition for relief from judgment on grounds of fraud, accident, mistake or excusable negligence, must be duly supported by
an affidavit of merits stating facts constituting a valid defense. (Sec. 3, Rule 38, Rules of Court.) Defendant's affidavit of merits
attached to his petition of June 21, 1955 stated: "That he has a good and valid defense against plaintiff's cause of action, his
failure to marry the plaintiff as scheduled having been due to fortuitous event and/or circumstances beyond his control." An
affidavit of merits like this stating mere conclusions or opinions instead of facts is not valid. (Cortes vs. Co Bun Kim, L-3926,
Oct. 10, 1951; Vaswani vs. P. Tarrachand Bros., L-15800, December 29, 1960.)
Defendant, however, would contend that the affidavit of merits was in fact unnecessary, or a mere surplusage, because the
judgment sought to be set aside was null and void, it having been based on evidence adduced before the clerk of court. In
Province of Pangasinan vs. Palisoc, L-16519, October 30, 1962, this Court pointed out that the procedure of designating the
clerk of court as commissioner to receive evidence is sanctioned by Rule 34 (now Rule 33) of the Rules of Court. Now as to
defendant's consent to said procedure, the same did not have to be obtained for he was declared in default and thus had no
standing in court (Velez vs. Ramas, 40 Phil. 787; Alano vs. Court of First Instance, L-14557, October 30, 1959).

Please do not ask too many people about the reason why — That would only create a scandal.
Paquing
But the next day, September 3, he sent her the following telegram:
NOTHING CHANGED REST ASSURED RETURNING VERY SOON APOLOGIZE MAMA PAPA LOVE .
PAKING
Thereafter Velez did not appear nor was he heard from again.
Sued by Beatriz for damages, Velez filed no answer and was declared in default. Plaintiff adduced evidence before the clerk of
court as commissioner, and on April 29, 1955, judgment was rendered ordering defendant to pay plaintiff P2,000.00 as actual
damages; P25,000.00 as moral and exemplary damages; P2,500.00 as attorney's fees; and the costs.
On June 21, 1955 defendant filed a "petition for relief from orders, judgment and proceedings and motion for new trial and
reconsideration." Plaintiff moved to strike it cut. But the court, on August 2, 1955, ordered the parties and their attorneys to
appear before it on August 23, 1955 "to explore at this stage of the proceedings the possibility of arriving at an amicable
settlement." It added that should any of them fail to appear "the petition for relief and the opposition thereto will be deemed
submitted for resolution."
In support of his "motion for new trial and reconsideration," defendant asserts that the judgment is contrary to law. The reason
given is that "there is no provision of the Civil Code authorizing" an action for breach of promise to marry. Indeed, our ruling
in Hermosisima vs. Court of Appeals (L-14628, Sept. 30, 1960), as reiterated in Estopa vs. Biansay (L-14733, Sept. 30, 1960), is
that "mere breach of a promise to marry" is not an actionable wrong. We pointed out that Congress deliberately eliminated from
the draft of the new Civil Code the provisions that would have it so.
It must not be overlooked, however, that the extent to which acts not contrary to law may be perpetrated with impunity, is not
limitless for Article 21 of said Code provides that "any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the damage."
The record reveals that on August 23, 1954 plaintiff and defendant applied for a license to contract marriage, which was
subsequently issued (Exhs. A, A-1). Their wedding was set for September 4, 1954. Invitations were printed and distributed to
relatives, friends and acquaintances (Tsn., 5; Exh. C). The bride-to-be's trousseau, party drsrses and other apparel for the
important occasion were purchased (Tsn., 7-8). Dresses for the maid of honor and the flower girl were prepared. A matrimonial
bed, with accessories, was bought. Bridal showers were given and gifts received (Tsn., 6; Exh. E). And then, with but two days
before the wedding, defendant, who was then 28 years old,: simply left a note for plaintiff stating: "Will have to postpone
wedding — My mother opposes it ... " He enplaned to his home city in Mindanao, and the next day, the day before the wedding,
he wired plaintiff: "Nothing changed rest assured returning soon." But he never returned and was never heard from again.
Surely this is not a case of mere breach of promise to marry. As stated, mere breach of promise to marry is not an actionable
wrong. But to formally set a wedding and go through all the above-described preparation and publicity, only to walk out of it
when the matrimony is about to be solemnized, is quite different. This is palpably and unjustifiably contrary to good customs for
which defendant must be held answerable in damages in accordance with Article 21 aforesaid.

On August 23, 1955 defendant failed to appear before court. Instead, on the following day his counsel filed a motion to defer for Defendant urges in his afore-stated petition that the damages awarded were excessive. No question is raised as to the award of
two weeks the resolution on defendants petition for relief. The counsel stated that he would confer with defendant in Cagayan de actual damages. What defendant would really assert hereunder is that the award of moral and exemplary damages, in the amount
Oro City — the latter's residence — on the possibility of an amicable element. The court granted two weeks counted from of P25,000.00, should be totally eliminated.
August 25, 1955.

Page 24 of 46 TORTS MEETING 7

Per express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in the cases mentioned in
Article 21 of said Code. As to exemplary damages, defendant contends that the same could not be adjudged against him because
under Article 2232 of the New Civil Code the condition precedent is that "the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner." The argument is devoid of merit as under the above-narrated circumstances of this case
defendant clearly acted in a "wanton ... , reckless [and] oppressive manner." This Court's opinion, however, is that considering
the particular circumstances of this case, P15,000.00 as moral and exemplary damages is deemed to be a reasonable award.

