Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 100727 March 18, 1992 COGEO-CUBAO OPERATORS AND DRIVERS ASSOCIATION, petitioner, vs. THE COURT OF APPEALS, LUNGSOD SILANGAN TRANSPORT SERVICES, CORP., INC., respondents.

MEDIALDEA, J.: This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed with modification the decision of the Regional Trial Court awarding damages in favor of respondent Lungsod Silangan Transport Services Corp., Inc. (Lungsod Corp. for brevity). The antecedents facts of this case are as follows:
It appears that a certificate of public convenience to operate a jeepney service was ordered to be issued in favor of Lungsod Silangan to ply the Cogeo-Cubao route sometime in 1983 on the justification that public necessity and convenience will best be served, and in the absence of existing authorized operators on the lined apply for . . . On the other hand, defendant-Association was registered as a non-stock, non-profit organization with the Securities and Exchange Commission on October 30, 1985 . . . with the main purpose of representing plaintiff-appellee for whatever contract and/or agreement it will have regarding the ownership of units, and the like, of the members of the Association . . . Perturbed by plaintiffs' Board Resolution No. 9 . . . adopting a Bandera' System under which a member of the cooperative is permitted to queue for passenger at the disputed pathway in exchange for the ticket worth twenty pesos, the proceeds of which shall be utilized for Christmas programs of the drivers and other benefits, and on the strength of defendants' registration as a collective body with the Securities and Exchange Commission, defendants-appellants, led by Romeo Oliva decided to form a human barricade on November 11, 1985 and assumed the dispatching of passenger jeepneys . . . This development as initiated by defendants-appellants gave rise to the suit for damages. Defendant-Association's Answer contained vehement denials to the insinuation of take over and at the same time raised as a defense the circumstance that the organization was formed not to compete with plaintiff-cooperative. It, however, admitted that it is not authorized to transport passengers . . . (pp. 15-16, Rollo)

On July 31, 1989, the trial court rendered a decision in favor of respondent Lungsod Corp., the dispositive portion of which states:
WHEREFORE FROM THE FOREGOING CONSIDERATION, the Court hereby renders judgment in favor of the plaintiff and against the defendants as follows: 1. Ordering defendants to pay plaintiff the amount of P50,000.00 as actual damages; 2. Ordering the defendants to pay the plaintiffs the amount of P10,000.00 as attorney's fees. SO ORDERED. (P. 39, Rollo)

Not satisfied with the decision, petitioner Association appealed with the Court of Appeals. On May 27, 1991, respondent appellate court rendered its decision affirming the findings of the trial court except with regard to the award of actual damages in the amount of P50,000.00 and attorney's fees in the amount of P10,000.00. The Court of Appeals however, awarded nominal damages to petitioner in the amount of P10,000.00. Hence, this petition was filed with the petitioner assigning the following errors of the appellate court:
I. THE RESPONDENT COURT ERRED IN MERELY MODIFYING THE JUDGMENT OF THE TRIAL COURT. II. THE RESPONDENT COURT ERRED IN HOLDING THAT THE PETITIONER USURPED THE PROPERTY RIGHT OF THE PRIVATE RESPONDENT. III. AND THE RESPONDENT COURT ERRED IN DENYING THE MOTION FOR RECONSIDERATION.

Since the assigned errors are interrelated, this Court shall discuss them jointly. The main issue raised by the petitioner is whether or not the petitioner usurped the property right of the respondent which shall entitle the latter to the award of nominal damages. Petitioner contends that the association was formed not to complete with the respondent corporation in the latter's operation as a common carrier; that the same was organized for the common protection of drivers from abusive traffic officers who extort money from them, and for the elimination of the practice of respondent corporation of requiring jeepney owners to execute deed of sale in favor of the corporation to show that the latter is the owner of the jeeps under its certificate of public convenience. Petitioner also argues that in organizing the association, the members thereof are merely exercising their freedom or right to redress their grievances. We find the petition devoid of merit. Under the Public Service Law, a certificate of public convenience is an authorization issued by the Public Service Commission for the operation of public services for which

no franchise is required by law. In the instant case, a certificate of public convenience was issued to respondent corporation on January 24, 1983 to operate a public utility jeepney service on the Cogeo-Cubao route. As found by the trial court, the certificate was issued pursuant to a decision passed by the Board of Transportation in BOT Case No. 82-565. A certification of public convenience is included in the term "property" in the broad sense of the term. Under the Public Service Law, a certificate of public convenience can be sold by the holder thereof because it has considerable material value and is considered as valuable asset (Raymundo v. Luneta Motor Co., et al., 58 Phil. 889). Although there is no doubt that it is private property, it is affected with a public interest and must be submitted to the control of the government for the common good (Pangasinan Transportation Co. v. PSC, 70 Phil 221). Hence, insofar as the interest of the State is involved, a certificate of public convenience does not confer upon the holder any proprietary right or interest or franchise in the route covered thereby and in the public highways (Lugue v. Villegas, L-22545, Nov . 28, 1969, 30 SCRA 409). However, with respect to other persons and other public utilities, a certificate of public convenience as property, which represents the right and authority to operate its facilities for public service, cannot be taken or interfered with without due process of law. Appropriate actions may be maintained in courts by the holder of the certificate against those who have not been authorized to operate in competition with the former and those who invade the rights which the former has pursuant to the authority granted by the Public Service Commission (A.L. Ammen Transportation Co. v. Golingco. 43 Phil. 280). In the case at bar, the trial court found that petitioner association forcibly took over the operation of the jeepney service in the Cogeo-Cubao route without any authorization from the Public Service Commission and in violation of the right of respondent corporation to operate its services in the said route under its certificate of public convenience. These were its findings which were affirmed by the appellate court:
The Court from the testimony of plaintiff's witnesses as well as the documentary evidences presented is convinced that the actions taken by defendant herein though it admit that it did not have the authority to transport passenger did in fact assume the role as a common carrier engaged in the transport of passengers within that span of ten days beginning November 11, 1985 when it unilaterally took upon itself the operation and dispatching of jeepneys at St. Mary's St. The president of the defendant corporation. Romeo Oliva himself in his testimony confirmed that there was indeed a takeover of the operations at St. Mary's St. . . . (p. 36, Rollo)

The findings of the trial court especially if affirmed by the appellate court bear great weight and will not be disturbed on appeal before this Court. Although there is no question that petitioner can exercise their constitutional right to redress their grievances with respondent Lungsod Corp., the manner by which this constitutional right is to be, exercised should not undermine public peace and order nor should it violate the legal rights of other persons. Article 21 of the Civil 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 provision covers a situation where a person has a legal right which was violated by another in a manner

contrary to morals, good customs or public policy. It presupposes loss or injury, material or otherwise, which one may suffer as a result of such violation. It is clear form the facts of this case that petitioner formed a barricade and forcibly took over the motor units and personnel of the respondent corporation. This paralyzed the usual activities and earnings of the latter during the period of ten days and violated the right of respondent Lungsod Corp. To conduct its operations thru its authorized officers. As to the propriety of damages in favor of respondent Lungsod Corp., the respondent appellate court stated:
. . . it does not necessarily follow that plaintiff-appellee is entitled to actual damages and attorney's fees. While there may have been allegations from plaintiff-cooperative showing that it did in fact suffer some from of injury . . . it is legally unprecise to order the payment of P50,000.00 as actual damages for lack of concrete proof therefor. There is, however, no denying of the act of usurpation by defendants-appellants which constituted an invasion of plaintiffs'-appellees' property right. For this, nominal damages in the amount of P10,000.00 may be granted. (Article 2221, Civil Code). (p. 18, Rollo)

No compelling reason exists to justify the reversal of the ruling of the respondent appellate court in the case at bar. Article 2222 of the Civil Code states that the court may award nominal damages in every obligation arising from any source enumerated in Article 1157, or in every case where any property right has been invaded. Considering the circumstances of the case, the respondent corporation is entitled to the award of nominal damages. ACCORDINGLY, the petition is DENIED and the assailed decision of the respondent appellate court dated May 27, 1991 is AFFIRMED. SO ORDERED. Narvasa, C.J., Cruz and Grio-Aquino, JJ., concur. Bellosillo, J., took no part. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-44190 October 30, 1980 MANILA GAS CORPORATION, petitioner-appellant, vs. COURT OF APPEALS and ISIDRO M. ONGSIP, respondents-appellees.

MAKASIAR, J.: This petition for certiorari treated as a special civil action seeks to review the decision of the Court of Appeals in CA-G.R. No. 50956-R dated July 6, 1976 affirming the decision of the Court of First Instance of Rizal, Pasay City Branch VII in Civil Case No. 3019-P dated May 2,1972. Manila Gas Corporation, the petitioner herein, is a public utility company duly authorized to conduct and operate the gainful business of servicing and supplying gas in the City of Manila and its suburbs for public necessity and convenience while private respondent, Isidro M. Ongsip, is a businessman holding responsible positions in a number of business firms and associations in the Philippines. On May 20, 1964, respondent Ongsip applied for gas service connection with petitioner Manila Gas Corporation. A 1 x 4 burner gas was installed by petitioner's employees in respondent's kitchen at his residence at 2685 Park Avenue, Pasay City. On July 27, 1965, respondent Ongsip requested petitioner to install additional appliances as well as additional gas service connections in his 46-door Reyno Apartment located also in the same compound. In compliance with said request, petitioner installed two 20-gallon capacity water storage heaters and two heavy-duty gas burners and replaced the original gas meter with a bigger 50-light capacity gas meter. The installations and connections were all done solely by petitioner's employees. There was no significant change in the meter reading despite additional installations. In May and June of 1966 no gas consumption was registered in the meter, prompting petitioner to issue a 'meter order' with instructions to change the gas meter in respondent's residence. On August 17, 1966, at around 1 o'clock in the afternoon, petitioner's employee led by Mariano Coronal, the then Chief of the Distribution Department, went to Ongsip's place. After Identifying themselves to the houseboy therein that they are from the Manila Gas Corporation, but without notifying or informing respondent Ongsip, they changed the gas meter and installed new tube connections. At the time the work was being undertaken, private respondent was taking a nap but he was informed afterwards of what had taken place by his houseboy. On that same afternoon, at about 5 o'clock, petitioner's employees returned with a photographer who took pictures of the premises. Respondent Ongsip inquired from Coronel why they were taking pictures but the latter simply gave him a calling card with instructions to go to his (Coronel's) office. There, he was informed about the existence of a by-pass valve or "jumper" in the gas connection and that unless he gave Coronel P3,000.00, he would be deported. Respondent Ongsip refused to give the money, saying that he was not afraid as he had committed no wrong and that he could not be deported because he is already a Filipino citizen.By the end of August, a reading was

made on the new meter and expectedly, it registered a sudden increase in gas consumption. Thereafter, in October, 1966, a complaint for qualified theft was filed by petitioner against respondent Ongsip in the Pasay City Fiscal's Office docketed as I.S. No. 51441 (p. 3, Folder of Exhibits) In February, 1967, pending investigation of the criminal complaint, petitioner disconnected respondent's gas service for alleged failure and/or refusal to pay his gas consumptions from July, 1965 to January, 1967 in violation of petitioner's regulation agreed upon in the 'Application for Gas Service' which states that:

xxx xxx xxx (8) The Corporation is authorized to discontinue service to the customer for any of the following reasons: After 72 hours' notice in writing for a) violation of the conditions herein set forth; b) Non-payment of bills overdue; xx xx (p. 1, Folder of Exhibits).

Subsequently, the complaint was dismissed by the city fiscal of Pasay City in a resolution dated May 29, 1967, on the ground that

. . there is no evidence to establish the fact that there is an illegal installation or jumper in the premises of Isidro Ongsip and this is sustained by the fact that the prosecution witnesses did not attempt to excavate the premises of Isidro Ongsip in order to determine with certainty that there is an illegal installation. Without excavating the premises of Isidro Ongsip it is impossible to conclude with reasonable certainty that there is a jumper or illegal installation because illegal installation or jumper must not only proceed from an assumption but must be based from actual facts as proved (pp. 4-6 Folder of Exhibits).

On July 14, 1967, following the dismissal by the investigating fiscal of the complaint for qualified theft and the disconnection by petitioner of his gas service, respondent Ongsip filed a complaint with the Court of First Instance of Rizal, Pasay City Branch VII for moral and exemplary damages against petitioner Manila Gas Corporation based on two causes of action, firstly: the malicious, oppressive and malevolent filing of the criminal complaint as a result of which "plaintiff has suffered mental anguish, serious anxiety, social humiliation, ridicule, embarrassment and degradation in the eyes of his business associates, friends, relatives and the general public"; and, secondly: the illegal closure of respondent Ongsip's gas service connection without court order and without notice of

warning purely "to further harass, humiliate and ridicule plaintiff, thereby again exposing unjustly, cruelly and oppressively the plaintiff, as well as his family, to social humiliation and degradation, to public contempt and ridicule, to personal discredit and dishonor and thus causing the plaintiff plaintiff and the members of his family irreparable injuries consisting of business and social humiliation, personal dishonor, mental anguish, serious anxieties, wounded feelings and besmirched reputation". In addition to attorney's fees and costs of litigation, respondent Ongsip likewise prayed that "pending final determination of the case that a writ of preliminary mandatory injunction forthwith issue, commanding the defendant corporation, its agents and employees to reconnect the gas service and supply at the residence and apartment of plaintiff at 2685 Park Avenue, Pasay City" (pp. 1-11, ROA). On July 19, 1967, petitioner filed a motion to dismiss alleging the complaint states no valid cause of action. Respondent Ongsip filed an opposition thereto (pp. 12-24, ROA). On August 11, 1967, the trial court issued an order denying petitioner's motion to dismiss (pp. 24-25, ROA). Consequently, on September 8, 1967, petitioner filed its answer stating that the filing of the criminal complaint in the Pasay City Fiscal's Office which was made the basis of the first cause of action was precipitated by the discovery of an illegal by-pas tube or "jumper" in the kitchen cabinet and immediately below the gas burners in respondent's residence. With respect to the second cause of action, petitioner stated that the cuttingoff or the disconnection of private respondent's gas service was on account of the latter's failure to settle and pay outstanding and due payments representing gas consumptions from July, 1965 to January, 1967. In both instances, according to petitioner, there was no intent to threaten, ridicule, embarrass or humiliate respondent Ongsip. A counterclaim for actual or compensatory damages and exemplary damages was interposed therein (pp. 24-31, ROA). In the meantime, the court had issued an order dated September 6, 1967 granting the writ of preliminary mandatory injunction as prayed for in the complaint for damages upon respondent Ongsip's filing of a bond in the amount of P10,000.00 (pp. 33-34, ROA). On May 2, 1972, the trial court rendered its decision
(a) Ordering defendant to pay plaintiff: (1) P50,000.00 as moral damages in the FIRST CAUSE OF ACTION; (2) P10,000.00 as exemplary damages in the FIRST CAUSE OF ACTION; (3) P30,000.00 as moral damages in the SECOND CAUSE OF ACTION; (4) P5,000.00 as exemplary damages in the SECOND CAUSE OF ACTION;

(5) P10,000.00 as attorney's fees; and (6) the costs of the suit; AND (b) Dismissing the defendant's counterclaim [pp. 44-76, ROA].

Within the reglementary period, petitioner appealed to the Court of Appeals assigning two errors, to wit:
The lower court erred in concluding that the filing of the criminal complaint was motivated purely 'to harass, threaten and ridicule' plaintiff despite clear and convincing evidence showing the actual existence of a gas jumper by-pass in plaintiff's establishment. The lower court erred in concluding without basis and findings of facts that the closure of plaintiff's gas service was arrogant and abusive despite provision of a contract to the contrary (p. 7, Brief for Defendant-Appellant).

On July 6, 1976, the said Court rendered its decision, pertinent portions of which are quoted hereinbelow:
We are inclined to concur with the court a quo that the existence of a 'jumper' was merely a presumption on the part of Coronel. Indeed the discrepancy or fluctuation in the gas consumption in appellee's place could very well be attributed to many factors, such as a defective meter or a reduction in the use of the appliances on the premises considering that the restaurant/hotel business is transient. Neither can appellant attribute any defect in the installation of the appliances to the appellee as the installation was undertaken by the former's employees (T.S.N. pp. 12-13, December 17, 1968). Similarly, the gas meter was installed by defendant corporation, so that when a report was made that the original meter was defective, a new one was installed (T.S.N., pp. 27-28, December 1, 1970). Again, according to the testimony of Delfin Custodia, mechanical engineer of defendantappellant, the second meter that was installed on August 11, 1966 was replaced as being defective because 'some of its parts were worn out and that it was not properly registering,' (T.S.N., pp. 14-15, December 2, 1970). Therefore, rather than impute the fluctuation in gas consumption to a 'jumper' in the service connection, it would be more in keeping with the circumstance of the case to attribute this to the faulty meter installed by defendantappellant. Indeed, from the evidence for the appellant itself that the old installation was embedded in the cement wall (which was later changed by appellant to exposed pipes; t.s.n. p. 55, March 3, 1971). We are of the belief that it was unlikely for the appellee to install a 'jumper' in the cement wall, a conclusion which bears support in the report of the City Fiscal, Pasay City that 'Isidro Ongsip was agreeable to have his place excavated and demolished provided that if there is no illegal installation or jumper found in the premises, the Manila Gas Corporation should answer for whatever damages that may be incurred in connection with its excavation of the premises "which offer was declined by appellant, indicating that it was not certain as to the existence of such jumper (Resolution, Exhibit 'D'). In the light of the foregoing, appellant's first assigmment of error must necessarily fail. Anent the second assignment of error, it appears that the gas service to appellee's compound was disconnected on the basis of non-payment of three-months bills, which were admittedly computed only on the average consumption registered, without benefit of meter reading (T.s.n. p. 13, April 30, 1971), and without previous notice of disconnection or reminder to pay (T.s.n. pp. 44-45, Id., p. 30, May 18, 1971).

Considering that the availability of the gas service was of utmost importance to appellee in the pursuit of his business venture (hotel-motel restaurant), it is not difficult to foresee the losses that the business must have incurred as a consequence of appellant's unwarranted and arbitrary act. It may not be amiss to take note at his juncture that in assessing the damages in favor of appellee, the court a quo did not award him actual damages, but merely moral and exemplary damages plus attorney's fees pursuant to Articles 2208 paragraphs (1) and (11); Articles 2217, 2219 paragraph (8) and 2229 of the New Civil Code. And, considering further the provisions of Article 2216 of said Code: No proof of pecuniary loss is necessary in order that moral nominal, temperate, liquidated or exemplary damages may be adjudicated. Theassessment of such damages, except liquidated ones, is left to the discretion of the Court, according to the circumstances of each case; which is amply supported by the evidence on record, taking into consideration appellee's standing in the community, WE find that the award must be sustained. WHEREFORE, the decision appealed from is hereby affirmed in toto, it being in accordance with the law and evidence adduced during the trial. Costs against appellant (pp. 75-85, rec.).

Hence, on September 1, 1976, Manila Gas Corporation filed a petition for review by way of appeal to this Court based on the following grounds, to wit:
I. The derision is not supported by the facts and the evidence. Rather, the decision is belied and rebuked by the clear and overwhelming evidence. A. The finding that witness Mariano Coronel is an unreliable witness is totally unsupported by any evidence. B. The filing of the criminal complaint against Ongsip was not actuated by malice on the part of petitioner. C. The filing of the criminal complaint against respondent Ongsip was based on probable cause. D. The closure of Ongsip's gas service was made after due notice to pay his back accounts was given and after a warning of disconnection. II. The decision of respondent court is contrary to settled jurisprudence enunciated by this Honorable Supreme Court and is unsupported by any evidence.

A. Advice of counsel is a complete defense against a suit for malicious prosecution. III. The decision of respondent court on the Second Cause of Action of respondent Ongsip is based on a misapprehension of facts.

IV. Under the facts and the law, petitioner is not liable for moral and exemplary damages. V. Assuming arguendo that the petitioner is liable for moral and exemplary damages, the amount awarded by the trial court and affirmed by the Court of Appeals are grossly, exorbitant as to call for a review thereof" (pp. 2223, rec.).

On December 13, 1976, this Court, after considerating the allegations, issues and arguments adduced in the petition for review on certiorari of the decision of the Court of Appeals, private respondent's comment thereon as well as petitioner's reply to said comment, resolved to GIVE LIMITED DUE COURSE to the petition as to whether or not the damages awarded by the trial court as affirmed by the Court of Appeals per its decision of July 6, 1976 are excessive and should be reduced and to TREAT the petition for review as a special civil action. WE are thus constricted to a single issue in this case: whether or not the amount of moral and exemplary damages awarded by the trial court and affirmed by the Court of appeals is excessive. Article 2217 of the Civil Code states that "moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act or omission." On the other hand, Article 2229 provides that "exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition, to the moral, temperate, liquidated or compensatory damages" (emphasis supplied). The first cause of action, for which respondent Ongsip was awarded moral and exemplary damages in the amount of P50,000.00 and P10,000.00, respectively, is predicated on Article 2219 of the Civil Code which states that "moral damages may be recovered in the following and analogous cases: .. . (8) malicious prosecution; .. . To constitute malicious prosecution, there must be proof that the prosecution was prompted by a siniter design to vex and humiliate a person that it was initiated deliberately by the defendant knowing that his charges were false and groundless. Concededly, the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution. (Salao vs. Salao, 70 SCRA 65 [March 16, 1976]; Ramos vs. Ramos, 61 SCRA 284 [December 3, 19741]; Solis & Yarisantos vs. Salvador, 14 SCRA 887] [August 14, 1965]; Buenaventura, et al. vs. Sto. Domingo, et al., 103 Phil. 239 [1958]; Barreto vs. Arevalo, 99 Phil. 771 [1956]). In the instant case, however, there is reason to believe that there was malicious intent in the filing of the complaint for qualified theft. This intent is traceable to that early afternoon of August 17, 1966, when petitioner's employees, upon being ordered, came to private respondent's residence and changed the defective gas meter and tube

connections without notice. In other words, respondent Ongsip had no opportunity to observe the works. Nonetheless, if indeed he had installed an illegal by-pass tube or jumper, he could have easily asked for its immediate removal soon after his houseboy told him what petitioner's employees did. As established by the facts, he had not even attempted to refuse entrance to petitioner's employees headed by Mariano Coronel nor to question their authority upon their return later that same afternoon with a photographer. Little did he realize that the pictures of the premises that were being taken would be used as evidence against him. Surprisingly, when respondent Ongsip asked Coronel why they were taking pictures, Coronel just gave him a calling card and instructed him to go to his office. It was quite an unusual gesture. Obviously, Coronel had something in mind. As correctly observed by the trial court in its decision
A significant fact brought about by the testimony of Coronel himself is the total absence of immediate accusation against Plaintiff right at the very moment when the by-pass valve was allegedly discovered. Right then and there Coronel should have told Plaintiff that he was using a by-pass valve and in effect stealing gas from Defendant. There would have been nothing wrong with that. The circumstance was familiar to that of catching a thief in flagrante delicto. But the truth is that when Coronel and his men entered Plaintiff's compound and made changes therein, Plaintiff was sleeping. He had no knowledge of what was then going on. Coronel and his men told the 'boy' of Plaintiff that the changes were being made so that the consumption of gas could be decreased. So that when Plaintiff woke up at four o'clock in the afternoon, Coronel and his men had already made the changes and had already gone. They returned however at five o'clock, this time with a photographer. This was the time when Plaintiff met Coronel. Here was then the opportunity for Coronel to confront Plaintiff with the allegedly discovered 'by-pass valve' and bluntly, even brutally, tell him that there was thievery of gas. This, Coronel did not do. .. .. ."

It bears noting that when he was informed as to the existence of a 'jumper' in his gas connection, respondent Ongsip did not show any sign of fear or remorse and did not yield to the threatening demand of Coronel. Experience tells us that this is not the attitude of a guilty person. On the contrary, this is the attitude of someone who knows how to take a firm stand where his principles and rights are concerned. To prove his innocence, he was even willing to have his place excavated but petitioner would not dare take the consequences. Besides, Delfin Custodio, petitioner's own mechanical engineer, testified that the second gas meter was replaced as being defective because "some of its parts were worn out and that it was not properly registering." Evidently, petitioner Manila Gas Corporation, in failing to recover its lost revenue caused by the gas meter's incorrect recording, sought to vindicate its financial loss by filing the complaint for qualified theft against respondent Ongsip knowing it to be false. It was actually intended to vex and humiliate private respondent and to blacken his reputation not only as a businessman but also as a person. Qualified theft is a serious offense indicating moral depravity in an individual. To be accused of such crime without basis is shocking and libelous. It stigmatized private respondent causing him emotional depression and social degradation. Petitioner should have realized that what is believed to be a vindication of a proprietary right is no justification for subjecting one's name to indignity and dishonor. One can thus imagine the anguish, anxiety, shock and humiliation suffered by respondent Ongsip. The fact that the complaint for qualified theft

was dismissed by the Pasay City fiscal is no consolation. The damage had been done. Necessarily, indemnification had to be made. The trial court awarded P50,000.00 as moral damages and P10,000.00 as exemplary damages. WE give due consideration to respondent Ongsip's social and financial status as a businessman and the mental anguish he suffered as a result of the false imputation. However, We also consider petitioner's financial capability. Petitioner is a public utility corporation whose primary concern is service to the people, the profit motive being merely secondary. Under the circumstances, We are of the opinion that the award of moral and exemplary damages should be reduced to P25,000.00 and P5,000.00, respectively. This award is sanctioned by Article 2234 of the Civil Code which states that:
When the amount of the exemplary damages need not be proved, the plaintiff show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded. In case liquidated damages have been agreed upon, although no proof of loss is necessary in order that such liquidated damages may be recovered nevertheless, before the court may consider the question of granting exemplary in addition to the liquidated damages, the plaintiff must show that he would be entitled to moral, temperate or compensatory damages were it not for the stipulation for liquidated damages (emphasis supplied).

On the second cause of action which is based on the illegal disconnection of respondent Ongsip's gas service constituting breach of contract, the trial court awarded P30,000.00 as moral damages and P5,000.00 as exemplary damages. Petitioner contends that the disconnection was on account of respondent Ongsip's failure to pay his gas consumptions for more than three months. While private respondent admits having accounts with petitioner, he denies having been notified thereof or having received any warning of the disconnection In determining the propriety of the award, it is material to establish that prior notice or warning had been given to respondent Ongsip before the gas service was disconnected, in accordance with the terms of the contract. In this regard, We find the trial court's observation in its decision to be well-founded, to quote:
Defendant would insist that the household helpers inside Plaintiff's premises refused to receive notices or to sign them. Defendant has not given the Court any plausible reason why these persons would refuse to receive, or sign for, notices of demands for payments or warnings of threatened disconnection of the service. The very evidence of Defendants indicates that Plaintiff had long been a customer of Defendant. Plaintiff has been paying his bills. Plaintiff had not suffered any financial reverses. As a matter of fact, upon the suggestion of the Court, Plaintiff readily made payment of his count with Defendant. He made payment not because the service would be restored. When he made the payment the Court had already issued a mandatory preliminary injunction, ordering Defendant to restore gas service in the premises of Plaintiff. Plaintiff made the payment to comply with the suggestion of the Court because the Court rather than enforce its order, would like the parties to settle the case amicably.

What is peculiar in the stand of Defendant is that while it would insist on the giving of notices and warnings, it did not have any competent and sufficient evidence to prove the Same. Demands in open were made by Plaintiff counsel whether Defendant could show any written evidence showing that notices and warnings were sent to Plaintiff. Not a single piece of evidence was produced. Normally, if a notice is refused, then the original and its copies would still be in the hands of the public utility concerned. In the instant case, it has to be repeated, not a single copy, original or duplicate, triplicate, etc. of any notice to pay or warning of disconnection was produced in court. The court cannot believe that Defendant, as what the testimonies of its witnesses would like to impress upon this Court, conducts its business that way. Defendant is a big business concern and it cannot be said that it treats its business as a joke. Its personnel should realize this, for only with such an awareness can they respond faithfully to their responsibilities as members of a big business enterprise imbued with public interest over which the Philippine Government is concerned.

Quite obviously, petitioner's act in disconnecting respondent Ongsip's gas service without prior notice constitutes breach of contract amounting to an independent tort. The prematurity of the action is indicative of an intent to cause additional mental and moral suffering to private respondent. This is a clear violation of Article 21 of the Civil Code which provides that "any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for damages." This is reiterated by paragraph 10 of Article 2219 of the Code. Moreover, the award of moral damages is sanctioned by Article 2220 which provides that "willful 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" (emphasis suplied). WE are not unmindful of the fact that at the time the gas service was disconnected, respondent Ongsip admitted having been in default of at least three months' bills. WE have established however that no notice to that effect has been served on him. It must be pointed out that respondent Ongsip is an old man involved in a number of business and social undertakings. It is quite natural and understandable that at times he forgets some minor obligations and details of his concern. This is the time when reminders and friendly notices become indispensable. The rudiments of procedural due proccess dictate that he should have been notified of any back accounts. In the past, respondent Ongsip had not been remiss in the payment of his bills. Petitioner should have at least accorded him the courtesy, if not the right, as per contract, of being notified before effecting disconnection so that he could take steps or initiate measures to avoid such embarrassment. Apparently, such misconduct or omission on the part of petitioner formed part of a malevolent scheme to harass and humiliate private respondent, exposing him to further ignominy and greater mental torture. Respondent Ongsip's default in payment cannot be utilized by petitioner to defeat or nullify the claim for damages. At most, this circumstance can be considered as a mitigating factor in ascertaining the amount of damages to which respondent Ongsip is entitled. In consequence thereof, We reduce the amount of moral damages to P15,000.00 The award of P5,000.00 as exemplary damages, on the other hand, is sustained, being similarly warranted by Article 2234 of the Civil Code aforequoted as complemented by Article 2220.

The award of attorney's fees in the amount of P10,000.00 is justified under the circumstances. WHEREFORE, PETITIONER MANILA GAS CORPORATION IS HEREBY DIRECTED TO PAY
(1) RESPONDENT ISIDRO M. ONGSIP P25,000.00 AS MORAL DAMAGES AND P5,000.00 AS EXEMPLARY DAMAGES FOR THE FIRST CAUSE OF ACTION, P15,000.00 AS MORAL DAMAGES AND P5,000.00 AS EXEMPLARY DAMAGES FOR THE SECOND CAUSE OF ACTION, AND P10,000.00 AS ATTORNEY'S FEES; AND (2) THE COSTS.

MODIFIED AS ABOVE STATED, THE DECISION OF RESPONDENT COURT OF APPEALS IS HEREBY AFFIRMED IN ALL OTHER RESPECTS. SO ORDERED. Teehankee, Acting C.J., Fernandez, Guerrero and Melencio-Herrera, JJ., concur. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-39019 January 22, 1988 MANILA ELECTRIC COMPANY and PEDRO YAMBAO, petitioners-appellants, vs. THE HONORABLE COURT OF APPEALS and ISAAC CHAVEZ, SR., ISAAC O. CHAVEZ, JR., ROSENDO O. CHAVES, and JUAN O. CHAVES, respondentsappellees.

YAP, J.: In an action for recovery of damages for embarassment, humiliation, wounded feelings and hurt pride, caused to herein private respondents, by reason of the disconnection of their electrical service by the petitioners, the then Court of First Instance of Manila, Sixth Judicial District, Branch XXIV, rendered a decision dated December 13,1967, ordering herein petitioners jointly and severally to pay private respondents the sum of Ten Thousand (P10,000.00) Pesos as moral damages, Two Thousand (P2,000.00) Pesos as exemplary damages and, One Thousand (P1,000.00) Pesos as attorney's fees, and dismissing petitioners' counterclaim.

On appeal, the Court of Appeals and in toto the trial court's decision. Their Motion for Reconsideration having been denied, petitioners filed the instant petition for certiorari. Petitioner Manila Electric Company (MERALCO) is a public utility corporation providing electric power for the consumption of the general public in Metro Manila. Petitioner Pedro Yambao is a bill collector of MERALCO. Private respondents Isaac Chaves and Juana O. Chaves, husband and wife, filed the complaint for damages, together with their children, Isaac O. Chaves, Jr. and Rosendo O. Chaves. Isaac Sr. and Isaac Jr. and Rosendo were members of the Philippine Bar; Isaac, Sr. and Isaac, Jr. were practicing lawyers and Rosendo was a Legal Officer at the Agricultural Productivity Commission. Juana O. Chaves was a public school teacher. The facts as found by the trial court and adopted by the Court of Appeals are as follows:
Plaintiff Isaac Chaves became a customer of defendant MERALCO in the year 1953 when he and his family were residing at No. 211-D Rubi, Manila. In connection with the contract for electrical service, he deposited the sum of P5.00 (Exh. "A") with defendant MERALCO on February 12, 1953. This deposit in the name of plaintiff Isaac Chaves was retained by MERALCO and made to apply to subsequent contracts for electrical service entered into after subsequent transfers of the Chaves family to other residences and up to the time this family went to reside at the place aforementioned, at No. 2656 Mercedes Street, Singalong, Manila. ... At or about the end of March, 1965, defendant Pedro Yambao went to the residence of plaintiffs and presented two overdue bills, one for January 11 to February 9,1965, for the sum of P7.90 (Exhibit "C"), and the other for February 9 to March 10, 1965, for the amount of P7.20 (Exhibit "C"). Juana O. Chaves, however, informed Yambao that these bills would be paid at the MERALCO main office. Accordingly, on April 2, 1965, Isaac Chaves went to the defendant's main office at San Marcelino, Manila, but paid only the bill marked as Exhibit 'C" leaving the other bill Identified as Exhibit "C-l" unpaid. Past 2:30 o'clock in the afternoon of April 21,1965, MERALCO caused the electric service in plaintiff's residence to be discontinued and the power line cut off. The next day, April 22, 1965, at about 9:00 a.m., plaintiff Rosendo O. Chaves went to the MERALCO main office and paid the amount of P7.20 for the bill marked as Exhibit "C-l", and the sum of P7.00 for the subsequent bill corresponding to the period from March 10 up to April 8, 1965 (Exhibit "C-2") after his attention was called to the latter account. Rosendo O. Chaves then sought the help of Atty. Lourdy Torres, one of the defendants' counsel, and, thereafter, the power line was reconnected and electric service restored to the Chaves residence at about 7:00 p.m. of that same day. 1

Petitioners dispute the finding that there was no notice given to herein respondent. However, since only questions of law may be raised in a petition for certiorari under Rule 45 of the Revised Rules of Court, petitioners, 'for the sake of argument and for the purpose of giving focus on the legal issues', do not take issue with such finding.

Petitioners contend that in the absence of bad faith, they could not be held liable for moral and exemplary damages as well as attorney's fees. The failure to give a notice of disconnection to private respondents might have been a breach of duty or breach of contract, but by itself does not constitute bad faith or fraud; it must be shown that such a failure was motivated by in or done with fraudulent intent.Petitioners also maintain that ' private respondents were in arrears in the payment of their electricity bills when their electric service was connected, no moral damages may be recovered by them under the 'clean hands' doctrine enunciated in Mabutas vs. Calapan Electric Company, CAG.R. No. L-9683-R, May 26, 1964. In its decision, the respondent Court of Appeals held that MERALCO's right to disconnect the electric service of a delinquent customer "is an absolute one, subject only to the requirement that defendant MERALCO should give the customer a written notice of disconnection 48 hours in advance." This requirement is embodied in Section 97 of the Revised Order No. 1 of the Public Service Commission which provides as follows:
Section 97. Payment of bills. A public service, may require that bills for service be paid within a specified time after rendition. When the billing period covers a month or more, the minimum time allowed will be ten days and upon expiration of the specified time, service may be discontinued for the non-payment of bills, provided that a 48 hours' written notice of such disconnection has been given the customer: Provided, however, that disconnections of service shall not be made on Sundays and official holidays and never after 2 p.m. of any working day: Provided, further, that if at the moment the disconnection is to be made the customer tenders payment of the unpaid bill to the agent or employee of the operator who is to effect the disconnection, the said agent or employee shall be obliged to accept tender of payment and issue a temporary receipt for the amount and shall desist from disconnecting the service. 2

The respondent court stressed the importance and necessity of the 48-hour advance written notification before a disconnection of service may be effected. Said the court:
... It sets in motion the disconnection of an electrical service of the customer by giving the notice, determining the expiration date thereof, and executing the disconnection. It, therefore, behooves the defendant MERALCO that before it disconnects a customer's electrical service, there should be sufficient evidence that the requirements for the disconnection had been duly complied with, otherwise, the poor consumer can be subjected to the whims and caprices of the defendant, by the mere pretension that the written notice had been duly served upon the customer. 3

We find no reversible error in the decision appealed from. One can not deny the vital role which a public utility such as MERALCO, having a monopoly of the supply of electrical power in Metro Manila and some nearby municipalities, plays in the life of people living in such areas. Electricity has become a necessity to most people in these areas justifying the exercise by the State of its regulatory power over the business of supplying electrical service to the public, in which petitioner MERALCO is engaged. Thus, the state may regulate, as it has done through Section 97 of the Revised Order No. 1 of the Public Service Commission, the conditions under which and the manner by which a public utility such as MERALCO may effect a disconnection of service to a

delinquent customer. Among others, a prior written notice to the customer is required before disconnection of the service. Failure to give such prior notice amounts to a tort, as held by us in a similar case, 4 where we said:
... petitioner's act in 'disconnecting respondent Ongsip's gas service without prior notice constitutes breach of contract amounting to an independent tort. The prematurity of the action is indicative of an intent to cause additional mental and moral suffering to private respondent. This is a clear violation of Article 21 of the Civil Code which provides that any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for damages. This is reiterated by paragraph 10 of Article 2219 of the Code. Moreover, the award of moral damages is sanctioned by Article 2220 which provides that wilfull injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.

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

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION 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 Decision1 of the Court of Appeals (CA) in CAG.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 Doa Segunda Hotel,3 formerly known as the Davao Imperial Hotel (Imperial Hotel Building),4 located 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 Doa 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 hotels unpaid electric consumption bill amounted to P190,111.02.11 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.15 NFA/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 grid17 under Account No. 091-12643,18 and installed Meter No. 8473819 to measure NFA/KADIWAs monthly electric consumption. In August 1986, the Kadiwa Center IV closed, and NFA/KADIWA vacated the Doa Segunda Building.20 In a letter21 dated 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.22 She also informed DLPC that the P1,020.00 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 Doa 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 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 P1,020.00 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 onephase meter to a three-phase meter connection.33 Mendiolas application was approved by DLPC. On December 19, 1986, DLPC and Mendiola executed a service Contract34 for electricity service. On January 7, 1987, Diaz filed an application for preliminary injunction in Sp. Civil Case No. 18,28835 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 Officerin-Charge, Rebecca Madrid, was issued to all security guards of the Doa Segunda Building who were ordered to prevent anyone from disturbing Meter No. 84738.37 Because of this, DLPC failed to substitute its single-phase meter with a three-phase meter. DLPCs 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 Order40 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 DLPCs consent and authority.48 The RTC issued an Order49 dated March 30, 1988 denying Diazs application for prohibitory and mandatory injunction, and granting DLPCs 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 Decision51 granting Diazs 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 P385,000.00 and further waives any claim in excess of said amount in the same case, and the defendantappellant 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 Doa 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. In Sp. Civil Case No. 18,288, the parties also filed a Joint Motion to Dismiss57 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 respondents 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 Decision60 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 Prosecutors Office, Davao City; respondent Braganza submitted an Affidavit63 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 Prosecutors Office of Davao City, issued a Resolution64 recommending the dismissal of the charge. He opined that the correspondence to DLPC Manager Orig negated DLPCs 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). 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 Reconsideration68 filed 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 Prosecutors 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 P300,000.00 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 attorneys 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 Decision80 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. 41399.1vvphi1.nt Diaz, et al. relied on the following grounds:

I TRIAL COURT ERRED IN IGNORING PLAINTIFF-APPELLANTS (SIC) EVIDENCE OF CONSPIRACY AMONG ALL DEFENDANT-APPELLANTS (SIC) AND IN MAKING NO FINDING THAT THERE WAS A CONSPIRACY TO PROSECUTE PLAINTIFFAPPELLANTS (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 DEFENDANTAPPELLANTS (SIC) CHARGE OF ESTAFA THROUGH FALSIFICATION; (c) BY IGNORING THE FACT THAT THERE WAS NO EVIDENCE LINKING PLAINTIFF-APPELLANTS (SIC) TO THE CRIME CHARGED; (d) BY IGNORING THE CIRCUMSTANCES THAT MANY ALLEGATIONS IN THE JOINT AFFIDAVIT OF DEFENDANT-APPELLANTS (SIC) ARE INADMISSIBLE; (e) BY IGNORING THE FACT THAT DAVAO LIGHTS USE OF THE VARYING DISCOUNT FORMULA WAS ADMITTEDLY PROVISIONALLY AUTHORIZED BY THE BOE WHICH AUTHORITY WAS IN FORCE DURING THE FILING AND PENDENCY OF THE CHARGE; (f) BY IGNORING THE FACT THAT THE VARYING DISCOUNT FORMULA WAS A FORMULA TO DETERMINE THE AMOUNT OF DISCOUNT DEDUCTIBLE FROM THE RATES EARLIER FIXED BY THE BOE RESULTING 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 NO. 73-146; (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; (h) BY IGNORING THE UNREBUTTED EVIDENCE THAT APPELLANT FUENTES DISOBEYED THE DIRECTIVE OF HIS SUPERIOR, THE CHIEF STATE PROSECUTOR TO HOLD IN ABEYANCE FURTHER PROCEEDINGS IN I.S. NO. 82115, AND THAT HE FILED AN INFORMATION CHARGING PLAINTIFF-

APPELLANTS (SIC) WITH AN OFFENSE DIFFERENT FROM THAT SUBJECT OF HIS PRELIMINARY INVESTIGATION; (i) IN FINDING THAT DEFENDANT-APPELLANTS (SIC) DID NOT ACT WITH MALICE AND HAD ACTED IN GOOD FAITH IN FILING SAID CHARGE. III TRIAL COURT ERRED IN NOT AWARDING DAMAGES TO PLAINTIFF-APPELLANTS (SIC).82 For their part, DLPC, et al. alleged the following: I THAT THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANTS APPELLANTS COUNTERCLAIMS HAVE NO CAUSE OF ACTION. II THAT THE TRIAL COURT ERRED IN NOT AWARDING DAMAGES AND ATTORNEYS FEES.83 On October 30, 2001, the CA rendered a Decision84 affirming the decision of the RTC. 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. On June 10, 1992, DLPC instituted a civil action for Damages,87 before the RTC, Cebu City, against Diaz for defamatory and libelous remarks and for abuse of rights. The plaintiff alleged that Diaz, motivated by malice and ill-will, had taken it upon himself to find fault in DLPCs acts and oppose all its application with the BOE, using the media to assault its good name by circulating or publishing libelous and false statements in the newspapers. The case was docketed as Civil Case No. CEB-11843. DLPC further alleged that Diaz published and disseminated a handbill claiming that there was something irregular and anomalous regarding the Energy Regulation Boards approval of the appraisal of the properties and equipment of DLPC, because of which the customers of DLPC could expect a P5.00 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 interview with the Peoples Daily Forum, claimed that the National Power Corporation sold two (2) generating sets to DLPC for only P1.00 each.89 Consequently, DLPC suffered besmirched reputation and public humiliation, and damage to its business standing. The complaint contained the following prayer:

1) Immediately issue a temporary restraining order ex-parte precluding defendant from committing further acts of tort or libel against plaintiff, and after the hearing of plaintiffs application for preliminary injunction, issue such writ after posting of the required injunction bond; 2) After trial, render judgment in favor of plaintiff and against defendant Antonio Diaz making the injunction permanent, and ordering the latter to pay the former a) The sum of P10,000,000.00 as moral damages anddamages to its business standing; b) The sum of P300,000.00 as exemplary damages; c) The sum of P500,000.00 as attorneys fees and expenses of litigation; d) The cost of suit.90 After trial, the RTC in Civil Case No. CEB-11843 rendered a Decision91 in favor of DLPC and against Diaz, awarding more than P1,500,000.00 in damages to DLPC and dismissing the counterclaim of Diaz. The decretal portion reads: 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: 1. To pay plaintiff the amount of P1,500,000.00 by way of moral damages for besmirched reputation, loss of business standing and goodwill; 2. To pay plaintiff the amount of P300,000.00 in exemplary damages by way of example or correction for the public good; and 3. To pay plaintiff the amount of P500,000.00 in attorneys fees and litigation expenses and to pay the costs. Defendant takes nothing from his counterclaim. SO ORDERED.92 Both parties appealed the decision to the CA in CA-G.R. CV No. 65082, which appeal is still pending. On October 30, 1992, Diaz, as plaintiff, filed a complaint for Damages, Injunction with Writ of Preliminary Injunction and Temporary Restraining Order, Plus Attorneys Fee93 against DLPC before the RTC, Davao City; the case was docketed as Civil Case No. 21,655-92. Diaz alleged that DLPCs filing of criminal cases, I. S. No. 593 for theft of electricity and I.S. No. 92-4590 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 P11.6 Million damage suit in Civil Case No. CEB-1055 and a P10.8 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 P10,000,000.00, attorneys fee in the amount of P500,000.00, litigation expenses in the amount of P100,000.00 and exemplary damage in the amount of P100,000.00; 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 plaintiffs first cause of action, which is damages for defendants 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 defendants alleged malicious prosecution of a criminal case of theft of electricity against him, for plaintiffs 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 defendants 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 plaintiffs 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 persons right to litigate should not be penalized by holding him liable for damages. 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 persons 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 DLPCs 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 latters total claims to only P385,000.00; (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 instituting any further action involving electric Meter No. 84736 or 86673509. 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. 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 the intention to abstain from taking an unconscionable and unscrupulous advantage of another.117 Good faith is presumed and he 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 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 response to duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad faith or bad motive. 119 The evidence presented by respondents negates malice or bad faith. Petitioner himself alleged in his complaint that he 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 meters should always be upon mutual contract of the parties, and that payments for electrical consumption should also be made promptly whenever due.120 Based on these established facts, petitioner has not shown that the acts of respondent were done with the sole intent of prejudicing and injuring him. Petitioner may have suffered damages as a result of the filing of the complaints. However, there is a material distinction between damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results from the injury; and damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage without injury in those instances in which the loss or harm was not the result of a violation of a legal duty. In such cases, the consequences must be borne by the injured person alone; the law affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong. These situations are often called damnum absque injuria.121 Whatever damages Diaz may have suffered would have to be borne by him alone since it was his acts which led to the filing of the complaints against him. 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 of such prosecution, suit, or other proceeding in favor of the defendant therein.122 It is an established rule that in order for malicious prosecution to prosper, the following requisites must be proven by petitioner: (1) the fact of prosecution and the further fact that the defendant (respondent) 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.123 The foregoing are necessary to preserve a persons right to litigate which may be emasculated by the undue filing of malicious prosecution cases.124 From the foregoing requirements, it can be inferred that malice and want of probable cause must both be clearly established to justify an award of damages based on malicious prosecution.125 The Court notes that respondents initiated two separate criminal actions, one for theft of electricity, Inv. Sheet No. 593 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 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.126 In addition, the elements of the two (2) offenses 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 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 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. 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. First. Although respondent DLPC initiated before the prosecutors office Inv. Sheet No. 593 July/1988 for theft of electricity, 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 were eventually dropped or dismissed before they could be filed in court. Ultimately, both actions could not end in an acquittal. Second. It cannot be concluded that respondent DLPC acted without probable cause when it instituted the actions. The events 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 prosecution where he acted with probable cause." As Justice Moreland explained in that case: 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. The general rule is well settled that one cannot be held liable in damages for maliciously instituting a prosecution where he acted 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 prosecutors, who had a tolerable ground of suspicion, were liable to be sued at law when their indictments miscarried. Thus, the element of malice and the absence of probable cause must be proved.131 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 knowing that the charge was false and baseless to entitle the victims to damages.132 The two elements must simultaneously exist; otherwise, the presence of probable cause signifies, as a legal consequence, the absence of malice.133 In the instant case, it is evident that respondent DLPC 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.

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 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 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 is an escape valve to relieve the pressures of personal disagreements that might otherwise explode in physical confrontation. It is necessary not only for upholding ones claims when they are unjustly denied but also for the maintenance of peace, if not goodwill, among incipient antagonists. Without the right to litigate, conflicting claims cannot be examined and resolved in accordance with one of the primary purposes of government, which is to provide for a just and orderly society.134 Hence, the mere act of submitting a case to the authorities for prosecution does not render a person liable for malicious prosecution should he or she be unsuccessful, for the law could not have meant to impose a penalty on the right to litigate.135 IN LIGHT OF THE FOREGOING, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 68709 is AFFIRMED. SO ORDERED. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-16439 July 20, 1961

ANTONIO GELUZ, petitioner, vs. THE HON. COURT OF APPEALS and OSCAR LAZO, respondents. Mariano H. de Joya for petitioner. A.P. Salvador for 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. It is the third and last abortion that constitutes plaintiff's basis in filing this action and award of damages. Upon application of the defendant Geluz we granted certiorari. 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 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. 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). 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. The decision appealed from is reversed, and the complaint ordered dismissed. Without costs. Let a copy of this decision be furnished to the Department of Justice and the Board of Medical Examiners for their information and such investigation and action against the appellee Antonio Geluz as the facts may warrant. Bengzon, C.J., Padilla, Labrador, Barrera, Paredes, Dizon and Natividad, JJ., concur. Concepcion, J., took no part. De Leon, J., took no part. SECOND DIVISION

[G.R. No. 105819. March 15, 1996] MARILYN L. BERNARDO, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION), HON. JOSE G. DE VERA, in his capacity as Labor Arbiter, UNIVET AGRICULTURAL PRODUCTS, INC., and CONRADO S. BAYLON, respondents. SYLLABUS 1. REMEDIAL LAW; SUPREME COURT CIRCULARS AND ORDERS; CIRCULAR NO. 28-91, AS AMENDED BY CIRCULAR NO. 4-94; REQUIREMENT FOR PARTIES IN THE COURT OF APPEALS ORIN THE SUPREME COURT TO INDICATE IN THE CAPTION OF EVERY PETITION THE DOCKET NUMBER OF THE CASE IN THE COURT BELOW IS NOW REMOVED BY REVISED CIRCULAR NO. 28-91. - While it is true that the docket numbers of the case in the Labor Arbiters office and in the NLRC are not indicated in the caption of the petition, the fact is that the numbers appear in the affidavit of service. This failure to comply strictly with the requirement may be excused on the ground that there was nevertheless substantial compliance by petitioner indicating the docket numbers in the affidavit of service which is a part of her petition. In any event the informality may be overlooked in view of the fact that this requirement was subsequently removed by the amendment of Circular No. 28-91 by Circular No. 4-94, which took effect on April 1, 1994. 2. ID.; WHILE THE REQUIREMENT AS TO CERTIFICATE OF NON-FORUM SHOPPING IS MANDATORY, IT SHOULD NOT BE INTERPRETED TOO LITERALLY AS TO DEFEAT THE OBJECTIVE OF PREVENTING THE UNDESIRABLE PRACTICE OF FORUM-SHOPPING. - As to the second requirement pertaining to certificates of non-forum shopping, the record shows that the certificaton in this case was incorporated in the petition. As in the case of the first requirement regarding docket numbers, there was substantial compliance in this case. Indeed, while the requirement as to certificate of non-forum shopping is mandatory, nonetheless the requirements must not be interpreted too literally and thus defeat the objective of preventing the undesirable practice of forum-shopping. 3. ID.; IN FILING G.R. NO. 93958, PETITIONER CANNOT BE ACCUSED OF FORUM-SHOPPING; REASON. - The petition in G.R. No. 93958 was filed when this case was still pending before the Labor Arbiters office. It was for reinstatement, pending determination of the case by the Labor Arbiter on the ground that there was undue delay in the disposition of the case. As already stated, the petition was dismissed and the Labor Arbiter was instead ordered to expedite the resolution of petitioners case by deciding it within 30 days. On the other hand, the present petition, although seeking the reinstatement of petitioner, is based on petitioners claim that the decision of the NLRC was rendered with grave abuse of discretion and therefore is void. The two actions, Therefore, involve different causes of action. For the principle of res judicata to apply, the following must be present; (a) a decision on the merits; (b) by a court of competent jurisdiction (c) the decision is final; and (d) the two actions involve indentical parties, subject matter and causes of action. The last element is absent in this case. Nor may petitioner be accused of forum-shopping, which exists when, as a result of an adverse decision rendered in a case, the losing party seeks a favorable decision in another forum other than by appeal or certiorari. The present certiorari is not a separate case but a review of the decision of the NLRC.

4. LABOR LAW; TERMINATION OF EMPLOYMENT; VIOLATION OF COMPANY RULES AS GROUND FOR DISMISSAL; NO FORMAL HEARING NECESSARY CONSIDERING THAT PETITIONER ADMITTED RESPONSIBILITY FOR THE VIOLATION. - Petitioner claims that without giving her the right to be heard, private respondent found her guilty of violating company rules for having inserted in the approved requisition request an order for an executive swivel chair and for other violations of company rules allegedly committed in the past. With respect to the first ground (inserting an additional item in the approved request for purchase), we hold that no formal hearing was necessary considering that petitioner admitted responsibility for the unauthorized insertion. It was sufficient that she was informed of the findings of management on the basis of its decision to dismiss her. 5. ID.; THE REASONABLE PENALTY IMPOSABLE UNDER THE CIRCUMSTANCES. - We agree with the finding that the insertion of an additional item in the request for purchase, after this had been approved, was a violation of company rule but it was not of such gravity as to warrant petitioners outright dismissal. On the other hand, considering the offense comitted, an award of backwages and order of reinstatement cannot be justified. Considering, however, that the insertion of the additional order did not cause damage to the company in the sense that the cost of the chair, even if purchased, would not make the total amount to be expended exceed the amount of budget, and that in all probability petitioner was simply motivated by a desire to curry favor with the head of her department rather than gain materially, we agree with the NLRC that outright dismissal would be out of proportion to the gravity of her offense. The question is what penalty is reasonable under the circumstances. Petitioner, while not deserving of outright dismissal as a penalty is not entitled to reinstatement either. Considering that petitioner has been in the service for twelve years and that her performance was rated excellent and superior, she is, in our opinion, entitled to separation pay at the rate of one-half months pay for every year of service, based on her salary at the time of dismissal from February 14, 1977 to March 18, 1989. 6. CIVIL LAW; MORAL DAMAGES; PETITIONERS CLAIM FOR MORAL DAMAGES IS WITHOUT MERIT; REASON. - Petitioners claim for moral damages is without merit. Not only was she guilty of misconduct, there is no showing that the company acted in bad faith or fraud or in a manner which is contrary to morals, good customs or public policy, in dismissing petitioner. Univet Agricultural was acting in the legitimate protection of its interest in seeing to it that its employees were performng their jobs with honesty, integrity and fidelity. 7. LEGAL ETHICS; ATTORNEYS FEES; AWARD OF ATTORNEYS FEES HAS NO BASIS. For the same reason, there is no basis for an award of attorneys fees. Under Art. 2208 (2) of the Civil Code, the award of such fees is to be justified if the claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act of the party against whom it is sought. APPEARANCES OF COUNSEL Jose C. Filio, Jr. for petitioner. The Solicitor General for respondents.