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

Page 25 of 46 TORTS MEETING 7

TORTS 77
G.R. No. 97336 February 19, 1993
GASHEM SHOOKAT BAKSH, petitioner,
vs.
HON. COURT OF APPEALS and MARILOU T. GONZALES, respondents.
DAVIDE, JR., J.:
This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to review and set aside the Decision 1 of the
respondent Court of Appeals in CA-G.R. CV No. 24256 which affirmed in toto the 16 October 1939 Decision of Branch 38
(Lingayen) of the Regional Trial Court (RTC) of Pangasinan in Civil Case No. 16503. Presented is the issue of whether or not
damages may be recovered for a breach of promise to marry on the basis of Article 21 of the Civil Code of the Philippines.
The antecedents of this case are not complicated:
On 27 October 1987, private respondent, without the assistance of counsel, filed with the aforesaid trial court a complaint2 for
damages against the petitioner for the alleged violation of their agreement to get married. She alleges in said complaint that: she
is twenty-two (22) years old, single, Filipino and a pretty lass of good moral character and reputation duly respected in her
community; petitioner, on the other hand, is an Iranian citizen residing at the Lozano Apartments, Guilig, Dagupan City, and is
an exchange student taking a medical course at the Lyceum Northwestern Colleges in Dagupan City; before 20 August 1987, the
latter courted and proposed to marry her; she accepted his love on the condition that they would get married; they therefore
agreed to get married after the end of the school semester, which was in October of that year; petitioner then visited the private
respondent's parents in Bañaga, Bugallon, Pangasinan to secure their approval to the marriage; sometime in 20 August 1987, the
petitioner forced her to live with him in the Lozano Apartments; she was a virgin before she began living with him; a week
before the filing of the complaint, petitioner's attitude towards her started to change; he maltreated and threatened to kill her; as a
result of such maltreatment, she sustained injuries; during a confrontation with a representative of the barangay captain of Guilig
a day before the filing of the complaint, petitioner repudiated their marriage agreement and asked her not to live with him
anymore and; the petitioner is already married to someone living in Bacolod City. Private respondent then prayed for judgment
ordering the petitioner to pay her damages in the amount of not less than P45,000.00, reimbursement for actual expenses
amounting to P600.00, attorney's fees and costs, and granting her such other relief and remedies as may be just and equitable.
The complaint was docketed as Civil Case No. 16503.
In his Answer with Counterclaim,3 petitioner admitted only the personal circumstances of the parties as averred in the complaint
and denied the rest of the allegations either for lack of knowledge or information sufficient to form a belief as to the truth thereof
or because the true facts are those alleged as his Special and Affirmative Defenses. He thus claimed that he never proposed
marriage to or agreed to be married with the private respondent; he neither sought the consent and approval of her parents nor
forced her to live in his apartment; he did not maltreat her, but only told her to stop coming to his place because he discovered
that she had deceived him by stealing his money and passport; and finally, no confrontation took place with a representative of
the barangay captain. Insisting, in his Counterclaim, that the complaint is baseless and unfounded and that as a result thereof, he
was unnecessarily dragged into court and compelled to incur expenses, and has suffered mental anxiety and a besmirched
reputation, he prayed for an award of P5,000.00 for miscellaneous expenses and P25,000.00 as moral damages.
After conducting a pre-trial on 25 January 1988, the trial court issued a Pre-Trial Order4 embodying the stipulated facts which
the parties had agreed upon, to wit:
1. That the plaintiff is single and resident (sic) of Bañaga, Bugallon, Pangasinan, while the defendant is single, Iranian
citizen and resident (sic) of Lozano Apartment, Guilig, Dagupan City since September 1, 1987 up to the present;
2. That the defendant is presently studying at Lyceum Northwestern, Dagupan City, College of Medicine, second year
medicine proper;
Page 26 of 46 TORTS MEETING 7
3. That the plaintiff is (sic) an employee at Mabuhay Luncheonette , Fernandez Avenue, Dagupan City since July, 1986 up
to the present and a (sic) high school graduate;
4. That the parties happened to know each other when the manager of the Mabuhay Luncheonette, Johhny Rabino
introduced the defendant to the plaintiff on August 3, 1986.
After trial on the merits, the lower court, applying Article 21 of the Civil Code, rendered on 16 October 1989 a
decision5 favoring the private respondent. The petitioner was thus ordered to pay the latter damages and attorney's fees; the
dispositive portion of the decision reads:
IN THE LIGHT of the foregoing consideration, judgment is hereby rendered in favor of the plaintiff and against the
defendant.
1. Condemning (sic) the defendant to pay the plaintiff the sum of twenty thousand (P20,000.00) pesos as moral damages.
2. Condemning further the defendant to play the plaintiff the sum of three thousand (P3,000.00) pesos as atty's fees and two
thousand (P2,000.00) pesos at (sic) litigation expenses and to pay the costs.
3. All other claims are denied.6
The decision is anchored on the trial court's findings and conclusions that (a) petitioner and private respondent were lovers, (b)
private respondent is not a woman of loose morals or questionable virtue who readily submits to sexual advances, (c) petitioner,
through machinations, deceit and false pretenses, promised to marry private respondent, d) because of his persuasive promise to
marry her, she allowed herself to be deflowered by him, (e) by reason of that deceitful promise, private respondent and her
parents — in accordance with Filipino customs and traditions — made some preparations for the wedding that was to be held at
the end of October 1987 by looking for pigs and chickens, inviting friends and relatives and contracting sponsors, (f) petitioner
did not fulfill his promise to marry her and (g) such acts of the petitioner, who is a foreigner and who has abused Philippine
hospitality, have offended our sense of morality, good customs, culture and traditions. The trial court gave full credit to the
private respondent's testimony because, inter alia, she would not have had the temerity and courage to come to court and expose
her honor and reputation to public scrutiny and ridicule if her claim was false. 7
The above findings and conclusions were culled from the detailed summary of the evidence for the private respondent in the
foregoing decision, digested by the respondent Court as follows:
According to plaintiff, who claimed that she was a virgin at the time and that she never had a boyfriend before, defendant
started courting her just a few days after they first met. He later proposed marriage to her several times and she accepted his
love as well as his proposal of marriage on August 20, 1987, on which same day he went with her to her hometown of
Bañaga, Bugallon, Pangasinan, as he wanted to meet her parents and inform them of their relationship and their intention to
get married. The photographs Exhs. "A" to "E" (and their submarkings) of defendant with members of plaintiff's family or
with plaintiff, were taken that day. Also on that occasion, defendant told plaintiffs parents and brothers and sisters that he
intended to marry her during the semestral break in October, 1987, and because plaintiff's parents thought he was good and
trusted him, they agreed to his proposal for him to marry their daughter, and they likewise allowed him to stay in their house
and sleep with plaintiff during the few days that they were in Bugallon. When plaintiff and defendant later returned to
Dagupan City, they continued to live together in defendant's apartment. However, in the early days of October, 1987,
defendant would tie plaintiff's hands and feet while he went to school, and he even gave her medicine at 4 o'clock in the
morning that made her sleep the whole day and night until the following day. As a result of this live-in relationship, plaintiff
became pregnant, but defendant gave her some medicine to abort the fetus. Still plaintiff continued to live with defendant
and kept reminding him of his promise to marry her until he told her that he could not do so because he was already married
to a girl in Bacolod City. That was the time plaintiff left defendant, went home to her parents, and thereafter consulted a
lawyer who accompanied her to the barangay captain in Dagupan City. Plaintiff, her lawyer, her godmother, and a barangay
tanod sent by the barangay captain went to talk to defendant to still convince him to marry plaintiff, but defendant insisted
that he could not do so because he was already married to a girl in Bacolod City, although the truth, as stipulated by the
parties at the pre-trial, is that defendant is still single.
 Plaintiff's father, a tricycle driver, also claimed that after defendant had informed them of his desire to marry Marilou, he
already looked for sponsors for the wedding, started preparing for the reception by looking for pigs and chickens, and even
already invited many relatives and friends to the forthcoming wedding. 8
Petitioner appealed the trial court's decision to the respondent Court of Appeals which docketed the case as CA-G.R. CV No.
24256. In his Brief,9 he contended that the trial court erred (a) in not dismissing the case for lack of factual and legal basis and
(b) in ordering him to pay moral damages, attorney's fees, litigation expenses and costs.
On 18 February 1991, respondent Court promulgated the challenged decision 10 affirming in toto the trial court's ruling of 16
October 1989. In sustaining the trial court's findings of fact, respondent Court made the following analysis:
First of all, plaintiff, then only 21 years old when she met defendant who was already 29 years old at the time, does not
appear to be a girl of loose morals. It is uncontradicted that she was a virgin prior to her unfortunate experience with
defendant and never had boyfriend. She is, as described by the lower court, a barrio lass "not used and accustomed to trend
of modern urban life", and certainly would (sic) not have allowed
"herself to be deflowered by the defendant if there was no persuasive promise made by the defendant to marry her." In fact,
we agree with the lower court that plaintiff and defendant must have been sweethearts or so the plaintiff must have thought
because of the deception of defendant, for otherwise, she would not have allowed herself to be photographed with defendant
in public in so (sic) loving and tender poses as those depicted in the pictures Exhs. "D" and "E". We cannot believe,
therefore, defendant's pretense that plaintiff was a nobody to him except a waitress at the restaurant where he usually ate.
Defendant in fact admitted that he went to plaintiff's hometown of Bañaga, Bugallon, Pangasinan, at least thrice; at (sic) the
town fiesta on February 27, 1987 (p. 54, tsn May 18, 1988), at (sic) a beach party together with the manager and employees
of the Mabuhay Luncheonette on March 3, 1987 (p. 50, tsn id.), and on April 1, 1987 when he allegedly talked to plaintiff's
mother who told him to marry her daughter (pp. 55-56, tsn id.). Would defendant have left Dagupan City where he was
involved in the serious study of medicine to go to plaintiff's hometown in Bañaga, Bugallon, unless there was (sic) some
kind of special relationship between them? And this special relationship must indeed have led to defendant's insincere
proposal of marriage to plaintiff, communicated not only to her but also to her parents, and (sic) Marites Rabino, the owner
of the restaurant where plaintiff was working and where defendant first proposed marriage to her, also knew of this love
affair and defendant's proposal of marriage to plaintiff, which she declared was the reason why plaintiff resigned from her
job at the restaurant after she had accepted defendant's proposal (pp. 6-7, tsn March 7, 1988).
Upon the other hand, appellant does not appear to be a man of good moral character and must think so low and have so little
respect and regard for Filipino women that he openly admitted that when he studied in Bacolod City for several years where
he finished his B.S. Biology before he came to Dagupan City to study medicine, he had a common-law wife in Bacolod
City. In other words, he also lived with another woman in Bacolod City but did not marry that woman, just like what he did
to plaintiff. It is not surprising, then, that he felt so little compunction or remorse in pretending to love and promising to
marry plaintiff, a young, innocent, trustful country girl, in order to satisfy his lust on her. 11
and then concluded:
In sum, we are strongly convinced and so hold that it was defendant-appellant's fraudulent and deceptive protestations of
love for and promise to marry plaintiff that made her surrender her virtue and womanhood to him and to live with him on
the honest and sincere belief that he would keep said promise, and it was likewise these (sic) fraud and deception on
appellant's part that made plaintiff's parents agree to their daughter's living-in with him preparatory to their supposed
marriage. And as these acts of appellant are palpably and undoubtedly against morals, good customs, and public policy, and
are even gravely and deeply derogatory and insulting to our women, coming as they do from a foreigner who has been
enjoying the hospitality of our people and taking advantage of the opportunity to study in one of our institutions of learning,
defendant-appellant should indeed be made, under Art. 21 of the Civil Code of the Philippines, to compensate for the moral
damages and injury that he had caused plaintiff, as the lower court ordered him to do in its decision in this case. 12
Unfazed by his second defeat, petitioner filed the instant petition on 26 March 1991; he raises therein the single issue of whether
or not Article 21 of the Civil Code applies to the case at bar. 13
Page 27 of 46 TORTS MEETING 7
It is petitioner's thesis that said Article 21 is not applicable because he had not committed any moral wrong or injury or violated
any good custom or public policy; he has not professed love or proposed marriage to the private respondent; and he has never
maltreated her. He criticizes the trial court for liberally invoking Filipino customs, traditions and culture, and ignoring the fact
that since he is a foreigner, he is not conversant with such Filipino customs, traditions and culture. As an Iranian Moslem, he is
not familiar with Catholic and Christian ways. He stresses that even if he had made a promise to marry, the subsequent failure to
fulfill the same is excusable or tolerable because of his Moslem upbringing; he then alludes to the Muslim Code which
purportedly allows a Muslim to take four (4) wives and concludes that on the basis thereof, the trial court erred in ruling that he
does not posses good moral character. Moreover, his controversial "common law life" is now his legal wife as their marriage had
been solemnized in civil ceremonies in the Iranian Embassy. As to his unlawful cohabitation with the private respondent,
petitioner claims that even if responsibility could be pinned on him for the live-in relationship, the private respondent should also
be faulted for consenting to an illicit arrangement. Finally, petitioner asseverates that even if it was to be assumed arguendo that
he had professed his love to the private respondent and had also promised to marry her, such acts would not be actionable in
view of the special circumstances of the case. The mere breach of promise is not actionable. 14
On 26 August 1991, after the private respondent had filed her Comment to the petition and the petitioner had filed his Reply
thereto, this Court gave due course to the petition and required the parties to submit their respective Memoranda, which they
subsequently complied with.
As may be gleaned from the foregoing summation of the petitioner's arguments in support of his thesis, it is clear that questions
of fact, which boil down to the issue of the credibility of witnesses, are also raised. It is the rule in this jurisdiction that appellate
courts will not disturb the trial court's findings as to the credibility of witnesses, the latter court having heard the witnesses and
having had the opportunity to observe closely their deportment and manner of testifying, unless the trial court had plainly
overlooked facts of substance or value which, if considered, might affect the result of the case. 15
Petitioner has miserably failed to convince Us that both the appellate and trial courts had overlooked any fact of substance or
values which could alter the result of the case.
Equally settled is the rule that only questions of law may be raised in a petition for review on certiorari under Rule 45 of the
Rules of Court. It is not the function of this Court to analyze or weigh all over again the evidence introduced by the parties
before the lower court. There are, however, recognized exceptions to this rule. Thus, in Medina vs.Asistio, Jr., 16 this Court took
the time, again, to enumerate these exceptions:
xxx xxx xxx
(1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures (Joaquin v. Navarro, 93 Phil.
257 [1953]); (2) When the inference made is manifestly mistaken, absurb or impossible (Luna v. Linatok, 74 Phil. 15
[1942]); (3) Where there is a grave abuse of discretion (Buyco v. People, 95 Phil. 453 [1955]); (4) When the judgment is
based on a misapprehension of facts (Cruz v. Sosing,
L-4875, Nov. 27, 1953); (5) When the findings of fact are conflicting (Casica v. Villaseca, L-9590 Ap. 30, 1957; unrep.) (6)
When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the
admissions of both appellate and appellee (Evangelista v. Alto Surety and Insurance Co., 103 Phil. 401 [1958]);
(7) The findings of the Court of Appeals are contrary to those of the trial court (Garcia v. Court of Appeals, 33 SCRA 622
[1970]; Sacay v. Sandiganbayan, 142 SCRA 593 [1986]); (8) When the findings of fact are conclusions without citation of
specific evidence on which they are based (Ibid.,); (9) When the facts set forth in the petition as well as in the petitioners
main and reply briefs are not disputed by the respondents (Ibid.,); and (10) The finding of fact of the Court of Appeals is
premised on the supposed absence of evidence and is contradicted by the evidence on record (Salazar v. Gutierrez, 33 SCRA
242 [1970]).
Petitioner has not endeavored to joint out to Us the existence of any of the above quoted exceptions in this case. Consequently,
the factual findings of the trial and appellate courts must be respected.
And now to the legal issue.
The existing rule is that a breach of promise to marry per se is not an actionable wrong. 17 Congress deliberately eliminated from
the draft of the New Civil Code the provisions that would have made it so. The reason therefor is set forth in the report of the
Senate Committees on the Proposed Civil Code, from which We quote:
The elimination of this chapter is proposed. That breach of promise to marry is not actionable has been definitely decided in
the case of De Jesus vs. Syquia. 18 The history of breach of promise suits in the United States and in England has shown that
no other action lends itself more readily to abuse by designing women and unscrupulous men. It is this experience which has
led to the abolition of rights of action in the so-called Heart Balm suits in many of the American states. . . . 19
This notwithstanding, the said Code contains a provision, Article 21, which is designed to expand the concept of torts or quasi-
delict in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible for
human foresight to specifically enumerate and punish in the statute books. 20
As the Code Commission itself stated in its Report:
But the Code Commission had gone farther than the sphere of wrongs defined or determined by positive law. Fully sensible
that there are countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even though they have
actually suffered material and moral injury, the Commission has deemed it necessary, in the interest of justice, to incorporate
in the proposed Civil Code the following rule:
Art. 23. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs
or public policy shall compensate the latter for the damage.
An example will illustrate the purview of the foregoing norm: "A" seduces the nineteen-year old daughter of "X". A promise
of marriage either has not been made, or can not be proved. The girl becomes pregnant. Under the present laws, there is no
crime, as the girl is above nineteen years of age. Neither can any civil action for breach of promise of marriage be filed.
Therefore, though the grievous moral wrong has been committed, and though the girl and family have suffered incalculable
moral damage, she and her parents cannot bring action for damages. But under the proposed article, she and her parents
would have such a right of action.
Thus at one stroke, the legislator, if the forgoing rule is approved, would vouchsafe adequate legal remedy for that untold
number of moral wrongs which it is impossible for human foresight to provide for specifically in the statutes. 21
Article 2176 of the Civil Code, which defines a quasi-delict thus:
Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-
delict and is governed by the provisions of this Chapter.
is limited to negligent acts or omissions and excludes the notion of willfulness or intent. Quasi-delict, known in Spanish
legal treatises as culpa aquiliana, is a civil law concept while torts is an Anglo-American or common law concept. Torts is
much broader than culpa aquiliana because it includes not only negligence, but international criminal acts as well such as
assault and battery, false imprisonment and deceit. In the general scheme of the Philippine legal system envisioned by the
Commission responsible for drafting the New Civil Code, intentional and malicious acts, with certain exceptions, are to be
governed by the Revised Penal Code while negligent acts or omissions are to be covered by Article 2176 of the Civil
Code. 22 In between these opposite spectrums are injurious acts which, in the absence of Article 21, would have been beyond
redress. Thus, Article 21 fills that vacuum. It is even postulated that together with Articles 19 and 20 of the Civil Code,
Article 21 has greatly broadened the scope of the law on civil wrongs; it has become much more supple and adaptable than
the Anglo-American law on torts. 23
In the light of the above laudable purpose of Article 21, We are of the opinion, and so hold, that where a man's promise to marry
is in fact the proximate cause of the acceptance of his love by a woman and his representation to fulfill that promise thereafter
Page 28 of 46 TORTS MEETING 7
becomes the proximate cause of the giving of herself unto him in a sexual congress, proof that he had, in reality, no intention of
marrying her and that the promise was only a subtle scheme or deceptive device to entice or inveigle her to accept him and to
obtain her consent to the sexual act, could justify the award of damages pursuant to Article 21 not because of such promise to
marry but because of the fraud and deceit behind it and the willful injury to her honor and reputation which followed thereafter.
It is essential, however, that such injury should have been committed in a manner contrary to morals, good customs or public
policy.
In the instant case, respondent Court found that it was the petitioner's "fraudulent and deceptive protestations of love for and
promise to marry plaintiff that made her surrender her virtue and womanhood to him and to live with him on the honest and
sincere belief that he would keep said promise, and it was likewise these fraud and deception on appellant's part that made
plaintiff's parents agree to their daughter's living-in with him preparatory to their supposed marriage." 24 In short, the private
respondent surrendered her virginity, the cherished possession of every single Filipina, not because of lust but because of moral
seduction — the kind illustrated by the Code Commission in its example earlier adverted to. The petitioner could not be held
liable for criminal seduction punished under either Article 337 or Article 338 of the Revised Penal Code because the private
respondent was above eighteen (18) years of age at the time of the seduction.
Prior decisions of this Court clearly suggest that Article 21 may be applied in a breach of promise to marry where the woman is a
victim of moral seduction. Thus, in Hermosisima vs. Court of Appeals,25 this Court denied recovery of damages to the woman
because:
. . . we find ourselves unable to say that petitioner is morally guilty of seduction, not only because he is approximately ten
(10) years younger than the complainant — who was around thirty-six (36) years of age, and as highly enlightened as a
former high school teacher and a life insurance agent are supposed to be — when she became intimate with petitioner, then a
mere apprentice pilot, but, also, because the court of first instance found that, complainant "surrendered herself" to petitioner
because, "overwhelmed by her love" for him, she "wanted to bind" him by having a fruit of their engagement even before
they had the benefit of clergy.
In Tanjanco vs. Court of Appeals, 26 while this Court likewise hinted at possible recovery if there had been moral seduction,
recovery was eventually denied because We were not convinced that such seduction existed. The following enlightening
disquisition and conclusion were made in the said case:
The Court of Appeals seem to have overlooked that the example set forth in the Code Commission's memorandum refers to
a tort upon a minor who had been seduced. The essential feature is seduction, that in law is more than mere sexual
intercourse, or a breach of a promise of marriage; it connotes essentially the idea of deceit, enticement, superior power or
abuse of confidence on the part of the seducer to which the woman has yielded (U.S. vs. Buenaventura, 27 Phil. 121; U.S.
vs. Arlante, 9 Phil. 595).
It has been ruled in the Buenaventura case (supra) that —
To constitute seduction there must in all cases be some sufficient promise or inducement and the woman must yield
because of the promise or other inducement. If she consents merely from carnal lust and the intercourse is from
mutual desire, there is no seduction (43 Cent. Dig. tit. Seduction, par. 56) She must be induced to depart from the
path of virtue by the use of some species of arts, persuasions and wiles, which are calculated to have and do have
that effect, and which result in her person to ultimately submitting her person to the sexual embraces of her seducer
(27 Phil. 123).
And in American Jurisprudence we find:
On the other hand, in an action by the woman, the enticement, persuasion or deception is the essence of the injury;
and a mere proof of intercourse is insufficient to warrant a recovery.
Accordingly it is not seduction where the willingness arises out of sexual desire of curiosity of the female, and the
defendant merely affords her the needed opportunity for the commission of the act. It has been emphasized that to
 allow a recovery in all such cases would tend to the demoralization of the female sex, and would be a reward for
unchastity by which a class of adventuresses would be swift to profit. (47 Am. Jur. 662)
xxx xxx xxx
Over and above the partisan allegations, the fact stand out that for one whole year, from 1958 to 1959, the plaintiff-appellee,
a woman of adult age, maintain intimate sexual relations with appellant, with repeated acts of intercourse. Such conduct is
incompatible with the idea of seduction. Plainly there is here voluntariness and mutual passion; for had the appellant been
deceived, had she surrendered exclusively because of the deceit, artful persuasions and wiles of the defendant, she would not
have again yielded to his embraces, much less for one year, without exacting early fulfillment of the alleged promises of
marriage, and would have cut short all sexual relations upon finding that defendant did not intend to fulfill his defendant did
not intend to fulfill his promise. Hence, we conclude that no case is made under article 21 of the Civil Code, and no other
cause of action being alleged, no error was committed by the Court of First Instance in dismissing the complaint. 27
These statements reveal the true character and motive of the petitioner. It is clear that he harbors a condescending, if not
sarcastic, regard for the private respondent on account of the latter's ignoble birth, inferior educational background, poverty and,
as perceived by him, dishonorable employment. Obviously then, from the very beginning, he was not at all moved by good faith
and an honest motive. Marrying with a woman so circumstances could not have even remotely occurred to him. Thus, his
profession of love and promise to marry were empty words directly intended to fool, dupe, entice, beguile and deceive the poor
woman into believing that indeed, he loved her and would want her to be his life's partner. His was nothing but pure lust which
he wanted satisfied by a Filipina who honestly believed that by accepting his proffer of love and proposal of marriage, she would
be able to enjoy a life of ease and security. Petitioner clearly violated the Filipino's concept of morality and brazenly defied the
traditional respect Filipinos have for their women. It can even be said that the petitioner committed such deplorable acts in
blatant disregard of Article 19 of the Civil Code which directs every person to act with justice, give everyone his due and
observe honesty and good faith in the exercise of his rights and in the performance of his obligations.
No foreigner must be allowed to make a mockery of our laws, customs and traditions.

The pari delicto rule does not apply in this case for while indeed, the private respondent may not have been impelled by the
In his annotations on the Civil Code, 28 Associate Justice Edgardo L. Paras, who recently retired from this Court, opined that in a
purest of intentions, she eventually submitted to the petitioner in sexual congress not out of lust, but because of moral seduction.
breach of promise to marry where there had been carnal knowledge, moral damages may be recovered:
In fact, it is apparent that she had qualms of conscience about the entire episode for as soon as she found out that the petitioner
was not going to marry her after all, she left him. She is not, therefore, in pari delicto with the petitioner. Pari delicto means "in
. . . if there be criminal or moral seduction, but not if the intercourse was due to mutual lust. (Hermosisima vs. Court of equal fault; in a similar offense or crime; equal in guilt or in legal fault." 35At most, it could be conceded that she is merely in
Appeals, delicto.
L-14628, Sept. 30, 1960; Estopa vs. Piansay, Jr., L-14733, Sept. 30, 1960; Batarra vs. Marcos, 7 Phil. 56 (sic); Beatriz
Galang vs. Court of Appeals, et al., L-17248, Jan. 29, 1962). (In other words, if the CAUSE be the promise to marry,
Equity often interferes for the relief of the less guilty of the parties, where his transgression has been brought about by the
and the EFFECT be the carnal knowledge, there is a chance that there was criminal or moral seduction, hence recovery
imposition of undue influence of the party on whom the burden of the original wrong principally rests, or where his consent
of moral damages will prosper. If it be the other way around, there can be no recovery of moral damages, because here
to the transaction was itself procured by
mutual lust has intervened). . . .
fraud. 36

together with "ACTUAL damages, should there be any, such as the expenses for the wedding presentations (See Domalagon
In Mangayao vs. Lasud, 37 We declared:
v. Bolifer, 33 Phil. 471).

Appellants likewise stress that both parties being at fault, there should be no action by one against the other (Art. 1412, New
Senator Arturo M. Tolentino 29 is also of the same persuasion:
Civil Code). This rule, however, has been interpreted as applicable only where the fault on both sides is, more or less,
equivalent. It does not apply where one party is literate or intelligent and the other one is not. (c.f. Bough vs. Cantiveros, 40
It is submitted that the rule in Batarra vs. Marcos, 30 still subsists, notwithstanding the incorporation of the present Phil. 209).
article31 in the Code. The example given by the Code Commission is correct, if there was seduction, not necessarily in the
legal sense, but in the vulgar sense of deception. But when the sexual act is accomplished without any deceit or qualifying
We should stress, however, that while We find for the private respondent, let it not be said that this Court condones the
circumstance of abuse of authority or influence, but the woman, already of age, has knowingly given herself to a man, it
deplorable behavior of her parents in letting her and the petitioner stay together in the same room in their house after giving
cannot be said that there is an injury which can be the basis for indemnity.
approval to their marriage. It is the solemn duty of parents to protect the honor of their daughters and infuse upon them the
higher values of morality and dignity.
But so long as there is fraud, which is characterized by willfulness (sic), the action lies. The court, however, must weigh the
degree of fraud, if it is sufficient to deceive the woman under the circumstances, because an act which would deceive a girl
WHEREFORE, finding no reversible error in the challenged decision, the instant petition is hereby DENIED, with costs against
sixteen years of age may not constitute deceit as to an experienced woman thirty years of age. But so long as there is a
the petitioner.
wrongful act and a resulting injury, there should be civil liability, even if the act is not punishable under the criminal law and
there should have been an acquittal or dismissal of the criminal case for that reason.
SO ORDERED.
We are unable to agree with the petitioner's alternative proposition to the effect that granting, for argument's sake, that he did
promise to marry the private respondent, the latter is nevertheless also at fault. According to him, both parties are in pari delicto;
hence, pursuant to Article 1412(1) of the Civil Code and the doctrine laid down in Batarra vs. Marcos, 32 the private respondent
cannot recover damages from the petitioner. The latter even goes as far as stating that if the private respondent had "sustained
any injury or damage in their relationship, it is primarily because of her own doing, 33 for:

. . . She is also interested in the petitioner as the latter will become a doctor sooner or later. Take notice that she is a plain
high school graduate and a mere employee . . . (Annex "C") or a waitress (TSN, p. 51, January 25, 1988) in a luncheonette
and without doubt, is in need of a man who can give her economic security. Her family is in dire need of financial
assistance. (TSN, pp. 51-53, May 18, 1988). And this predicament prompted her to accept a proposition that may have been
offered by the petitioner. 34

Page 29 of 46 TORTS MEETING 7

TORTS 78 However, on January 27, 1992, Florenda, together with several armed men who identified themselves as policemen, forcibly
evicted petitioner from the leased premises, claiming that she was the owner and that the place was already covered by another
existing contract of lease. During the encounter, Florenda and her men took some equipment, machinery and other properties
belonging to petitioner, thereby causing loss and damage to said properties.
G.R. No. 161722 July 20, 2006

In the meantime, Angel secured a copy of the purported contract of lease he allegedly executed in favor of EMECO. On March
G.Q. GARMENTS, INC., petitioner,
12, 1992, he forthwith filed a complaint for declaration of nullity of the contract of lease before the Regional Trial Court (RTC)
vs.
of Makati, Branch 66, docketed as Civil Case No. 92-699. Angel alleged therein that his signature as lessor in the purported
ANGEL MIRANDA, FLORENDA MIRANDA and EXECUTIVE MACHINERIES and EQUIPMENT
contract was a forgery. He prayed that judgment be rendered in his favor declaring the said contract null and void.
CORPORATION,respondents.