DECISION MENDOZA, J.: This is a petition for certiorari to annul the decision of the National Labor Relations Commission (Second Division) in NLRC-NCR CA No. 4-016-89 which, after finding the penalty of dismissal imposed on petitioner by private respondent to be too severe, instead denied her backwages as penalty for violation of the companys rules. Private respondents were ordered to give separation pay, with option to reinstate petitioner in lieu thereof. The NLRC thus modified the decision of the Labor Arbiter which completely dismissed the petitioners complaint for illegal dismissal. The facts of this case are as follows: Petitioner Marilyn Bernardo was employed at the Univet Agricultural Products, Inc., a division of United Laboratories, on February 14, 1977. Starting as general clerk, she rose in 1980 to the position of administrative clerk, which she held until March 18, 1989 when she was dismissed for dishonesty. It appears that in January 1989, the Manufacturing Department of the Univet Agricultural asked for two filing cabinets. Accordingly, petitioner prepared the Capital Appropriations Request (CAR) for the purchase of two filing cabinets. The request was signed by Dr. Salvador P. Cajilog, department head, and later approved by five other officers of Univet Agricultural. Before the CAR was transmitted to the purchasing department for the procurement of the office equipment, it was discovered that petitioner had included in the order the acquisition of one executive swivel chair. On February 18, 1989, the following memorandum was issued to petitioner, requiring her to explain within 48 hours why no disciplinary action should be taken against her. [1]
i

FROM : TO :

Univet Manufacturing Department

Mrs. Marilyn L. Bernardo Violation of Company House Rules & Labor Code February 18, 1989

SUBJECT : DATE :

Please explain within 48 hours from receipt of this memo why no disciplinary action be imposed against you for unauthorized insertion of one (1) executive swivel chair as indicated per CAR # 89053 dated January 26, 1989, which constitute violations of the Company House Rules and Labor Code. Company House Rules 1. Any form or act of dishonesty. Article 1, Paragraph 11, page 9;

2. Falsification of records furnishing false data with deliberate intent to defraud the company of cash, stocks or other company properties. Article 1, Paragraph 13, page 9; 3. Any act or omission, conduct of behavior or offense not specifically mentioned in these House Rules which are pre-judicial to the interest of the company shall be also punishable. The penalty to be imposed will depend upon the gravity of the offense as may be determined by the Division Gen. Manager. Article 1, page 10. Labor Code 1. Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes: a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his works. Kindly give this matter your immediate attention. (Sgd.) SALVADOR P. CAJILOG Petitioner admitted making the insertion in the Capital Appropriations Request but explained that she had done so in good faith. In her letter [2] to the company, she explained:
ii

SUBJECT: VIOLATIONS OF COMPANY HOUSE RULES AS PER MEMO DATED FEBRUARY 18, 1989 Dear Sir: In reference to the above-subject below are my explanations: 1. I inserted one (1) swivel chair as per CAR #89-053 dated January 26, 1989 for the simple reason that the budgeted amount of CAR (exec. swivel chair included) will not exceed the budgeted amount of 8,000 pesos: 1.a. Budgeted amount P8,000 pesos 1.b. Less: Actual cost of CAR as per survey 7,860 pesos BALANCE 2. 3. 4. 140 pesos

I just acted in good faith. I thought that what I was doing would benefit the department. The CAR went to the usual channel or normal procedure. It was never delivered nor stolen.

5.

It was intended for the use of manufacturing personnel and not for my personal use.

6. It didnt occur to me that my actions would be misinterpreted since my intention is purely for the good of the department. 7. I have no intention to defraud the company of cash, etc.

Sir, if you can still recall, the insertion was not really hidden from you, I have mentioned to you that with the budgeted amount there is still around 4,000 pesos balance which would suffice to buy swivel chairs for the department. I was not told to refrain from doing that. Then after a day or two, you mentioned to me that we will make a supplemental budget for office chairs since our existing chairs are similar to the one being used at Mayflower canteen. You told me that I should remind you about it. After that day, I changed my mind and instead type executive swivel chair. To be honest with you Sir, I want that chair for you as my simple way of thanking you for being so fair and just with your subordinates. You are one of the few managers in Univet whom I respect because of your tactfulness and being so malambing to us. In fact, when somebody (unfortunately I forgot his name) from the office of one of the approving department (UL) called up and asked me about it. I told him that the chair is intended for you because your existing chair is already going out of style. Gusto ko noon sorpresahin ko kayo, kaya lang ako ang nasorpresa ninyo. With all my earnestness my motive then was merely to surprise you with that swivel chair. In view of the above-explanations, I would like to take this opportunity to apologize for whatever shortcoming I have made. Thank you for your attention and understanding on this matter. Respectfully yours, (Sgd.) MARILYN L. BERNARDO Univet Marketing Apparently, petitioners explanation was considered not satisfactory, because on March 18, 1989, she was given notice of the termination of her employment. The notice read: [3]
iii

TO

: Mrs. Marilyn L. Bernardo FROM : Univet Personnel Committee SUBJECT: Violation of Company House Rules and Labor Code DATE : March 18, 1989

Investigation of the charges against you have been completed. We exhaustively delved on all the facts and evidences of this case. The pertinent documents which includes among others, your written explanation dated February 21, 1989, the explanation and recommendation of your immediate supervisor were thoroughly considered. After series of lengthy and exhaustive deliberations, you were found to have violated Company House Rules and Labor Code. COMPANY HOUSE RULES: 1. Any form or act of dishonesty. Article I, Paragraph 11, page 9; 2. Falsification of records furnishing false data with deliberate intent to defraud the company of cash, stocks or other company properties. Article I, Paragraph 13, page 9; 3. Any act or omission, conduct or behavior or offense not specifically mentioned in these House Rules which are prejudicial to the interest of the company shall be also punishable. The penalty to be imposed will depend upon the gravity of the offense as may be determined by the Division General Manager. Article I, page 10. LABOR CODE: Art. 282. Termination by employer. Any employer may terminate an employment for any of the following causes: a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his works. b. Gross and habitual neglect by the employee of his duties.

c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative. In view of the foregoing, your services with the company is hereby terminated effective March 18, 1989. FOR UNIVET PERSONNEL COMMITTEE: (Sgd.) WINSTON T. YOUNG Petitioner wrote Dr. Delfin Samson, president of United Laboratories, Inc., asking for a fair investigation. Getting no favorable response, she filed on April 7, 1989 a complaint for illegal dismissal against Univet Agricultural Products, Inc. Petitioner alleged that she made the intercalation in the CAR in good faith, without any intention of defrauding the company, because she intended the chair for the manager of her department, Dr.

Salvador Cajilog. She claimed that what she did was made with the knowledge of Dr. Cajilog. Petitioner alleged that she was dismissed because she had exposed the involvement of two company officers, Conrado Baylon and Dr. Benedicto Santiago, in the rival company, Biomass Corp. of the Philippines. Due to delays and postponements of her case in the Labor Arbiters office, petitioner filed with the NLRC a petition for reinstatement pending resolution of her claim. When her petition was denied, she filed a petition for certiorari in this Court (G.R. No. 93958). In its resolution of December 10, 1990, this Court dismissed the petition but directed the Labor Arbiter to resolved petitioners case within 30 days. On February 21, 1991 the Labor Arbiter rendered a decision dismissing petitioners complaint for lack of merit. The Labor Arbiter found petitioner guilty of dishonesty and serious misconduct, warranting dismissal from the service. On appeal the NLRC, while finding petitioner liable to disciplinary action, thought that the penalty imposed by the company was too severe. Accordingly, it set aside the decision of the Labor Arbiter and ordered the petitioner reinstated and paid backwages for one year of P84,164.72 (P7,014.56 x 12) and attorneys fees equivalent to 10% of the award or P8,416.47. Petitioner filed a motion for clarification, while private respondent Univet Agricultural filed a motion for reconsideration. On March 13, 1992, the NLRC modified its decision and deleted the award of backwages and, instead of reinstatement, simply ordered petitioner to be paid separation pay equivalent to 1/2 months pay for every year of service based on her salary at the time of dismissal, unless the company opted to reinstate her. Petitioner moved for reconsideration but her motion was denied on May 20, 1992. Hence, this petition alleging that the NLRC gravely abused its discretion. Her petition raises the following issues: I. WHETHER OR NOT PETITIONER WAS DISMISSED WITHOUT DUE PROCESS OF LAW; II. WHETHER OR NOT THERE WAS VALID GROUND TO DISMISS PETITIONER; AND III. WHETHER OR NOT PETITIONER IS ENTITLED TO THE AWARD OF MORAL DAMAGES. I. Before discussing the merits of the petition, we shall first consider the objection of private respondents that the petition in this case does not comply with this Courts Circular No. 28-91, [4] which as originally promulgated, [5] required parties in the Court of Appeals or in the Supreme Court (1) to indicate in the caption of every petition the docket number of the case in the court below and (2) to submit a certification that no case involving the same or similar parties and issues is pending in any other court or tribunal.
iv v

While it is true that the docket numbers of the case in the Labor Arbiters office and in the NLRC are not indicated in the caption of the petition, the fact is that the numbers appear in the affidavit of service. [6] This failure to comply strictly with the requirement may be excused on the ground that there was nevertheless substantial compliance by petitioner indicating the docket numbers in the affidavit of service which is a part of her petition. In any event the informality may be overlooked in view of the fact that this requirement was subsequently removed by the amendment of Circular No. 28-91 by Revised Circular No. 28-91, which took effect on April 1, 1994.
vi

As to the second requirement pertaining to certificates of non-forum shopping, the record shows that the certification in this case was incorporated in the petition. As in the case of the first requirement regarding docket numbers, there was substantial compliance in this case. Indeed, while the requirement as to certificate of non-forum shopping is mandatory, nonetheless the requirements must not be interpreted too literally and thus defeat the objective of preventing the undesirable practice of forum-shopping . [7]
vii

II. Private respondents accuse petitioner of forum-shopping, citing the petition for certiorari which petitioner filed in G.R. No. 93958. They claim that our decision in that case [8] constitutes res judicata in the present case.
viii

The petition in G.R. No. 93958 was filed when this case was still pending before the Labor Arbiters office. It was for reinstatement, pending determination of the case by the Labor Arbiter on the ground that there was undue delay in the disposition of the case. As already stated, the petition was dismissed and the Labor Arbiter was instead ordered to expedite the resolution of petitioners case by deciding it within 30 days. On the other hand, the present petition, although seeking the reinstatement of petitioner, is based on petitioners claim that the decision of the NLRC was rendered with grave abuse of discretion and therefore is void. The two actions, therefore, involve different causes of action. For the principle of res judicata to apply, the following must be present: (a) a decision on the merits; (b) by a court of competent jurisdiction; (c) the decision is final; and (d) the two actions involve identical parties, subject matter, and causes of action. The last element is absent in this case. Nor may petitioner be accused of forum-shopping, which exists when, as a result of an adverse decision rendered in a case, the losing party seeks a favorable decision in another forum other than by appeal or certiorari. [9] The present certiorari is not a separate case but a review of the decision of the NLRC.
ix

III. Having cleared the way of procedural obstacles, we now reach the merits of the case. A. Petitioner claims that without giving her the right to be heard, private respondents found her guilty of violating company rules for having inserted in the approved requisition request an order for an executive swivel chair and for other violations of company rules allegedly committed in the past. With respect to the first ground (inserting an additional item in the approved request for purchase), we hold that no formal hearing was necessary considering that petitioner admitted responsibility for the unauthorized insertion. It was sufficient that she was informed of the findings of management and the basis of its decision to dismiss her. [10]
x

With regard to the second ground, it appears that, in recommending petitioners dismissal, the companys personnel committee also took into account other violations of company rules allegedly committed by her. As the NLRC found, however, these other alleged violations had not been proven and could not be taken into consideration. As they cannot be the basis of any disciplinary action against petitioner, it is now immaterial to consider whether with respect to them, petitioner was not given a hearing by the company. It is sufficient for our purpose, that the action taken against her is based on the first ground (making an unauthorized intercalation in the approved requisition form), as to which there is no question that petitioner was duly heard. B. The NLRC found that petitioners dismissal was for cause but, although her offense was a ground for disciplinary action, it was not serious enough to warrant her dismissal. Hence, the NLRC denied her claim for backwages but awarded to her separation pay, with option given to private respondent to reinstate petitioner instead of giving her separation pay. We agree with the finding that the insertion of an additional item in the request for purchase, after this had been approved, was a violation of company rules but it was not of such gravity as to warrant petitioners outright dismissal. On other hand, considering the offense committed, an award of backwages and order of reinstatement cannot be justified. Petitioners claim that the insertion was with the knowledge of the department head, Dr. Salvador P. Cajilog, is belied by her own allegation that Dr. Cajilog was merely thinking of buying chairs and told her to remind him about the matter. If this latter claim is true, then it would appear that instead of waiting for Dr. Cajilog to decide, petitioner simply took it upon herself to include in the approved request the executive swivel chair. Dr. Cajilog precisely told petitioner to remind him about the matter so that a supplemental budget could be prepared because it was wrong to intercalate an item in the CAR after it had been approved by the officers of the company. Petitioner submitted in evidence the affidavit of Gloria Cajilog who claimed that when Dr. Salvador P. Cajilog was asked about the additional item for swivel chair, he allegedly replied, Kay Mayeen mo tanungin iyan, iha, siya ang nakakaalam niyan basta ba within the budget, okay lang. [11] Gloria Cajilog stated, however, that she only heard this from one Susan Rodriguez. Her affidavit is therefore hearsay and should be received with caution.
xi

Petitioner claims that she did not consult Dr. Cajilog because she wanted to surprise him since it was for his use that the swivel chair was to be purchased. This is contrary to her other claim that what she did was with the knowledge of her superior. She could not have surprised him with the chair if the latter had authorized its purchase. Petitioner attributes her dismissal to the fact that in June 1988, she reported two Univet officials to the management for alleged activities in a rival company, Biomass Corp. of the Philippines. One of these officials was Conrado Baylon who later became a member of the Personnel Committee which recommended petitioners dismissal. Petitioner claims that she was transferred from the Product Development Department under Dr. Benedicto Santiago to the Manufacturing Department headed by Dr. Salvador Cajilog, because Dr.

Santiago was the other Univet official whose activities in the rival Biomass Corp. of the Philippines petitioner reported to the management of the company. To be sure this point, although raised before Labor Arbiter and the NLRC, was not passed upon by either one. Both the Labor Arbiter and the NLRC found that there was sufficient ground for holding petitioner subject to disciplinary action for having made an unauthorized intercalation in the approved Capital Appropriations Request. Both concluded that she committed a violation of company rule, although they differed as to the propriety of outright dismissal as penalty. We hold that petitioners transfer from the Product Development Department to the Manufacturing Department was made in the legitimate exercise of management prerogative. As petitioner herself admitted, her previous cordial relationship with Dr. Benedicto Santiago turned cold and in fact she had a heated exchange of words with Dr. Santiago. Petitioners transfer was made after her expos. It was done to restore peace in the troubled department. [12]
xii

At all events, whatever may have been the motive of some committee members in recommending the dismissal of petitioner, the fact is that what she did constitutes misconduct. Her explanations as to why she made the insertion in the approved purchase order are contradictory. Under no circumstance was her misconduct excusable. The NLRC correctly held her subject to disciplinary action. Considering, however, that the insertion of the additional order did not cause damage to the company in the sense that the cost of the chair, even if purchased, would not make the total amount to be expended exceed the amount of budget, and that in all probability petitioner was simply motivated by a desire to curry favor with the head of her department rather than gain materially, we agree with the NLRC that outright dismissal would be out of proportion to the gravity of her offense. The question is what penalty is reasonable under the circumstances. Petitioner, while not deserving of outright dismissal as a penalty is not entitled to reinstatement either. Considering that petitioner has been in the service for twelve years and that her performance was rated excellent and superior, she is, in our opinion, entitled to separation pay at the rate of onehalf months pay for every year of service, based on her salary at the time of dismissal from February 14, 1977 to March 18, 1989. Petitioners claim for moral damages is without merit. Not only was she guilty of misconduct, there is no showing that the company acted in bad faith or fraud or in a manner which is contrary to morals, good customs or public policy, [13] in dismissing petitioner. Univet Agricultural was acting in the legitimate protection of its interest in seeing to it that its employees were performing their jobs with honesty, integrity and fidelity.
xiii

For the same reason there is no basis for an award of attorneys fees. Under Art. 2208(2) of the Civil Code, the award of such fees is to be justified if the claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act of the party against whom it is sought. [14]
xiv

WHEREFORE, the decision of the NLRC is MODIFIED and private respondents are ORDERED to PAY petitioner separation pay at the rate of one-half month pay for every year of service based on her salary at the time of her dismissal, for the period February 14, 1977 to March 18, 1989. SO ORDERED. Regalado (Chairman), Romero, and Puno, JJ., concur. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 139680 April 12, 2000 WILLIAM R. BAYANI, petitioner, vs. PANAY ELECTRIC CO., INC., respondent.

RESOLUTION

QUISUMBING, J.: This is a petition for certiorari of the decision1 dated October 26, 1998, of the Court of Appeals in CA-G.R. SP No. 46012, which set aside the orders of the Regional Trial Court of Iloilo City, Branch 34, in Civil Case No. 23276, for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. The facts of the case are as follows: In March 1996, private respondent, Panay Electric Company, Inc. (PECO), discontinued supplying electrical services to two pension houses, the Bayani Drive Inn at Calumpang, Molo, Iloilo City and the William Bayani Hotel in Mandurriao, Iloilo City, both owned by petitioner. Alleging that it had discovered theft of electricity in petitioner's business establishments, PECO filed two complaints for violation of R.A. No. 78322 against petitioner with the City Prosecutor of Iloilo City. The City Prosecutor dismissed the complaints on August 8, 1996 and August 19, 1996, respectively. PECO appealed the dismissal to the Secretary of Justice. On October 10, 1996, petitioner filed Civil Case No. 23276 with the Regional Trial Court, Iloilo City, for injunction and damages arising from malicious prosecution. PECO moved to dismiss the petition. Pending resolution of the motion to dismiss, petitioner, on January 20, 1997, amended his

complaint to add a prayer for writ of preliminary prohibitory injunction to make PECO desist from making "false imputations that plaintiff allegedly continued to commit violations" of R.A. No. 7832.3 PECO filed a motion to dismiss the amended complaint, but said motion was denied by the trial court in its order dated March 20, 1997. The court also denied its motion for reconsideration on August 27, 1997. On September 2, 1997, the trial court granted petitioner's request for the issuance of a writ of preliminary mandatory injunction as follows: WHEREFORE, IN VIEW OF THE FOREGOING, let a Writ of Preliminary Mandatory Injunction issue after the plaintiff puts up a bond in the amount of Three Hundred Thousand Pesos (P300,000.00). Upon the filing of the Injunctive Bond by the plaintiff and approval of the same by the Court, the Defendant is ordered to immediately restore the electric services to the Bayani Drive Inn, Calumpang, Molo, Iloilo City and the William Bayani Hotel at Mandurriao, Iloilo City. SO ORDERED.4 Petitioner initially submitted a surety bond but later substituted a cashier's check for the surety. The trial court approved the substitution on September 10, 1997. On September 15, 1997, PECO filed its answer with counterclaim for damages for alleged injuries done to its good name and business standing. On November 17, 1997, PECO filed a petition, CA-G.R. SP No. 46012, for certiorari and prohibition with the Court of Appeals, praying that the appellate court declare the orders of the trial court dated March 20, 1997, August 27, 1997, September 2, 1997 and September 10, 1997 null and void. PECO likewise sought the dismissal of herein petitioner's complaint in the lower court. The Secretary of Justice upheld the dismissal of the complaints for violations of R.A. No. 7832, on March 4, 1998. On October 26, 1998, respondent appellate court disposed of the petition, CA-G.R. SP No. 46012, as follows: WHEREFORE, premises considered, the assailed orders of the public respondent dated 20 March 1997, 27 August 1997, 2 September 1997 and 10 September 1997, respectively, are hereby SET ASIDE and the complaint for injunction and damages filed by private respondent against petitioner is hereby ordered DISMISSED for lack of merit.1wphi1.nt SO ORDERED.5 On November 12, 1998, petitioner moved for reconsideration, which the appellate court denied in its resolution dated July 15, 1999.

Hence, the instant petition for review before us, with petitioner raising the following issues: I. Whether or not the Court of Appeals erred in dismissing Civil Case No. 23276 filed by petitioner against respondent in ruling that said case is based on malicious prosecution, the element of final termination of the action resulting in acquittal is absent and therefore premature? II. Whether or not the Court of Appeals erred in ruling that the Regional Trial Court acted with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the orders appealed from, as well as the subsequent orders dated 2 September 1997 and 10 September 1997 granting the issuance of a writ of Preliminary Mandatory Injunction and admitting the cashier's check in the amount of P300,000.00 as substitute for the surety bond earlier submitted as injunctive bond? III. Whether or not the Court of Appeals erred in ruling that the period to assail the order denying the motion to dismiss filed by respondent has long expired so the latter has already lost the right to question the same and had already submitted to the jurisdiction of the Regional Trial Court when it filed its Answer with Counterclaim to join the issues raised, when it proceeded to cross-examine the witnesses of the petitioner and presented its evidence to prove his defenses and causes of action? Notwithstanding petitioner's formulation of the issues, the pertinent issues in this case now are: (1) Is Civil Case No. 23276 a case based on malicious prosecution? (2) Was Civil Case No. 23276 prematurely filed with the Regional Trial Court? Petitioner faults respondent court for finding that his complaint in Civil Case No. 23276 was one for malicious prosecution. Petitioner insists that its complaint was based on other causes of action, independent from malicious prosecution. He alleged in particular, that by summarily disconnecting electrical service to petitioner's business establishments, PECO violated Articles 196 and 217 of the Civil Code. A review of petitioner's Amended Complaint,8 however, clearly shows that petitioner's allegations deal mainly with the criminal complaints instituted by PECO against petitioner for violating R.A. No. 7832. In addition to damages, petitioner had sought a prohibitory injunction to prohibit private respondent from making "false imputations that plaintiff allegedly continued to commit violations" of R.A. No. 7832."9 What determines the nature of an action are the allegations in the complaint and the character of the relief sought. 10 Conformably, no reversible error was committed by the Court of Appeals in finding that petitioner's action was one based on malicious prosecution. There is malicious prosecution when a person directly insinuates or imputes to an innocent person the commission of a crime and the maliciously accused is compelled to defend himself in court. 11

While generally associated with unfounded criminal actions, "the term has been expanded to include unfounded civil suits instituted just to vex and humiliate the defendant despite the absence of a cause of action or probable cause." 12 The basis for a civil action for damages arising from malicious prosecution is found in Articles 19, 21, 29, 13 35, 14 of the Civil Code. The requisites for an action for damages based on malicious prosecution are: (1) the fact of the prosecution and the further fact that the defendant was himself the prosecutor, and that the action was finally terminated with an acquittal; (2) that in bringing the action, the prosecutor acted without probable cause; and (3) the prosecutor was actuated or impelled by legal malice. 15 Considering the facts in this case, we agree with the respondent appellate court that one of the elements for an action based on malicious prosecution, the element of final termination of the action resulting in an acquittal, was absent at the time petitioner filed Civil Case No. 23276. The records show that petitioner's action for injunction and damages was filed on October 10, 1996, whereas the Secretary of Justice dismissed with finality PECO's criminal complaints against herein petitioner only on March 4, 1998. Hence, Civil Case No. 23276 was prematurely filed. WHEREFORE, the instant petition is DENIED. The assailed decision of the Court of Appeals in CA-G.R. SP No. 46012 is AFFIRMED. This resolution, however, shall in no way prejudice re-filing of the civil case within the reglementary period. SO ORDERED. Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

THIRD DIVISION
[G.R. No. 47013. February 17, 2000]

ANDRES LAO, petitioner, vs. COURT OF APPEALS, THE ASSOCIATED ANGLO-AMERICAN TOBACCO CORPORATION and ESTEBAN CO, respondents.
[G.R. No. 60647. February 17, 2000]

ESTEBAN CO, petitioner, vs. COURT OF APPEALS and ANDRES LAO, respondents. Esmsc
[G.R. No. 60958-59. February 17, 2000]

THE ASSOCIATED ANGLO-AMERICAN TOBACCO CORPORATION, petitioner, vs. COURT OF APPEALS, ANDRES LAO, JOSE LAO, and TOMAS LAO, respondents. DECISION
PURISIMA, J.: PURISIMA These consolidated petitions for review on certiorari under Rule 45 of the Rules of Court revolve around discrepant statements of accountability between a principal and its agent in the sale of cigarettes. The common factual background at bar follows: On April 6, 1965, The Associated Anglo-American Tobacco Corporation (Corporation for brevity) entered into a "Contract of Sales Agent" with Andres Lao. Under the contract, Lao agreed to sell cigarettes manufactured and shipped by the Corporation to his business address in Tacloban City. Lao would in turn remit the sales proceeds to the Corporation. For his services, Lao would receive commission depending on the kind of cigarettes sold, fixed monthly salary, and operational allowance. As a guarantee to Laos compliance with his contractual obligations, his brother Jose and his father Tomas executed a deed of mortgage [1] in favor of the Corporation in the amount of P200,000.00
1

In compliance with the contract, Lao regularly remitted the proceeds of his sales to the Corporation, generating, in the process, a great deal of business. Thus, the Corporation awarded him trophies and plaques in recognition of his outstanding performance from 1966 to 1968. However, in February 1968 and until about seven (7) months later, Lao failed to accomplish his monthly sales report. In a conference in Cebu, Ching Kiat Kam, the President of the Corporation, reminded Lao of his enormous accounts and the difficulty of obtaining a tally thereon despite Laos avowal of regular remittances of his collections. Sometime in August and September 1969, Esteban Co, the vice-president and general manager of the Corporation, summoned Lao to Pasay City for an accounting. It was then and there established that Laos liability amounted to P525,053.47. And so, Lao and his brother Lao Y Ka, enlisted the services of the Sycip Gorres and Velayo Accounting Firm (SGV) to check and reconcile the accounts. Esmmis Ching Kiat Kam allowed Lao to continue with the sales agency provided Lao would reduce his accountability to P200,000.00, the amount secured by the mortgage. The Corporation thereafter credited in favor of Lao the amount of P325,053.47 representing partial payments he had made but without prejudice to the result of the audit of accounts. However, the SGV personnel Lao had employed failed to conclude their
1

services because the Corporation did not honor its commitment to assign two of its accountants to assist them. Neither did the Corporation allow the SGV men access to its records. Subsequently, the Corporation discovered that Lao was engaging in the construction business so much so that it suspected that Lao was diverting the proceeds of his sales to finance his business. In the demand letter of April 15, 1979, [2] counsel for the Corporation sought payment of the obligations of Lao, warning him of the intention of the Corporation to foreclose the mortgage. Attached to said letter was a statement of account indicating that Laos total obligations duly supported by receipts amounted to P248,990.82.
2

Since Lao appeared to encounter difficulties in complying with his obligations under the contract of agency, the Corporation sent Ngo Kheng to supervise Laos sales operations in Leyte and Samar. Ngo Kheng discovered that, contrary to Laos allegation that he still had huge collectibles from his customers, nothing was due the Corporation from Laos clients. From then on, Lao no longer received shipments from the Corporation which transferred its vehicles to another compound controlled by Ngo Kheng. Shipments of cigarettes and the corresponding invoices were also placed in the name of Ngo Kheng. On May 21, 1970, Andres, Jose and Tomas Lao brought a complaint for accounting and damages with writ of preliminary injunction [3] against the Corporation, docketed as Civil Case No. 4452 before the then Court of First Instance of Leyte, Branch I in Tacloban City, which court [4] came out with its decision [5] on March 26, 1975, disposing as follows:
3 4 5

"IN VIEW OF ALL THE FOREGOING PREMISES, and upon a clear preponderance of evidence in favor of the plaintiffs, the court hereby renders judgment as follows: Esmso 1........Ordering both the plaintiffs and defendant corporation to undergo a Court supervised accounting of their respective account with the view of establishing once and for all, by a reconciliation of their respective books of accounts, the true and correct accountability of Andres Lao to the defendant corporation. Pursuant thereto, both plaintiff Andres Lao and the defendant The Associated Anglo-American Tobacco Corporation are directed to make available all their records pertainting [sic] to their business transactions with each other under the contract of sales agent, from 1965 up to the time Andres Lao ceased being the agent of the defendant. A Committee on Audit is hereby formed to be composed of
2 3 4 5

three (3) members, one member to be nominated by the plaintiffs, another to be nominated by the defendant corporation and the third member who shall act as the Committee Chairman to be appointed by this Court. As Committee Chairman, the Court hereby appoints the Branch Clerk of Court of this Court, Atty. Victorio Galapon, who shall immediately convene the Committee upon appointment of the other two members, and undertake to finish their assigned task under his decision within two (2) months. 2........Ordering the defendant corporation to pay Plaintiffs the amount of P180,000 representing actual loss of earnings. 3........Ordering the defendant to pay plaintiffs moral damages in the amount of P130,000.00. 4........Ordering the defendant to pay to the plaintiffs, exemplary damages in the amount of P50,000.00. 5........Ordering the defendant to pay to the plaintiffs, attorneys fees in the amount of P40,000.00. 6........Ordering the plaintiffs and the defendant to pay the compensation of the commissioners pro-rata. 7........Finally ordering the defendant to pay the cost of this suit. SO ORDERED." The Committee of Audit that was eventually constituted was composed of Atty. Victorio L. Galapon, Jr., as chairman, Wilfredo Madarang, Jr. and Cesar F.P. Corcuera, as representatives of the Corporation, and Lao himself. On September 16, 1976, said committee submitted a report [6] with the following findings: Msesm
6

"Total remittances made by Mr. Andres Lao in favor of Associated from April 10, 1965 to November 1969 which are substantially supported by official receipt ..................................................... Shipments by Associated to Mr. Andres Lao duly supported by bills of lading, factory consignment invoices and delivery receipts.................................. Shipments by Associated to Mr. Andres

P13,686,148.80

9,110,777.00

Lao, covered by bills of lading and factory consignment invoices but with no supporting delivery receipts purported to have been delivered to Mr. Lao on the basis of sales made by him as reported in his monthly sales reports (except for sales in December, 1968 and November and December 1968 where the sales reports were not available to the Audit Committee)............................................... Shipments covered by bills of lading and factory consignment invoices but with no supporting delivery receipts .................................................... .. Shipments with covering factory consignment invoices but not covered by bills of lading and delivery receipts .................................................... ..
7

4,018,927.60

597,239.40

126,950.00"

On February 28, 1977, the trial court [7] promulgated a supplemental decision wherein it dismissed Laos claim that he had made an overpayment of P556,444.20. The alleged overpayment was arrived at after deducting the total payment made by Lao in the amount of P13,686,148.80 from the total volume of shipments made by the Corporation in the amount of P13,129,704.60, without including the amount of P597,239.40, representing alleged shipments covered by bills of lading and factory consignment invoices but with no supporting delivery receipts, and the amount of P126,950.00, representing shipments with factory consignment invoices but not covered by bills of lading and delivery receipts. The trial court, in rejecting the claim of overpayment, held that "when he (referring to Lao) made partial payments amounting to P325,053.47 subsequent to the demand in September, 1969, he is deemed to have admitted his liability and his claim of overpayment is not only preposterous but devoid of logic." Therefore, with the sums of P597,239.40 and P126,950.00 included in the total volume of shipments made by the Corporation in the amount of P13,129,704.60, Laos total remittances of P13,686,248.80 were short of P167,745.20. Thus, the trial court held: "WHEREFORE, judgment is hereby rendered declaring plaintiff Andres Laos accountability to defendant Corporation in the amount of P167,745.20 and ordering him to pay said amount of P167,745.20 to defendant The Associated Anglo-American Tobacco Corporation." Exsm The Corporation appealed the decision, dated March 26, 1975, just as Lao appealed the supplemental decision, dated February 28, 1977, to the Court of Appeals. Docketed as

CA-G.R. No. 62532-R, the appeal was resolved in the Decision of the Court of Appeals dated October 26, 1981, [8] disposing thus:
8

"WHEREFORE, in connection with the decision of March 26, 1975, defendant corporation is hereby ordered to pay plaintiffs P150,000.00 actual damages for loss of earnings, P30,000.00 by way of moral damages and P10,000.00 for exemplary damages. As modified, the decision is AFFIRMED in all other respects. As for the supplemental decision of February 28, 1977, the same is hereby reversed and set aside, and defendant-appellant corporation sentenced to reimburse Andres Laos overpayment in the amount of P556,444.20. Costs against defendant-appellant corporation." The Corporation presented a motion for reconsideration [9] of the said Decision but the same was denied in a Resolution dated May 18, 1982. [10] A motion for leave to file a second motion for reconsideration was likewise denied. [11] Kylex
9 10 11

Meanwhile, on June 24, 1974 and during the pendency of Civil Case No. 4452, Esteban Co, representing the Corporation as its new vice-president, filed an affidavit of complaint [12] with the Pasay City Fiscals Office under I.S. No. 90994; alleging that Lao failed to remit the amount of P224,585.82 which he allegedly misappropriated and converted to his personal use. Although the amount supposedly defalcated was put up as a counterclaim in Civil Case No. 4452 for accounting, the Corporation averred that it reserved the right to institute a criminal case against Lao.
12

On July 31, 1974, after finding a prima facie case against Lao, the Pasay City Fiscal filed an information [13] for estafa against Lao, docketed as Criminal Case No. 2650-P before the then Court of First Instance of Rizal, Branch XXVII. Lao sought a reinvestigation [14] of the case, contending that he was never served a subpoena or notice of preliminary investigation that was considered mandatory in cases cognizable by Court of First Instance, now Regional Trial Court. Apparently, the preliminary investigation proceeded ex-parte because Esteban Co made it appear that Lao could not be located. Kycalr
13 14

8 9 10 11 12 13 14

On December 17, 1974, without awaiting the termination of the criminal case, Lao lodged a complaint [15] for malicious prosecution against the Corporation and Esteban Co, praying for an award of damages for violation of Articles 20 and 21 of the Civil Code. The case was docketed as Civil Case No. 5528 before Branch I of the then Court of First Instance in Cotabato City.
15

In his resolution dated January 3, 1975, [16] then Pasay City Fiscal Jose Flaminiano found merit in the petition for reinvestigation of the estafa case. He opined that Lao had not committed estafa as his liability was essentially civil in nature. The Fiscal entertained doubts about the motive of the Corporation in instituting the criminal case against Lao because of the undue delay in its filing, aside from the fact that the estafa case involved the same subject matter the Corporation sued upon by way of counterclaim in Civil Case No. 4452. Eventually, on May 13, 1976, the Court of First Instance of Rizal, Branch XXVII, in Pasay City, promulgated a decision [17] acquitting Lao of the crime charged and adopting in toto the said Resolution of Fiscal Flaminiano.
16 17

On March 18, 1977, the Court of First Instance of Samar [18] handed down a decision in Civil Case No. 5528, the action for damages arising from malicious prosecution, disposing thus:
18

"WHEREFORE, the Court declares that the defendants filed Criminal Case No. 2650-P against the plaintiff for estafa before the Court of First Instance of Rizal, Branch XXVII, Pasay City, without probable cause and with malice and therefore orders the defendants Associated AngloAmerican Tobacco Corporation and Esteban Co to jointly and severally pay the plaintiff: a........P30,000 as actual damages; Calrky b........P150,000.00 as moral damages; c........P100,000.00 as exemplary damages; d........P50,000.00 as attorneys fees and costs. SO ORDERED." The Corporation and Esteban Co both appealed the aforesaid decision to the Court of Appeals under CA-G.R. No. 61925-R.

15 16 17 18

On April 18, 1977, Lao presented a motion for execution pending appeal [19] before the trial court. The opposition of the Corporation notwithstanding, on June 8, 1977 the trial court issued a special order granting the motion for execution pending appeal, [20] and on the following day, the corresponding writ of execution issued. [21]
19 20 21

On June 10, 1977, the Court of Appeals issued a Restraining Order enjoining the execution of subject judgment. [22] The said order was issued on account of a petition for certiorari, prohibition and mandamus with preliminary injunction [23] filed by the Corporation and Esteban Co with the said appellate court. Docketed as CA-G.R. No. 06761, the petition was received by the Court of Appeals on June 9, 1977. A supplemental to the petition and a "compliance" were also received on the same time and date. [24] On June 21, 1977, Lao moved to lift the restraining order.
22 23 24

On September 14, 1977, the Court of Appeals resolved in CA-G.R. No. 06761 thus: "WHEREFORE, the petition for certiorari is hereby granted, the special order granting execution pending appeal is annulled and the restraining order heretofore issued is made permanent. No pronouncement as to costs." On October 21, 1981, the Court of Appeals likewise rendered a Decision [25] in CA-G.R. No. 62532-R, affirming the trial courts finding that Criminal Case No. 2650-P was filed without probable cause and with malice; and held the Corporation and Esteban Co solidarily liable for damages, attorneys fees and costs.
25

The Corporation and Esteban Co moved to reconsider [26] the said decision in CA-G.R. No. 61925-R but to no avail. The motion for reconsideration was denied in a Resolution promulgated on May 18, 1992. A motion for leave of court to file a second motion for reconsideration [27] met the same fate. It was likewise denied in a Resolution [28] dated June 23, 1982.
26 27 28

19 20 21 22 23 24 25 26 27 28

From the said cases sprung the present petitions which were ordered consolidated in the Resolutions of December 15, 1982 and November 11, 1985. [29] Subject petitions are to be passed upon in the order they were filed. Mesm
29

G.R. No. 47013 A petition for review on certiorari of the Decision of the Court of Appeals in CA-G.R. No. 06761 that Lao filed, contending that: 1........The Court of Appeals cannot validly give due course to an original action for certiorari, prohibition and mandamus where the petition is fatally defective for not being accompanied by a copy of the trial courts questioned process/order. 2........The Court of Appeals, cannot, in a petition for certiorari, prohibition and mandamus, disregard, disturb and substitute its own judgment for the findings of facts of the trial court, particularly as in the present case, where the trial court did not exceed nor abuse its discretion. 3........The Court of Appeals did not act in accordance with established jurisprudence when it overruled the trial courts holding that the posting of a good and solvent bond is a good or special reason for execution pending appeal. For clarity, the petition for review on certiorari questioning the Decision of the Court of Appeals that nullified the special order granting execution pending appeal is anchored on the antecedent facts as follows: Slx After the Court of First Instance of Samar had decided in favor of Lao in the action for damages by reason of malicious prosecution, Lao filed a motion for execution pending appeal [30] even as the Corporation and Co had interposed an appeal from the said decision. In that motion, Lao theorized that the appeal had no merit and the judgment in his favor would be rendered ineffectual on account of losses incurred by the Corporation in the 1972 floods in Luzon and in a fire that cost the Corporation P5 million, as well as the fact that the properties of the Corporation were heavily encumbered as it had even incurred an overdraft with a bank; for which reasons, Lao evinced his willingness to post a bond although Section 2, Rule 39 of the Rules of Court does not require such bond. Lao thereafter sent in a supplemental motion [31] asserting that the Corporations properties were mortgaged in the total amount of Seven Million (P7,000,000.00) Pesos. The Corporation and Co opposed both motions.
30 31

29 30 31

On June 8, 1977, after hearing and presentation of evidence by both parties, the Court of First Instance of Samar issued a special order granting the motion for execution pending appeal. [32] The following day, June 9, 1977, the corresponding writ of execution pending appeal issued. [33] At 8:00 a.m. on the same day, the Corporation and Co filed a petition for certiorari, prohibition and mandamus with preliminary injunction with the Court of Appeals, the filling of which petition was followed by the filing of a supplement to the petition and a "compliance" with each pleading bearing the docket stamp showing that the Court of Appeals also received the same at 8:00 a.m. [34]
32 33 34

Scslx

In the petition under consideration, petitioner Lao contends that the supplemental petition and "compliance" could not have been filed with the Court of Appeals at the same time as the original petition; pointing out that the supplemental petition contains an allegation to the effect that the special order granting execution pending appeal was then still "being flown to Manila" and would be attached to the petition "as soon as it arrives in Manila which is expected tomorrow, June 10, 1977 or Saturday." [35] Petitioner Lao thus expressed incredulity on the fact that both the supplemental petition and the "compliance" submitted to the appellate court a copy of the special order bearing the same time of receipt. He theorized that the writ of execution could have been issued by the Court of First Instance of Samar at the earliest, at 8:30 a.m. on July 9, 1977. Petitioner Lao then noted that, the restraining order enjoining execution pending appeal did not mention the date of issuance of the writ subsequently issued and the names of the special sheriffs tasked to execute it simply because when the restraining order was issued the copy of the writ of execution was not yet filed with the Court of Appeals. Petitioner Lao also averred that because his counsel was furnished a copy of the restraining order through the mail, he was deprived of the opportunity to take immediate "remedial steps in connection with the improvident issuance of the restraining order." [36]
35 36

In their comment on the petition, respondent Corporation and Co assail petitioner Laos insinuation of irregularity in the filing of their pleadings. They aver that in view of petitioner Laos allegation, they, made inquiries in the Docket Section of the Court of Appeals, and they were informed that the receiving machine of said section was out of order when the pleadings were received "as the time of receipt appearing therein is always 8:00 a.m." [37]
37

This Court cannot gloss over, as it has never glossed over allegations of irregularity in the handling of pleadings filed in the Court. However, in the absence of concrete proof that there was malicious intent to derail the propriety of procedure, this Court has no basis on which to arrive at a conclusion thereon. The documentary evidence of
32 33 34 35 36 37

simultaneous receipt of pleadings that should ordinarily be received one after another is simply insufficient to warrant any conclusion on irregularity of procedure. All court personnel are enjoined to do their jobs properly and according to law. Should they notice anything in the performance of their duties that may generate even a mere suspicion of irregularity, they are duty-bound to correct the same. In this case, more diligence on the part of the personnel handling the receiving machine could have prevented the stamping on the pleadings with erroneous date and time of receipt and would have averted suspicion of an anomaly in the filing of pleadings. Persons responsible for the negligence should be taken to task. However, since this is not the proper forum for whatever administrative measures may be taken under the premises, the Court opts to discuss the merits of the petition for review on certiorari at bar rather than tarry more on an administrative matter that is fundamentally extraneous to the petition. Slxsc Petitioner Lao maintains that the Court of Appeals should not have been given due course to the petition for certiorari, prohibition and mandamus considering that it was fatally defective for failure of the petitioners to attach thereto a copy of the questioned writ of execution. On their part, private respondents concede the mandatory character of the requirement of Section 1, Rule 65 of the Rules of Court - that the petition "shall be accompanied by a certified true copy of the judgment or order subject thereof, together with copies of all pleadings and documents relevant and pertinent thereto." However, private respondents asked that their submission of a certified true copy of the special order granting execution pending appeal attached to their "compliance" dated June 9, 1977 [38] be taken as substantial compliance with the rule.
38

The Court gives due consideration to private respondents stance. Strict adherence to procedural rules must at all times be observed. However, it is not the end-all and be-all of litigation. As this Court said: "xxx adjective law is not to be taken lightly for, without it, the enforcement of substantive law may not remain assured. The Court must add, nevertheless, that technical rules of procedure are not ends in themselves but primarily devised and designed to help in the proper and expedient dispensation of justice. In appropriate cases, therefore, the rules may have to be so construed liberally as to meet and advance the cause of substantial justice." [39]
39

Thus, in holding that the Court of Appeals may entertain a second motion for reconsideration of its decision although the filing of such motion violates a prohibition thereof, the Court said:

38 39

"xxx (I)t is within the power of this Court to temper rigid rules in favor of substantial justice. While it is desirable that the Rules of Court be faithfully and even meticulously observed, courts should not be so strict about procedural lapses that do not really impair the proper administration of justice. If the rules are intended to ensure the orderly conduct of litigation, it is because of the higher objective they seek which is the protection of substantive rights of the parties." [40] Slxmis
40

In the case under consideration, private respondents substantially complied with the Rules of Court when they submitted a copy of the writ of execution sought to be enjoined on the same day they filed the petition for certiorari, prohibition and mandamus. Petitioner Cos allegation of irregularity as to the time of receipt of the "compliance" to which copy of the writ was attached being unsubstantiated, the presumption of regularity of its receipt on the day the original petition was filed should prevail. Petitioner Co argues that the Court of Appeals cannot disturb the factual findings of the trial court and substitute its own in a petition for certiorari, prohibition and mandamus where the basic issue is one of jurisdiction or grave abuse of discretion. It is well-settled, however, that in a petition for certiorari and mandamus, the Court of Appeals, when inevitable, may examine the factual merits of the case. [41] In the present case, it was necessary and inevitable for the Court of Appeals to look into the diverse factual allegations of the parties. It is worthy to note that petitioners motion for execution pending appeal was premised on his contention that the award of damages in his favor would be meaningless on account of respondent Corporations precarious financial status. On the other hand, respondent Corporation countered that it was operating at a profit, an assurance that at the time, it was a stable business entity that could answer for its obligations. In the face of these contradictory allegations, the appellate court correctly opted to make its own finding of facts on the issue of the propriety of the issuance of the writ of execution pending appeal. It should be stressed that what was at issue was not the award of damages itself but the issuance of said writ.
41

Petitioner Laos position that the posting of a good and solvent bond is a special reason for the issuance of the writ of execution pending appeal is utterly barren of merit. Mere posting of a bond to answer for damages does not suffice as a good reason for the granting of execution pending appeal, within the context of "good reasons" under Section 2, Rule 39 of the Rules of Court. [42] In Roxas v. Court of Appeals, [43] the Court held: Missdaa
42 43

"It is not intended obviously that execution pending appeal shall issue as a matter of course. Good reasons, special, important, pressing reasons
40 41 42 43

must exist to justify it; otherwise, instead of an instrument of solicitude and justice, it may well become a tool of oppression and inequity. But to consider the mere posting of a bond a good reason would precisely make immediate execution of a judgment pending appeal routinary, the rule rather than the exception. Judgments would be executed immediately, as a matter of course, once rendered, if all that the prevailing party needed to do was to post a bond to answer for damages that might result therefrom. This is a situation, to repeat, neither contemplated nor intended by law." [44]
44

G.R. No. 60647 From the decision of the Court of First Instance of Samar in Civil Case No. 5528, finding that they are liable for malicious prosecution and therefore, they must pay Lao damages, the Corporation and Co appealed to the Court of Appeals. In affirming the lower courts decision, the Court of Appeals deduced from the facts established that the Corporation knew all along that Laos liability was civil in nature. However, after around four (4) years had elapsed and sensing that Civil Case No. 4452 would result in a decision against them, they instituted the criminal case for estafa. In awarding damages in the total amount of P330,000, the Court of Appeals took into account Laos social and business standing. [45] Sdaadsc
45

From the Decision of the Court of Appeals in CA-G.R. No. 61925-R, Co filed the instant petition for review on certiorari; contending that the Court of Appeals erred in affirming the decision of the Samar Court of First Instance because when the case for malicious prosecution was commenced there was as yet no cause of action as the criminal case was still pending decision. Co also asserted that he should not be held jointly and severally liable with the Corporation because in filing the affidavit-complaint against respondent Lao, he was acting as the executive vice-president of the Corporation and his action was within the scope of his authority as such corporate officer. The issue of whether the Court of Appeals correctly ruled that the Corporation and petitioner Co should be held liable for damages on account of malicious prosecution shall be ratiocinated upon and resolved with the issues submitted for resolution in G.R. Nos. 60958-59. What should concern the Court here is whether petitioner Co should be held solidarily liable with the Corporation for whatever damages would be imposed upon them for filing the complaint for malicious prosecution. Petitioner Co argues that following the dictum in agency, the suit should be against his principal unless he acted on his own or exceeded the limits of his agency. A perusal of his affidavit-complaint reveals that at the time he filed the same on June 24, 1974, petitioner Co was the vice-president of the Corporation. As a corporate officer,
44 45

his power to bind the Corporation as its agent must be sought from statute, charter, bylaws, a delegation of authority to a corporate officer, or from the acts of the board of directors formally expressed or implied from a habit or custom of doing business. [46] In this case, no such sources of petitioners authority from which to deduce whether or not he was acting beyond the scope of his responsibilities as corporate vice-president are mentioned, much less proven. It is thus logical to conclude that the board of directors or by laws- of the corporation vested petitioner Co with certain executive duties [47]one of which is a case for the Corporation.
46 47

That petitioner Co was authorized to institute the estafa case is buttressed by the fact that the Corporation failed to make an issue out of his authority to file said case. Upon well-established principles of pleading, lack of authority of an officer of a corporation to bind it by contract executed by him in its name, is a defense which should have been specially pleaded by the Corporation. [48] The Corporations failure to interpose such a defense could only mean that the filing of the affidavit-complaint by petitioner Co was with the consent and authority of the Corporation. In the same vein, petitioner Co may not be held personally liable for acts performed in pursuance of an authority and therefore, holding him solidarily liable with the Corporation for the damages awarded to respondent Lao does accord with law and jurisprudence. Rtcspped
48

G.R. No. 606958-59 In this petition for review on certiorari of the Decisions of the Court of Appeals in CAG.R. No. 61925-R, regarding Laos claim for damages on account of malicious prosecution, and in CA-G.R. No. 62532-R that arose from Laos complaint for accounting and damages, petitioner Corporation assigns as errors, that: 1........The respondent Court of Appeals erred and/or committed a grave abuse of discretion in affirming the erroneous decision of the lower court. The civil case for malicious prosecution was filed during the pendency of the criminal case upon which the civil suit was based. There is as yet no cause of action. xxx. 2........The respondent Court of Appeals erred and/or committed a grave abuse of discretion when it reversed or set aside the supplemental decision of the lower court in Civil Case No. 4452, which reversal was merely based on surmises and conjectures. xxx. 3........The respondent Court of Appeals erred and/or committed grave abuse of discretion when it awarded moral damages in Civil Case No. 4452 which was not prayed for because Andres Lao prayed for moral
46 47 48

damages and was already awarded in Civil Case No. 5528. Moral damages must be specifically prayed for. xxx. [49]
49

Petitioner Corporation contends that the complaint for malicious prosecution brought by Lao during the pendency of subject criminal case for estafa, states no cause of action as it was prematurely filed when the criminal case that resulted in the acquittal of Lao was not yet terminated. On the other hand, respondent Lao countered that the elements supportive of an action for malicious prosecution are evidentiary in nature and their existence or non-existence cannot be the subject of evaluation and conclusion upon the filing of the complaint. For Lao, those elements must be determined at the time the plaintiff has offered all his evidence and rested his case. Kortex Malicious prosecution 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. [50] As thus defined, the fact of termination of the criminal prosecution, civil suit or legal proceeding maliciously filed and without probable cause, should precede the complaint for malicious prosecution. Such a complaint states a cause of action if it alleges: (a) that the defendant was himself the prosecutor or at least instigated the prosecution; (b) that the prosecution finally terminated in the acquittal of the plaintiff; (c) that in bringing the action the prosecutor acted without probable cause, and (d) that the prosecutor was actuated by malice, i.e., by improper and sinister motives. [51]
50 51

Ocamp v. Buenaventura [52] demonstrates the importance of the requirement that the case maliciously commenced should be terminated before a claim for damages arising from the filing of such case should be presented. In that case, a complaint for damages arising from the alleged malicious filing of an administrative case for serious misconduct, grave abuse of authority and commission of a felony, was held to be premature during the pendency of said administrative case before the then Police Commission (POLCOM). Observing that the complaint for damages was based on the claim that the administrative case brought before the POLCOM was malicious, unfounded and aimed to harass the respondents, the Court there held:
52

"xxx. The veracity of this allegation is not for us to determine, for if We rule and allow the civil case for damages to proceed on that ground, there is the possibility that the court a quo in deciding said case might declare the respondents victims of harassment and thereby indirectly interfere with the proceedings before the POLCOM. The respondents case for damages before the lower court is, therefore, premature as it was filed during the
49 50 51 52

pendency of the administrative case against the respondents before the POLCOM. The possibility cannot be overlooked that the POLCOM may hand down a decision adverse to the respondents, in which case the damage suit will become unfounded and baseless for wanting in cause of action. Of persuasive force is the ruling in William H. Brown vs. Bank of the Philippine Islands and Santiago Freixas, 101 Phil. 309, 312, where this Court said: Sclaw "xxx. In effect, plaintiff herein seeks to recover damages upon the ground that the detainer case has been filed, and is being maintained, maliciously and without justification; but this pretense affects the merits of said detainer case. Should final judgment be eventually rendered in that case in favor of the plaintiffs therein, such as the one rendered in the municipal court, the validity of the cause of action of said lessors against Brown, would thereby be conclusively established, and necessarily, his contention in the present case would have to be rejected. Similarly, we cannot sustain the theory of Brown in the case at bar, without prejudging the issue in the detainer case, which is still pending. Until final determination of said case, plaintiff herein cannot, and does not, have, therefore, a cause of action - if any, on which we do not express our opinion - against the herein defendants. In short, the lower court has correctly held that the present action is premature, and, that, consequently, the complain herein does not set forth a cause of action against the defendants." [53]
53

A similar ruling was laid down in Cabacungan v. Corrales [54] where the Court sustained the dismissal of an action for damages on the ground of prematurity. The records disclosed that the alleged false and malicious complaint charging plaintiffs with malicious mischief was still pending trial when the action for damages based on the subject complaint was brought.
54

Premises studiedly viewed in proper perspective, the contention of Lao that the elements of an action for malicious prosecution are evidentiary in nature and should be determined at the time the plaintiff offers evidence and rests his case, is untenable. To rule otherwise would, in effect, sanction the filing of actions without a cause of action. The existence of a cause of action is determined solely by the facts alleged in the complaint. Consideration of other facts is proscribed and any attempt to prove extraneous circumstances is not allowed. [55] As this Court said in Surigao Mine
55

53 54 55

Exploration Co., Inc. v. Harris, [56] "unless the plaintiff has a valid and subsisting cause of action at the time his action is commenced, the defect cannot be cured or remedied by the acquisition or accrual of one while the action is pending, and a supplemental complaint or an amendment setting up such after-accrued cause of action is not permissible." [57] Thus, the circumstance that the estafa case concluded in respondent Laos acquittal during the pendency of the complaint for malicious prosecution did not cure the defect of lack of cause of action at the time of filing of the complaint. Sclex
56 57

Neither does the Court find merit in respondent Laos submission that the complaint for malicious prosecution is viable inasmuch as it is also anchored on Articles 20 and 21 of the Civil Code. This may appear to be a persuasive argument since there is no hard and fast rule which can be applied in the determination of whether or not the principle of abuse of rights has been violated, resulting in damages under the said articles of the Civil Code on Human Relations. Indeed, a party injured by the filing of a court case against him, even if he is later on absolved, may file a case for damages grounded either on the principle of abuse of rights or on malicious prosecution. [58] However, whether based on the principle of abuse of rights or malicious prosecution, a reading of the complaint here reveals that it is founded on the mere filing of the estafa charge against respondent Lao. As such, it was prematurely filed and it failed to allege a cause of action. Should the action for malicious prosecution be entertained and the estafa charge would result in respondent Laos conviction during the pendency of the damage suit, even if it is based on Articles 20 and 21, such suit would nonetheless become groundless and unfounded. To repeat; that the estafa case, in fact, resulted in respondent Laos acquittal would not infuse a cause of action on the malicious prosecution case already commenced and pending resolution.
58

The complaint for damages based on malicious prosecution and/or on Articles 20 and 21 should have been dismissed for lack of cause of action and therefore, the Court of Appeals erred in affirming the decision of the trial court of origin. It should be stressed, however, that the dismissal of subject complaint should not be taken as an adjudication on the merits, the same being merely grounded on the failure of the complaint to state a cause of action. [59]
59

As regards the Decision in CA-G.R. No. 62532-R which was spawned by respondent Laos complaint for accounting, petitioner contends that the appellate court erred when it reversed and set aside the supplemental decision in Civil Case No. 4452 and directed the corporation to reimburse the amount of P556,444.20, representing Laos overpayment to the Corporation. The Court would normally have restricted itself to questions of law and shunned away from questions of fact were it not for the conflicting findings of fact by the trial court and appellate court on the matter. The Court is
56 57 58 59

therefore constrained to relax the rule on conclusiveness of factual findings of the Court of Appeals and, on the basis of the facts on record, make its own findings. [60]
60

It is significant to note that as per decision of the trial court dated March 26, 1975, a court-supervised accounting was directed so as to ascertain the true and correct accountability of Andres Lao to the defendant corporation. Thus, a three-man audit committee was formed with the branch of clerk of court, Atty. Victorio Galapon, as chairman, and two other certified public accountants respectively nominated by the parties, as members. On September 16, 1976, the said Audit Committee submitted its report [61] and in the hearing of November 25, 1976, the parties interposed no objection thereto and unanimously accepted the Audit Committee Report. The Committee found that Andres Lao has made a total overpayment to defendant corporation in the amount of P556,444.20. Xlaw
61

Trial by commissioners is allowed by the Rules of Court when a) the trial of an issue of fact requires the examination of a long account on either side, in which case the commissioner may be directed to hear and report upon the whole issue or any specific question involved therein; b) when the taking of an account is necessary for the information of the court before judgment, or for carrying a judgment or order into effect; and c) when a question of fact, other than upon the pleadings, arises upon motion or otherwise, at any stage of a case, or for carrying a judgment or order into effect. [62] Ultimately, the trial court, in the exercise of its sound discretion, may either adopt, modify, or reject in whole or in part, the commissioners report or it may recommit the same with instructions, or require the parties to present additional evidence before the commissioners or before the court. [63]
62 63