DECISION
CALLEJO, SR., J.:
Before the Court is a Petition for Review on Certiorari for the reversal of the Decision1 of the Court of Appeals (CA) in CA-
G.R. CV No. 45567, as well as its Resolution2 denying the motion for reconsideration thereof.
Angel Miranda is the registered owner of a 9,646 square meters parcel of land located at Niog, Bacoor, Cavite ("Property"). The
property was covered by Transfer Certificate of Title (TCT) No. T-606793 of the Registry of Deeds of Cavite.
Meanwhile, petitioner sought the help of the Philippine National Police (PNP). General Gerardo N. Flores, Deputy Director
General and Chief Directorial Staff, issued a Memorandum 6 to Superintendent Wenceslao A. Soberano, Provincial Director of
the Cavite PNP Provincial Command, ordering the latter to prevent his men from interfering with the pending civil case.
Petitioner subsequently regained possession over the leased premises. However, Florenda and her group were undaunted. They
went back to the place and ousted the guards and other personnel manning the corporation's office, and even removed their
equipment, and ransacked anew their raw materials, electric wire and other valuables inside.
On April 20, 1992, petitioner instituted an action for damages and recovery of possession of the property before the RTC of
Cavite City, Branch 17, with Angel, EMECO and Florenda, as alternative defendants. The case was docketed as Civil Case No.
N-5573. The corporation alleged the following in its complaint:

In 1984, Angelito Miranda, the son of Angel Miranda, established the Executive Machineries and Equipment Corporation
(EMECO), a domestic corporation engaged primarily in the manufacture and fabrication of rubber rollers. Angelito owned 80%
of the stocks of the corporation, while his wife Florenda owned 10%. That year, Angel entered into a verbal contract of lease
over the Property with EMECO, and allowed it to build a factory thereon. The agreement was on a month-to-month basis, at the
rate of P8,000 per month. EMECO constructed its factory on the property. At the outset, EMECO paid the monthly rentals.
However, after Angelito died on June 21, 1988, EMECO failed to pay the rentals but still continued possessing the leased
premises.
VI That on December 23, 1991, Plaintiff leased from Alternative Defendant ANGEL MIRANDA the premises just adverted
to, for a period of FIFTEEN (15) years, commencing on February 1, 1992 and to expire on January 31, 2007, as evidenced
by the Contract of Lease x x x ;
VII That by the terms of said lease agreement, Plaintiff was to pay to Alternative ANGEL MIRANDA rentals in the sum of
THIRTY THOUSAND PESOS (P30,000) per month, with SIXTY THOUSAND PESOS (P60,000) as deposit, and THIRTY
THOUSAND PESOS (P30,000) as advance rental, all of which were complied with by Plaintiff;

On November 19, 1989, the factory of EMECO was totally razed by fire. In a letter to EMECO dated June 3, 1991, Angel VIII That in accordance with the same agreement, Plaintiff was authorized to introduce into the premises such
demanded the payment of accrued rentals in the amount of P280,000.00 as of May 1991. EMECO was also informed that the improvements as it may find necessary;
oral contract of lease would be terminated effective June 30, 1991. However, EMECO failed to pay the accrued rentals and to
vacate the property. Another demand letter dated September 27, 1991 was sent to EMECO. It vacated the leased premises, but
IX That Plaintiff took possession of the leased premises and moved thereto its equipments (sic), machineries, appliances,
the accrued rentals remained unpaid.
supplies and kindred items, as well as certain construction materials necessary for the repairs and improvement of the
facilities therein; that, as a matter of fact, Plaintiff had already commenced the construction of roofs over the concrete
Sometime in November 1991, Florenda arrived at the office of petitioner and offered to sublease the property to Wilson Kho, the structures in the leased premises;
Officer-in Charge of the corporation. Florenda showed Kho a purported copy of a contract of lease4over the said property
allegedly executed by Angel in favor of EMECO. After visiting and viewing the property, Kho agreed to rent the area upon the
X That, furthermore, Plaintiff secured from the proper authorities all the needful licenses and permits for its construction and
condition that its true and registered owner would personally sign the lease contract in his presence. When Florenda failed to
business activities;
present Angel for said purpose, Kho turned down her proposal.

XI That on January 27, 1992, Alternative Defendant FLORENDA MIRANDA, in her behalf and in representation of
Later, Kho was able to locate Angel at Noveleta, Cavite and offered, in behalf of petitioner, to lease the property, as to which
Alternative Defendant EMECO, and in the company of armed men, forcibly evicted Plaintiff from the premises, not only
Angel agreed. On December 23, 1991, Angel and the corporation, represented by its Executive Vice-President, Davy John
stopping the construction works being performed in the premises, but also physically bringing out Plaintiff's equipment,
Barlin, executed a contract of lease5 over the subject property. The lease was for a period of 15 years, commencing on February
machineries, and other personalities (sic) of the leased realty;
1, 1992 until January 31, 2007 for a monthly rental of P30,000.00. Petitioner paid P90,000.00 representing two months deposit
and advance rental for one month. As lessee, it was authorized to introduce improvements, structures, and buildings on the
property as it may deem necessary and for the purpose for which it was leased. XII That the Alternative Defendants just named did the acts just described under the claim that the premises are either
owned by Alternative Defendant FLORENDA MIRANDA or that the same are covered by [a] still existing lease agreement
by and between Alternative Defendants, the latter claim being evidenced by the Contract of Lease x x x;
Consequently, petitioner secured the following documents: mayor's permit, sanitary permit, business sticker, and an application
for municipal license. Thereafter, it moved into the property with its equipment, machinery, appliances, supplies, and other
construction materials. The construction of a building and factory in the leased premises commenced. XIII That regardless of the validity of either claim on the part of Alternative Defendants FLORENDA MIRANDA and
EMECO, the same cannot be pleaded in derogation of Plaintiff's possessory rights over the premises, for the reason that the
realty in question is covered by a torrens certificate in the name of Alternative Defendant ANGEL MIRANDA on which

Page 30 of 46 TORTS MEETING 7

 document third parties have a legally-authorized right to rely (in the first instance), and that in order to evict Plaintiff from
the premises, proper ejectment proceedings would have to be instituted (in the second instance);
XIV That under the law, Alternative Defendant ANGEL MIRANDA has the obligation to keep and maintain Plaintiff in
peaceful possession of the leased premises, which obligation said defendant failed to observe and discharge;
XV That as a result of the forcible eviction of Plaintiff from the leased property, it suffered damages not only in terms of
destruction and/or impairment of its machineries, equipments (sic), appliances, personalities, supplies and materials, but also
in terms of lost profits and business opportunities, besmirched reputation, administrative cost overruns, tarnished goodwill
and impairment of credit facilities, the total pecuniary value of which amounts to not less than TWO MILLION PESOS
(P2,000,000);7
It prayed that, after due proceedings, judgment be rendered in its favor, as follows:
1. That upon due notice and hearing, a writ of preliminary mandatory injunction issue, restoring Plaintiff to the possession of
the premises in question;
2. That after trial, judgment issue directing Alternative Defendants, singly or collectively, and any person or persons
claiming right under them to surrender possession of the leased premises to Plaintiff;
3. That either Defendant, or all of them, be condemned to pay to Plaintiff the sum of TWO MILLION PESOS (P2,000,000)
by way of actual, compensatory, and moral damages;
4. That either Defendant, or all of them, be condemned to pay attorney's fees and litigation expenses in the sum earlier set
forth; and
5, That either Defendant, or all of them, be condemned to pay the costs of this suit;
6. OTHER RELIEFS and remedies as are just and equitable under the premises are likewise prayed for. 8
On June 25, 1992, Angel and petitioner, as plaintiffs, filed a separate complaint for ejectment against Florenda before the
Municipal Trial Court (MTC) of Bacoor, Cavite, docketed as Civil Case No. 1265. After due proceedings, the court rendered
judgment on July 2, 1993, ordering the eviction of Florenda and all those claiming the property in her behalf. The decision was
appealed to the RTC. However, for failure to pay a supersedeas bond, the decision was executed and Florenda was evicted from
the property.
On November 26, 1993, the RTC rendered judgment in Civil Case No. N-5573, dismissing the complaint against all the
alternative defendants without prejudice. It declared that plaintiff was entitled to damages, but it had to dismiss the complaint
because of the pendency of Civil Case Nos. 92-699 and 92-1265.9
However, the RTC resolved to deny the motion of petitioner prompting it to appeal to the Court of Appeals. Angel Miranda also
appealed the decision, which was docketed as CA-G.R. CV No. 45567.
Meantime, on September 22, 1994, the RTC rendered judgment in Civil Case No. 92-699 in favor of Angel and declared the
contract of lease purportedly executed by him and EMECO void.
In its Brief as appellant in CA-G.R. CV No. 45567, petitioner alleged that:
Page 31 of 46 TORTS MEETING 7
THE LOWER COURT GRIEVOUSLY ERRED IN FAILING TO AWARD DAMAGES IN FAVOR OF PLAINTIFF BY
DISMISSING THE CASE DESPITE ITS CLEAR FACTUAL FINDINGS THAT THE LATTER IS ENTITLED TO
DAMAGES PRAYED FOR IN THE COMPLAINT.
I THE DISMISSAL OF THE COMPLAINT ON THE GROUND OF "LITIS PENDENTIA" IS DEVOID OF ANY
FACTUAL AND LEGAL BASIS.
II IN THE SAME VEIN, THE AWARD OF DAMAGES IN THE PRESENT CASE WOULD NOT PRE-EMPT ANY
DECISION THAT MIGHT BE RENDERED IN THE "PENDING CASES."10
It maintained that the trial court erred in dismissing its complaint on the ground of litis pendentia and in not ordering Angel
Miranda to reimburse the P360,000.00 it had paid as rentals for the property.
For his part, Angel averred that the trial court should have dismissed the complaint against him with prejudice for the reason that
there is no allegation in the complaint that he participated, directly or indirectly, in the forcible ejectment of petitioner from the
property, and in the looting and taking of its properties.11 He insisted that it was Florenda who forcibly evicted the corporation
and took its properties. Thus, he cannot be held responsible for the tortious and wrongful acts of third persons, as there is no law
to that effect. Under Article 1664 of the New Civil Code, he is not obliged to answer for a mere act of trespass, and the lessee
has a direct action against the intruder. He pointed out that the law unconditionally and unequivocally absolves the lessor from
any liability arising from an act of trespass by a third person. The duty to maintain the lessee in the peaceful and adequate
enjoyment of the lease for the duration of the contract is merely a warranty by the lessor that the lessee shall not be disturbed in
his legal, not physical, possession.
On October 29, 2002, the CA rendered judgment reversing the decision of the RTC. The fallo reads:
WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE and a new one entered dismissing the
complaint with prejudice against Angel Miranda and ordering Florenda Miranda to pay G.Q. Garments, Inc. the amount of:
1. P300,000.00 as and for nominal damages;
2. P200,000.00 as and for attorney's fees; and
3. To pay the costs of suit.
SO ORDERED.12
The appellate court absolved Angel of any liability due to the absence of evidence showing that he had participated, directly or
indirectly, in the looting of GQ Garment's properties and in forcibly ejecting the latter from the premises in question. While
under Article 1654, paragraph 3, of the New Civil Code, a lessor is obliged to maintain the lessee in peaceful and adequate
enjoyment of the lease for the entire duration of the contract, the law, however, does not apply to him since the unlawful acts
were caused by a third person or an intruder. Under Article 1664, he is not obliged to answer for a mere act of trespass which a
third person may cause on the use of the thing leased, but the lessee shall have a direct action against the intruder.
Moreover, the appellate court declared that the warranty of a lessor under Article 1654 of the New Civil Code extends only to
non-disturbance of legal possession and not of physical possession. As ruled in the case of Bohol, Sr. v. Torres,13 "the duty to
maintain the lessee in the peaceful and adequate enjoyment of the lease for the duration of the contract is merely a warranty that
the lessee shall not be disturbed in his legal, not physical possession." According to the CA, the evidence on record clearly
showed that Florenda disturbed only the physical possession of the leased premises, and not legal possession. Thus, the
complaint with respect to Angel Miranda should be dismissed with prejudice for lack of cause of action. 14
Petitioner moved to have the decision reconsidered on the following grounds:
 I THE HONORABLE COURT ERRONEOUSLY HELD THAT THE LOSS OF THE ARTICLES VALUED
AT P9,960,000.00 WAS NOT PROVED BY EVIDENCE.
II THE HONORABLE COURT ERRED IN NOT FINDING DEFENDANT-APPELLANT ANGEL MIRANDA LIABLE
TO HEREIN PLAINTIFF-APPELLANT.15
Petitioner filed a motion for the reconsideration of the decision,16 claiming that it adduced proof that it sustained actual damages.
It claimed that Angel was liable for damages against it for disturbance in law. It was not just "a mere act of trespass," since
Florenda claimed to have a prior contract of lease with Angel and by virtue of a supposedly legal judicial order, Florenda
questioned its (GQ Garment's) right to enjoy the property and deprived it of possession thereof. Besides, Angel filed an
ejectment suit and an action for the nullity of the contract of lease against Florenda only after it was dispossessed of the subject
property.17
Petitioner averred that Angel was liable for damages under Article 1654(3) of the New Civil Code, under which, as lessor, he
was obliged "to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract." It
likewise cited De la Cruz vs. Seminary of Manila18 where it was ruled that in case of legal disturbance, the lessor is liable for
whatever the lessee has lost by virtue of the breach of the contract and that it is the duty of the lessor to place the lessee in legal
possession of the premises and to maintain him in the peaceful possession of the property during the lifetime of the lease. It
insisted that the lessor who fails in the performance of such obligation must indemnify the lessee for the damages occasioned
thereby, the true measure of damages being the actual loss to the lessee arising from the breach of the contract on the part of the
lessor.
Petitioner averred that it complied fully with its contract of lease and had paid Angel two (2) months deposit in the amount
of P60,000.00; one (1) month advance rental of P30,000.00 and nine (9) months advance deposit in the amount of P270,000.00
or the total sum of P360,000.00.
On cross-examination, Angel admitted that he received P360,000.00 from petitioner. The plaintiff asserted that, in the interest of
justice and fairness, the trial court should order the defendant to reimburse the actual damages it suffered and return the amounts
of rentals and deposits received, considering that it failed to "enjoy" the leased premises. To rule otherwise, according to GQ
Garments, would be to sanction the unjust enrichment of one at the expense of another. 19
The CA denied the motion.
Petitioner filed the instant petition for review on certiorari on the following issues:
I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED A MANIFEST ERROR IN
AWARDING DAMAGES TO THE PETITIONER WAY BELOW THAT PRAYED FOR IN THE COMPLAINT, THUS,
TOTALLY DISREGARDING THE EVIDENCE ON RECORD.
II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT
RESPONDENT ANGEL MIRANDA SHOULD LIKEWISE BE HELD LIABLE FOR DAMAGES TO THE
PETITIONER.20
Petitioner asserts that it adduced preponderant evidence that it sustained actual damages when its equipment and machineries
were destroyed, and that such damaged property is valued at P10,000,000.00. It points out that aside from respondent Florenda
Miranda's testimony, it also adduced in evidence photographs of the damaged property. Respondent Angel Miranda failed to
adduce any evidence to rebut the same. Petitioner also avers that the damages it suffered was not merely an act of trespass but a
disturbance in law for which respondent Angel Miranda is liable. He violated its right, as lessee; hence, he is liable for damages
under Article 1654(3) of the New Civil Code. To buttress its claim, petitioner cites the ruling of this Court in De la Cruz vs.
Seminary of Manila.21 It insists that respondent Angel Miranda should pay actual damages of P10,000,000.00 and P360,000.00 it
had paid to him by way of reimbursement, and prays that the Court render judgment as follows:
Page 32 of 46 TORTS MEETING 7
1. Respondents Florenda Miranda and Angel Miranda to pay petitioner, jointly and severally, actual damages in the sum
of P10,000,000.00;
2. Respondent Florenda Miranda to pay petitioner exemplary damages in the amount to be determined by the Honorable
Court;
3. Respondent Angel Miranda to reimburse petitioner the amount of P360,000.00 plus interest at 12% per annum from the
time the complaint was filed until the same is fully paid;
4. Respondent Angel Miranda to pay petitioner moral, exemplary, temperate and nominal damages for breach of his
warranty in the Contract of Lease;
5. Respondents to pay attorney's fees and the costs of suit.
Other reliefs just and equitable under the premises are likewise prayed for. 22
Respondents did not file any comment on the petition, and were thus considered to have waived their right to do so.
The issues are the following: (1) whether respondents are liable to petitioner for the amount of P10,000,000.00 by way of actual
damages; (2) whether respondent Angel Miranda is liable to reimburse to petitioner the P360,000.00 paid as rentals.
Petitioner asserts that the P10,000,000.00 in actual damages was specifically alleged in its complaint and that evidence was
adduced to prove the same, consisting of the testimonies of respondent Florenda Miranda and her witnesses to determine the
extent of petitioner's damages.
We agree with the ruling of the appellate court that petitioner's claim for actual damages was not properly substantiated by
evidence. The CA correctly ruled as follows:
Considering the above provisions of the law, there is no question that defendant-appellee Florenda Miranda and/or EMECO
should be held accountable for the damage sustained by plaintiff-appellant due to their willful and wanton disregard of the
lease rights of plaintiff-appellant over the property in question. However, we find that the alleged loss of articles, machinery
and equipment in the total sum of P9,960,000.00 was not proven by clear and convincing evidence. Other than the bare
testimony of Mr. Wilson Kho and the witnesses he presented, there was no poof as to the existence of these items prior to
the taking over of Florenda over the property in question. The listing of lost items contained in plaintiff-appellant's Exhibits
"I" and "I-1" is self-serving considering that no inventory was made on the said items prior to its delivery to the
premisesin question and that no receipt or proof of acquisition of these listed items were presented during the trial of the
case.23
Under Article 2199 of the New Civil Code, actual damages include all the natural and probable consequences of the act or
omission complained of, classified as one (1) for the loss of what a person already possesses (daño emergente) and the other, for
the failure to receive, as a benefit, that which would have pertained to him (lucro cesante). As expostulated by the Court:
Under Article 2199 of the Civil Code, actual or compensatory damages are those awarded in satisfaction of, or in
recompense for, loss or injury sustained. They proceed from a sense of natural justice and are designed to repair the wrong
that has been done, to compensate for the injury inflicted and not to impose a penalty. In actions based on torts or quasi-
delicts, actual damages include all the natural and probable consequences of the act or omission complained of. There are
two kinds of actual or compensatory damages: one is the loss of what a person already possesses, (daño emergente), and the
other is the failure to receive as a benefit that which would have pertained to him (lucro cesante) (citations omitted).24
The burden of proof is on the party who will be defeated if no evidence is presented on either side. His burden is to establish his
case by preponderance of evidence which means that the evidence, as whole, adduced by one side, is superior to that of the other.
Actual damages are not presumed. The claimant must prove the actual amount of loss with a reasonable degree of certainty No other proof was adduced to establish the value or price of the equipment, machineries and valuables taken by respondent
premised upon competent proof and on the best evidence obtainable. He must point out specific facts that could afford a basis for Florenda Miranda, as well as the damage to petitioner's building. The bare claim of Kho that the petitioner sustained actual
measuring whatever compensatory or actual damages are borne. Actual damages cannot be anchored on mere surmises, damages in the amount of P10,000,000.00 is utterly insufficient on which to anchor a judgment for actual damages in the amount
speculations or conjectures. As the Court declared: of P10,000,000.00; it is speculative and merely a surmise.

As stated at the outset, to enable an injured party to recover actual or compensatory damages, he is required to prove the The Court notes that respondent Florenda Miranda admitted, when she testified, that she and her cohorts caused the damages to
actual amount of loss with reasonable degree of certainty premised upon competent proof and on the best evidence available. the property of the petitioner:
The burden of proof is on the party who would be defeated if no evidence would be presented on either side. He must
establish his case by a preponderance of evidence which means that the evidence, as a whole, adduced by one side is
ATTY. QUIJANO:
superior to that of the other. In other words, damages cannot be presumed and courts, in making an award must point out
Q When you went to the premises in question, you found out that there were already some construction going on?
specific facts that could afford a basis for measuring whatever compensatory or actual damages are borne. 25
MS. MIRANDA:
A Construction? Not construction but there [were] some machineries inside but not installed.
The claimants are not, however, mandated to prove damages in any specific or certain amount in order to recover damages for a xxx xxx xxx
substantial amount.26 When the existence of a loss is established, absolute certainty as to its amount is not required.27 The amount Q There [were] purlins and trusses already in the …?
of the damages should be determined with reasonable certainty. The law does not require that the amount fixed be absolute or A No, in the latter part only.
beyond conjectural possibilities. The ascertainment of the amount of damages should be by the plainest, easiest and most xxx xxx xxx
accurate measure which will do justice in the premises.28 Q You said that you did not throw their equipment but just pulled it out and transferred it to another lot. How long did it take
you to transfer that?
A The first one it took us one day to be able to pull out or get outside, I think six or nine machineries and then it was
The Court further declared that "where goods are destroyed by the wrongful acts of the defendant, the plaintiff is entitled to their
stopped.
value at the time of the destruction, that is normally, the sum of money which he would have to pay in the market for identical or
Q How did you bring it out?
essentially similar good plus, in a proper case, damages for the loss of the use during the period before replacement. 29
A By means of forklift.
Q So, you hired a forklift?
To be entitled to an award of actual damages, it is necessary to prove the precise amount of the loss with a reasonable degree of A Yes, Sir.
certainty, premised upon competent proof and on the best evidence obtainable by the injured party to justify such award. 30 The xxx xxx xxx
award of actual damages cannot be simply based on the mere allegation of a witness without any tangible claim, such as receipts Q Are all the machineries pulled out?
or other documentary proofs to support such claim.31 Failing to satisfy the court that petitioner certainly suffered actual damages, A On the first time, it wasn't because it was stopped x x x so it took us another, I think a month or weeks also before we
its claim must now fail. could hire another trucking firm.
Q You mean this truck was hired by Mr. Kho and not by you?
A No, by me.
In this case, there is no question that, indeed, petitioner sustained damages because its equipment, machineries, and other xxx xxx xxx
valuables were taken, and its building was destroyed by respondent Florenda Miranda and her cohorts. Respondent Angel Q So, you hired this truck to pull all these machineries out?
Miranda did not cause the damages sustained by petitioner's property. However, the only evidence adduced by the petitioner to A Yes. x x x (TSN dated 11 June 1993, pp. 20-23 before the RTC, Cavite, emphasis ours)33
prove the value of said property is the testimony of Kho, viz.:

With this admission, Florenda Miranda is clearly liable for damages to the equipment, machineries and building of petitioner.
ATTY. QUIJANO:
Q You said defendant Miranda looted all your items, machinery and other valuables inside the premises, do you have a list
of those which you claimed to [have] been lost and stolen from the premises? We agree with the ruling of the CA that respondent Angel Miranda is not liable for damages caused to petitioner's property.
MR. KHO: Article 1654 of the New Civil Code reads:
A We have a partial list of the equipment and materials lost.
ATTY. QUIJANO:
Art. 1654. The lessor is obliged:
May we request that the list be marked as Exhibits I and I-1, respectively.
WITNESS:
The first page represents the items lost on January 27 and the second page, items lost in the middle of March up the (sic) of (1) To deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended;
June.
COURT:
(2) To make on the same during the lease all the necessary repairs in order to keep it suitable for the use to which it has been
Mark it. x x x .
devoted, unless there is a stipulation to the contrary;
xxx xxx xxx
Q Considering that you have been forcibly evicted from the premises, what did you do?
A We seek (sic) the services of M .R. Pamaran Law Office. (3) To maintain the less in the peaceful and adequate enjoyment of the lease for the entire duration of the contract.
Q And do you have any arrangement with said office?
A The agreement is P200,000.00 plus P2,000.00 per appearance, damaged equipment and loss is P10,000,000.00 and the
actual items lost is more than P10,000,000.00 plus construction materials, P11,000,000.00. Under the provision, a lessor is obliged to maintain petitioner's peaceful and adequate enjoyment of the premises for the entire
duration of the lease. In case of noncompliance with these obligations, the lessee may ask for the rescission of the lease contract
COURT:
Q The actual damage is P10,000,000.00? and indemnification for damages or only the latter, allowing the contract to remain in force.34
A P10,000,000.00, including the building x x x.
(TSN dated 10 July 1992, pp. 26-28, bold ours)32

Page 33 of 46 TORTS MEETING 7

The trespass referred to in Article 1654, paragraph 3, of the New Civil Code, is legal trespass or perturbacion de mero derecho.
The lessor is not liable for the mere fact of a trespass or trespass in fact (perturbacion de mero hecho) made by a third person of
the leased property. The lessee shall have a direct action against the trespasser and not against the lessor. As explained by the
Court, if the act of trespass is not accompanied or preceded by anything which reveals a really juridic intention on the part of the
trespasser, in such wise that the lessee can only distinguish the material fact, such a trespass is merely a trespass in fact.35

The duty of the lessor to maintain the lessee in the peaceful and adequate enjoyment of the leased property for the entire duration
of the contract is merely a warranty that the lessee shall not be disturbed in having legal and not physical possession of the
property.36

In this case, the trespass perpetrated by respondent Florenda Miranda and her confederates was merely trespass in fact. They
forcibly entered the property and caused damage to the equipment and building of petitioner, because the latter refused to enter
into a contract of lease with EMECO over the property upon respondent Florenda Miranda's failure to present respondent Angel
Miranda to sign the contract of lease. It turned out that respondent Florenda Miranda attempted to hoodwink petitioner and
forged respondent Angel Miranda's signature on the contract of lease she showed to petitioner. It appears that respondent
Florenda Miranda tried to coerce the petitioner into executing a contract of lease with EMECO over the property, only to be
rebuffed by the petitioner.

Petitioner cannot rely on the ruling of this Court in De la Cruz v. Seminary of Manila,37 because, in this case, respondent Angel
Miranda had the legal power to place petitioner in the peaceful possession of the property upon the execution of the contract of
lease between him and petitioner; in fact, actual possession of the property was placed in the hands of petitioner, enabling it to
start the construction of its factory.

It bears stressing that respondent Angel Miranda was not content in adopting a mere passive stance in the face of respondent
Florenda Miranda's act of trespass. He and the petitioner filed a case for forcible entry against Florenda Miranda; he also
succeeded in having the RTC, in Civil Case No. 92-699, declare the contract of lease which respondent Florenda Miranda
showed petitioner as null and void, with the court's ruling that his signature on the contract was a forgery.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. Cost against the petitioner.

ORDERED.

Page 34 of 46 TORTS MEETING 7

TORTS 79 meter and bring it to their laboratory for verification/confirmation of their findings. In the event the meter turned out to be
tampered, defendant-appellant had to temporarily disconnect the electric services of plaintiffs-appellees. The laboratory
testing conducted on the meter has the following findings to wit:
G.R. No. 142943 April 3, 2002

'1. Terminal seal was missing.

Spouses ANTONIO and LORNA QUISUMBING, petitioners,
vs.
MANILA ELECTRIC COMPANY (MERALCO), respondent. '2. Lead cover seals ('90 ERB 1-Meralco 21) were tampered by forcibly pulling out from the sealing wire.

PANGANIBAN, J.:
Under the law, the Manila Electric Company (Meralco) may immediately disconnect electric service on the ground of alleged
meter tampering, but only if the discovery of the cause is personally witnessed and attested to by an officer of the law or by a
duly authorized representative of the Energy Regulatory Board.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the February 1, 2000 Decision 1 and the April
10, 2000 Resolution2 of the Court of Appeals (CA) in CA-GR SP No. 49022. The decretal portion of the said Decision reads as
follows:
"WHEREFORE, the challenged decision in Civil Case No. Q-95-23219 is hereby SET ASIDE and the complaint against
defendant-appellant MERALCO is hereby DISMISSED. Plaintiffs-appellees are hereby ORDERED to pay defendant-
appellant MERALCO the differential billing of ₱193,332.00 representing the value of used but unregistered electrical
consumption."3
The assailed Resolution denied petitioner's Motion for Reconsideration.
'3. The 1000th, 100th and 10th dial pointers of the register were found out of alignment and with circular
scratches at the face of the register which indicates that the meter had been opened to manipulate the said
dial pointers and set manually to the desired reading. In addition to this, the meter terminal blades were
found full of scratches.'
"After an hour, defendant-appellant's head inspector, E. Orlina returned to the residence of plaintiffs-appellees and informed
them that the meter had been tampered and unless they pay the amount of ₱178,875.01 representing the differential billing,
their electric supply would be disconnected. Orlina informed plaintiffs-appellees that they were just following their standard
operating procedure. Plaintiffs-appellees were further advised that questions relative to the results of the inspection as well
as the disconnection of her electrical services for Violation of Contract (VOC) may be settled with Mr. M. Manuson of the
Special Accounts, Legal Service Department. However, on the same day at around 2:00 o'clock in the afternoon defendant-
appellant's officer through a two-way radio instructed its service inspector headed by Mr. Orlino to reconnect plaintiffs-
appellees' electric service which the latter faithfully complied.
"On March 6, 1995, plaintiffs-appellees filed a complaint for damages with prayer for the issuance of a writ of preliminary
mandatory injunction, despite the immediate reconnection, to order defendant-appellant to furnish electricity to the
plaintiffs-appellees alleging that defendant-appellant acted with wanton, capricious, malicious and malevolent manner in
disconnecting their power supply which was done without due process, and without due regard for their rights, feelings,
peace of mind, social and business reputation.

"In its Answer, defendant-appellant admitted disconnecting the electric service at the plaintiffs-appellees' house but denied
The Facts liability citing the 'Terms and Conditions of Service,' and Republic Act No. 7832 otherwise known a 'Anti-Electricity and
Electric Transmission Lines/Materials Pilferage Act of 1994.'
The facts of the case are summarized by the Court of Appeals in this wise:
"After trial on the merits, the lower court rendered judgment, ruling in favor of plaintiffs-appellees."4 (Citations omitted)
"Defendant-appellant Manila Electric Company (MERALCO) is a private corporation, authorized by law to charge all
persons, including the government, for the consumption of electric power at rates duly authorized and approved by the
Ruling of the Trial Court
Board of Energy (now the Energy Regulatory Board).

The trial court held that Meralco (herein respondent) should have given the Quisumbing spouses (herein petitioners) ample
"Plaintiffs-appellees Spouses Antonio and Lorna Quisumbing are owners of a house and lot located at No. 94 opportunity to dispute the alleged meter tampering.
Greenmeadows Avenue, Quezon City, which they bought on April 7, 1994 from Ms. Carmina Serapio Santos. They alleged
to be business entrepreneurs engaged in the export of furnitures under the business name 'Loran Industries' and recipient of
the 1993 Agora Award and 1994 Golden Shell Award. Mrs. Quisumbing is a member of the Innerwheel Club while Mr. It held that respondent had acted summarily and without procedural due process in immediately disconnecting the electric
Quisumbing is a member of the Rotary Club, Chairman of Cebu Chamber of Commerce, and Director of Chamber of service of petitioners. Respondent's action, ruled the RTC, constituted a quasi delict.
Furniture.
Ruling of the Court of Appeals
"On March 3, 1995 at around 9:00 a.m., defendant-appellant's inspectors headed by Emmanuel C. Orlino were assigned to
conduct a routine-on-the-spot inspection of all single phase meters at Greenmeadows Avenue. House no. 94 of Block 8, Lot
The Court of Appeals overturned the trial court's ruling and dismissed the Complaint. It held that respondent's representatives
19 Greenmeadows Avenue owned by plaintiffs-appellees was inspected after observing a standard operating procedure of
had acted in good faith when they disconnected petitioners' electric service. Citing testimonial and documentary evidence, it
asking permission from plaintiffs-appellees, through their secretary which was granted. The secretary witnessed the
ruled that the disconnection was made only after observing due process. Further, it noted that petitioners had not been able to
inspection. After the inspection, defendant-appellant's inspectors discovered that the terminal seal of the meter was missing;
prove their claim for damages. The appellate court likewise upheld respondent's counterclaim for the billing differential in the
the meter cover seal was deformed; the meter dials of the meter was mis-aligned and there were scratches on the meter base
amount of ₱193,3325 representing the value of petitioners' used but unregistered electrical consumption, which had been
plate. Defendant-appellant's inspectors relayed the matter to plaintiffs-appellees' secretary, who in turn relayed the same to
established without being controverted.
plaintiff-appellee, Lorna Quisumbing, who was outraged of the result of the inspection and denied liability as to the
tampering of the meter. Plaintiffs-appellees were advised by defendant-appellant's inspectors that they had to detach the

Page 35 of 46 TORTS MEETING 7

Hence, this Petition.6 (a) The presence of any of the following circumstances shall constitute prima facie evidence of illegal use of electricity, as
defined in this Act, by the person benefitted thereby, and shall be the basis for: (1) the immediate disconnection by the
electric utility to such person after due notice, x x x
The Issues

xxx xxx xxx

In their Memorandum,7 petitioners submit the following issues for our consideration:

(viii) x x x Provided, however, That the discovery of any of the foregoing circumstances, in order to constitute prima
"4.1 Whether a prima facie presumption of tampering of electrical meter enumerated under Sec. 4 (a) iv of RA 7832 (Anti-
facie evidence, must be personally witnessed and attested to by an officer of the law or a duly authorized representative of
Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994) may be had despite the absence of an ERB
the Energy Regulatory Board (ERB)."9 (Italics supplied)
representative or an officer of the law?