In the case under consideration, it is thus within the power of the trial court to refer the accounting to court-appointed commissioners because a true and correct accounting is necessary for the information of the court before it can render judgment. Moreover, the technical nature of the audit procedure necessitates the assistance of a certified public accountant. And since both parties offered no objection to the commissioners report, they are deemed to have accepted and admitted the findings therein contained. There is no discernible cause for veering from the findings of the Audit Committee. In arriving at its conclusion, the Audit Committee subtracted the total remittances of Lao in the amount of P13,686,148.80 from the entire volume of shipments made by the corporation. In determining the total volume of shipments made by the corporation, the Audit Committee did not include the shipments covered by bills of lading and factory
60 61 62 63

consignment invoices but without the corresponding delivery receipts. These included shipments in the amount of P597, 239.40 covered by bills of lading and factory consignment invoices but with no supporting delivery receipts, and shipments worth P126, 950.00 with factory consignment invoices but not covered by bills of lading and delivery receipts. However, the Audit Committee considered shipments made by the corporation to Lao in the amount of P9,110,777.00 covered by bills of lading and factory invoices but without the corresponding delivery receipts because subject shipments were duly reported in Laos monthly sales report. Xsc The Audit Committee correctly excluded the shipments not supported by delivery receipts, albeit covered by bills of lading and factory consignment invoices. Under Article 1497 of the Civil Code, a thing sold shall be understood as delivered when it is placed in the control or possession of the vendee. Unless possession or control has been transferred to the vendee, the thing or goods sold cannot be considered as delivered. Thus, in the present case, the Audit Committee was correct when it adopted as guideline that accountability over the goods shipped was transferred from the corporation to Andres Lao only upon actual delivery of the goods to him. For it is only when the goods were actually delivered to and received by Lao, did Lao have control and possession over subject goods, and only when he had control and possession over said goods could he sell the same. Delivery is generally evidenced by a written acknowledgement of a person that he or she has actually received the thing or the goods, as in delivery receipts. A bill of lading cannot substitute for a delivery receipt. This is because it is a written acknowledgement of the receipt of the goods by the carrier and an agreement to transport and deliver them at a specific place to a person named or upon his order. [64] It does not evidence receipt of the goods by the consignee or the person named in the bill of lading; rather, it is evidence of receipt by the carrier of the goods from the shipper for transportation and delivery.
64

Likewise, a factory consignment invoice is not evidence of actual delivery of the goods. An invoice is nothing more than a detailed statement of the nature, quantity and cost of the thing sold. [65] It is not proof that the thing or goods were actually delivered to the vendee or the consignee. As admitted by the witness for the corporation:
65

A: Factory consignment invoices represents what the company billed the plaintiff Mr. Lao and the bill of lading represents the goods which were supposed to have been shipped. xxx.......xxx.......xxx A: Shipments covered by factory consignment invoices simply meant these are billings made again by the Associated Anglo-American Tobacco
64 65

Corporation to plaintiff Andres Lao. (t.s.n., November 25, 1976, pp. 45-47 as cited in Respondent Laos Comment, Rollo, p. 259) Thus, in the absence of proof that the goods were actually received by Lao as evidenced by delivery receipts, the shipments allegedly made by the corporation in the amount of P597,239.40 and P126,950.00 covered only by bills of lading and factory consignment invoices cannot be included in Laos accountability. Sc However, as to the shipments worth P4,018,927.60 likewise covered only by bills of lading and factory consignment invoices, the Audit Committee correctly considered them in Laos account because such shipments were reported in the latters sales reports. The fact that Lao included them in his sales reports is an implied admission that subject goods were actually delivered to him, and that he received the said goods for resale. As regards the award of moral damages, petitioner Corporation faults the Court of Appeals for awarding such damages not specifically prayed for in the complaint for accounting and damages in Civil Case No. 4452. Petitioner Corporation argues that moral damages were prayed for and duly awarded in Civil Case No. 5528 and therefore, it would be unfair and unjust to allow once again, recovery of moral damages on similar grounds. Contrary to the allegation of the petitioner Corporation, the award of moral damages was specifically prayed for in the complaint albeit it left the amount of the same to the discretion of the court. [66] Moreover, Civil Case Nos. 4452 and 5528 were on varied causes of action. While the award for moral damages in Civil Case No. 4452 was based on the evident bad faith of the petitioner Corporation in unilaterally rescinding respondent Laos sales agency through his immediate replacement by Ngo Kheng, the claim for moral damages in Civil Case No. 5528 was anchored on the supposed malice that attended the filing of the criminal case for estafa.
66

Petitioner Corporation also opposes for being conjectural, the award of P150,000.00 in Civil Case No. 4452, representing actual damages for loss of earnings. True, damages cannot be presumed or premised on conjecture or even logic. A party is entitled to adequate compensation only for duly substantiated pecuniary loss actually suffered by him or her. [67] In this case, however, the trial court correctly found that an award for actual damages was justified because several months before their contract of agency was due to expire in 1969, the petitioner Corporation replaced Lao with Ngo Kheng as sales agent for the areas of Leyte and Samar. This, despite the fact that they had already agreed that Lao would continue to act as the corporations sales agent provided that he would reduce his accountability to P200,000.00, the amount covered by his bond, and engaged the services of an independent accounting firm to do an audit to
67

66 67

establish Laos true liability. Due to his ouster as sales agent, Lao failed to realize a net income from his sales agency in the amount of P30,000.00 a year. Scmis However, the amount of actual damages should be reduced to P30,000.00 only instead of the P150,000.00 awarded by the appellate court. Since the contract of sales agency was on a yearly basis, the actual damages Lao suffered should be limited to the annual net income he failed to realize due to his unjust termination as sales agent prior to the expiration of his contract in 1969. Unrealized income for the succeeding years cannot be awarded to Lao because the corporation is deemed to have opted not to renew the contract with Lao for the succeeding years. As to the award of exemplary damages, suffice it to state that in contracts and quasicontracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. [68] In the case under scrutiny, the Court finds the award of exemplary damages unjustified or unwarranted in the absence of any proof that the petitioner Corporation acted in a wanton, fraudulent, reckless, oppressive, and malevolent manner. For the same reasons, the award for attorneys fees should be deleted.
68

WHEREFORE, In G.R. No. L-47013, the petition for review on certiorari is DENIED for lack of merit; In G.R. No. 60647, the petition is GRANTED and the assailed decision is SET ASIDE; and the Decision of the Court of Appeals in CA-G.R. No. 61925-R, finding Esteban Co solidarily liable with the respondent Associated Anglo-American Tobacco Corporation for damages, is REVERSED AND SET ASIDE. As above ratiocinated, the respondent corporation cannot be held liable for damages. In G.R. Nos. 60958-59, the Decision in CA-G.R. No. 61925-R is REVERSED AND SET ASIDE; the respondent corporation is adjudged not liable for malicious prosecution due to the prematurity of the action; while the Decision in CA-G.R. No. 62532-R is AFFIRMED, insofar as it ordered respondent corporation to reimburse Andres Laos overpayment in the amount of P556,444.20, but MODIFIED, in that only an award of P30,000.00 for actual damages is GRANTED, and all the other monetary awards are deleted. No pronouncement as to costs. SO ORDERED. Melo, (Chairman), Vitug, and Panganiban, JJ., concur. Gonzaga-Reyes, J., no part. Spouse is with counsel for respondents.

68

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 132659 February 12, 2007

CONRADO MAGBANUA and ROSEMARIE MAGBANUA-TABORADA, the latter assisted by her husband ARTEMIO TABORADA,Petitioners, vs. PILAR S. JUNSAY, asssisted by her husband VICENTE JUNSAY, IBARRA LOPEZ, and JUANITO JACELA, Respondents. DECISION CHICO-NAZARIO, J.: This is an Appeal by Certiorari from the Decision,1 dated 26 January 1998, of the Court of Appeals in CA-G.R. CV No. 51750, which affirmed in toto the Decision,2 dated 25 July 1995, of the Regional Trial Court (RTC), Branch 51, Bacolod City, in Civil Case No. 4361, dismissing the Complaint for Damages for malicious prosecution, filed by petitioners against respondents. The RTC rendered judgment declaring that the prosecution was not prompted by sinister design to vex and humiliate petitioner Rosemarie Magbanua. The Court of Appeals similarly found the appeal without merit. The following are the antecedent facts: Petitioner Rosemarie Magbanua, who worked as a housemaid in the residence of complainant and herein respondent Pilar S. Junsay was charged as a co-accused with the crime of Robbery before the RTC, Branch XLI of Bacolod City in Criminal Case No. 28 entitled, People of the Philippines v. Rosemarie Magbanua, et al., by virtue of an Information, which recites, thus: That on or about the 18th day of July, 1982, in the City of Bacolod, Philippines, and within the jurisdiction of this Honorable Court, the herein accused, conspiring, confederating and mutually helping one another, with intent to gain and with the use of force upon things by then and there making a hole on the lower portion of the kitchens door of the house of the herein offended party, Dra. Pilar S. Junsay, situated at Bata Subdivision, Bacolod City, through which opening made (sic) them, said accused gained entrance thereto and once inside the said house, did, then and there willfully, unlawfully and feloniously take, rob and carry away with them, assorted jewelries and cash, valued all in all in the amount of P29,624.00, Pesos, Philippine Currency, to the damage and prejudice of the herein offended party in the aforementioned amount.3 The records show that only petitioner Rosemarie was tried in Criminal Case No. 28. Her coaccused, Ernesto Fernandez and a certain Gudo, remain at large.

The case for the prosecution relied on an alleged confession made by petitioner Rosemarie, admitting her participation in the crime of Robbery. The defense contested the admissibility of the confession, and averred that the same was made under duress. On 20 December 1985, the RTC, Branch XLI of Bacolod City, rendered a Decision,4 acquitting petitioner Rosemarie of the crime of Robbery. The RTC held: The evidence for accused [herein petitioner Rosemarie] more particularly the Medical Certificate and the testimony of the attending physician as well as the Decision of the NAPOLCOM finding the investigating officers guilty has clearly establish (sic) the fact that accused was physically maltreated by the investigating officers in an attempt to force her to confess her participation in the robbery. Whatever declaration of accused therefore against her interest is inadmissible in evidence against her, hence, the alleged admission of the accused that she participated in the commission of the Robbery made to the police investigator and complainant [complainant respondent Pilar] even if it is true cannot be used against her. Notwithstanding however, accused could still be found guilty if the evidence for the prosecution is sufficient to establish her participation in the crime without said alleged admission by the accused. Record, however, shows that other than the alleged admission of the accused made to the police investigator and the complainant, the only evidence to establish the participation of the accused in the robbery is the testimony of the complaining witness that after accused informed her that part of the jewelry stolen was inside her bag at her room, the complaining witness searched the room of accused and found one (1) piece of gold necklace. On this point, the evidence adduced shows that the police authorities went at (sic) the scene of the robbery and thoroughly investigated the incident including dusting for fingerprints, tending to show that the investigation of the police authorities was extensive, hence, it was quite improbable and difficult to believe that the police investigator would fail to search the bag nor the room of accused. This Court[,] therefore[,] find said testimony of the complaining witness on this point discredited.5 The decretal portion of the 20 December 1985 RTC Decision pronounced: IN VIEW OF THE FOREGOING THEREFORE, this Court finds the evidence for the prosecution not only insufficient to prove the guilt of the accused beyond reasonable doubt but even insufficient to establish a prima facie case against her for having participated in the robbery subject of the above entitled case and therefore ACQUITS accused on the ground of insufficiency of evidence. The bailbond of the accused for her provisional liberty is hereby ordered cancelled.6 On 9 March 1987, petitioner Rosemarie, assisted by Artemio Taborada, and together with copetitioner Conrado Magbanua (Rosemaries father) filed with the RTC, Branch 51, Bacolod City, a Complaint for Damages7 against respondent Pilar, assisted by her husband Vicente Junsay, Ibarra Lopez, and Juanito Jacela. Respondent Pilar was the employer of petitioner Rosemarie, while respondents Ibarra and Juanito were members of the police force of Bacolod City, and assigned at the Police Station in Taculing, Bacolod City. The Complaint, alleged, inter alia, that by reason of respondents false, malicious, and illegal actuations in filing Criminal Case No. 28 for Robbery against petitioner Rosemarie, the latter suffered untold pain, shame, humiliation, worry, and mental anguish, which if assessed in

monetary terms will not be less than P200,000.00.8 It was further alleged therein that Conrado, Rosemaries father, lost his job and his entire family suffered.9 Petitioners maintained that Rosemarie suffered physical pain and mental torture due to the filing of the false criminal charge against her.10 They sought moral and exemplary damages, including attorneys fees and litigation expenses, as well as loss of earnings and expenses incurred in connection with Rosemaries defense in Criminal Case No. 28 for Robbery.11 They similarly prayed for payment of the expenses incurred in the prosecution of the instant case. Subsequently, petitioners filed a Petition to litigate as pauper which the RTC granted in its Order dated 9 March 1987, it appearing that they had no means to prosecute their action.12 Respondent Pilar filed a Motion to Dismiss,13 on the ground that the cause of action is barred by the Statute of Limitations, as crystallized in Article 114614 of the Civil Code. From the time the cause of action arose to the filing of the Complaint, four years and eight months had already lapsed. Petitioners filed an Opposition to the Motion to Dismiss,15 contending that their cause of action is not for damages based on the physical injuries suffered by Rosemarie during the investigation of the criminal case nor the violation of her rights for the indignities foisted upon her by the respondents from 18 July 1982, and several days thereafter.16 They posited that the damages sought are for the malicious prosecution of Rosemarie. They reasoned that the baseless filing of the criminal case for Robbery against Rosemarie, despite her protestations of innocence and the lack of evidence against her, caused her family to incur expenses and subjected her to untold shame and humiliation.17 Petitioners clarified that the allegations about the violation of Rosemaries rights as a person were included only to demonstrate respondents palpable malice in the filing of the said criminal case against her. Petitioners postulated that as the Complaint for Damages is for malicious prosecution, the prescriptive period should be counted from the date of Rosemaries acquittal in Criminal Case No. 28, or on 20 December 1985, and not from 18 July 1982, the date when respondents injured the rights of Rosemarie. From the time judgment in Criminal Case No. 28 was rendered to the filing of the Complaint in the instant case, not more than one year and three months had passed.18 On 24 March 1988, the RTC issued an Order19 denying respondents Motion to Dismiss for lack of merit. It found that the cause of action of petitioners Complaint was based on malicious prosecution; hence, the prescriptive period shall be counted from the date of petitioner Rosemaries acquittal. According to the RTC, the allegations about the wanton violation of the rights of Rosemarie as a person were to show the pattern of respondents malice. Respondent Pilar filed before the RTC an Answer,20 dated 18 May 1988, disclaiming petitioners allegation that she maltreated petitioner Rosemarie while the latter was being investigated by the police authorities. She posited, inter alia: that she was not present during the investigation, and was subsequently informed of petitioner Rosemaries participation in the robbery by the investigators, the same being reflected in the Joint Affidavit of the police investigators; that she never laid a hand on petitioner Rosemarie before, during, or after the investigation, as, in fact, she had no inkling of her participation in the crime; that she had no hand in the filing of the case except to execute an affidavit regarding her ownership of the lost jewelry; and that she has no liability whatsoever to

petitioner Rosemarie, much less, to her father, petitioner Conrado, who does not appear to have any involvement in the matter.21 By way of counterclaim, she sought damages, including attorneys fees, and costs of suit from the petitioners. Petitioners filed a Reply and Answer to Counterclaim,22 reiterating the allegation in the Complaint, that respondent Pilar actually participated in the maltreatment of petitioner Rosemarie, and she cannot deny her participation as she was always present in the police station during the investigation. Petitioners alleged that respondent Pilar cannot claim lack of knowledge of the maltreatment and indignities suffered by petitioner Rosemarie because she herself participated in such maltreatment. Petitioners further contended, inter alia, that they have a proper and valid cause of action against the respondents, including petitioner Conrado who suffered and incurred expenses to defend his daughter, Rosemarie, who was then a minor against unjust accusation, maltreatment and torture. On 9 September 1988, at the pre-trial, the parties entered into a stipulation of facts. Counsel for the petitioners manifested that they were claiming damages not for physical injuries which petitioner Rosemarie allegedly suffered in the hands of respondents during her investigation, but for her malicious prosecution.23 In concurrence thereto, counsel for respondents declared that the main issue was whether Rosemarie was maliciously prosecuted with the filing of the criminal case for Robbery.24 Following the stipulations and counter-stipulation of facts, pre-trial was terminated. Meanwhile, respondents Ibarra and Juanito, members of the police force of Bacolod City, filed an Answer and Manifestation,25 adopting the Answer filed by their co-respondent Pilar, dated 18 May 1988, insofar as the allegations therein were applicable to them, and further adopting the counterclaim interposed in the aforesaid action. Trial, thereafter, ensued. Seeking to fortify their case, petitioners offered the following exhibits, to wit: Exhibit "A" The medical certificate issued by Dr. Teodoro S. Lavasa, Medico-legal officer and Chief, Crime Laboratory, Bacolod Metro Police District, dated July 27, 1982. This exhibit is offered to show the many injuries sustained by [herein petitioner] Rosemarie Magbanua at the hands of the [herein respondents] in their joint effort to make her admit the crime in the absence of proof that she participated therein and despite her protestations of innocence. Exhibit "B" The note of Dr. Teodoro S. Lavada to the jail warden. This exhibit is offered to show the result of the maltreatment and/or physical injuries inflicted by the [respondents] on the person of [petitioner] Rosemarie Magbanua hemoptysis, fever, and body pains - which made the medico-legal officer recommend hospitalization for her.

Exhibit "C" The information filed by Fiscal Ricardo F. Tornilla, 2nd Asst. City Fiscal, Bacolod City, dated July 20, 1982. This exhibit is offered to show the result of the [respondents] confederated efforts for Rosemarie Magbanua to be prosecuted for the crime she did not commit, including untrue affidavits, a biased and false investigation report mentioning Rosemarie Magbanuas alleged confession of her participation in the robbery when she never did, despite the injuries and indignities to which she was subjected, all of which made the Asst. City Fiscal Ricardo F. Tornilla file the information against said plaintiff Rosemarie Magbanua. Exhibit "D" The Decision rendered by Hon. Quirino D. Abad Santos, Jr., Judge, Regional Trial Court of Negros Occidental, Branch XLI Bacolod City, in Criminal Case No. 28 entitled, "People of the Philippines vs. Rosemarie Magbanua, et al." dated December 20, 1985. Exhibit "D-1" The portion appearing on page 4 of said decision stating that, "IN VIEW OF THE FOREGOING THEREFORE, this Court finds the evidence for the prosecution not only insufficient to prove the guilt of the accused beyond reasonable doubt but even insufficient to establish a prima facie case against her for having participated in the robbery subject of the above entitled case and therefore ACQUITS accused on the ground of insufficiency of evidence. The bailbond of the accused for her provisional liberty is hereby ordered cancelled." This exhibit with its sub-marking is offered to show that the [petitioner] Rosemarie Magbanua was acquitted of the crime charged because the evidence for the prosecution was not only insufficient to prove the guilt of the accused beyond reasonable doubt but even insufficient to establish a prima facie evidence against her for having participated in the robbery, thus glaringly exposing the utter lack of basis for charging and/or prosecuting Rosemarie Magbanua for the crime of robbery which was nevertheless filed at the behest of the [respondents] who knowing fully the bereftness of their stand even tried to concoct additional evidence of having found still more jewelry in [petitioner] Rosemarie Magbanuas handbag, a maneuver which was debunked by the honorable Court in its decision. Exhibit "E" The decision of the National Police Commission Adjudication Board No. 11 in Adm. Case No. 83-0888 finding the respondent PFC Ibarra Lopez and respondent Patrolman Juanito Jacela, two of the defendants, guilty of grave misconduct and ordering their suspension for two (2) months without pay. Exhibit "E-1" The bracketed dispositive portion of the decision appearing on page 3 thereof which is as follows: "IN VIEW OF THE FOREGOING, this Board finds respondents PFC IBARRA LOPEZ AND PAT JUANITO JACELA guilty of Misconduct and they are hereby ordered SUSPENDED FOR TWO (2) MONTHS WITHOUT PAY WITH WARNING THAT A REPETITION OF THE SAME OFFENSE SHALL BE PENALIZED MORE SEVERELY."

This exhibit with its submarking is offered to show that the two (2) [respondents], PFC Ibarra Lopez and Patrolman Juanito Jacela, employed unnecessary force on the person of the [petitioner] Rosemarie Magbanua just to make her admit and/or confess to a crime she did not commit, thus contributing to and even making possible the unnecessary, baseless, and malicious prosecution of the [petitioner].26 On 25 January 1991, the RTC issued an Order,27 admitting Exhibits "A" to "E," including the submarkings thereon for the purposes for which they had been offered and for such purpose as may serve the court a quo in the resolution of the case.28 On 25 July 1995, the RTC rendered a Decision dismissing the Complaint. The RTC applied the established rule that for a malicious prosecution suit to succeed, two indispensable elements must be shown to exist, to wit: (a) malice and (b) absence of probable cause. It found that the elements were not successfully shown by petitioners. It held that the mere filing of a suit does not render a person liable for malicious prosecution should he be unsuccessful for the law could not have meant to impose a penalty on the right to litigate.29 In sustaining the respondents, the RTC said that the filing of the criminal complaint against petitioner Rosemarie was not prompted with a sinister design to vex, or humiliate her. It reasoned that respondent Pilar reported the robbery which occurred on 17 July 1982 to the Bacolod Police Station; consequently, police investigators, including respondents Ibarra and Juanito, proceeded to the residence of respondent Pilar. It ratiocinated that there was no legal malice on the part of the latter as victim of the crime of robbery for bringing the same to the attention of the police authorities. The RTC similarly did not find legal malice on the part of her co-respondents, Ibarra and Juanito, as they were merely performing their duties when they conducted the investigation; and subsequently filed the case against petitioner Rosemarie and her co-accused pursuant thereto. In denying petitioners prayer for damages arising from malicious prosecution, the RTC ruled that: In the course of the investigation, Rosemarie Magbanua admitted her participation in the robbery together with a certain Ernesto Fernandez and a person named "Gudo." The necklace given to her as her share was recovered in her shoulder bag. After the police authorities had completed their investigation, they filed a case for robbery with the office of the City Fiscal of Bacolod City (now City Prosecutor) against Rosemarie Magbanua, Ernesto Fernandez and a certain "Gudo." The Office of the City Fiscal after conducting a preliminary investigation filed a case for robbery against the three suspects. After trial, as against then accused now [herein petitioner] Rosemarie Magbanua, the Court acquitted her. [Herein respondent] Dra. Pilar Junsay, cannot be faulted for reporting to the police. She was robbed of valuables worth P29,974.00. Besides, she did not tell the police that she was robbed by herein [petitioner] Rosemarie Magbanua. And, there is no legal malice for a victim of a crime to report the matter to the police. Furthermore, the mere filing of a suit does not render a person liable for malicious prosecution should he be unsuccessful for the law could not have meant to impose a penalty on the right to litigate (Albenson Enterprises Corp. vs. Court of Appeals, 217 SCRA 16).

Neither can [respondents] police investigator Ibarra Lopez and Juanito Jacela be faulted for filing a complaint of robbery with the Office of the City Fiscal, against herein plaintiff Rosemarie Magbanua, Ernesto Fernandez and a certain "Gudo." It is part of their duties to conduct an investigation of a case reported to their office. And Rosemarie Magbanua admitted to them her participation to the commission of the crime together with her co-accused Ernesto Fernandez and Gudo. Thus, there was probable cause of the crime of robbery against said accused. Their finding of a probable cause against the accused was shared by the City Fiscals Office when an Information for robbery against said accused was filed after conducting a preliminary investigation. [Respondents] police investigators Ibarra Lopez and Juanito Jacela do not know [respondent] Dra.Pilar Junsay nor [petitioner] Rosemarie Magbanua, prior to July 18, 1982, when the crime was reported by the former to their office. And, the criminal complaint filed by them was not only against Rosemarie Magbanua, but also against Ernesto Fernandez and a certain "Gudo." Hence, it cannot be said that they were prompted by a sinister design to vex, and humiliate [petitioner] Rosemarie Magbanua.30 Petitioners filed a Notice of Appeal on the 25 July 1995 Decision of the RTC. Thus, the records of the case were subsequently forwarded to the Court of Appeals. The Court of Appeals affirmed the RTC in toto. The appellate court declared that the design to vex and humiliate petitioner Rosemarie in the prosecution of Criminal Case No. 28 was wanting. It held that respondent Pilar as complaining witness merely reported the matter to the police authorities; while respondents Ibarra and Juanito were merely performing their duties as investigating police officers. Thus: In the present case, there was no proof that the prosecution was prompted by a design to vex and humiliate the [herein petitioner] Rosemarie Magbanua. The crime of robbery was actually committed and [petitioner] Rosemarie Magbanua admitted her participation therein. There was nothing illegal, sinister or malicious in prosecuting her on the part of [herein respondent] Dra. Junsay who, as a victim of the crime of robbery, reported the incident to the police authorities. In fact, the [respondent] did not suspect that the [petitioner] was one of those who committed the crime. On the part of the police investigators, they were only performing their duties in accordance with the standard procedure of their office. They came to know the victim Dra. Junsay and [petitioner] Rosemarie Magbanua only during the investigation. The fact was that Rosemarie Magbanua admitted participation in the commission of the crime. Finding that there was a prima facie case, the City Fiscal who investigated the case filed a case for robbery in the then Court of First Instance of Bacolod (now RTC).31 The Court of Appeals was also convinced that there was probable cause to believe that the robbery was committed by petitioner Rosemarie and her co-accused. The finding of probable cause, according to the appellate court, was confirmed by the filing of the Information for Robbery by the City Fiscals Office after the preliminary investigation.32

The Court of Appeals disposed: WHEREFORE, the Decision of the trial court dated July 25, 1995 is hereby AFFIRMED IN TOTO. Costs against the [herein petitioners].33 Hence, petitioners come to the succor of this Court via the instant Appeal by Certiorari to assail the Decision of the Court of Appeals, which affirmed the Decision of the RTC, that there was no malicious prosecution. For our resolution is the issue of whether petitioners are entitled to damages for malicious prosecution. However, before we could resolve said issue, we should first determine whether the filing of a criminal case for Robbery against petitioner Rosemarie constituted malicious prosecution. It is petitioners submission that the prosecution of petitioner Rosemarie was founded upon baseless accusations.34 Petitioners posit that the charges were based on false affidavits and false police reports, without which the criminal case against petitioner Rosemarie would not have been filed.35 Petitioners further decry the maltreatment which petitioner Rosemarie allegedly suffered from the hands of respondents. According to petitioners, Rosemarie was maltreated to extract a confession from her, and to make her admit to a crime she did not commit. They reasoned that petitioner Rosemarie, who was then a minor, an uneducated farm girl, and a stranger in Bacolod City, was subjected to torture and inhumane treatment.36 Petitioners contend further that respondent Pilar employed her privileged status in the society as a medical doctor; and her co-respondents Ibarra and Juanito utilized their positions as members of the Bacolod City Police to secure an admission from petitioner Rosemarie.37 In this jurisdiction, the term "malicious prosecution" 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."38 While generally associated with unfounded criminal actions, the term has been expanded to include unfounded civil suits instituted just to vex and humiliate the defendant despite the absence of a cause of action or probable cause.39 This Court, in Drilon v. Court of Appeals,40 elucidated, viz: The term malicious prosecution has been defined in various ways. In American jurisdiction, it is defined as: "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 (Hicks v. Brantley, 29 S.E. 459, 102 Ga. 264; Eggett v. Allen, 96 N.W. 803, 119 Wis. 625)." 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)." 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). 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. This Court has drawn the four elements that must be shown to concur to recover damages for malicious prosecution. Therefore, for a malicious prosecution suit to prosper, the plaintiff must prove the following: (1) the prosecution did occur, and the defendant was himself the prosecutor or that he instigated its commencement; (2) the criminal action finally ended with an acquittal; (3) in bringing the action, the prosecutor acted without probable cause; and (4) the prosecution was impelled by legal malice -- an improper or a sinister motive.41 The gravamen of malicious prosecution is not the filing of a complaint based on the wrong provision of law, but the deliberate initiation of an action with the knowledge that the charges were false and groundless.42 We shall proceed to determine whether in the prosecution of petitioner Rosemarie for the crime of Robbery, all four elements were in attendance. It is not disputed that the first and second elements are present. The prosecution of petitioner Rosemarie for the crime of robbery did occur, and respondents Pilar, Ibarra and Juanito instigated its commencement. On 20 December 1985, the RTC, Branch XLI, Bacolod City, rendered a Decision acquitting Rosemarie Magbanua on the ground of insufficiency of evidence. On the question of probable cause, this Court has ruled that for purposes of malicious prosecution, "probable cause" means "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."43 It is merely based on opinion and reasonable belief.44 Thus, a finding of probable cause does not require an inquiry into whether there is sufficient evidence to procure a conviction.45 Anent the question of whether the prosecutor acted without probable cause in bringing the action against petitioner Rosemarie, we find no reason to depart from the conclusions reached by the RTC and the Court of Appeals. The filing of Criminal Case No. 28 for Robbery was not without probable cause.

Indeed, during the investigation petitioner Rosemarie admitted her participation in the commission of the incident complained of. The investigation report, which prompted the filing of the Information for Robbery against petitioner Rosemarie showed that she admitted to receiving instruction from her co-accused Ernesto Fernandez and a certain Gudo to leave the barrel belt of the kitchen door unlocked,46 so her co-accused can gain entry to the house of respondent Pilar.1avvphi1.net Moreover, she admitted that after her co-accused had taken the pieces of jewelry owned by respondent Pilar, they gave her a necklace which she kept in a shoulder bag. During the investigation, she was shown the said necklace, and she positively identified the same to be the necklace her co-accused had given her.47 On the basis of the said admission, the Office of the Prosecutor found basis and probable cause to file the appropriate Information with the RTC against petitioner Rosemarie and her co-accused Ernesto Fernandez and a certain Gudo. The inadmissibility of the aforesaid admission on the ground that the same was extracted under duress was an evidentiary matter, which does not detract from the fact that based on petitioner Rosemaries admission, there was reason for the respondents to believe that the suit was not unfounded, and that the crime was committed. Finally, in an action to recover damages based on malicious prosecution, it must be established that the prosecution was impelled by legal malice. There is necessity of proof that the suit was so patently malicious as to warrant the award of damages under Articles 19 to 21,48 of the Civil Code, or that the suit was grounded on malice or bad faith.49 Moreover, it is a doctrine well-entrenched in jurisprudence that the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution, for the law would not have meant to impose a penalty on the right to litigate.50 1awphi1.net Applying the rule to the case at bar, we affirm the findings of the RTC and the Court of Appeals that there was no proof of a sinister design on the part of the respondents to vex or humiliate petitioner Rosemarie by instituting the criminal case against her and her co-accused. Respondent Pilar who was robbed of her valuable belongings can only be expected to bring the matter to the authorities. There can be no evil motive that should be attributed to one, who, as victim of a crime institutes the necessary legal proceedings. At the risk of redundancy, we stress that the proscription against the imposition of penalty on the right to litigate must not be violated. Mere filing of a suit does not render a person liable for malicious prosecution should he be unsuccessful, for the law could not have meant to impose a penalty on the right to litigate.51 There was no other explanation or motive as to why respondents would institute baseless prosecution of petitioner Rosemarie. No evidence was shown that there was bad blood between respondent Pilar and petitioner Rosemarie prior to the supposed robbery. We also do not find the actuations of respondents Ibarra and Juanito to be impelled by legal malice. Their commencement of the action against petitioner Rosemarie and her co-accused was pursuant to their duties as police officers. The same was made subsequent to the report of respondent Pilar of the commission of the crime, and the investigation on the person of petitioner Rosemarie. Even then, mistakes committed by a public officer are not actionable absent any clear showing that they were motivated by malice or gross negligence amounting to bad faith,52 which was not established in the case at bar.

Moreover, as was clear from the outset, the instant case is a suit seeking damages for malicious prosecution, and not for the violations and maltreatment that respondents allegedly committed against petitioner Rosemarie in extracting the admission from her. At any rate, the RTC had ruled that the instant case is not an action on the injuries allegedly suffered by petitioner Rosemarie, but rather for malicious prosecution. Otherwise, an action seeking damages for her injuries should have been deemed prescribed.53 WHEREFORE, the Appeal is DENIED. The Decision, dated 26 January 1998, of the Court of Appeals in CA-G.R. CV No. 51750, which affirmed in toto the Decision, dated 25 July 1995, of the RTC, Branch 51, Bacolod City, in Civil Case No. 4361, is AFFIRMED. Costs against petitioners. SO ORDERED. MINITA V. CHICO-NAZARIO Associate Justice Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-48250 December 28, 1979 GRAND UNION SUPERMARKET, INC. and NELIA SANTOS FANDINO, petitioners, vs. JOSE J. ESPINO JR., and THE HONORABLE COURT OF APPEALS, respondents.

GUERRERO, J. This is a petition tor certiorari by way of appeal from the decision of the Court of Appeals 1 dated September 26, 1977 rendered in CA-G.R. No. 55186-R entitled "Jose J. Espino, Jr., plaintiff-appellant. versus Grand Union Supermarket, Inc. and Nelia Santos-Fandino, defendants-appellees," the dispositive portion of which states;
WHEREFORE, the appealed judgment is hereby reversed and set aside. Defendants are ordered to pay plaintiff-jointly and severally, the sum of Seventy-Five Thousand Pesos (P75,000.00) by way of moral damages. Twenty-Five Thousand Pesos (P25,000.00) as exemplary damages, and Five Thousand Pesos (P5,000.00) as attorney's fee, Costs of both instances shall be taxed against the defendant defendants.

The facts of the case are as stated in the decision of the respondent court to wit:

"Upon the evidence, and from the findings of the lower court, it appears that in the morning of August 22, 1970, plaintiff Jose J. Espino. Jr., a civil engineer and an executive of Procter and Gamble Philippines, Inc., and his wife and their two daughters went to shop at the defendants' South Supermarket in Makati. While his wife was shopping at the groceries section, plaintiff browsed around the other parts of the market. Finding a cylindrical "rat tail" file which he needed in his hobby and had been wanting to buy, plaintiff picked up that item from one of the shelves. He held it in his hand thinking that it might be lost, because of its tiny size, if he put it in his wife's grocery cart. In the course of their shopping, plaintiff and his wife saw the maid of plaintiff's aunt. While talking to this maid, plaintiff stuck the file into the front breast pocket of his shirt with a good part of the merchandise exposed. "At the check-out counter, the plaintiff paid for his wife's purchases which amounted to P77.00, but he forgot to pay for the file. As he was leaving by the exit of the supermarket on his way to his car, carrying two bags of groceries and accompanied by his wife and two daughter, plaintiff was approached by a uniformed guard of the supermarket who said: "Excuse me, Mr., I think you have something in your pocket which you have not paid for." (p. 5, tsn, Aug. 13, 1971), pointing to his left front breast pocket. Suddenly reminded of the file, plaintiff apologized thus: "I am sorry," and he turned back toward the cashier to pay for the file. But the guard stopped him and led him instead toward the rear of the supermarket. The plaintiff protested but the guard was firm saying: "No, Mr., please come with me. It is the procedure of the supermarket to bring people that we apprehend to the back of the supermarket" (p. 8, Ibid). The time was between 9 and 10 o'clock. A crowd of customers on their way into the supermarket saw the plaintiff being stopped and led by a uniformed guard toward the rear of the supermarket. Plaintiff acquiesced and signaled to his wife and daughters to wait. "Into a cubicle which was immediately adjacent to the area where deliveries to the supermarket were being made, the plaintiff was ushered. The guard directed him to a table and gave the file to the man seated at the desk. Another man stood beside the plaintiff. The man at the desk looked at the plaintiff and the latter immediately explained the circumstances that led to the finding of the file in his possession. The man at the desk pulled out a sheet of paper and began to ask plaintiff's name, age, residence and other personal data. Plaintiff was asked to make a brief statement, and on the sheet of paper or "Incident Report" he wrote down the following: "While talking to my aunt's maid with my wife, I put this item in my shirt pocket. I forgot to check it out with my wife's items" (Exhibit A). Meanwhile, the plaintiff's wife joined him and asked what had taken him so long. "The guard who had accosted plaintiff took him back inside the supermarket in the company of his wife. Plaintiff and his wife were directed across the main entrance to the shopping area, down the line of check-out counters, to a desk beside the first checkout counter. To the woman seated at the desk, who turned out to be defendant Nelia Santos-Fandino, the guard presented the incident report and the file, Exhibit B. Defendant Fandino read the report and addressing the guard remarked: "Ano, nakaw na naman ito" (p. 22, Id.). Plaintiff explained and narrated the incident that led to the finding

of the file in his pocket, telling Fandino that he was going to pay for the file because he needed it. But this defendant replied: "That is all they say, the people whom we cause not paying for the goods say... They all intended to pay for the things that are found to them." (p. 23, Id). Plaintiff objected and said that he was a regular customer of the supermarket. "Extracting a P5.00 bill from his pocket, plaintiff told Fandino that he was paying for the file whose cost was P3.85. Fandino reached over and took the P5.00 bill from plaintiff with these words: "We are fining you P5.00. That is your the fine." Plaintiff was shocked. He and his wife objected vigorously that he was not a common criminal, and they wanted to get back the P5.00. But Fandino told them that the money would be given as an incentive to the guards who apprehend pilferers. People were milling around them and staring at the plaintiff. Plaintiff gave up the discussion. He drew a P50.00 bill and took back the file. Fandino directed him to the nearest check-out counter where he had to fall in line. The people who heard the exchange of words between Fandino and plaintiff continued to stare at him. At the trial, plaintiff expressed his embarrassment and humiliation thus: " I felt as though I wanted to disappear into a hole on the ground" (p. 34, Id.). After paying for the file, plaintiff and his wife walked as fast as they could out of the supermarket. His first impulse was to go back to the supermarket that night to throw rocks at its glass windows. But reason prevailed over passion and he thought that justice should take its due course. "Plaintiff was certain during the trial that when he signed the incident report, Exhibit A, inside the cubicle at the back of the supermarket only his brief statement of the facts (Exhibit A-2), aside from his name and personal circumstances, was written thereon. He swore that the following were not in the incident report at, the time he signed it:
Exhibit A-I which says opposite the stenciled word SUBJECT "Shoplifting" Exhibit A-3 which says opposite the stenciled words Action Taken: Released by Mrs. Fandino after paying the item. Exhibit A-4 which says opposite the stenciled words Remarks Noted: "Grd. Ebreo requested Grd. Paunil to apprehend subject shoplifter.

Private respondent's complaint filed on October 8, 1970 is founded on Article 21 in relation to Article 2219 of the New Civil Code and prays for moral damages, exemplary damages, attorney s fees and 'expenses of litigation, costs of the suit and the return of the P5.00 fine. After trial, the Court of First Instance of Pasig, Rizal, Branch XIX dismissed the complaint, Interposing the appeal to the Court of Appeals, the latter reversed and set aside the appealed judgment, granting and damages as earlier stated. Not satisfied with the decision of the respondent court, petitioners instituted the present petition and submits the following grounds and/or assignment of errors, to wit:
I

Respondent Court of Appeals erred in awarding moral and exemplary damages to the respondent Espino under Articles 19 and 21 in relation to Article 2219 of the Civil Code, considering that A. Respondent Espino was guilty of theft; B. Petitioners legitimately exercised their right of defense of property within the context of Article 429 of the Civil Code negating the application of Articles 19 and 21 of the same Code; C. Petitioners acted upon probable cause in stopping and investigating respondent Espino for shoplifting and as held in various decisions in the United States on shoplifting, a merchant who acts upon probable cause should not be held liable in damages by the suspected shoplifter; D. Petitioners did not exercise their right maliciously, wilfully or in bad faith; and/or E. The proximate cause of respondent Espino's alleged injury or suffering was his own negligence or forgetfulness; petitioners acted in good faith. II Assuming arguendo that petitioners are hable for moral and exemplary damages, the award of P75,000.00 for moral damages and P25,000.00 for exemplary damages by the respondent Court of Appeals is not legally justified and/or is grossly excessive in the premises. III The award of P5,000.00 for attorney's fees by the respondent Court of Appeals is unjustified and unwarranted under Article 2199 of the Civil Code.

We agree with the holding of the respondent appellate court that "the evidence sustains the court's finding that the plaintiff had absolutely no intention to steal the file." The totality of the facts and circumstances as found by the Court of Appeals unerringly points to the conclusion that private respondent did not intend to steal the file and that is act of picking up the file from the open shelf was not criminal nor done with malice or criminal intent for on the contrary, he took the item with the intention of buying and paying for it. This Court needs only to stress the following undisputed facts which strongly and convincingly uphold the conclusion that private respondent was not "shoplifting." Thus, the facts that private respondent after picking the cylindrical "rat-tail" file costing P3.85 had placed it inside his left front breast pocket with a good portion of the item exposed to view and that he did not conceal it in his person or hid it from sight as well as the fact that he paid the purchases of his wife amounting to P77.00 at the checkout counter of the Supermarket, owed that he was not acting suspiciously or furtively. And the circumstance that he was with his family consisting of his wife Mrs. Caridad Jayme Espino, and their two daughters at the time negated any criminal intent on his part to steal. Moreover, when private respondent was approached by the guard of the

Supermarket as he was leaving by the exit to his car who told him, "Excuse me, Mr., I think you have something in your pocket which you have not paid for," Espino, immediately apologized and answered, "I am sorry," which indicated his sincere apology or regrets. He turned back towards the cashier to pay for the file which proved his honesty sincerity and good faith in buying the item, and not to shoplift the same. His brief statement on the sheet of paper called the Incident Report where private respondent wrote the following: "While talking to my aunt's maid with my wife, I put this item in in my shirt pocket. I forgot to check it out with my wife's item," was an instant and contemporaneous explanation of the incident. Considering further the personal circumstances of the private respondent. his education, position and character showing that he is a graduate Mechanical Engineer from U.P. Class 1950, employed as an executive of Proctor & Gamble Phils., Inc., a corporate manager incharge of motoring and warehousing therein; honorably discharged from the Philippine Army in 1946; a Philippine government pensionado of the United States for six months; member of the Philippine veterans Legion; author of articles published in the Manila Sunday Times and Philippines Free Press; member of the Knights of Columbus, Council No. 3713; son of the late Jose Maria Espino, retired Minister, Department of Foreign Affairs at the Philippine Embassy Washington, We are fully convinced, as the trial and appellate courts were, that private respondent did not intend to steal the article costing P3.85. Nothing in the records intimates or hints whatsoever that private respondent has had any police record of any sort much less suspicion of stealing or shoplifting. We do not lay down here any hard-and-fast rule as to what act or combination of acts constitute the crime of shoplifting for it must be stressed that each case must be considered and adjudged on a case-to-case basis and that in the determination of whether a person suspected of shoplifting has in truth and in fact committed the same, all the attendant facts and circumstances should be considered in their entirety and not from any single fact or circumstance from which to impute the stigma of shoplifting on any person suspected and apprehended therefor. We likewise concur with the Court of Appeals that "(u)pon the facts and under the law, plaintiff has clearly made the cause of action for damages against the defendants. Defendants wilfully caused loss or injury to plaintiff in a manner that was contrary to morals, good customs or public policy, making them amenable to damages under Articles 19 and 21 in relation to Article 2219 of the Civil Code." 2 That private respondent was falsely accused of shoplifting is evident. The Incident Report (Exhibit A) with the entries thereon under Exhibit A-1 which says opposite the stenciled word SUBJECT: "Shoplifting," Exhibit A-3 which says opposite the stenciled words Action Taken: Relesed by Mrs. Fandino after paying the item," Exhibit A-4 which says opposite the stenciled words Remarks Noted: Grd. Ebreo requested Grd. Paunil to apprehend subject shoplifter," established the opinion, judgment or thinking of the management of petitioner's supermarket upon private respondent's act of picking up the

file. ln plain words, private respondent was regarded and pronounced a shoplifter and had committed "shoplifting." We also affirm the Court of Appeals' finding that petitioner Nelia Santos Fandino, after reading the incident report, remarked the following: "Ano, nakaw na naman ito". Such a remark made in the presence of private respondent and with reference to the incident report with its entries, was offensive to private respondent's dignity and defamatory to his character and honesty. When Espino explained that he was going to pay the file but simply forgot to do so, Fandino doubted the explanation. saying: "That is all what they say, the people whom we caught not paying for the goods say... they all intended to pay for the things that are found to them." Private respondent objected and said that he was a regular customer of the Supermarket. The admission of Fandino that she required private respondent to pay a fine of P5.00 and did in fact take the P5.00 bill of private respondent tendered by the latter to pay for the file, as a fine which would be given as an incentive to the guards who apprehend pilferers clearly proved that Fandino branded private respondent as a thief which was not right nor justified. The testimony of the guard that management instructed them to bring the suspected customers to the public area for the people to see those kind of customers in order that they may be embarassed (p. 26, tsn, Sept. 30, 1971); that management wanted "the customers to be embarrassed in public so that they will not repeat the stealing again" (p. 2, tsn, Dec. 10, 1971); that the management asked the guards "to bring these customers to different cashiers in order that they will know that they are pilferers" (p. 2, Ibid.) may indicate the manner or pattern whereby a confirmed or self-confessed shoplifter is treated by the Supermarket management but in the case at bar, there is no showing that such procedure was taken in the case of the private respondent who denied strongly and vehemently the charge of shoplifting. Nonetheless, the false accusation charged against the private respondent after detaining and interrogating him by the uniformed guards and the mode and manner in which he was subjected, shouting at him, imposing upon him a fine, threatening to call the police and in the presence and hearing of many people at the Supermarket which brought and caused him humiliation and embarrassment, sufficiently rendered the petitioners liable for damages under Articles 19 and 21 in relation to Article 2219 of the Civil Code. We rule that under the facts of the case at bar, petitioners wilfully caused loss or injury to private respondent in a manner that was contrary to morals, good customs or public policy. It is against morals, good customs and public policy to humiliate, embarrass and degrade the dignity of a person. Everyone must respect the dignity, personality, privacy and peace of mind of his neighbors and other persons (Article 26, Civil Code). And one must act with justice, give everyone his due and observe honesty and good faith (Article 19, Civil Code).

Private respondent is entitled to damages but We hold that the award of Seventy-Five Thousand Pesos (P75,000.00) for moral damages and Twenty-Five Thousand Pesos (P25,000.00, for exemplary damages is unconscionable and excessive. While no proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages may be adjudicated, the assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case (Art. 2216, New Civil Code). In the case at bar, there is no question that the whole incident that befell respondent had arisen in such a manner that was created unwittingly by his own act of forgetting to pay for the file. It was his forgetfullness in checking out the item and paying for it that started the chain of events which led to his embarassment and humiliation thereby causing him mental anguish, wounded feelings and serious anxiety. Yet, private respondent's act of omission contributed to the occurrence of his injury or loss and such contributory negligence is a factor which may reduce the damages that private respondent may recover (Art. 2214, New Civil Code). Moreover, that many people were present and they saw and heard the ensuing interrogation and altercation appears to be simply a matter of coincidence in a supermarket which is a public place and the crowd of onlookers, hearers or bystanders was not deliberately sought or called by management to witness private respondent's predicament. We do not believe that private respondent was intentionally paraded in order to humiliate or embarrass him because petitioner's business depended for its success and patronage the good will of the buying public which can only be preserved and promoted by good public relations. As succinctly expressed by Mr. Justice J. B. L. Reyes in his concurring and dissenting opinion in Pangasinan Transportation Company, Inc, vs. Legaspi, 12 SCRA 598, the purpose of moral damages is essentially indemnity or reparation, both punishment or correction. Moral damages are emphatically not intended to enrich a complainant at the expense of a defendant; they are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone, by reason of the defendant's culpable action. In other words, the award of moral damages is aimed at a restoration, within the limits of the possible, of the spiritual status quo ante and, it must be proportionate to the suffering inflicted. In Our considered estimation and assessment, moral damages in the amount of Five Thousand Pesos (P5,000.00) is reasonable and just to award to private respondent. The grant of Twenty-Five Thousand Pesos (P25,000.00) as exemplary damages is unjustified. Exemplary or corrective damages are imposed by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages (Art. 2229, New Civil Code). Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they could be adjudicated (Art. 2223, New Civil Code). Considering that exemplary damages are awarded for wanton acts, that they are penal in character granted not by way of compensation but as a punishment to the offender and as a warning to others as a sort

of deterrent, We hold that the facts and circumstances of the case at bar do not warrant the grant of exemplary damages. Petitioners acted in good faith in trying to protect and recover their property, a right which the law accords to them. Under Article 429, New Civil Code, the owner or lawful possessor of a thing has a right to exclude any person from the enjoyment and disposal thereof and for this purpose, he may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property. And since a person who acts in the fulfillment of a duty or in the lawful exercise of a right or office exempts him from civil or criminal liability, petitioner may not be punished by imposing exemplary damages against him. We agree that petitioners acted upon probable cause in stopping and investigating private respondent for taking the file without paying for it, hence, the imposition of exemplary damages as a warning to others by way of a deterrent is without legal basis. We, therefore, eliminate the grant of exemplary damages to the private respondent. In the light of the reduction of the damages, We hereby likewise reduce the original award of Five Thousand Pesos (P5,000.00) as attorney's fees to Two Thousand Pesos (P2,000.00). WHEREFORE, IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals is hereby modified. Petitioners are hereby ordered to pay, jointly and severally, to private respondent moral damages in the sum of Five Thousand Pesos (P5,000.00) and the amount of Two Thousand Pesos (P2,000.00) as and for attorney's fees; and further, to return the P5.00 fine to private respondent. No costs. SO ORDERED. Makasiar, Fernandez, De Castro and Melencio-Herrera, JJ., concur, Teehankee (Chairman), took no part. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-51832 April 26, 1989 RAFAEL PATRICIO, petitioner, vs. THE HONORABLE OSCAR LEVISTE, JUDGE, CFI CAPIZ, BRANCH II and BIENVENIDO BACALOCOS, respondents. Stephen C. Arceo for petitioner.

Isagani V. Roblete for private respondent.

PADILLA, J.: Petition for review on certiorari of the Order 1 of the Court of First Instance of Capiz, Branch II, on the motion for reconsideration flied by private respondent Bienvenido Bacalocos, dismissing the complaint for damages against the latter, docketed as Civil Case No. V-3937. Petitioner Rafael Patricio, an ordained Catholic priest, and actively engaged in social and civic affairs in Pilar, Capiz, where he is residing, was appointed Director General of the 1976 Religious and Municipal Town Fiesta of Pilar, Capiz. On 16 May 1976 at about 10:00 o'clock in the evening, while a benefit dance was ongoing in connection with the celebration of the town fiesta, petitioner together with two (2) policemen were posted near the gate of the public auditorium to check on the assigned watchers of the gate. Private respondent Bienvenido Bacalocos, President of the Association of Barangay Captains of Pilar, Capiz and a member of the Sangguniang Bayan, who was in a state of drunkenness and standing near the same gate together with his companions, struck a bottle of beer on the table causing an injury on his hand which started to bleed. Then, he approached petitioner in a hostile manner and asked the latter if he had seen his wounded hand, and before petitioner could respond, private respondent, without provocation, hit petitioner's face with his bloodied hand. As a consequence, a commotion ensued and private respondent was brought by the policemen to the municipal building. 2 As a result of the incident, a criminal complaint for "Slander by Deed was flied by petitioner with the Municipal Trial Court of Pilar, Capiz, docketed as Criminal Case No. 2228, but the same was dismissed. 3 Subsequently, a complaint for damages was filed by petitioner with the court a quo. In a decision 4 dated 18 April 1978, the court ruled in favor of herein petitioner (as complainant), holding private respondent liable to the former for moral damages as a result of the physical suffering, moral shock and social humiliation caused by private respondent's act of hitting petitioner on the face in public. The dispositive part of the decision reads as follows:
WHEREFORE, the Court orders defendant to pay plaintiff the damages as follows: a) Moral damages of P10,000.00 b) Exemplary damages, P1,000.00 and c) Attorney's fees, P2,000.00. SO ORDERED. 5

On 9 June 1978, petitioner filed a motion for execution of judgment, alleging that the 18 April 1978 decision had become final and executory after the lapse of thirty (30) days from receipt thereof by private respondent, without any motion for reconsideration or appeal having been filed. 6 However, said motion was denied by the court a quo on the ground that there was a pending motion for reconsideration filed by private respondent. 7 Subsequently, private respondent filed a supplemental motion for reconsideration 8 and the court ordered petitioner to file a reply (opposition) thereto. 9 In compliance, petitioner flied a reply (opposition) to the motion for reconsideration, alleging that the filing of said motion and supplement thereto was without notice to the adverse party and proof of service, hence, the decision sought to be reconsidered had already become final and unappealable. 10 Private respondent filed a rejoinder (reply) and a manifestation stating that petitioner was duly served with a copy of said motion for reconsideration by ordinary mail, attaching thereto the affidavit of Godofredo Almazol who stated that he mailed the envelope to counsel for herein petitioner. 11 The court a quo then scheduled the motion for oral argument and the parties were allowed to extensively argue their respective causes. On 3 August 1979, an order 12 of dismissal of the petitioner's complaint was issued by the trial court, thus
ORDER This is a motion for reconsideration of the decision of this Court dated April 18, 1978, filed by counsel for defendant on May 18, 1978. In view of the recent trend in the Supreme Court to liberally construe the Rules, and in view of Section 2, Rule 1, the Court resolves to give due course to the motion. Upon review of the facts of the case, it appears and the Court finds merit in the motion for reconsideration, particularly noting that there is indeed no showing of compensatory damages being proved. WHEREFORE, tills Court reconsiders its decision to conform to the facts and the law, namely, that moral and exemplary damages, in order to merit, the plaintiff ought to have proven actual or compensatory damages. WHEREFORE, this case is ordered dismissed. SO ORDERED.

Not satisfied with said order, petitioner filed the petition at bar contending that no copy of the Motion for consideration was served upon petitioner and no proof of service as well as notice of hearing were attached to said motion when filed with the court a quo; thus, the motion for reconsideration did not interrupt the running of the period to appeal. The alleged mailing of a copy of said motion by ordinary mail did not, according to petitioner, cure the defect. Petitioner further argues that respondent's admission that he

slapped herein petitioner in public causing him physical suffering and social humiliation, entitles the latter to moral damages. Actual and compensatory damages need not be proven before an award of moral damages can be granted, so petitioner contends. On the other hand, private respondent claims that the order of the court a quo apprising petitioner of the motion for reconsideration filed by private respondent and requiring the former to file a reply (opposition) thereto, had cured the defect of lack of proof of service and notice of hearing of said motion for reconsideration; and that the award of moral damages to petitioner is without basis for lack of proof of bad faith on the part of private respondent. With respect to the alleged lack of service on petitioner of a copy of the motion and notice of hearing and failure to attach to the motion proof of service thereof, the general rule is that notice of motion is required where a party has a right to resist the relief sought by the motion and principles of natural justice demand that his rights be not affected without an opportunity to be heard. 13 In the case at bar, a copy of the motion for reconsideration was served upon petitioner, although service was effected through ordinary mail and not by registered mail as reqired by the rules. But, petitioner was duly given the full opportunity to be heard and to argue his case when the court a quo required him to file a reply (opposition) to the motion for reconsideration and subsequently set the motion for oral argument. What the law really eschews is not the lack of previous notice of hearing but the lack of opportunity to be heard. It has been held that parties should not rely on mere technicalities which, in the interest of justice, may be relaxed. 14 The rifles of procedure should be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must be avoided. 15 Moreover, the case should, as much as possible, be decided on the merits and not merely on technicalities. As to the petitioner's claim for moral damages, we find the same to be meritorious. There is no question that moral damages may be recovered in cases where a defendant's wrongful act or omission has caused the complainant physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. 16 An award of moral damages is allowed in cases specified or analogous to those provided in Article 2219 of the Civil Code, to wit:
ART. 2219. Moral damages may be recovered in the following and analogous cases (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts. (4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in article 309; (10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. xxx xxx xxx

Private respondent's contention that there was no bad faith on his part in slapping petitioner on the face and that the incident was merely accidental is not tenable. It was established before the court a quo that there was an existing feud between the families of both petitioner and private respondent and that private respondent slapped the petitioner without provocation in the presence of several persons. The act of private respondent in hitting petitioner on the face is contrary to morals and good customs and caused the petitioner mental anguish, moral shock, wounded feelings and social humiliation. Private respondent has to take full responsibility for his act and his claim that he was unaware of what he had done to petitioner because of drunkenness is definitely no excuse and does not relieve him of his liability to the latter. Pursuant to Art. 21 of the Civil Code in relation to par. (10) of Art. 2219 of the same Code, "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 fact that no actual or compensatory damage was proven before the trial court, does not adversely affect petitioner's right to recover moral damages. Moral damages may be awarded in appropriate cases referred to in the chapter on human relations of the Civil Code (Articles 19 to 36), without need of proof that the wrongful act complained of had caused any physical injury upon the complainant. 17 It is clear from the report of the Code Commission that the reason underlying an award of damages under Art. 21 of the Civil Code is to compensate the injured party for the moral injury caused upon his person, thus
... . 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.

xxx xxx xxx 18

In addition to the award of moral damages, exemplary or corrective damages may be imposed upon herein private respondent by way of example or correction for the public good. 19 Exemplary damages are required by public policy to suppress the wanton acts of the offender. They are an antidote so that the poison of wickedness may not run through the body politic. 20 The amount of exemplary damages need not be proved where it is shown that plaintiff is entitled to either moral, temperate or compensatory damages, as the case may be, 21 although such award cannot be recovered as a matter of right. 22 In cases where exemplary damages are awarded to the injured party, attorney's fees are also recoverable. 23 WHEREFORE, the petition is GRANTED. The order appealed from, dated 3 August 1979, is REVERSED and the decision of the court a quo dated 18 April 1978 is hereby REINSTATED. With costs against private respondent. SO ORDERED. Melencio-Herrera (Chairperson), Paras, Sarmiento and Regalado, JJ., concur. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. Nos. L-51171-72 June 4, 1990 MARIA G. FORD, Substituted by PATRICK G. FORD, petitioner,** vs. COURT OF APPEALS and SULPICIA FABRIGAR, respondents. G.R. No. L-51273 June 4, 1990 VICENTE F. UY, petitioner, vs. COURT OF APPEALS and SULPICIA FABRIGAR, respondents. Quiason, Makalintal, Barot, Torres & Ibarra for petitioner in 51171-72. Charlito F. Fantilanan for petitioner in 51273. Ricardo C. Castro, Jr. and Teodulfo L.C. Castro for private respondents.