Under the above provision, the prima facie presumption that will authorize immediate disconnection will arise only upon the
"4.2 Whether the enumeration of instances to establish a prima facie presumption of tampering of electrical meter
satisfaction of certain requisites. One of these requisites is the personal witnessing and attestation by an officer of the law or by
enumerated under Sec. 4 (a) iv of RA 7832 (Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of
an authorized ERB representative when the discovery was made.
1994) is exclusive?

As a rule, this Court reviews only questions of law, not of facts. However, it may pass upon the evidence when the factual
"4.3 What constitutes notice prior to disconnection of electricity service? Corollarily, whether the definition of notice under
findings of the trial court are different from those of the Court of Appeals, as in this case. 10
Meralco v. Court of Appeals (157 SCRA 243) applies to the case at bar?

A careful review of the evidence on record negates the appellate court's holding that "the actions of defendant-appellant's service
"4.4 Whether a prima facie presumption may contradict logic?
inspectors were all in accord with the requirement of the law."11

"4.5 Whether documentary proof is pre-requisite for award of damages?"8

Respondent's own witnesses provided the evidence on who were actually present when the inspection was made. Emmanuel C.
Orlino, the head of the Meralco team, testified:
In sum, this Petition raises three (3) main issues which this Court will address: (1) whether respondent observed the requisites of
law when it disconnected the electrical supply of petitioners, (2) whether such disconnection entitled petitioners to damages, and
"Q When you were conducting this inspection, and you discovered these findings you testified earlier, who was present?
(3) whether petitioners are liable for the billing differential computed by respondent.
A The secretary, sir."12
"ATTY. REYES - Who else were the members of your team that conducted this inspection at Greenmeadows Avenue on
The Court's Ruling that day, March 3, 1995?
A The composition of the team, sir?
Q Yes.
The Petition is partly meritorious. A Including me, we are about four (4) inspectors, sir.
Q You were four (4)?
First Issue: A Yes, sir.
Q Who is the head of this team?
A I was the head of the team, sir."13
Compliance with Requisites of Law

Further, Catalino A. Macaraig, the area head of the Orlino team, stated that only Meralco personnel had been present during the
Petitioners contend that the immediate disconnection of electrical service was not validly effected because of respondent's inspection:
noncompliance with the relevant provisions of RA 7832, the "Anti-Electricity and Electric Transmission Lines/Materials
Pilferage Act of 1994." They insist that the immediate disconnection of electrical supply may only be validly effected only when
there is prima facie evidence of its illegal use. To constitute prima facie evidence, the discovery of the illegal use must be "Q By the way you were not there at Green Meadows on that day, right?
"personally witnessed and attested to by an officer of the law or a duly authorized representative of the Energy Regulatory Board A Yes, sir.
(ERB)." Q Only Mr. Orlino and who else were there?
A Two or three of his men.
Q All members of the inspection team?
Respondent, on the other hand, points out that the issue raised by petitioners is a question of fact which this Court cannot pass A Yes, sir."14
upon. It argues further that this issue, which was not raised in the court below, can no longer be taken up for the first time on
appeal. Assuming arguendo that the issue was raised below, it also contends that petitioners were not able to specifically prove
the absence of an officer of the law or a duly authorized representative of the ERB when the discovery was made.1âwphi1.nêt These testimonies clearly show that at the time the alleged meter tampering was discovered, only the Meralco inspection team
and petitioners' secretary were present. Plainly, there was no officer of the law or ERB representative at that time. Because of the
absence of government representatives, the prima facie authority to disconnect, granted to Meralco by RA 7832, cannot apply.
Prima facie Evidence of Illegal Use of Electricity

Neither can respondent find solace in the fact that petitioners' secretary was present at the time the inspection was made. The law
We agree with petitioners. Section 4 of RA 7832 states: clearly states that for the prima facie evidence to apply, the discovery "must be personally witnessed and attested to by an officer
of the law or a duly authorized representative of the Energy Regulatory Board (ERB)." 15 Had the law intended the presence of

Page 36 of 46 TORTS MEETING 7

the owner or his/her representative to suffice, then it should have said so. Embedded in our jurisprudence is the rule that courts
may not construe a statute that is free from doubt.16 Where the law is clear and unambiguous, it must be taken to mean exactly
what it says, and courts have no choice but to see to it that the mandate is obeyed. 17
In fact, during the Senate deliberations on RA 7832, Senator John H. Osmeña, its author, stressed the need for the presence of
government officers during inspections of electric meters. He said:
"Mr. President, if a utility like MERALCO finds certain circumstances or situations which are listed in Section 2 of this bill
to be prima facie evidence, I think they should be prudent enough to bring in competent authority, either the police or the
NBI, to verify or substantiate their finding. If they were to summarily proceed to disconnect on the basis of their findings
and later on there would be a court case and the customer or the user would deny the existence of what is listed in Section 2,
then they could be in a lot of trouble."18 (Italics supplied)
Neither can we accept respondent's argument that when the alleged tampered meter was brought to Meralco's laboratory for
testing, there was already an ERB representative present.
The law says that before immediate disconnection may be allowed, the discovery of the illegal use of electricity must have been
personally witnessed and attested to by an officer of the law or by an authorized ERB representative. In this case, the
disconnection was effected immediately after the discovery of the alleged meter tampering, which was witnessed only by
Meralco's employees. That the ERB representative was allegedly present when the meter was examined in the Meralco
laboratory will not cure the defect.
It is undisputed that after members of the Meralco team conducted their inspection and found alleged meter tampering, they
immediately disconnected petitioners' electrical supply. Again, this verity is culled from the testimony of Meralco's Orlina:
"A When she went inside then she came out together with Mrs. Lourdes Quis[u]mbing at that time. We did tell our
findings regarding the meter and the consequence with it. And she was very angry with me.
Q When you say consequence of your findings, what exactly did you tell Mrs. Quisumbing?
A We told her that the service will be temporarily disconnected and that we are referring to our Legal Department so
could know the violation, sir."19
"A Yes, sir. At that time, I referred her to Mr. Macaraig, sir.
Q What is the fist name of this supervisor?
A Mr. Catalino Macara[i]g, sir.
Q Then after talking to Mr. Catalino Macara[i]g, this is over the telephone, what happened?
A The supervisor advised her that the service will be temporarily disconnected and she has to go to our Legal
Department where she could settle the VOC, sir.
Q You are talking of 'VOC,' what is this all about Mr. Orlino?
A 'VOC' is violation of contract, sir."20
As to respondent's argument that the presence of an authorized ERB representative had not been raised below, it is clear,
however, that the issue of due process was brought up by petitioners as a valid issue in the CA. The presence of government
agents who may authorize immediate disconnections go into the essence of due process. Indeed, we cannot allow respondent to
act virtually as prosecutor and judge in imposing the penalty of disconnection due to alleged meter tampering. That would not sit
well in a democratic country. After all, Meralco is a monopoly that derives its power from the government. Clothing it with
unilateral authority to disconnect would be equivalent to giving it a license to tyrannize its hapless customers.
Besides, even if not specifically raised, this Court has already ruled that "[w]here the issues already raised also rest on other
issues not specifically presented, as long as the latter issues bear relevance and close relation to the former and as long as they
arise from matters on record, the Court has the authority to include them in its discussion of the controversy as well as to pass
upon them."21
Contractual Right to Disconnect
Electrical Service
Page 37 of 46 TORTS MEETING 7
Neither may respondent rely on its alleged contractual right to disconnect electrical service based on Exhibits "10"22 and
"11,"23 or on Decisions of the Board of Energy (now the Energy Regulatory Board). The relevant portion of these documents
concerns discontinuance of service. It provides:
"The Company reserves the right to discontinue service in case the Customer is in arrears in the payment of bills or for
failure to pay the adjusted bills in those cases where the meter stopped or failed to register the correct amount of energy
consumed, or for failure to comply with any of these terms and conditions, or in case of or to prevent fraud upon the
Company. Before disconnection is made in case of or to prevent fraud, the Company may adjust the bill of said Customer
accordingly and if the adjusted bill is not paid, the Company may disconnect the same. In case of disconnection, the
provisions of Revised Order No. 1 of the former Public Service Commission (now the Board of Energy) shall be observed.
Any such suspension of service shall not terminate the contract between the Company and the Customer." 24
Petitioners' situation can fall under disconnection only "in case of or to prevent fraud upon the Company." However, this too has
requisites before a disconnection may be made. An adjusted bill shall be prepared, and only upon failure to pay it may the
company discontinue service. This is also true in regard to the provisions of Revised Order No. 1 of the former Public Service
Commission, which requires a 48-hour written notice before a disconnection may be justified. In the instant case, these requisites
were obviously not complied with.
Second Issue
Damages
Having ruled that the immediate disconnection effected by Meralco lacks legal, factual or contractual basis, we will now pass
upon on the right of petitioners to recover damages for the improper disconnection.
Petitioners are asking for the reinstatement of the RTC Decision, which awarded them actual, moral and exemplary damages as
well as attorney's fees. All these were overturned by the CA.
As to actual damages, we agree with the CA that competent proof is necessary before our award may be made. The appellate
court ruled as follows:
"Considering further, it is a settled rule that in order for damages to be recovered, the best evidence obtainable by the injured
party must be presented. Actual and compensatory damages cannot be presumed but must be duly proved and proved with
reasonable degree and certainty. A court cannot rely on speculation, conjecture or guess work as to the fact and amount of
damages, but must depend upon competent proof that they have been suffered and on evidence of actual amount thereof. If
the proof is flimsy and unsubstantial, no damages will be awarded."25
Actual damages are compensation for an injury that will put the injured party in the position where it was before it was
injured.26 They pertain to such injuries or losses that are actually sustained and susceptible of measurement. 27 Except as provided
by law or by stipulation, a party is entitled to an adequate compensation only for such pecuniary loss as it has duly proven. 28
Basic is the rule that to recover actual damages, not only must the amount of loss be capable of proof; it must also be actually
proven with a reasonable degree of certainty, premised upon competent proof or the best evidence obtainable. 29
Petitioners' claim for actual damages was premised only upon Lorna Quisumbing's bare testimony as follows:
"A Actually that da[y] I was really scheduled to go to that furniture exhibit. That furniture exhibit is only once a year.
Q What is this furniture exhibit?
A The SITEM, that is a government agency that takes care of exporters and exclusive marketing of our products around
the world. We always have that once a year and that's the time when all our buyers are here for us to show what we had that
was exhibited to go around. So, my husband had to [fly] from Cebu to Manila just for this occasion. So we have an
appointment with our people and our buyers with SITEM and also that evening we will have to treat them [to] dinner.
 Q Whereat? To reiterate, respondent had no legal right to immediately disconnect petitioners' electrical supply without observing the
A At our residence, we were supposed to have a dinner at our residence. requisites of law which, in turn, are akin to due process. Had respondent been more circumspect and prudent, petitioners could
Q What happened to this occasion? have been given the opportunity to controvert the initial finding of alleged meter tampering. Said the RTC:
A So when they disconnected our electric power we had to get in touch with them and change the venue.
Q Which venue did you transfer your dinner for your buyers?
"More seriously, the action of the defendant in maliciously disconnecting the electric service constitutes a breach of public
A We brought them in a restaurant in Makati at Season's Restaurant. But it was very embar[r]assing for us because we
policy. For public utilities, broad as their powers are, have a clear duty to see to it that they do not violate nor transgress the
faxed them ahead of time before they came to Manila.
rights of the consumers. Any act on their part that militates against the ordinary norms of justice and fair play is considered
Q Now as a result of this change of your schedule because of the disconnection of the electric power on that day, Friday,
an infraction that gives rise to an action for damages. Such is the case at bar."39
what damage did you suffer?
A I cancelled the catering service and that is so much of a h[a]ssle it was so embarras[s]ing for us.
Q Can you tell us how much amount? Indeed, the Supreme Court has ruled in Meralco v. CA40 that respondent is required to give notice of disconnection to an alleged
A Approximately ₱50,000.00."30 delinquent customer. The Court said:

No other evidence has been proffered to substantiate her bare statements. She has not shown how she arrived at the amount of "x x x One can not deny the vital role which a public utility such as MERALCO, having a monopoly of the supply of
₱50,000; it is, at best, speculative. Her self-serving testimonial evidence, if it may be called such, is insufficient to support electrical power in Metro Manila and some nearby municipalities, plays in the life of people living in such areas. Electricity
alleged actual damages. has become a necessity to most people in these areas, justifying the exercise by the State of its regulatory power over the
business of supplying electrical service to the public, in which petitioner MERALCO is engaged. Thus, the state may
regulate, as it has done through Section 97 of the Revised Order No. 1 of the Public Service Commission, the conditions
While respondent does not rebut this testimony on the expenses incurred by the spouses in moving the dinner out of their
under which and the manner by which a public utility such as MERALCO may effect a disconnection of service to a
residence due to the disconnection, no receipts covering such expenditures have been adduced in evidence. Neither is the
delinquent customer. Among others, a prior written notice to the customer is required before disconnection of the service.
testimony corroborated. To reiterate, actual or compensatory damages cannot be presumed, but must be duly proved with a
Failure to give such prior notice amounts to a tort."41
reasonable degree of certainty. It is dependent upon competent proof of damages that petitioners have suffered and of the actual
amount thereof.31 The award must be based on the evidence presented, not on the personal knowledge of the court; and certainly
not on flimsy, remote, speculative and unsubstantial proof.32 Consequently, we uphold the CA ruling denying the grant of actual Observance of the rights of our people is sacred in our society. We cannot allow such rights to be trifled with or trivialized.
damages. Although the Court sympathizes with respondent's efforts to stamp out the illegal use of electricity, such action must be done
only with strict observance of the rights of our people. As has been we succinctly said: "there is a right way to do the right thing
at the right time for the right reason."42
Having said that, we agree with the trial court, however, that petitioners are entitled to moral damages, albeit in a reduced
amount.
However, the amount of moral damages, which is left largely to the sound discretion of the courts, should be granted in
reasonable amounts, considering the attendant facts and circumstances. 43 Moral damages, though incapable of pecuniary
The RTC opined as follows:
estimation, are designed to compensate the claimant for actual injury suffered and not to impose a penalty. 44 Moral damages are
not intended to enrich a plaintiff at the expense of the defendant. 45 They are awarded only to obtain a means, a diversion or an
"This Court agrees with the defendant regarding [its] right by law and equity to protect itself from any fraud. However, such amusement that will serve to alleviate the moral suffering the injured party has undergone by reason of the defendant's culpable
right should not be exercised arbitrarily but with great caution and with due regard to the rights of the consumers. Meralco action.46 They must be proportionate to the suffering inflicted.47
having a virtual monopoly of the supply of electric power should refrain from taking drastic actions against the consumers
without observing due process. Even assuming that the subject meter has had history of meter tampering, defendant cannot
It is clear from the records that respondent was able to restore the electrical supply of petitioners on the same day. Verily, the
simply assume that the present occupants are the ones responsible for such tampering. Neither does it serve as a license to
inconvenience and anxiety they suffered as a result of the disconnection was thereafter corrected. Thus, we reduce the RTC's
deprive the plaintiffs of their right to due process. Defendant should have given the plaintiffs simple opportunity to dispute
grant of moral damages to the more equitable amount of ₱100,000.
the electric charges brought about by the alleged meter-tampering, which were not included in the bill rendered them.
Procedural due process requires reasonable notice to pay the bill and reasonable notice to discontinue supply. Absent due
process the defendant may be held liable for damages. While this Court is aware of the practice of unscrupulous individuals Exemplary damages, on the other hand, are imposed by way of example or correction for the public good in addition to moral,
of stealing electric curre[n]t which causes thousands if not millions of pesos in lost revenue to electric companies, this does temperate, liquidated or compensatory damages.48 It is not given to enrich one party and impoverish another, but to serve as a
not give the defendant the right to trample upon the rights of the consumers by denying them due process."33 deterrent against or as a negative incentive to socially deleterious actions.49 In this case, to serve an example -- that before a
disconnection of electrical supply can be effected by a public utility like Meralco, the requisites of law must be faithfully
complied with -- we award the amount of ₱50,000 to petitioners.
Article 2219 of the Civil Code lists the instances when moral damages may be recovered. One such case34 is when the rights of
individuals, including the right against deprivation of property without due process of law, are violated. 35
Finally, with the award of exemplary damages, the award of attorney's fees is likewise granted. 50 It is readily apparent that
petitioners needed the services of a lawyer to argue their cause, even to the extent of elevating the matter to this Court; 51 thus, an
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
award of ₱50,000 is considered sufficient.
moral shock, social humiliation, and similar injury.36 Although incapable of pecuniary computation, such damages may be
recovered if they are the proximate results of the defendant's wrongful act or omission. 37
Final Issue:
Case law establishes the following requisites for the award of moral damages: (1) there is an injury -- whether physical, mental
or psychological -- clearly sustained by the claimant; (2) there is a culpable act or omission factually established; (3) the Billing Differential
wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award of
damages is predicated on any of the cases stated in Article 2219 of the Civil Code.38

Page 38 of 46 TORTS MEETING 7

Finally, this Court holds that despite the basis for the award of damages -- the lack of due process in immediately disconnecting
petitioners' electrical supply -- respondent's counterclaim for the billing differential is still proper. We agree with the CA that
respondent should be given what it rightfully deserves. The evidence it presented, both documentary and testimonial, sufficiently
proved the amount of the differential.