REGALADO, J.: The generally accepted rule m our jurisprudence is that the findings of fact of a trial court carry great weight since it had the opportunity of observing the demeanor of the witnesses on the stand as a further aid in determining their credibility. The rule, however, admits of exceptions, both in the factual findings of the trial court and the conclusions drawn by it therefrom, and, as respondent court holds, the decision of the court a qou in these cases exemplifies a warranted departure from the aforesaid jurisprudential rule. These consolidated petitions seek the review of the decision of respondent court 1 in CA-G.R. Nos.59402-03-R entitled "Sulpicia F. Fabrigar, Plaintiff-Appellant vs. Vicente F. Uy and Maria G. Ford, Defendants-Appellees," together with its resolution denying petitioners' motions for recondsideration, which reversed the decision of the trial court in Civil Cases Nos. M-282 and M-283 of the then the Court of First Instance of Capiz, Mambusao Branch, filed herein private respondent Sulpicia Fabrigar against spouses Vicente Uy and Paciencia Uy and spouses Thomas J. Ford and Maria G. Ford, respectively. From the nature of the issues raised in the present appeals, we are constrained to set out and analyze the facts involved which we are told do not sustain the conclusions drawn by the court. below. The decision of respondent court presents the two sides of the incident as follows:
On July 27, 1973, at about 7:00 o'clock in the morning, Sulpicia Fabrigar, being a public school teacher of Barrio Sta. Cruz. Dumalag, Capiz reported to the precinct of her assignment particularly at the Elementary School of Sta. Cruz, Dumalag, Capiz, by reason of the deputization of all public school teachers to assist the COMELEC in the conduct of the National Referendum. Between 3:00 and 3:30 P.M. of that day, while she was inside Precinct No. 11-a, she saw Elmo Uy, son of the barrio captain of Sta. Cruz, Vicente Uy, get the remark sheet of voter Regalado Firmalino and began to write on said remark sheet of the latter. She called the attention of the Referendum Committee composed of Leandra Fagtanac, Chairwoman; Concepcion Fale and Benito Facura, Members, to these acts of Elmo Uy but the Committee did not mind her. So, she took the initiative of going to and advising Elmo Uy not to write anything on the remark sheet of the voter Firmalino. Elmo Uy asked Sulpicia what business of hers (sic) in so doing to which she answered that she was merely advising him. Elmo Uy stood up, pulled out his appointment paper as an observer in the referendum and tore it to pieces saying that it was useless and not respected anyway. Thereafter, Elmo Uy went out of the precinct reported the matter to his father, Vicente Uy, the barrio captain of Sta. Cruz. A few minutes later, barrio captain Vicente Uy, father of Elmo, entered Precinct No. 11-A and shouted at Sulpicia Fabrigar, 'Hijo de puta, why do you interfere with what my son is doing? Why are you pretending to be somebody here in Sta. Cruz? You are a no good headteacher. I do not send my children to this school because of your enviousness.' Sulpicia Fabrigar answered that she was merely advising Elmo Uy not to write on the remark sheet of Regalado Firmalino and she did not pretend to

be somebody. While Vicente Uy was leaving the precinct, he further said that he would report Sulpicia Fabrigar to Mrs. Maria Ford. Thirty minutes after Vicente Uy had left the precinct, Maria Ford, owner of the Asturias Sugar Central, arrived very angry, saying, 'Where is Suping, where is Suping?' Sulpicia Fabrigar immediately presented herself to Maria Ford, and the latter said, 'Why did you campaign for 'No' according to the barrio captain?' Sulpicia Fabrigar answered, 'I did not campaign for 'No' I even wanted a zero 'No' because you promised to provide electricity in this barrio if nobody votes 'No'. 'Elmo Uy then interrupted their conversation and said that Sulpicia Fabrigar really campaigned for ''No' votes. Maria Ford said, 'Its true you campaigned for 'No' and why do you still insist on reasoning? and then, Maria Ford slapped Sulpicia Fabrigar on the left face. She wanted to retaliate but her sister, Fidelina Frias, held her back and pulled her away. Maria Ford further said, 'Ill have you transferred to a far place. You are ungrateful to me. You are always rebelling against me. Get out and go home.' , Sulpicia Fabrigar reported this particular incident to the police authorities of Dumalag, Capiz (Exhibit 'A'/'1'). She also sent telegrams to the President (Exhibits 'I' and 'H'), to the COMELEC (Exhibit 'J') and to the Secretary of National Defense (Exhibit 'U') in connection with this incident. 2

Respondent court observes that, on his part, Vicente Uy presented his version of the incident thus:
At about 2 p.m. on referendum day, Benito Facura, upon the request of the chairwoman of the Referendum Committee, Leandra Fagtanac, went to the house of Vicente Uy to inform him that there was trouble in the barrio center. Vicente Uy went to said place and he had a talk with Leandra Fagtanac about what happened thereat. Leandra Fagtanac informed Vicente Uy that Sulpicia Fabrigar shouted at Elmo Uy; that she requested Sulpicia Fabrigar to keep quiet but the latter continued to shout at Elmo Uy that he should not teach the voters because they were more intelligent than him; that when Elmo Uy showed his appointment papers as referendum observer, Sulpicia Fabrigar tore it to pieces and threw it on the floor; and that as a result of the commotion created by the quarrel of Sulpicia Fabrigar and Elmo Uy, the people scattered away from the precinct. Upon getting this information from Leandra Fagtanac, Vicente Uy asked her where was Sulpicia Fabrigar and he was told that she had just left the room. When Vicente Uy was about to leave the precinct, Sulpicia Fabrigar came in. Vicente Uy then addressed her, 'Mrs. Fabrigar, what happened here? Can you not settle this since this is our affair? Sulpicia Fabrigar answered, 'I told Elmo not to teach the voters because they also know what they're doing and why are you inquiring?' Vicente Uy said: 'Why did you humiliate Elmo when we have a chairwoman to refer this matter?' (sic) Sulpicia Fabrigar countered, 'You think you are still a barangay captain inside this precinct. It's the headteacher who is powerful in this building. 'Vicente Uy said, 'I'm not trying to be somebody here. If you won't believe me, I'd report this matter at the poblacion.' Sulpicia Fabrigar said, 'I don't care to whom you'd report, I'm not afraid, go ahead. 'So, Vicente Uy left with-his jeep. The people were no longer voting, and on the way to the poblacion Vicente Uy thought of asking Maria Ford to pacify Sulpicia Fabrigar, to stop her from molesting and disturbing the people so they could vote. Vicente Uy then believed that Maria Ford, being the godmother of Sulpicia Fabrigar, could pacify her. Maria Ford asked Vicente Uy how the voting was going along, and the latter told her that Sulpicia Fabrigar was getting uncontrollable in the precinct, that she tore the appointment as observer of his son Elmo, and that the people were not voting anymore. Vicente Uy asked Maria Ford to stop Sulpicia Fabrigar from molesting and disturbing the people. Thereafter, Vicente Uy left to report the matter to the COMELEC Registrar but he did not

meet him because he was out. On his way home, he met the Mayor and the Governor and to whom he narrated this incident. The following day, Vicente Uy reported this incident to the police authorities of Dumalag, Capiz and it was entered in the Police Blotter (Exhibit '3'Uy). 3

Said decision continues with an account of the incident this time by Maria Ford:
At about 1:30 p.m. on referendum day, some people reported to Maria Ford that Sulpicia Fabrigar was screaming at the polling place, and they asked her to stop Sulpicia Fabrigar as she is her (a)hijada and relative because people were going away and not voting anymore. Then came Vicente Uy, the barrio captain, who also asked Maria Ford to intercede with Sulpicia Fabrigar because she was creating trouble, fighting with his son, and many people were leaving the polling place. Maria Ford went to the polling place to find out the truth of the report and also to make the people vote. Upon her arrival at the polling place, Sulpicia Fabrigar immediately shouted, 'Why did you come here, you're helping the barrio captain Maria Ford answered, 'I came here because the people and the barrio captain asked me to make you keep quiet and stop this trouble.' Then Sulpicia Fabrigar screamed, 'I'm the headteacher here!' Maria Ford told Sulpicia Fabrigar to keep quiet and go home and not to scream, but she answered that she was the headteacher and she was supposed to be there and she would not go home. Then Maria Ford started to inquire from the people around whether or not Sulpicia Fabrigar has some trouble with Elmo Uy and whether or not she tore his appointment paper as referendum observer. Suddenly, Sulpicia Fabrigar screamed again saying that Elmo Uy was insulting her. Maria Ford told Elmo Uy to go home, and when Elmo Uy passed between her and Sulpicia Fabrigar, the latter continued to scream insulting words at Elmo Uy. 'Sulpicia Fabrigar even wanted to beat Elmo Uy, and she was trembling. So, laboring under the belief that Sulpicia Fabrigar had already become hysterical, Maria Ford slapped her on the face to calm her down. After this, Sulpicia Fabrigar quieted down momentarily, and then she said to Maria Ford, 'If you're not only old, I'd beat you!' Maria Ford held out her face to Sulpicia Fabrigar and ordered her to hit it, but she did not. 4

After trial in the Court of First Instance of Capiz, Mambusao Branch, presided over by Judge Tomas R. Leonidas, judgment was rendered dismissing Sulpicia Fabrigar's complaint and further ordering her to pay Maria Ford P2,000.00 as moral damages, P2,000.00 as exemplary damages, P1,000.00 for attorney's fees and P5,000.00 for expenses of litigation; and also to pay Vicente Uy P2,000.00 as moral damages, P2,000.00 as exemplary damages, P2,000.00 for attorney's fees and P1,000.00 for expenses of litigation, said amounts to bear interest from the date of judgment. 5 In dismissing said complaint for damages of herein private respondent, the lower court arrived at the following conclusions:
According Sulpicia Fabrigar, upon entering the precinct, Vicente Uy immediately shouted at her, 'Hijo de puta why do you interfere with what my son is doing here? Why are you pretending to be somebody here in Sta. Cruz? You are a no good headteacher. I do not send my children to this school because of your enviousness. ... It clearly appears that from among the statements of Vicente Uy, only 'Why are you pretending to be somebody in Sta. Cruz' called for comment or action from Sulpicia Fabrigar which, to the mind of the court, is an innocuous expression or statement merely showing disgust, displeasure of, at its worst, anger, and not to slander. It is of a lesser

degree and intensity than the words 'putang ina mo" Which the Supreme Court in Reyes v. People, L-21528, March 28, 1969, 27 SCRA 686, has stated to be a common expression in the dialect that is often employed not really to slander but rather to express anger or displeasure. With respect to the other statements of Vicente Uy which did not call for any comment from Sulpicia Fabrigar, her silence should be deemed to be an admission of their truth and truth can not hurt or insult. Thus, an act or declaration made in the presence and within the observation of a party who does or says nothing when the act or declaration is such as naturally to call for action or comment if not true, may be given in evidence against him. (See. 23, Rule 130 Rules of Court). . . . xxx xxx xxx Maria Ford admitted that she slapped Sulpicia Fabrigar because the latter became hysterical and the former was then laboring under the belief that the only way to stop a hysteric is to slap and jolt him There is speciousness in this assertion. Sulpicia Fabrigar even admitted on the witness stand that Maria Ford slapped her so that she would stop with Elmo Uy, but she failed to positively state that by this one slap she was, dishonored, defamed or shamed. She merely felt a deafening sensation, and nothing more. Sulpicia Fabrigar, by her ravings and rantings against Elmo Uy, was already disturbing the peace of mind of the people and scaring them from participating in the referendum process. There was then an emergency, absent any police officer, and as godmother and second cousin by affinity of Sulpicia Fabrigar, Maria Ford thought it her duty to do what she did which nobody would have dared done. In this setting, this court finds that Maria Ford acted within her legal and moral right and duty, for her own peace of mind, to arrest the shameful act of an (a)hijada and relative. To restore peace and order in the polling place and to prevent Sulpicia Fabrigar from further eroding and invading the right of suffrage of others. In so doing, Maria Ford could not have been actuated with malice aforethought of putting Sulpicia Fabrigar into disrepute, but rather to restore her to normal self and bring back order to the referendum process. . . 6

Respondent court, however, rejected said conclusions on the following ratiocinations:

As we appreciate the facts of the case, We believe that Vicente Uy was very much offended by the action of Mrs. Fabrigar in admonishing former's son, Elmo, who has been shown to have interfered in the voting in Sta. Cruz, Dumalag, Capiz. Unable to swallow the fact that someone has questioned his 'power' as barrio captain, Vicente Uy immediately rushed to the barrio school and there began insulting the lowly school headteacher, Sulpicia Fabrigar. We cannot clearly see Our way through when in disregarding other slanderous remarks of Vicente Uy, the lower court said that "her silence (to those facts) should be deemed an admission of their truth and truth cannot hurt or insult.' The trial court most certainly is in error in this regard. 7 xxx xxx xxx

It further observed that. . . It is not for Maria Ford to say whether her acts did or-did not place the offended party Sulpicia Fabrigar in contempt of the spectators. The facts obtaining in this case indicate that appellee Ford in performing the act of slapping the school teacher in front of the people was motivated by personal animosity because Maria Ford has been misinformed that Sulpicia Fabrigar has been campaigning for 'No' votes in the National. Referendum of July 27, 1973 which was against the wishes of Maria Ford. And taking into account the

position held by the victim and the circumstances surrounding the incidents in question, we believe that Maria Ford has by deed slandered plaintiff Sulpicia Fabrigar which would entitle the latter to damages. There can be no circumstance more humiliating for a headteacher of a barrio school than to be seen by the barrio folks being slapped in her face. 8

Setting aside the decision of the trial court, respondent court ordered Vicente Uy to pay Sulpicia Fabrigar the sum of P5,000.00 as moral damages, P2,000.00 as exemplary damages, and P2,000.00, as attorney's fees; and also ordered Maria Ford to pay Sulpicia Fabrigar the sum of P10,000.00, as moral damages, P2,000.00 as exemplary damages and P2,000.00 as attorney's fees, with costs against both defendantsappellees. In her petition at bar, the late Maria Ford contends that respondent court erred in holding that she acted with malice and ill will when she slapped private respondent, and in awarding damages and attorney's fees to the latter. 9 Along the same vein, petitioner Uy submits that the Court of Appeals should not have, reversed, the trial court's decision nor should it have awarded damages, attorney's fees, litigation expenses and costs to private respondent. 10 Petitioner Ford contends that the act of slapping, standing alone and unexplained, would not speak well of the intent of the actor and that to determine the intent, the surrounding stances, particularly those preceding the slapping, should be taken into consideration. It is submitted that this is so since malice, which is an essential element in this type of an offense, is a state of mind and can only be proven by extrinsic evidence. She declares that her act of slapping Sulpicia Fabrigar was not actuated by malice but engendered by a legitimate motive prompted by her desire to calm down a person who appeared to be hysterical and to stop a goddaughter and relative from further creating a scandal. She also assails as exorbitant the award of moral damages and, for alleged lack of legal basis, the awards of exemplary damages and attorney's fees. 11 On the other hand, petitioner Uy maintains that he has not slandered Sulpicia Fabrigar; and that the contents of Exhibits "A"/"1" (police blotter of the incident in question), "I" and "K", (telegram of Fabrigar to the President), "J" (Telegram of Fabrigar to the Commission on Elections) and "L"(telegram Fabrigar to the Secretary of National Defense) constitute admissions against Fabrigar's interest under Section 22, Rule 130 and also judicial admissions under Section 2, Rule 129, both of the 1964 Rules of court, which would have barred respondent court from reversing the lower court's finding that he did not utter the words imputed to him and did not insult Fabrigar. 12 We find both appeals devoid of merit. The decision of the trial court proceeds from misapprehensions and patently erroneous conclusions of fact. A slap on the face is an unlawful aggression. The face personifies one's dignity and slapping it is a serious personal affront. It is a physical assault coupled with a willful disregard of the integrity of one's person. This is especially true if the

aggrieved party is a school teacher who, in penal law, is a person in authority. Respect for a teacher is required of all, if we are to uphold and enhance the dignity of the teaching profession. The demeaning act of respondent Ford is virtually inexpiable when done, as in this case, in the presence of the public inside a polling precinct during an electoral exercise. This certainly is one of the extreme circumstances under which ridicule, discredit and contempt could be cast upon the aggrieved party in the community where she performs her functions as a mentor of their children. As discerningly observed by respondent court, considering the position of private respondent, nothing but shame, humiliation and dishonor could have been heaped upon her by the indignities she had to suffer at the hands of petitioner Ford. Furthermore, there is ample reason to believe that said petitioner's displeasure over the rumor that private respondent was campaigning for "No" votes was sufficient motive for her to deliberately confront private respondent and maltreat the latter. The act of petitioner Ford in slapping private respondent on the face in public is contrary to morals and good customs and under the circumstances, could not but have caused the latter mental anguish, moral shock, wounded feelings and social humiliation. 13 Full responsibility attached to said act of the late petitioner Ford and the corresponding sanctions should be imposed. Her excuse that she was prompted by her desire to calm down private respondent and prevent her from becoming hysterical is too lame a subterfuge upon which to premise a plea for exoneration. We are not persuaded by such pretense. Private respondent was in the performance of her duty when the incident took place and she had every right to stay in her post. On the other hand, petitioner Ford had no legitimate business inside the polling precinct. Definitely, she barged into the premises in response to the report and importuning of petitioner Uy. The award of moral damages is allowed in cases specified or analogous to those provided in Article 2219 of the Civil Code. 14 Under Article 21 of said Code, in relation to Paragraph (10), Article 2219 thereof, 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 moral damages. By way of example or correction for the public good, exemplary damages may also be awarded. 15 Attorney's fees are also recoverable. 16 With respect to petitioner Uy, the gravity of the defamatory words uttered by him depends not only upon their sense and grammatical meaning, judging them separately, but also upon the special circumstances of the case and the 'antecedents or relationship between the offended party and the offender which might tend to prove the intention of the offender at the time. 17 Suffice it to say that the imputations uttered by petitioner Uy against private respondent also cast further dishonor, discredit and contempt on the latter. Petitioner Uy was a barrio captain. His proven actuations do not speak well of a, public officer, especially when done in the presence of the public during said referendum.

Petitioner Uy claims that private respondent should be bound by her statement appearing in the police blotter where, she made no mention that she was slandered by the former. This is fallacious reasoning. The entry in the police blotter, even if admitted as an exception to the hearsay rule, is not necessarily entitled to full credit as the, entrant did not have personal knowledge of the facts stated and the police agent who prepared the same did not testify in court. 18 Admissibility of evidence is one thing; the weight thereof is another. The court below also declared that an entry in the police blotter is an entry in an official record made in the performance of duty by a public officer and as such, its trustworthiness arises and its correctness cannot be impugned, there being a presumption of regularity in its execution. This is not entirely correct. Entries in official records are only prima facie evidence of the facts therein stated. They are not conclusive. We are satisfied with private respondent's explanation. Her initiative in promptly instituting her complaint clearly manifests her honest intention to vindicate the wrong committed against her. She explained that shortly after the incident between her and petitioner Uy, petitioner Ford came and slapped her. Thus, when the report was made by private respondent to the police authorities of Dumalag Capiz, the immediate hurt and humiliation being felt by her was not only the slander committed by petitioner Uy but, primarily and foremost, the slapping by petitioner Ford. Hence, the police report of private respondent which focused on her being slapped by petitioner Ford, although inadvertently omitting the incident with petitioner Uy in view of her emotional state then, should not be construed to mean that private respondent was not slandered by 222petitioner Uy. Like an affidavit, a police blotter is taken ex parte hence, in the same manner, it could be just as incomplete and inaccurate, sometimes from either partial suggestions or for want of suggestion or inquiries, without the aid of which the witness may be unable to recall the connected collateral circumstances necessary for the correction of the first suggestion of his memory and for his accurate recollection of all that pertains to the subject. 19 It is understandable that the testimony during the trial would be more lengthy and detailed than the matters stated in the police blotter. Petitioner Uy's disquisition on the omission of his intemperate and slanderous outburst in the entries made in the police blotter, or in the telegrams sent by private respondent, cannot outweigh the evidence on -which respondent court based its factual findings and conclusions that he did commit said act. Further, the testimony thereon of private respondent in open court, in our view, has not been successfully rebutted and we have no reason to doubt the veracity thereof. WHEREFORE, the instant petitions are hereby DENIED for lack of merit. The decision of respondent court is hereby AFFIRMED in toto. SO ORDERED. Melencio-Herrera (Chairman), Paras, Padilla and Sarmiento, JJ., concur.

SECOND DIVISION [G.R. No. 130721. May 26, 2005] ROMAGO ELECTRIC CO., INC., petitioner, vs. HONORABLE COURT OF APPEALS, SOLEDAD C. CAC, JOEPHIL BIEN, RENATO CUNANAN and DELFIN INCIONG, respondents. DECISION CHICO-NAZARIO, J.: The Case This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking the reversal of the decision[1] of the Court of Appeals dated 31 July 1997 and its resolution dated 16 September 1997 in CA-G.R. CV No. 28608. The Court of Appeals affirmed the decision[2] dated 29 June 1990 of the Regional Trial Court (RTC), Branch 19, Cauayan, Isabela, in Civil Case No. 19-300 in favor of herein private respondents for collection of a sum of money with damages. The Facts In 1982, the National Power Corporation (NPC) entered into an agreement with ROMAGO ELECTRIC CO., INC. (ROMAGO), under Contract No. Sp80DLC-502, for the erection and installation of NPCs 69 KV 3-Phase Transmission Lines from Santiago-Jones, Jones-Saguday and Cauayan-Roxas, Isabela, for an agreed consideration of P2,657,856.40. Subsequently, on 07 June 1982, ROMAGO subcontracted the project to BICC Construction, an unregistered loose partnership composed of Soledad Cac, Delfin Inciong, Joephil Bien and Renato Cunanan, for and in consideration of the sum of P1,614,387.99. Under the subcontract agreement, the following documents, collectively termed therein as Contract Documents, were incorporated into and made part of the contract as though fully written out and set forth herein, to wit: ARTICLE I DOCUMENTS COMPRISING THE CONTRACT The following documents are hereby incorporated and made part of this Contract as though fully written out and set forth herein insofar as they are not inconsistent with the terms thereof: 1. National Power Corporations Specification No. Sp80DLc 502 2. Any and all plans, drawings, and schedules prepared by National Power Corporation. 3. SUB-CONTRACTORS proposal dated March 8, 1982.

The documents mentioned above shall collectively be referred to as Contract Documents.[ 3 ] Also in the aforementioned agreement, the subcontractors obligations are defined in its Article II, to wit: SUB-CONTRACTOR shall, in accordance with the provisions of this Contract and Contract Documents, fully and faithfully furnish all labor, tools, equipment and necessary materials (except NPC supplied) and proceed to completely perform the Erection and Installation of the 69 KV, 3 Phases Transmission Lines (Schedule II) under the 7th Power Loan. SUB-CONTRACTOR shall commence the work starting March 23, 1982 and shall complete the same within two hundred forty (240) calendar days plus any extension of time duly granted by National Power Corporation under the provisions of the Contract Documents. Except as otherwise provided for herein, all provisions of the National Power Corporations Specifications No. Sp80DLc-502, with reference to obligations, responsibilities of Contractor thereunder are hereby made applicable to the SUB-CONTRACTOR under this Contract.[ 4 ] In the course of the construction, the NPC granted ROMAGO a Contract Price Adjustment (CPA) amounting to P250,778.65. Under the provision governing the CPA, as embodied in GP-08[ 5 ] of the Plans and Specifications: GP-08 CONTRACT PRICE ADJUSTMENT Adjustment of contract prices will be made should any or both of the following conditions occur as embodied in P.D. No. 454 as amended by PD No. 459. (a) If during the effectivity of the contract, the cost of labor, materials, equipment rentals and supplies for construction should increase or decrease due to the direct acts of the Philippine Government. The increase of prices of gasoline and other fuel oils, and of cement shall be considered as direct acts of the Philippine Government. (b) If during the effectivity of the contract, the costs of labor, equipment rentals, construction materials and supplies used in the project should cause the sum total of the prices of bid items to increase or decrease by more than five percent (5%) compared with the total contract price. The increased amount in the contract price shall be determined by application of appropriate official indices, complied and issued by the Central Bank of the Philippines. The additive or deductive adjustment shall be added or deducted from the unit prices every six (6) months beginning from the date of bidding.[ 6 ]

When the project was completed, there appeared to be an outstanding balance due to BICC Construction from ROMAGO, part of which was the formers share in the CPA amounting to 70% of the NPC-ROMAGO contract or P175,545.05. Mrs. Soledad Cac, one of the owners of BICC Construction, wrote NPC to hold its payment to ROMAGO of the aforementioned CPA amounting to P250,778.65. Payment was nonetheless released to ROMAGO by virtue of a sworn affidavit executed by ROMAGOs Vice President for Finance Eduardo Cruz who certified that there does not exist any lien or encumbrances against the said NPC-ROMAGO contract. It appears that on 04 October 1983, Mariano Cac, authorized representative and husband of Soledad Cac, one of the partners of BICC Construction, was paid the amount of P38,712.70 in full payment of accounts including retention of various works at NPC-Isabela under defendants Cash Disbursement Voucher No. 23162 dated 03 October 1983. When BICCs demands for payment were ignored by ROMAGO, the partners, thru Mrs. Soledad Cac as lone plaintiff, filed a complaint for collection of sum of money with damages. In its pre-trial order of 23 November 1988, the lower court summed up the issues agreed upon by the parties, as follows: 1. Whether or not plaintiffs, as sub-contractors of the projects mentioned in Exhibit C (i.e., NPC-ROMAGO contract)are entitled to the price cost adjustment under said contract obtained by the defendant from the NPC; and 2. Whether or not all obligations and/or indebtedness of the defendant to the plaintiffs were already paid and/or released upon the execution of Mariano Cac of the defendants Exh. A (sic; it should be Exh. 4). On 29 June 1990, the trial court rendered its decision, the dispositive portion of which reads: WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered: 1. Declaring that the venue of this case could be before this Court at the option of the plaintiffs; 2. Declaring that all contract price adjustments (CPA) under contract No. Sp 80DLc-502-(b) of the NPC inured to the benefit of the plaintiffs and not to the defendant; 3. Ordering the defendant to pay the plaintiffs said CPA in the amount of P250,778.65 excluding therefrom any tax lawfully paid by the defendant to the Philippine Government supported by authentic official receipts; 4. Ordering the defendant to pay interest on said amount at the legal rate from August 12, 1983 until fully paid; and 5. Ordering the defendant to pay the plaintiffs the sum of P10,000.00 as attorneys fees.