Not only did respondent show how the meter examination had been conducted by its experts, but it also established the amount
of ₱193,332.96 that petitioners owed respondent. The procedure through which this amount was arrived at was testified to by
Meralco's Senior Billing Computer Enrique Katipunan. His testimony was corroborated by documentary evidence showing the
account's billing history and the corresponding computations. Neither do we doubt the documents of inspections and
examinations presented by respondent to prove that, indeed there had been meter tampering that resulted in unrecorded and
unpaid electrical consumption.

The mere presentation by petitioners of a Contract to Sell with Assumption of Mortgage52 does not necessarily mean that they are
no longer liable for the billing differential. There was no sufficient evidence to show that they had not been actually residing in
the house before the date of the said document. Lorna Quisumbing herself admitted 53 that they did not have any contract for
electrical service in their own name. Hence, petitioners effectively assumed the bills of the former occupants of the premises.

Finally, the CA was correct in ruling that the convincing documentary and testimonial evidence presented by respondent, was
not controverted by petitioners.1âwphi1.nêt

WHEREFORE, the Petition is hereby PARTLY GRANTED. The assailed CA Decision is MODIFIED as follows: petitioners
are ORDERED to pay respondent the billing differential of ₱193,332.96; while respondent is ordered to pay petitioners
₱100,000 as moral damages, ₱50,000 as exemplary damages, and ₱50,000 as attorney's fees. No pronouncement as to costs.

SO ORDERED.

Page 39 of 46 TORTS MEETING 7

TORTS 80
G.R. No. 129132 July 8, 1998
ISABELITA VITAL-GOZON, petitioner,
vs.
HONORABLE COURT OF APPEALS and ALEJANDRO DE LA FUENTE, respondents.
DAVIDE, JR., J.:
This is a sequel to our decision 1 of 5 August 1992 in G.R. No. 101428, entitled Isabelita Vital-Gozon v. The Honorable Court of
Appeals, et al., which held that the Court of Appeals had jurisdiction, in a special civil action for mandamus against a public
officer (docketed therein as CA-G.R. SP No. 16438 and entitled Dr. Alejandro S. de la Fuente v. Dr. Isabelita Vital-Gozon, et
al.), to take cognizance of the claim for damages against respondent public officer.
Specifically, the instant petition seeks to reverse the Resolution of 7 May 1997 2 of respondent Court of Appeals in CA-G.R. SP
No. 16438 awarding to petitioner below, now private respondent, moral and exemplary damages and attorney's fees after hearing
the evidence thereon sometime after this Court's decision in G.R. No. 101428 became final.
The factual antecedents then, as found by us in G.R. No. 101428, must be restated, thus:
In the early months of 1987 — and pursuant to Executive Order No. 119 issued on January 30, 1987 by president
Corazon C. Aquino — reorganization of the various offices of the Ministry of Health commenced; existing offices were
abolished, transfers of personnel effected.
At the time of the reorganization, Dr. Alejandro S. de la Fuente was the Chief of Clinics of the National Children's
Hospital, having been appointed to that position on December 20, 1978. Prior thereto, he occupied the post of Medical
Specialist II, a position to which he was promoted in 1977 after serving as Medical Specialist I of the same hospital for
six (6) years (since 1971).
On February 4, 1988 Dr. de la Fuente received notice from the Department of Health that he would be re-appointed
"Medical Specialist II." Considering this to be a demotion by no less than two ranks from his post as Chief of Clinics,
Dr. de la Fuente filed a protest with the DOH Reorganization Board. When his protest was ignored, he brought his case
to the Civil Service Commission where it was docketed as CSC Case No. 4. In the meantime "the duties and
responsibilities pertaining to the position of Chief of Clinics were turned over to and were allowed to be exercised by
Dr. Jose D. Merencilla, Jr."
Dr. de la Fuente's case was decided by the Civil Service Commission in a Resolution dated August 9, 1988. In that
Resolution, the Commission made the following conclusion and disposition, to wit:
. . . (The Commission) declares the demotion/transfer of appellant dela Fuente, Jr. from Chief of Clinics to Medical
Specialist II as null and void: hence, illegal. Considering further that since the National Children's Hospital was not
abolished and the positions therein remained intact although the title or the position of Chief of Clinics was
changed to "Chief of Medical professional Staff" with substantially the same functions and responsibilities, the
Commission hereby orders that:
1. Appellant dela Fuente, Jr. be retained or considered as never having relinquished his position of Chief of
Clinics (now Chief of Medical Professional Staff) without loss of seniority rights; and
Page 40 of 46 TORTS MEETING 7
2. He be paid back salaries, transportation, representation and housing allowances and such other benefits
withheld from him from the date of his illegal demotion/transfer.
No motion for reconsideration of this Resolution was ever submitted nor appeal therefrom essayed to the Supreme
Court, within the thirty-day period prescribed therefor by the Constitution. Consequently, the resolution became
final, on September 21, 1988.
De la Fuente thereupon sent two (2) letters to Dr. Vital-Gozon, the Medical Center Chief of the National Children's
Hospital, demanding implementation of the Commission's decision. Dr. Vital-Gozon referred "de la Fuente's claims to
the Department of Health Assistant Secretary for Legal Affairs for appropriate advice and/or action . . . (She did this
allegedly because, according to the Solicitor General, she was) unaware when and how a CSC Resolution becomes final
and executory, whether such Resolution had in fact become final and executory and whether the DOH Legal
Department would officially assail the mentioned Resolution." But she did not answer Dr. de la Fuente's letters, not
even to inform him of the referral thereof to the Assistant Secretary. She chose simply to await "legal guidance from the
DOH Legal Department." On the other hand, no one in the DOH Legal Department bothered to reply to Dr. de la
Fuente, or to take steps to comply or otherwise advise compliance, with the final and executory Resolution of the Civil
Service Commission. In fact, de la Fuente claims that Vital-Gozon had "actually threatened to stop paying . . . (his)
salary and allowances on the pretext that he has as yet no "approved" appointment even as "Medical Specialist II" . . .
Three months having elapsed without any word from Vital-Gozon or anyone in her behalf, or any indication whatever
that the CSC Resolution of August 9, 1988 would be obeyed, and apprehensive that the funds to cover the salaries and
allowances otherwise due him would revert to the General Fund, Dr. de la Fuente repaired to the Civil Service
Commission and asked it to enforce its judgment. He was however "told to file in court a petition for mandamus
because of the belief that the Commission had no coercive powers — unlike a court — to enforce its final
decisions/resolutions."
So he instituted in the Court of Appeals on December 28, 1988 an action of "mandamus and damages with preliminary
injunction" to compel Vital-Gozon, and the Administrative Officer, Budget Officer and Cashier of the NCH to comply
with the final and executory resolution of the Civil Service Commission. He prayed for the following specific reliefs:
(1) (That) . . . a temporary restraining order be issued immediately, ordering the principal and other
respondents to revert the funds of the NCH corresponding to the amounts necessary to implement the final
resolution of the CSC in CSC Case No. 4 in favor of herein petitioner, Dr. Alejandro S. de la Fuente, Jr., and to
pay such sums which have accrued and due and payable as of the date of said order;
(2) After hearing on the prayer for preliminary injunction, that the restraining order be converted to a writ of
preliminary injunction; and that a writ of preliminary mandatory injunction be issued ordering principal
respondent and the other respondents to implement in full the said final resolution; and
(3) That, after hearing on the merits of the petition, that judgment be rendered seeking (sic) permanent writs
issued and that principal respondent be ordered and commanded to comply with and implement the said final
resolution without further delay; and, furthermore, that the principal respondent be ordered to pay to the
petitioner the sums of P100,000.00 and P20,000.00 as moral and exemplary damages, and P10,000.00 for
litigation expenses and attorney's fees.
xxx xxx xxx
The Court of Appeals required the respondents to answer. It also issued a temporary restraining order as prayed for, and
required the respondents to show cause why it should not be converted to a writ of preliminary injunction. The record
shows that the respondents prayed for and were granted an extension of fifteen (15) days to file their answer "through
counsel, who," as the Court of Appeals was later to point out, "did not bother to indicate his address, thus notice was
sent to him through the individual respondents . . . (However, no) answer was filed; neither was there any show cause
[sic] against a writ of preliminary injunction." It was a certain Atty. Jose Fabia who appeared in Vital-Gozon's behalf.
About a month afterwards, de la Fuente filed with the same Court a "Supplemental/Amended Petition" dated February
2, 1989. The second petition described as one for "quo warranto" aside from "mandamus", added three respondents
including Dr. Jose Merencilla, Jr.; and alleged inter alia that he (de la Fuente) had "clear title" to the position in
question [by] virtue of the final and executory judgment of the Civil Service Commission; that even after the
Commission's judgment had become final and executory and been communicated to Vital-Gozon, the latter allowed
"Dr. Merencilla, Jr. as "OIC Professional Service" to further usurp, intrude into and unlawfully hold and exercise the
public office/position of petitioner (under a duly approved permanent appointment as "Chief of Clinics" since 1978). De
la Fuente thus prayed, additionally, for judgment:
(a) Declaring that principal respondent Dr. Jose D. Merencilla, Jr. is not legally entitled to the office of "Chief
of Clinics" (now retitled/known as "Chief of Medical Professional Staff," NCH), ousting him therefrom and
ordering said respondent to immediately cease and desist from further performing as "OIC Professional
Service" any and all duties and responsibilities of the said office; (and)
(b) Declaring that the petitioner, Dr. Alejandro S. de la Fuente, Jr., is the lawful or de jure Chief of Clinics
(now known as "Chief of the Medical Professional Staff" and placing him in the possession of said
office/position, without the need of reappointment or new appointment as held by the Civil Service
Commission in its resolution of August 9, 1988, in CSC Case No. 4.
xxx xxx xxx
Copy of the "Supplemental/Amended Petition" was sent to "Atty. Jose A. Favia, Counsel for Respondents c/o Dr. Ma.
Isabelita Vital-Gozon, etc., National Children's Hospital, E. Rodriguez Ave., Quezon City (Atty. Fabia's address not
being indicated or mentioned in his motion for Extension of Time)."
Again the Court of Appeals required answer of the respondents. Again, none was filed. The petitions were consequently
"resolved on the basis of their allegations and the annexes." The Appellate Court promulgated its judgment on June 9,
1989. It held that —
The question of whether petitioner may be divested of his position as Chief of Clinics by the expedient of having
him appointed to another, lower position is no longer an issue. It ceased to be such when the resolution in CSC
Case No. 4 became final. The said resolution is explicit in its mandate; petitioner was declared the lawful and de
jure Chief of Clinics (Chief of the Medical Professional Staff) of the National Children's Hospital, and by this
token, respondent Dr. Jose D. Merencilla, Jr. is not legally entitled to the office. Respondents, particularly Dr.
Isabelita Vital-Gozon, had no discretion or choice on the matter; the resolution had to be complied with. It was ill-
advised of principal respondent, and violative of the rule of law, that the resolution has not been obeyed or
implemented.
and accordingly ordered —
. . . respondents, particularly Dr. Isabelita Vital-Gozon, . . . to forthwith comply with, obey and implement the
resolution in CSC Case No. 4 (and) . . . Dr. Jose D. Merencilla, Jr., who is not entitled to the office, . . . to
immediately cease and desist from further performing and acting as OIC Professional Service.
But de la Fuente's prayer for damages — founded essentially on the refusal of Gozon, et al. to obey the final and
executory judgment of the Civil Service Commission, which thus compelled him to litigate anew in a different forum —
was denied by the Court of Appeals on the ground that the "petitions (for mandamus) are not the vehicle nor is the Court
the forum for . . . (said) claim of damages."
Gozon acknowledged in writing that she received a copy of the Appellate Tribunal's Decision of June 9, 1989 on June
15, 1989. Respondent de La Fuente acknowledged receipt of his own copy on June 15, 1989. Neither Vital-Gozon nor
her co-party, Dr. Merencilla, Jr., moved for reconsideration of, or attempted to appeal the decision.
Page 41 of 46 TORTS MEETING 7
It was de la Fuente who sought reconsideration of the judgment, by motion filed through new counsel, Atty. Ceferino
Gaddi. He insisted that the Appellate Court had competence to award damages in a mandamus action. He argued that
while such a claim for damages might not have been proper in a mandamus proceeding in the Appellate Court "before
the enactment of B.P. Blg. 129 because the Court of Appeals had authority to issue such writs only "in aid of its
appellate jurisdiction," the situation was changed by said BP 129 in virtue of which three levels of courts — the
Supreme Court, the Regional Trial Court, and the Court of Appeals — were conferred concurrent original jurisdiction to
issue said writs, and the Court of Appeals was given power to conduct hearings and receive evidence to resolve factual
issues. To require him to separately litigate the matter of damages, he continued, would lead to that multiplicity of suits
which is abhorred by the law.
While his motion for reconsideration was pending, de la Fuente sought to enforce the judgment of the Court of Appeals
of June 9, 1989 — directing his reinstatement pursuant to the Civil Service Commission's Resolution of August
9,1988, supra. He filed on July 4, 1989 a "Motion for Execution," alleging that the judgment of June 9, 1989 had
become final and executory for failure of Gozon, et al. — served with notice thereof on June 16, 1989 — to move for its
reconsideration or elevate the same to the Supreme Court. His motion was granted by the Court of Appeals in a
Resolution dated July 7, 1989, reading as follows:
The decision of June 9, 1989 having become final and executory, as prayed for, let the writ of execution issue
forthwith.
The corresponding writ of execution issued on July 13, 1989, on the invoked authority of Section 9, Rule 39. The writ
quoted the dispositive portion of the judgment of June 9, 1989, including, as the Solicitor General's Office points out,
the second paragraph to the effect that the petitions "are not the vehicle nor is the Court the forum for the claim of
damages; (hence,) the prayer therefor is denied."
The writ of execution notwithstanding, compliance with the June 9, 1989 judgment was not effected. Consequently, de
la Fuente filed, on July 20, 1989, an "Urgent Ex Parte Manifestation with Prayer to Cite Respondents for Contempt,"
complaining that although Gozon and her co-parties had been served with the writ of execution on July 14, they had not
complied therewith. By Resolution dated July 26, 1989, the Court required Gozon and Merencilla to appear before it on
August 3, 1989 to answer the charge and show cause "why they should not be adjudged in contempt for disobeying
and/or resisting the judgment."
At the hearing Gozon and Merencilla duly presented themselves, accompanied by their individual private lawyers —
one for Gozon (Felipe Hidalgo, Jr.), two for Merencilla (Bernardo S. Nera and Moises S. Rimando). One other lawyer
appeared in their behalf, from the Health Department, Artemio Manalo, who stated that he was there "in behalf of Jose
A. Fabia." They explained that they had no intention to defy the Court, they had simply referred the matter to their
superiors in good faith; and they were perfectly willing to comply with the judgment, undertaking to do so "even in the
afternoon" of that same day. The Court consequently ordered them "to comply with their undertaking . . . without any
further delay," and report the action taken towards this end, within five (3) days.
On August 9, 1989, Gozon, as "Medical Center Chief," sent a letter to Associate Justice Pedro A. Ramirez, advising that
under Hospital Special Order No. 31 dated August 3, 1989, de la Fuente had been directed to assume the position of
Chief of the Medical Professional Staff, and that a voucher for the payment of his allowances had been prepared and
was being processed.
More than a month later, or more precisely on September 27, 1989, the Court of Appeals promulgated another
Resolution, this time resolving de la Fuente's motion for reconsideration of June 29, 1989. It modified the Decision of
June 9, 1989 by (a) deleting its last paragraph (disallowing the claim of damages, supra), (b) consequently describing
and treating it as a "PARTIAL DECISION," and (c) scheduling "further proceedings for the purpose of receiving
evidence (of damages)," since said question "cannot be resolved by mere reference to the pleadings." This was done in
reliance on Section 3, Rule 65 of the Rules of Court, invoked by de la Fuente, which reads as follows:
Sec. 3. Mandamus. — When any tribunal, corporation, board, or person unlawfully neglects the performance of an act
which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another
 from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and
adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper
court alleging the facts with certainty and praying that judgment be rendered commanding the defendant, immediately
or at some other specified time, to do the act required to be done to protect the rights of the petitioner, and to pay the
damages sustainend by petitioner by reason of the wrongful acts of the defendant.
At about this time, yet another lawyer, Atty. Pedro F. Martinez entered his appearance for Isabelita Gozon. At his
instance, the Court gave him an "opportunity to . . . file a motion for reconsideration" of the Resolution of September
27, 1989. That motion he filed by registered mail on November 10, 1989. His basic contentions were (a) that the
decision of June 9, 1989 could no longer be altered, having become final and executory and having in fact been
executed, and (b) that under BP 129, the Appellate Court had no jurisdiction over the question of damages in
a mandamus action.
The Office of the Solicitor General also put in an appearance in Gozon's behalf at this juncture, saying that the case had
been referred to it only on November 14, 1989. It, too, sought reconsideration of the Resolution of September 27, 1989.
It filed on November 16, 1989 an "Omnibus Motion: I. For Reconsideration of Resolution dated September 27, 1989;
and II. To defer hearing on petitioner's claims for damages."
Both motions were denied by the Court of Appeals in a Resolution dated January 11, 1991. In that Resolution, the Court
—
1) declared that the amended decision had already become final and could no longer be re-opened because,
although "a copy of the amendatory resolution was received by counsel who was representing Gozon on
October 3, 1989," the first motion for reconsideration was not mailed until November 10, 1989 and the
Solicitor General's "Omnibus Motion" was not filed until November 16, 1989; and
2) prohibited the Solicitor General from representing Gozon in connection with . . . (de la Fuente's) claim for
damages," on the authority of this Court's ruling promulgated on March 19, 1990 in G.R. No. 87977
(Urbano, et al. v. Chavez, et al.) and G.R. No. 88578 (Co v. Regional Trial Court of Pasig).
Notice of this Resolution of January 11, 1991 was served on the Solicitor General's Office on January 18, 1991. Again
the Solicitor General sought reconsideration, by motion dated January 25, 1991 and filed on January 30, 1991. Again it
was rebuffed. In a Resolution rendered on August 7, 1991, served on the Solicitor General's Office on August 20, 1991,
the Court of Appeals denied the motion. It ruled that the "question of the authority of the Solicitor General to appear as
counsel for respondent Gozon . . . (had already) been extensively discussed," and that its "jurisdiction . . . to hear and
determine issues on damages proceeds from Sec. 9, Batas Pambansa 129 as amended."
In an attempt to nullify the adverse dispositions of the Court of Appeals — and obtain "the ultimate and corollary relief
of dismissing respondent de la Fuente's claim for damages" — the Solicitor General's Office has instituted the special
civil action of certiorari at bar. It contends that the Court of Appeals is not legally competent to take cognizance of and
decide the question of damages in a mandamus suit. . . . 3
4 resolution.
On 5 May 1993, the Court of Appeals issued a Resolution which noted that our decision in G.R. No. 101428 had become final
and left the option to reopen the case to de la Fuente.
In its resolution of 26 October 1995, 5 the Court of Appeals, inter alia, set the hearing for reception of evidence on the matter of
damages on 7 December 1995.
After de la Fuente presented his evidence, the Court of Appeals set reception of Vital-Gozon's evidence on 16 and 17 January
1996. 6
Page 42 of 46 TORTS MEETING 7
At the scheduled hearing on 16 January 1996, Conrado M. Dela Fuente sought to block the presentation of Vital-Gozon's
evidence on the ground that the former had not filed an answer, which the latter refuted. The hearing was then reset to other dates
for the parties to prove their respective claims. Vital-Gozon submitted, on 18 January 1996, copies of a "Manifestation and
Motion" dated 10 September 1992 to which was attached an Answer likewise dated 10 September 1992. It was claimed in the
Manifestation that the answer to the claim for damages could not have been filed earlier as the jurisdiction of the Court of
Appeals over de la Fuente's claim for damages had been questioned before the Supreme Court. Vital-Gozon likewise claimed
that copies of the Manifestation and Motion were received by the Court of Appeals on 18 September 1992 at 3:40 p.m. and sent
by registered mail to counsel for dela Fuente. 7 The filing of the Manifestation and Motion with the Court of Appeals was
confirmed by Remigio M. Escalada, Jr., Division Clerk of Court of the Fifth Division of the Court of Appeals in an undated
Report. 8 He further disclosed that the pleading was transmitted to the Archives Section on 19 September 1992.
The Court of Appeals then ordered the parties to submit their respective memoranda, 9 after which, the Court of Appeals
promulgated, on 20 March 1997, a resolution denying petitioner's motion to admit her Answer to the petition and
supplemental/amended petition for mandamus with damages, on the ground that the period to file the answer had long
prescribed, thus:
It was too late that the answer was filed in this Court on September 18, 1992, after promulgation on August 5, 1992, of
the decision of the Supreme Court in G.R. No. 101428. The prescribed period to file such answer as well as the
extended period had long expired on January 24, 1989 (pp. 35, 37, 55, rollo) by the time respondent's answer was filed
in this Court on September 18, 1992. She had another opportunity to answer when petitioner filed a
supplemental/amended petition. (pp. 57, 72, rollo). Still, she filed none. It is evident respondent just ignored the case
filed against her or gave no importance to the petitions and the notices sent to her by this Court. The delay in filing her
answer is inexcusable.
After promulgation and upon finality of this Court's decision granting the principal relief sought by the petitioner, the
instant case for mandamus was virtually disposed of with the exception of the incidental damages that petitioner has
claimed. It was uncontested in view of respondent's failure to answer the petition setting up her defenses. Consequently,
the allegations in the petition and supplemental petition were deemed admitted; unpleaded defenses were deemed
waived and any counterclaim not set up, barred (Sections 1, 2 and 4, Rule 9, Revised Rules of Court). Such procedural
rules would become meaningless unless strictly complied with by litigants. As clearly indicated in the proposed answer,
respondent's purpose is to set up a counterclaim already barred and to plead defenses already waived.
Besides, the parties as well as this Court are bound by the comprehensive findings and conclusions of the Supreme
Court in its final decision in G.R. No. 101428, based on the uncontroverted allegations of the verified petitions. So are
they bound thereby in this proceeding which deals with the lone issue of incidental damages claimed by petitioner.
What remains to be done by this is but the determination of whether respondent's wrongful act or refusal/failure to
perform an official duty caused injury to the claimant and the amount of the damages that may be awarded in his
favor. 10
Respondent court then set the hearing of the case on 22-23 April 1997 "for the presentation of [Vital-Gozon's] evidence to
controvert or rebut that of [de la Fuente] which he has adduced in support of his claim for damages."
In its resolution 11 of 21 April 1997, the Court of Appeals denied petitioner's motion to reconsider 12 the 20 March 1997
Petitioner then opted not to present her evidence, as she intended to file a petition with the Supreme Court questioning the
validity of the 20 March 1997 resolution and 21 April 1997 order of the Court of Appeals. 13
On 7 May 1997, the Court of Appeals promulgated a Resolution 14 finding petitioner liable for damages and ordered her to pay
private respondent P50,000.00 as moral damages, P20,000.00 as exemplary damages and P10,000.00 as attorney's fees. In
support thereof, respondent court quoted our finding in G.R. No. 101428, 15to wit:
The record demonstrates that Vital-Gozon was fully aware of the following acts and events:
 1) the proceeding commenced by de la Fuente in the Civil Service Commission in protest against his demotion;
2) the Commission's Resolution of August 9, 1988 as well, particularly, as the direction therein that de la
Fuente be reinstated and paid all his back salaries and other monetary benefits otherwise due him, this being
couched in fairly simple language obviously understandable to persons of ordinary or normal intelligence;
3) no less than two (2) written demands of de la Fuente for implementation of the CSC's aforesaid Resolution
of August 9, 1988;
4) the petition filed by de la Fuente in the Court of Appeals for enforcement of the CSC Resolution of August
9, 1988;
5) the extension granted by said Court of Appeals within which to file answer, notice thereof having been sent
directly to her and her co-respondents since the attorney who sought the extension in their behalf (Atty. Fabia)
did not set out his address in his motion for extension;
6) the "supplemental/amended petition" subsequently presented by de la Fuente, copy of which was sent to
Atty. Fabia, c/o Dr. Vital-Gozon; and
7) the Decision and Amendatory Decision sent to he counsel on October 3, 1989.
To all these, her reaction, and that of the officials of the Department of Health concerned, was a regrettably cavalier
one, to say the least. Neither she nor the Health officials concerned accorded said acts and events any importance.
She never bothered to find out what was being done to contest or negate de la Fuente's petitions and actions,
notwithstanding that as time went by, de la Fuente's efforts were being met with success.
Nothing in the record even remotely suggests that Vital-Gozon merits relief from the final and executory
Resolution of the Civil Service Commission. This Court will not disturb that Resolution. It is satisfied that no
procedural or substantive errors taint that Resolution, or its becoming final and executory.
The Court of Appeals then considered the evidence for private respondent and the applicable law, thus:
Upon respondent's continued refusal without justifiable cause to implement the final resolution of the Civil Service
Commission upholding petitioner's right to the position he has been claiming with back salaries, transportation,
representation and housing allowances and other benefits withheld from him, petitioner is entitled to the damages he
claims. Testifying in his own behalf petitioner declared that he was greatly disturbed, shocked and frustrated during the
three months preceding the filing of his petition; that he had sleepless nights and suffered from mental anxiety, mental
anguish, worry, tension and humiliation when respondent ignored and disregarded the final resolution of the Civil
Service Commission; that he felt harassed by her refusal because he had to go to court to obtain relief and had to incur
additional expenses for litigation which he could hardly afford; and that he had to spend no less than P5,000 for court
fees and incidental expenses and to pay his counsel P10,000 at the end of the litigation (pp. 6, 7, 12, 13, t.s.n., Dec. 7,
1995). All these respondent has not successfully rebutted by her evidence since she adduced none in her behalf.
Petitioner therefore, is entitled to recover moral damages from respondent for her refusal and neglect without just cause
to perform her official duty to reinstate petitioner to the position he was entitled, as ordered by the Civil Service
Commission in its decision. While he was reinstated to his position, petitioner had to seek the aid of the courts for that
purpose. In point is the case of San Luis vs. Court of Appeals, decided by the Supreme Court on June 26, 1989 (174
SCRA 258, 276), which involves the unlawful suspension and dismissal by a Provincial Governor of a quarry
superintendent and the Governor's obstinate refusal to comply with the final decisions of the Civil Service Commission
and the Office of the President which declared said suspension and dismissal unlawful or without just cause. The
Supreme Court held that the Governor (who was sued both in his official and private capacities) was personally liable
for the damages claimed and awarded in favor of the offended party P50,000 as moral damages and P20,000 for
Page 43 of 46 TORTS MEETING 7
attorney's fees and litigation expenses. Tan Kapoe vs. Masa, decided January 21, 1985 (134 SCRA 231), is also
pertinent. There the Supreme Court upheld the award of moral damages although it was "made on the basis of
documentary evidence . . . without supporting oral testimonies." And the award of exemplary damages, in addition to
moral damages, was also deemed proper "even if not expressly pleaded in the complaint nor proved." Such award of
exemplary damages is by way of example or correction for the public good, in addition to moral damages (Article 2229,
Civil Code). Inasmuch as petitioner is entitled to exemplary damages, he should be awarded attorney's fees. The award
in favor of petitioner of moral and exemplary damages are attorney's fees in the amounts of P50,000 P20,000 and
P10,000, respectively, is but fair and just and not excessive. 16
Unsatisfied, petitioner forthwith filed the instant petition for review on certiorari under Rule 45 of the Rules of Court. She prays
that we reverse and set aside the challenged Resolution on the following grounds:
1. There is absolutely no ground for the award of moral and exemplary damages, as well as attorney's fees.
2. Petitioner's right to due process was violated.
Anent the first ground, petitioner asserts there is no factual basis for the award of moral damages for, concretely, private
respondent was unable to show any causal connection between his supposed injury and petitioner's alleged actionable wrong.
Petitioner argues that while testifying, private respondent simply made generalized statements that he had sleepless nights and
suffered mental anxiety, mental anguish, worry, tension and humiliation. Petitioner next reiterates her stand that she had nothing
to do with the Civil Service case relative to respondent's original position, as she was not yet connected with the NCH when said
case was filed. Moreover, the failure to immediately reinstate private respondent was caused by the directive of the Legal
Department of the Department of Health, to which office she forwarded the decision of the Civil Service Commission for
guidance, pursuant to standard procedure. Petitioner, therefore, acted in good faith. She likewise faults the Court of Appeals for
considering our observations in G.R. No. 101428 as factual findings which bound respondent court.
As to exemplary damages, petitioner asserts that she did not act with vindictiveness nor wantonness, hence the award of said
damages was unwarranted, 17 as such, there could likewise be no basis for the award of attorney's fees. 18
Anent the second ground, petitioner contends that she was sued in her official capacity, hence could not be held liable for
damages, and to hold otherwise would violate her right to due process as a private individual, citing Cariño v. Agricultural
Credit and Cooperative Financing Administration 19 and Animos v. Philippine Veterans Affairs Office. 20
Petitioner further argues that the Court of Appeals denied her due process by refusing to admit her answer, considering that: (a)
she personally attended each and every hearing of the mandamus case; (b) in its decision of 9 June 1989, the Court of Appeals
explicitly declared that it was not the proper forum for the claim for damages, at which point then the necessity of an answer had
become moot; (c) it was only on 27 September 1989 that the Court of Appeals reconsidered its decision of 9 June 1989 thereby
upholding its jurisdiction to hear the claims for damages; (d) but then, consistent with her stand that the Court of Appeals had no
jurisdiction over the claims for damages, she assailed such ruling before this Court, hence she could not have been expected to
file an answer; (e) nonetheless, upon receipt of the adverse decision of this Court of 4 August 1992 in G.R. No. 101428, she
immediately filed her answer with a corresponding motion for its admission; and (f) while her motion for admission of the
answer had been pending since 18 October 1992, the Court of Appeals did not act on it until it was already her turn to present her
evidence on the claim for damages.
In his comment on the petition submitted in compliance with the Resolution of 21 July 1997, private respondent contends that:
(a) petitioner's incomplete and slanted version of the facts of the case cannot be relied upon; (b) the factual findings of this Court
in G.R. No. 101428 are conclusive and binding, hence the Court of Appeals did not err nor abuse its discretion in relying on said
findings; (c) petitioner's invocation of state immunity is untenable as she was sued not in her official capacity, and assuming
otherwise, petitioner could nevertheless be held liable for damages under Articles 20, 27 and 2176 of the Civil Code and Section
3, Rule 65 of the Rules of Court; (d) the Court of Appeals did not err in denying petitioner's motion to admit her answer; and (e)
the Court of Appeals' awards of moral and exemplary damages and attorney's fees were proper, fair, reasonable, justified and in
accord with the law and precedent.
Two principal issues thus confront us, viz: (a) whether petitioner was denied due process when her answer to the petition was not
admitted; and (b) whether the awards of moral and exemplary damages and attorney's fees were proper. These will be resolved in
seriatim.
I
We do not hesitate to rule that petitioner was not denied due process. The record of CA-G.R. SP No. 16438 shows that in the
resolution of 29 December 1998, the Court of Appeals gave due course to private respondent's petition and required herein
petitioner and the other respondents to answer the petition within 10 days from notice of the resolution. 21 On 9 January 1988,
petitioner and the other respondents, represented by Atty. Jose Fabia, filed a motion for an extension of 15 days from said date
within which to file their answer, which respondent court granted in its resolution of 17 January 1989. 22 Likewise, on 17 January
1989, private respondent, as petitioner below, was granted leave to file a supplemental/amended petition. 23
neglects to mention is that respondent court did not deprive her the right to cross-examine private respondent when the latter
testified as to the matter of damages. Through the exercise of the right, petitioner could have negated private respondent's claims
by showing the absence of legal or factual basis therefor. Moreover, the Court of Appeals explicitly allowed petitioner to present
her evidence against the claim for damages. However, petitioner again failed to take the opportunity to have herself heard.
It may be pointed out that in her Answer, 31 she interposed the following defenses against the claim for moral and exemplary
damages and attorney's fees, namely: (1) the claim was effectively and exclusively a suit against the State, but without its
consent; (2) she had not committed any actionable wrong as she acted in good faith and without malice or negligence; and (3)
whatever injury private respondent may have suffered were mere consequences of his indiscretion, negligence and/or ignorance
of the law which, at best, constituted damnum absque injuria. From the nature of these defenses, they could very well have been
taken up, even indirectly, on cross-examination of private respondent or in the course of petitioner's testimony had she chosen to
present her evidence. All told, the above discussion should readily refute petitioner's claim of a denial of due process.

The Supplemental/Amended Petition was filed on 3 February 1989, 24 and in the resolution of 9 February 1989, 25 the Court of
Appeals required petitioner herein and her co-respondents in CA-G.R. SP No. 16438 to file their answer thereto within 10 days
from notice. However, no such answer was filed, and on 9 June 1989, the Court of Appeals rendered its decision. 26 De la Fuente
seasonably filed a motion for reconsideration, 27 principally as regards the holding that "the petitions are not the vehicle nor is the
Court the forum for the claim of damages." A copy of this motion was furnished counsel for respondents. Respondents therein
were then required, in the resolution of 5 July 1989, 28 to comment within 10 days from notice. However, respondents below
once more failed to comply. Thus, on 27 September 1989, the Court of Appeals promulgated a resolution 29 granting the motion
for reconsideration by deleting therefrom the challenged portion of its decision of 9 June 1989. Respondent court then set
reception of evidence on the claims for damages on 9 and 11 of October 1989.
Respondents below, represented by new counsel, Atty. Pedro Martinez, and the rest by the Office of the Solicitor General, filed
motions to reconsider the resolution of 27 September 1989, primarily on the ground that the Court of Appeals had no jurisdiction
over the claim for damages in the petition for mandamus. The incidental issue of the authority of the Solicitor General to appear
for herein petitioner in respect of the claim for damages against her in her personal capacity was also raised. These matters
became the subject of various pleadings.
30
Eventually, on 11 January 1991, the Court of Appeals promulgated a resolution which gave rise to G.R. No. 101428, after the
Court of Appeals denied herein petitioner's motion for reconsideration.
II
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury. They may be recovered if they are the proximate result of the defendant's
wrongful act or omission. 32 The instances when moral damages may be recovered are, inter alia, "acts and actions referred to in
Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35 of the Civil Code," 33 which, in turn, are found in the Chapter on Human Relations
of the Preliminary Title of the Civil Code. Relevant to the instant case, which involves public officers, is Article
27, 34 which provides:
Art. 27. Any person suffering material or moral loss because a public servant or employee refuses or neglects, without
just cause, to perform his official duty may file an action for damages and other relief against the latter, without
prejudice to any disciplinary administrative action that may be taken.
Art. 27 must then be read in conjunction with Section I of Article XI (Accountability of Public Officers) of the
Constitution, 35 which provides:
Sec. 1. Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve
them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives.

Clearly, therefore, petitioner's failure to file the answer to the petition was due to her fault or negligence. She was, by formal
It is thus evident that under Article 27, in relation to Articles 2219 and 2217 of the Civil Code, a public officer, like petitioner
resolutions of the Court of Appeals, required to file answers to both the original petition and the Supplemental/Amended
herein, may be liable for moral damages for as long as the moral damages suffered by private respondent were the proximate
Petition; yet, she failed to heed both resolutions. As regards the resolution to answer the Supplemental/Amended Petition, herein
result of petitioner's wrongful act or omission, i.e., refusal to perform an official duty or neglect in the performance thereof. In
petitioner totally disregarded the same. And if only to further evince that herein petitioner had no one to blame but herself for her
fact, if only to underscore the vulnerability of public officials and employees to suits for damages to answer for any form or
plight, as regards the resolution to answer the original petition, this she spurned despite the fact that she asked for and was
degree of misfeasance, malfeasance or nonfeasance, this Court has had occasion to rule that under Articles 19 and 27 of the Civil
granted an extension of 15 days within which to do so. That she questioned the jurisdiction of the Court of Appeals over the
Code, a public official may be made to pay damages for performing a perfectly legal act, albeit with bad faith or in violation of
claims for damages is entirely irrelevant, considering that she did so only after the Court of Appeals promulgated its Resolution
the "abuse of right" doctrine embodied in the preliminary articles of the Civil Code concerning Human Relations. 36
of 27 September 1989. Up to that time, petitioner had absolutely no responsive pleading setting forth her defense.

It may likewise be stressed that under Section 2.c.(4) of the Revised Internal Rules of the Court of Appeals then in force, after
the expiration of the period for filing the answer or the reply in special civil actions, a case is deemed submitted for resolution.
Thus, after the expiration of the 10-day period granted to herein petitioner to file her Answer to the Supplemental/Amended
Petition, and in light of her failure to file her answer to the original petition despite the grant of her motion for extension of time
to file it, then the case was automatically deemed submitted for decision. After the decision was rendered, she could then no
longer be heard to raise a defense which, by her inaction, she indubitably expressed no desire to raise.
It cannot then be successfully maintained that the Court of Appeals committed reversible error, much less, grave abuse of
discretion, when it denied admission to an answer that was filed only after this Court's decision in G.R. No. 101428 had long
become final and immutable.
What further militates against petitioner's advocacy is that the Court of Appeals, aside from affording petitioner an opportunity
to be heard through the filing of pleadings, likewise sustained petitioner's right to due process at the hearing. What petitioner
Page 44 of 46 TORTS MEETING 7
Exemplary damages may be imposed by way of example or correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages. 37
Attorney's fees and other expenses of litigation may be recovered as actual or compensatory damages when, inter alia,
exemplary damages are awarded; when the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs
plainly valid, just and demandable claim, and in any other case where the court deems it just and equitable that attorney's fees
and expenses of litigation should be recovered. 38
There can be no question that private respondent was entitled to be restored to his position as Chief of Clinics by virtue of the
final and executory decision of the Civil Service Commission. Petitioner, as head or chief of the National Children's Hospital,
then had the duty to see to it that the decision be obeyed and implemented. This she failed to do and private respondent's two
official demands for compliance with the Civil Service Commission's decision were merely referred by petitioner to the Legal
Department of the Department of Health; and as further noted by this Court in its decision in G.R. No. 101428, "she did not
answer [private respondent's] letters not even to inform him of the referral thereof to the Assistant Secretary [for Legal Affairs].
She chose simply to await 'legal guidance from the DOH Legal Department.'" This Court further noted:
To all these, [petitioner's] reaction, and that of the officials of the Department of Health concerned, was a regrettably
cavalier one, to say the least. Neither she nor the Health Department officials concerned accorded said acts and events
any importance. She never bothered to find out what was being done to contest or negate [private respondent's] petitions
and actions, notwithstanding that as time went by, [private respondent's] efforts were being met with success.
That petitioner then committed an actionable wrong for unjustifiably refusing or neglecting to perform an official duty is
undeniable. Private respondent testified on the moral damages which he suffered by reason of such misfeasance or malfeasance
of petitioner, and the attorney's fees and litigation expenses he incurred to vindicate his rights and protect his interests. The Court
of Appeals which heard him gave full faith and credit to his testimony. Private respondent declared that by reason of the "unjust
action" or "refusal" of petitioner when she did not recognize, ignored and disregarded the final and executory Civil Service
Resolution, he:
[W]as actually greatly disturbed, shocked and frustrated during those three . . . months. [He] had sleepless nights and . .
. suffered from mental anxiety, worry, tension and humiliation . . . 39
and specifically as "Head of the Children's Hospital;" her duty to restore private respondent to his position by virtue of the final
decision of the Civil Service Commission; and her refusal to allow private respondent to perform and discharge his duties and
responsibilities as Chief of Clinics. As to the latter, paragraph 16 of the Petition explicitly speaks of
petitioner's personal liability, thus:
16. For causing such mental suffering and anguish, etc., 42 principal respondent [herein petitioner] ought to and must be,
in accordance with the Civil Code, held personally answerable and liable to the petitioner in the sum of not less than
P100,000.00 as moral damages, and another sum of P20,000.00 as exemplary damages, by way of example or
correction for the public good. 43 (emphasis supplied)
In maintaining then that she was sued merely in her official capacity, petitioner has either overlooked paragraph 16 or
sought to deliberately mislead this Court.
WHEREFORE, for utter failure to show that respondent Court of Appeals committed reversible error in the challenged
resolutions, the instant petition is denied.
Costs against petitioner.

Private respondent's anguish even continued during the 5-month period while the case was pending with the Court of
SO ORDERED.
Appeals, thus:

During this period my sleepless nights and my moral sufferings continued. As a matter of fact, even worsened. I just
could not understand, actually I could not understand the action here of Dr. Gozon for having not followed the decision
of the Court of Appeals. And that is why I felt very much aggrieved during this period. I could not sleep at all and this
has weakened me. 40

Private respondent further testified that he "spent not less than P5,000.00 for court fees and as incidental expenses" and had
committed himself to pay "P10,000.00 to his counsel at the end of the case." 41

While private respondent did not quantify the extent of his moral damages, the Court of Appeals fixed the same at P50,000.00.
Since moral damages are, in the language of Article 2217 of the Civil Code, "incapable of pecuniary estimation," courts have the
discretion to fix the corresponding amount, not being bound by any self-serving assessment by the claimants. On the other hand,
a claimant's failure to state the monetary value of moral damages suffered presents no legal obstacle to a court's determination
thereof, as long as there is factual basis for the award such as the claimant's testimony as to his sufferings. As a matter of fact, it
is not unusual for claimants to leave the determination of the amount of the award to the discretion of the court.

Under Article 2233 of the Civil Code, exemplary damages cannot be recovered as a matter of right; the court will decide whether
or not they should be adjudicated. In the instant case, the Court of Appeals awarded exemplary damages in the amount of
P20,000.00. Considering that a public official is the culprit here, the propriety of such an award cannot be questioned. It serve as
an example or deterrent so that other public officials be always reminded that they are public servants bound to adhere faithfully
to the constitutional injunction that a public office is a public trust. That the aggrieved party happened to be another public
official will not serve to mitigate the effects of petitioner's having failed to observe the required degree of accountability and
responsibility.

As to attorney's fees as actual damages, the Court of Appeals' determination of its propriety in this case and the extent thereof
were well within its discretion. The agreement between private respondent and his counsel as to the amount does not control.

Petitioner's contention that she cannot be liable for damages since she was sued in her official capacity is without merit. Whether
petitioner was impleaded as respondent in an official capacity, i.e., solely in her capacity as Chief of the National Children's
Hospital, is best determined from the Petition as well as the Supplemental/Amended Petition. For one, in the captions in both,
she is named as one of the respondents without any express mention that she was so sued in her "capacity, as Chief of the
National Children's Hospital." For another, the allegations in the body of the Petition clearly show that she was sued in both her
official and private capacities. As to the former, paragraphs 1 and 7 respectively allege petitioner's position as a public official,

Page 45 of 46 TORTS MEETING 7

TORTS 81 The prevailing American jurisprudence is to the same effect; and it is generally held that recovery can not had for the death of an
unborn child (Stafford vs. Roadway Transit Co., 70 F. Supp. 555; Dietrich vs. Northampton, 52 Am. Rep. 242; and numerous
cases collated in the editorial note, 10 ALR, (2d) 639).
G.R. No. L-16439 July 20, 1961

ANTONIO GELUZ, petitioner,
vs.
THE HON. COURT OF APPEALS and OSCAR LAZO, respondents.
REYES, J.B.L., J.:
This petition for certiorari brings up for review question whether the husband of a woman, who voluntarily procured her
abortion, could recover damages from physician who caused the same.
The litigation was commenced in the Court of First Instance of Manila by respondent Oscar Lazo, the of Nita Villanueva, against
petitioner Antonio Geluz, a physician. Convinced of the merits of the complaint upon the evidence adduced, the trial court
rendered judgment favor of plaintiff Lazo and against defendant Geluz, ordering the latter to pay P3,000.00 as damages, P700.00
attorney's fees and the costs of the suit. On appeal, Court of Appeals, in a special division of five, sustained the award by a
majority vote of three justices as against two, who rendered a separate dissenting opinion.
The facts are set forth in the majority opinion as follows:
Nita Villanueva came to know the defendant (Antonio Geluz) for the first time in 1948 — through her aunt Paula Yambot.
In 1950 she became pregnant by her present husband before they were legally married. Desiring to conceal her pregnancy
from her parent, and acting on the advice of her aunt, she had herself aborted by the defendant. After her marriage with the
plaintiff, she again became pregnant. As she was then employed in the Commission on Elections and her pregnancy proved
to be inconvenient, she had herself aborted again by the defendant in October 1953. Less than two years later, she again
became pregnant. On February 21, 1955, accompanied by her sister Purificacion and the latter's daughter Lucida, she again
repaired to the defendant's clinic on Carriedo and P. Gomez streets in Manila, where the three met the defendant and his
wife. Nita was again aborted, of a two-month old foetus, in consideration of the sum of fifty pesos, Philippine currency. The
plaintiff was at this time in the province of Cagayan, campaigning for his election to the provincial board; he did not know
of, nor gave his consent, to the abortion.
This is not to say that the parents are not entitled to collect any damages at all. But such damages must be those inflicted directly
upon them, as distinguished from the injury or violation of the rights of the deceased, his right to life and physical integrity.
Because the parents can not expect either help, support or services from an unborn child, they would normally be limited to
moral damages for the illegal arrest of the normal development of the spes hominis that was the foetus, i.e., on account of
distress and anguish attendant to its loss, and the disappointment of their parental expectations (Civ. Code Art. 2217), as well as
to exemplary damages, if the circumstances should warrant them (Art. 2230). But in the case before us, both the trial court and
the Court of Appeals have not found any basis for an award of moral damages, evidently because the appellee's indifference to
the previous abortions of his wife, also caused by the appellant herein, clearly indicates that he was unconcerned with the
frustration of his parental hopes and affections. The lower court expressly found, and the majority opinion of the Court of
Appeals did not contradict it, that the appellee was aware of the second abortion; and the probabilities are that he was likewise
aware of the first. Yet despite the suspicious repetition of the event, he appeared to have taken no steps to investigate or pinpoint
the causes thereof, and secure the punishment of the responsible practitioner. Even after learning of the third abortion, the
appellee does not seem to have taken interest in the administrative and criminal cases against the appellant. His only concern
appears to have been directed at obtaining from the doctor a large money payment, since he sued for P50,000.00 damages and
P3,000.00 attorney's fees, an "indemnity" claim that, under the circumstances of record, was clearly exaggerated.
The dissenting Justices of the Court of Appeals have aptly remarked that:
It seems to us that the normal reaction of a husband who righteously feels outraged by the abortion which his wife has
deliberately sought at the hands of a physician would be highminded rather than mercenary; and that his primary concern
would be to see to it that the medical profession was purged of an unworthy member rather than turn his wife's indiscretion
to personal profit, and with that idea in mind to press either the administrative or the criminal cases he had filed, or both,
instead of abandoning them in favor of a civil action for damages of which not only he, but also his wife, would be the
beneficiaries.
It is unquestionable that the appellant's act in provoking the abortion of appellee's wife, without medical necessity to warrant it,
was a criminal and morally reprehensible act, that can not be too severely condemned; and the consent of the woman or that of
her husband does not excuse it. But the immorality or illegality of the act does not justify an award of damage that, under the
circumstances on record, have no factual or legal basis.

It is the third and last abortion that constitutes plaintiff's basis in filing this action and award of damages. Upon application of the The decision appealed from is reversed, and the complaint ordered dismissed. Without costs.
defendant Geluz we granted certiorari.

Let a copy of this decision be furnished to the Department of Justice and the Board of Medical Examiners for their information
The Court of Appeals and the trial court predicated the award of damages in the sum of P3,000.06 upon the provisions of the and such investigation and action against the appellee Antonio Geluz as the facts may warrant.
initial paragraph of Article 2206 of the Civil Code of the Philippines. This we believe to be error, for the said article, in fixing a
minimum award of P3,000.00 for the death of a person, does not cover the case of an unborn foetus that is not endowed with
personality. Under the system of our Civil Code, "la criatura abortiva no alcanza la categoria de persona natural y en
consscuencia es un ser no nacido a la vida del Derecho" (Casso-Cervera, "Diccionario de Derecho Privado", Vol. 1, p. 49), being
incapable of having rights and obligations.

Since an action for pecuniary damages on account of personal injury or death pertains primarily to the one injured, it is easy to
see that if no action for such damages could be instituted on behalf of the unborn child on account of the injuries it received, no
such right of action could derivatively accrue to its parents or heirs. In fact, even if a cause of action did accrue on behalf of the
unborn child, the same was extinguished by its pre-natal death, since no transmission to anyone can take place from on that
lacked juridical personality (or juridical capacity as distinguished from capacity to act). It is no answer to invoke the provisional
personality of a conceived child (conceptus pro nato habetur) under Article 40 of the Civil Code, because that same article
expressly limits such provisional personality by imposing the condition that the child should be subsequently born alive:
"provided it be born later with the condition specified in the following article". In the present case, there is no dispute that the
child was dead when separated from its mother's womb.

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