Costs further taxed against the defendant.[ 7 ] From the foregoing decision, defendant ROMAGO filed a notice of appeal[ 8 ] on 26 July 1990. Thereafter, the Court of Appeals rendered the assailed decision[ 9 ] on 31 July 1997. The Court of Appeals found the claim of private respondents to be meritorious. Consequently, the dispositive portion of the assailed decision of the appellate court pronounced that: WHEREFORE, with the modification that appellant is hereby ordered to pay the appellees the sum of P175,545.05 representing 70% of the total contract price adjustment of P250,778.65, with interest thereon at the legal rate from August 12, 1983 until fully paid but deducting therefrom any lawful tax appellant may have paid the government, the decision appealed from is hereby AFFIRMED in all other respects and the instant appeal DISMISSED. With costs against appellant.[ 1 0 ] The Issues Its motion to reconsider the said decision having been denied by the Court of Appeals in a Resolution dated 16 September 1997, petitioner ROMAGO filed the instant petition for review predicated on the following issues: I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN ITS INTERPRETATION OF THE SUB-CONTRACT IN RELATION TO NATIONAL POWER CORPORATIONS (NPC) PLANS AND SPECIFICATION . . . BY FINDING THAT THE CONTRACT PRICE ADJUSTMENT (CPA) OBTAINED BY PETITIONER INURES TO THE BENEFIT OF PRIVATE RESPONDENTS; II. WHETHER OR NOT THE HONORABLE COURT ERRED WHEN IT APPLIED THE PRINCIPLE OF EQUITY TO JUSTIFY PAYMENT TO PRIVATE RESPONDENTS OF THE CONTRACT PRICE ADJUSTMENT (CPA) WHEN THE CLEAR TERMS OF THE SUBCONTRACT AND THE LAW PRECLUDES (SIC) SUCH APPLICATION; III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED WHEN IT INTERPRETED THAT THE PARTICULARS OF PETITIONERS CASH DISBURSEMENT VOUCHER NO. 23162 WHICH STATES FULL PAYMENT OF ACCOUNTS INCLUDING RETENTION FOR VARIOUS WORKS AT NPC-ISABELA AS ATTACHED PHP37,712.70 SIGNED BY PRIVATE RESPONDENTS AUTHORIZED REPRESENTATIVE / AGENT ACKNOWLEDGING RECEIPT OF SAID AMOUNT DID NOT EXTINGUISH, RELIEVE,

RELEASE ANY AND ALL CLAIMS INCLUDING CONTRACT PRICE ADJUSTMENT (CPA) WHICH PRIVATE RESPONDENTS MAY HAVE AGAINST PETITIONER ON THE SUBCONTRACT; IV. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED WHEN IT HELD THAT MARIANO CAC WAS NOT CLOTHED WITH AUTHORITY BY PRIVATE RESPONDENTS TO RENOUNCE OR WAIVE WHATEVER CLAIMS INCLUDING CPA THAT PRIVATE RESPONDENTS MAY HAVE AGAINST PETITIONER; V. WHETHER OR NOT, GRANTING GRATIS ARGUENDO THAT PRIVATE RESPONDENTS ARE ENTITLED TO SHARE IN THE CONTRACT PRICE ADJUSTMENT (CPA) GRANTED BY NPC TO PETITIONER THE HONORABLE COURT OF APPEALS ERRED IN AWARDING PHP175,545.05 THEREOF, TO PRIVATE RESPONDENTS SINCE IT HAS NO BASIS AND CONTRARY TO EVIDENCE OF PRIVATE RESPONDENTS WHICH ONLY CLAIM AN AMOUNT OF PHP134,755.10 MINUS WHATEVER LEGAL DEDUCTIONS, IF ANY.[ 1 1 ] The Courts Ruling The petition is not meritorious. The first two issues can be stated in one concise statement, that is, whether or not the private respondents are entitled to the CPA accorded to the petitioner by NPC. Petitioner posits that by virtue of its contract with NPC, it is exclusively entitled to the CPA and no amount of strained interpretation could the CPA be deemed extended to private respondents.[ 1 2 ] The petitioner contends that under its contract with the private respondents, only the provisions of the NPC-ROMAGO Contract pertaining to ROMAGOs obligations and responsibilities[ 1 3 ] thereunder were made applicable to the private respondents. While it is true that National Power Corporations Specification No. Sp80DLC-502 were among those Contract Documents forming part of the Subcontract. . ., it would be gross judicial error to read the grant of the CPA in the Subcontract. These Contract Documents were incorporated in the Subcontract for the purpose of binding private respondents in fulfilling the obligations and responsibilities of petitioner in the latters contract with NPC. . . .[ 1 4 ] The petitioner further hypothesizes that (h)ad the parties intended that private respondents shall be entitled to share in the CPA that may be granted by NPC to petitioner, the Subcontract could have expressly stipulated. But it did not. Moreover, in Art. I of the Subcontract, it provides that the Contract Documents incorporated shall only be considered fully written insofar as they are not inconsistent with the terms thereof. NPC Contract No. Sp80DLC-502 being inconsistent to the

unequivocal silence of the Subcontract with respect to the grant of CPA, private respondents are not entitled to grant of the CPA.[ 1 5 ] For its part, however, the Court of Appeals ruled that the private respondents claim under the CPA is meritorious. The appellate court clarified that the provision of the CPA is not found in the NPC-ROMAGO contract,[ 1 6 ] but in the NPC's Plans and Specifications.[ 1 7 ] On the other hand, the obligations and responsibilities averred to by the petitioner are, in appellants own words, those flowing from the provisions of the x x x contract entered into between NPC and ROMAGO Thus, the phrase obligations and responsibilities should only qualify the main contract and not the other Contract Documents. The records of the present case sustain the findings of the Court of Appeals. Thus, the petition must fail. Contrary to the petitioners asseverations that the CPA was not intended to be made applicable to the ROMAGO-BICC subcontract, it must be remembered that the petitioner and the private respondents expressly agreed what documents were going to be incorporated in the principal subcontract. We agree with the appellate court that the qualifying phrase obligations and responsibilities contained in the ROMAGO-BICC subcontract was applicable only to the NPCROMAGO contract. What is more, the CPA is not found in the NPC-ROMAGO contract,[ 1 8 ] but in the NPC's Plans and Specifications[ 1 9 ] which was expressly included as part of the Contract Documents, to wit: ARTICLE I DOCUMENTS COMPRISING THE CONTRACT The following documents are hereby incorporated and made part of this Contract as though fully written out and set forth herein insofar as they are not inconsistent with the terms thereof: 1. National Power Corporations Specification No. Sp80DLc 502 2. Any and all plans, drawings, and schedules prepared by National Power Corporation. 3. SUB-CONTRACTORS proposal dated March 8, 1982. The documents mentioned above shall collectively be referred to as Contract Documents.[ 2 0 ] [Emphasis supplied.] As propitiously pointed out by the Court of Appeals, the NPC prepared a document entitled, Plans and Specifications, paragraph GP-O8 of which deals with contract price adjustment: It must be stressed herein that among the documents which were incorporated into and made part of the ROMAGO-BICC contract (Exh. D) as though fully written out and set forth therein are

[A]ny and all plans, drawings, and schedules prepared by the National Power Corporation. Relative thereto, appellant makes no denial of the fact that in connection with the project in question, there was prepared by the NPC a document entitled Plans and Specifications (Exhs. E to E-5), paragraph GP-O8 of which deals on contract price adjustment, thus: GP-O8 CONTRACT PRICE ADJUSTMENT Adjustment of contract prices will be made should any or both of the following conditions occur as embodied in PD No. 454 as amended by PD No. 459: (a) If during the effectivity of the contract, the cost of labor, materials, equipment rentals and supplies for construction should increase or decrease due to the direct acts of the Philippine Government. The increase of prices of gasoline and other fuel oils, and of cement shall be considered as direct acts of the Philippine Government. (b) If during the effectivity of the contract, the costs of labor, equipment rentals, construction materials and supplies used in the project should cause the sum total of the prices of bid items to increase or decrease by more than five percent (5%) compared with the total contract price. (Exh. E-5-A).
[21]

And assuming for the sake of argument that the qualifying phrase obligations and responsibilities applies to the other Contract Documents, upon closer inspection of the provisions granting the CPA, it is quite evident that said provision consequently requires an obligation or responsibility on the part of the petitioner that in the event of a decrease in the cost of labor, materials, equipment rentals and supplies for construction, etc., the reduction of the contract price will be for the account of the petitioner. The provision respecting the grant of CPA does not merely provide for the probability of receipt of additional payment, but it also involves an obligation on the part of the petitioner and the private respondents to return any excess payment received from the NPC in the event of any decrease in the cost of labor, materials, equipment rentals and supplies for the construction of said transmission lines. The petitioners view that the CPA provision is inconsistent with the tenor of the subcontract is indefensible. In contrast, the inverse is true. Contrary to the petitioners assertions, there is nothing in the subcontract that supports the claimed inconsistency. Had the parties to the subcontract intended to restrict the application of the CPA provision, they would have particularly stated so. Alas, they only made a sweeping statement as to what documents were to be deemed read into the subcontract. To borrow the words of the petitioner, the unequivocal silence of the subcontract with respect to the non-applicability of the CPA necessitates the entitlement of the private respondents to said adjustment. Finally, the petitioner relies heavily on the case of MC Engineering, Inc. v. Court of Appeals, et al. [ 2 2 ] In said case, we held that: In a subcontract transaction, the benefit of a main contractor is not unjust even if it does less work, and earns more profit, than the subcontractor. The subcontractor should be satisfied with its own

profit, even though less than the main contractors, because that is what it bargained for and contracted with the main contractor. Article 22 of the Civil Code is not intended to insure that every party to a commercial transaction receives a profit corresponding to its effort and contribution. If a subcontractor knowingly agrees to receive a profit less than its proportionate contribution, that is its own lookout. The fact that a subcontractor accepts less does not make it dumb for that may be the only way to beat its competitors. The winning subcontractor cannot be allowed to later on demand a higher price after bagging the contract and beating competitors who asked for higher prices. Even if the subcontractor incurs a loss because of its low price, it cannot invoke Article 22 of the Civil Code to save it from financial loss. Article 22 is not a safety net against bad or overly bold business decisions.[ 2 3 ] Its reliance is misplaced. Upon a thorough review of the facts of the above-quoted case, it is quite evident that its particulars are not on all fours with the circumstances of the case at bar. In the case of MC Engineering, Inc., MC Engineering, Inc. and Surigao Coconut Development Corporation entered into a contract for the restoration of the latters building, land improvement, electrical and mechanical works which were damaged by a strong typhoon. The next day, MC Engineering, Inc. entered into a subcontract agreement with Gerent Builders. The subcontracted work covered only the restoration of the building and improvement portion of the original contract. Two months later, Surigao and MC Engineering, Inc., entered into another agreement amending Section 7 of the original contract by increasing the price of the civil works, i.e., building and land improvement, to P854,851.51. When the subcontracted work was completed, subcontractor Gerent received the payment of the works done under the subcontract. Subsequently, however, Gerent claimed an additional P632,590.13 as its shares in the adjusted contract price pertaining to the civil works, alleging that the subcontract is subject to the readjustment provided for in Section 7, as amended, plus P166,252.00 for additional works outside the scope of the subcontract. MC Engineering, Inc. refused to pay Gerent, thus, the latter filed a complaint in court. This Court ruled in favor of MC Engineering, Inc., as it found that the main contract between MC Engineering, Inc. and Surigao clearly provides that as a condition precedent for any upward or downward adjustment in the contract price, there must first be a true valuation of the materials and labor costs to be determined through evaluation and inspection by representatives of petitioner and Sucodeco. A similar provision is found in the subcontract requiring, before any change in the subcontract price, for a true valuation to be determined by Sucodeco, petitioner and respondent Gerent. The records establish that respondent Gerent was responsible for making the estimates of the actual cost of the civil works which served as basis for the original price of the main contract.[ 2 4 ] The evidence adduced, however, revealed that the parties did not undertake any true valuation of the cost of civil works. We held: . . . The price increase could not have been based on a true valuation because no true valuation was ever made as required by the main contract and subcontract. There is no substantial evidence to support respondent Gerents assertion that the price increase was based on a second estimate that Gerent allegedly supplied petitioner.[ 2 5 ]

In the case at bar, though, the provisions pertaining to the CPA are quite clear the adjustment in the contract price, i.e., increase or decrease, is dependent on the application of appropriate official indices, as compiled and issued by the Central Bank of the Philippines, and not on the acts of any of the parties to the contract or subcontract. In fact, there is no issue as to the occurrence of any of the scenarios envisioned under the provisions of GP-08 that necessitated the increase as stated in the contract as well as in the subcontract. Anent the third and fourth assigned errors, the petitioner asserts that whatever claims the private respondents may have against it, including the CPA, has been extinguished when Mariano Cac received from the petitioner a check for P38,712.70 representing full payment of accounts including retention for various works at NPC-Isabela. This is so due to the fact that said authorized representative or agent had the authority to bind the private respondents. By signing and receiving, he released the petitioner from whatever claims private respondents had against the former in connection with the subcontract, including the CPA. Petitioner ROMAGOs position is untenable. The very same petition that the petitioner filed with the Court clearly negates its position. Said pleading expressly states that the CPA is not included in the computation. This is precisely because the petitioner believes that the private respondents are not entitled to the CPA, hence, there is no basis for including it. Said CPA not being part of the subcontract price of P1,614,387.99, the release mentioned in the cash voucher cannot, therefore, be construed as a release of the CPA. In fact, nowhere in the computation prepared by petitioners finance manager, Narita Chalak, provides for the payment of the CPA, to wit: RE: BICC CONSTRUCTION Total Actual Billing of BICC to Romago Less: (1) Withholding tax .0045% - P 6,100.70 (2) Total payments made - 1,143,387.76 (3) Material Accountability 8,076.61 (4) NPC Material Acct. Local - P14,631.75 Foreign - 64,373.79 Surcharge fee - 16,093.44 95,098.98 - - - - - - - - - - - - - - - - - - P1,355,713.22

Penalty for 33 days 64,337.46 (P1,317,000.55) Total Balance Due BICC including Retention -- P 38,712.71 ===========

(Paid per CDV #23162 ) 10-3-83.[ 2 6 ] As to the final issue regarding the amount of CPA the private respondents are entitled to, we disagree with the petitioner that the private respondents are only entitled to the amount of P134,755.10 representing 70% of the CPA claimed by petitioner ROMAGO from NPC less tax due thereon and P38,712.70, the amount received by BICC contained in Cash Disbursement Voucher No. 23162. The petitioners computation is incorrect. As established above, the amount received by the private respondents under said voucher does not in any way represent a single centavo of the CPA. As evidenced again by the computation prepared by the petitioners own finance manager, Ms. Narita Chalak, the P38,712.71 was arrived at as follows: RE: BICC CONSTRUCTION Total Actual Billing of BICC to Romago - - - - - - - - - - - - - - - - - - P1,355,713.22 Less: (1) Withholding tax .0045% - P 6,100.70 (2) Total payments made - 1,143,387.76 (3) Material Accountability 8,076.61 (4) NPC Material Acct. Local - P14,631.75 Foreign - 64,373.79 Surcharge fee - 16,093.44 95,098.98 64,337.46 (P1,317,000.55) -- P 38,712.71 ============ (Paid per CDV #23162 ) 10-3-83.[ 2 7 ] As seen from the above-quoted computation, therefore, the sum of P38,712.71, representing the total balance due to BICC under its original contract with ROMAGO excluding the CPA, should not be deducted from P175,545.05, BICCs share of the CPA received by ROMAGO from NPC. In fine, private respondents are entitled to the CPA as embodied in the subcontract. Basic is the rule that parties are bound by the terms of their contract which is the law between them.[ 2 8 ] WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The questioned Decision dated 31 July 1997, of the Court of Appeals and its Resolution dated 16 September 1997, in CA-G.R. CV No. 28608 are hereby AFFIRMED. With costs against the petitioner.

Penalty for 33 days

Total Balance Due BICC including Retention

SO ORDERED. Puno, (Chairman), Austria-Martinez, and Callejo, Sr., JJ., concur. Tinga, J., out of the country.

SECOND DIVISION

VICENTE S. ALMARIO, Petitioner,

G.R. No. 170928

Present:

- versus -

QUISUMBING,* J., Chairperson, SANDOVAL-GUTIERREZ, ** CARPIO,*** CARPIO MORALES, TINGA, and VELASCO, JR., JJ.

PHILIPPINE AIRLINES, INC.,

Promulgated:

* * *

Respondent.

September 11, 2007

x-------------------------------------------------- x

DECISION

CARPIO MORALES, J.:

On October 21, 1988, petitioner, Vicente S. Almario (Almario), was hired by respondent, Philippine Airlines, Inc. (PAL), as a Boeing 747 Systems Engineer.

On April 28, 1995, Almario, then about 39 years of age69[1] and a Boeing 737 (B-737) First Officer at PAL, successfully bid for the higher position of Airbus 300 (A-300) First Officer.70[2] Since said higher position required additional training, he underwent, at PALs expense, more than five months of training consisting of ground schooling in Manila and flight simulation in Melbourne, Australia.71[3]

69 70 71

After completing the training course, Almario served as A-300 First Officer of PAL, but after eight months of service as such or on September 16, 1996, he tendered his resignation, for personal reasons, effective October 15, 1996.72[4]

On September 27, 1996, PALs Vice President for Flight Operations sent Almario a letter, the pertinent portions of which read:

xxxx 2. Our records show that you have been trained by the Company as A300 First Officer starting on 04 September 1995 and have completed said training on 08 February 1996. As you are aware the Company invested heavily on your professional training in the estimated amount of PHP786,713.00 on the basis that you continue to serve the Company for a definite period of time which is approximately three (3) years or thirty-six (36) months. In view of the foregoing, we urge you to reconsider your proposed resignation otherwise you will be required to reimburse the Company an amount equivalent to the cost of your professional training and the damaged [sic] caused to the Company.73[5] (Emphasis and underscoring supplied)

3.

Despite receipt of the letter, Almario pushed through with his resignation.

By letter of October 9, 1996, Almarios counsel sought PALs explanation behind its September 27, 1996 letter considering that Almario did not sign
72 73

anything regarding any reimbursement.74[6]

PAL did not reply, prompting

Almarios counsel to send two letters dated January 6, 1997 and February 10, 1997 following-up PALs reply, as well as the release of Almarios clearances which he needed to avail of his benefits.75[7]

On February 11, 1997, PAL filed a Complaint76[8] against Almario before the Makati Regional Trial Court (RTC), for reimbursement of P851,107 worth of training costs, attorneys fees equivalent to 20% of the said amount, and costs of litigation. PAL invoked the existence of an innominate contract of do ut facias (I give that you may do) with Almario in that by spending for his training, he would render service to it until the costs of training were recovered in at least three (3) years.77[9] Almario having resigned before the 3-year period, PAL prayed that he should be ordered to reimburse the costs for his training.

In his Answer with Special and Affirmative Defenses and Compulsory Counterclaims,78[10] Almario denied the existence of any agreement with PAL that he would have to render service to it for three years after his training failing which he would reimburse the training costs. He pointed out that the 1991-1994 Collective Bargaining Agreement (CBA) between PAL and the Airline Pilots

74 75 76 77 78

Association of the Philippines (ALPAP), of which he was a member,79[11] carried no such agreement.

Almario thus prayed for the award of actual damages on account of PALs withholding of the necessary clearances which he needed in order to obtain his lawful benefits, and moral and exemplary damages for malicious prosecution and unjust harassment.80[12]

PAL, in its Reply to Defendants Answer and Answer to Counterclaim, 81[13] argued as follows:

The right of PAL to be reimbursed for training expenses is based on Article XXIII, Section 1 of the 1991-1994 Collective Bargaining Agreement (CBA, for brevity) and which was taken from the decision of the Secretary of Labor. [The Secretary of Labor] ruled that a pilot should remain in the position where he is upon reaching the age of fifty-seven (57), irrespective of whether or not he has previously qualified in the Companys turbo-jet operations. The rationale behind this is that a pilot who will be compulsorily retired at age sixty (60) should no longer be burdened with training for a new position. Thus, Article XXIII, Section 1 of the CBA provide[s]: Pilots fifty-seven (57) years of age shall be frozen in their position. Pilots who are less than fifty-seven (57) years of age provided they have previously qualified in any companys turbo-jet
79 80 81

aircraft shall be permitted to occupy any position in the companys turbo-jet fleet. The reason why pilots who are 57 years of age are no longer qualified to bid for a higher position is because they have only three (3) years left before the mandatory retirement age [of 60] and to send them to training at that age, PAL would no longer be able to recover whatever training expenses it will have to incur. Simply put, the foregoing provision clearly and unequivocally recognizes the prohibitive training cost principle such that it will take a period of at least three (3) years before PAL could recover from the training expenses it incurred. 82[14] (Emphasis and underscoring supplied)

By Decision83[15] of October 25, 2000, Branch 147 of the Makati RTC, finding no provision in the CBA between PAL and ALPAP stipulating that a pilot who underwent a training course for the position of A-300 First Officer must serve PAL for at least three years failing which he should reimburse the training expenses, rendered judgment in favor of Almario.

The trial court denied Almarios claim for moral damages, however. 84[16] It denied too Almarios claim for the monetary equivalent of his family trip pass benefits (worth US$49,824), it holding that the same had been forfeited as he did not avail of them within one year from the date of his separation.

Thus the trial court disposed:

82 83 84

WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of defendant Vicente Almario and against the plaintiff: 1- Dismissing the plaintiffs complaint; 2- Ordering the plaintiff to pay the defendant: a- the amount of P312,425.00 as actual damages with legal interest from the filing of the counterclaim; b- the amount of P500,000.00 as exemplary damages; c- the amount of P150,000.00 as attorneys fees; d- the costs of the suit. SO ORDERED.85[17]

On appeal by both parties,86[18] the Court of Appeals, by Decision87[19] dated March 31, 2005, reversed the trial courts decision. It found Almario liable under the CBA between PAL and ALPAP and, in any event, under Article 22 of the Civil Code. Thus it disposed:

WHEREFORE, the appealed Decision is REVERSED and SET ASIDE. In lieu thereof, a new judgment is hereby ENTERED, as follows: (a) Appellee Vicente Almario is hereby ordered to pay appellant Philippine Airlines, Inc. the sum of Five Hundred Fifty Nine Thousand, Seven Hundred [T]hirty Nine & 9/100 Pesos (P559, 739.90) with six percent (6%) interest as above-computed; and (b) the award of exemplary damages and attorneys fees in favor of appellee is hereby DELETED.88[20] (Emphasis in the original; underscoring supplied)

85 86 87 88

His Motion for Reconsideration89[21] having been denied,90[22] Almario filed the instant Petition for Certiorari [sic] (Under Rule 45),91[23] raising the following issues:

A.

Whether the Court of Appeals committed reversible error in interpreting the Collective Bargaining Agreement between Philippine Airlines, Inc. (PAL) and the Airline Pilots Association of the Philippines (ALPAP) as an ordinary civil law contract applying ordinary contract law principles which is contrary to the ruling of the Supreme Court in Samahang Manggagawa sa Top Form Manufacturing-United Workers of the Philippines (SMTFM-UWP) v. NLRC and, therefore, erroneously reading into the CBA a clause that was not agreed to during the negotiation and not expressly stated in the CBA; Whether the Court of Appeals committed reversible error in holding that Article 22 of the Civil Code can be applied to recover training costs which were never agreed to nor included as reimbursable expenses under the CBA;

B.

C.

Whether the availing by petitioner of a required training is a legal ground justifying the entitlement to a benefit and therefore, negating claims of unjust enrichment;

D.

Whether the failure of private respondent to honor and provide the Family Trip Pass Benefit in the equivalent amount of US$ 49,824.00 which petitioner and his family were not able to avail of within the one (1) year from date of separation due to the actions of PAL amounts to unjust enrichment;

E.

Whether or not respondent is liable for malicious prosecution[.]92[24] (Underscoring supplied)

89 90 91 92

Almario insists on the absence of any written contract or explicit provision in the CBA obliging him to reimburse the costs incurred by PAL for his training. And he argues:

[T]here can be no unjust enrichment because petitioner was entitled to the benefit of training when his bid was accepted, and x x x PAL did not suffer any injury because the failure to include a reimbursement provision in the CBA was freely entered into by the negotiating parties; xxxx It is not disputed that the petitioner merely entered a bid for a higher position, and that when he was accepted based on seniority and qualification, the position was awarded to him. It is also not disputed that petitioner [had] not asked, requested, or demanded for the training. It came when his bid was accepted by PAL; Because the training was provided when the bid was accepted, the acceptance of the bid was the basis and legal ground for the training; Therefore, since there is a legal ground for the entitlement of the training, contrary to the ruling of the Court of Appeals, there can be no unjust enrichment;93 [25] (Underscoring supplied)

The petition fails.

As reflected in the above-enumerated issues raised by Almario, he cites the case of Samahang Manggagawa sa Top Form Manufacturing-United Workers of the
93

Philippines (SMTFM-UWP) v. NLRC94[26] (Manggagawa) in support of his claim that the appellate court erred in interpreting the CBA as an ordinary civil law contract and in reading into it a clause that was not agreed to during the negotiation and not expressly stated in the CBA.

On the contrary, the ruling in Manggagawa supports PALs position. Thus this Court held:

The CBA is the law between the contracting parties the collective bargaining representative and the employer-company. Compliance with a CBA is mandated by the expressed policy to give protection to labor. In the same vein, CBA provisions should be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve. This is founded on the dictum that a CBA is not an ordinary contract but one impressed with public interest. It goes without saying, however, that only provisions embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a contracting party does not find print in the CBA, it is not a part thereof and the proponent has no claim whatsoever to its implementation.95[27] (Emphasis and underscoring supplied)

In N.S. Case No. 11-506-87, In re Labor Dispute at the Philippine Airlines, Inc., the Secretary of the Department of Labor and Employment (DOLE), passing on the failure of PAL and ALPAP to agree on the terms and conditions for the

94 95

renewal of their CBA which expired on December 31, 1987 and construing Section 1 of Article XXIII of the 1985-1987 CBA, held:

xxxx Section 1, Article XXIII of the 1985-1987 CBA provides: Pilots fifty-five (55) years of age or over who have not previously qualified in any Company turbo-jet aircraft shall not be permitted to bid into the Companys turbo-jet operations. Pilots fifty-five (55) years of age or over who have previously qualified in the companys turbo-jet operations may be by-passed at Company option, however, any such pilot shall be paid the by-pass pay effective upon the date a junior pilot starts to occupy the bidded position. x x x PAL x x x proposed to amend the provision in this wise: The compulsory retirement age for all pilots is sixty (60) years. Pilots who reach the age of fifty-five (55) years and over without having previously qualified in any Company turbo-jet aircraft shall not be permitted to occupy any position in the Companys turbo-jet fleet. Pilots fifty-four (54) years of age and over are ineligible for promotion to any position in Group I. Pilots reaching the age of fifty-five (55) shall be frozen in the position they currently occupy at that time and shall be ineligible for any further movement to any other positions. PALs contention is basically premised on prohibitive training costs. The return on this investment in the form of the pilot promoted is allegedly five (5) years. Considering the pilots age, the chances of full recovery [are] asserted to be quite slim. ALPAP opposed the proposal and argued that the training cost is offset by the pilots maturity, expertise and experience. By way of compromise, we rule that a pilot should remain in the position where he is upon reaching age fifty-seven (57), irrespective of whether or not he has previously qualified in the Companys turbo-jet operations. The rationale behind this is that a pilot who will be compulsorily retired at age sixty (60) should no longer be burdened with training for a new position. But if a pilot is only at age fifty-five (55), and promotional positions are available, he should still be

considered and promoted if qualified, provided he has previously qualified in any company turbo-jet aircraft. In the latter case, the prohibitive training costs are more than offset by the maturity, expertise, and experience of the pilot. Thus, the provision on age limit should now read: Pilots fifty-seven (57) years of age shall be frozen in their positions. Pilots fifty-five (55) [sic] years of age provided they have previously qualified in any company turbo-jet aircraft shall be permitted to occupy any position in the companys turbo-jet fleet.96 [28] (Emphasis and underscoring supplied)

The above-quoted provision of Section 1 of Article XXIII of the 1985-1987 CBA, as construed by the DOLE Secretary, was substantially incorporated in the 1991-1994 CBA between PAL and ALPAP97[29] as follows:

Pilots fifty-seven (57) years of age shall be frozen in their position. Pilots who are less than fifty-seven (57) years of age provided they have previously qualified in any companys turbo-jet aircraft shall be permitted to occupy any position in the companys turbo-jet fleet.98[30]

The same section of Article XXIII of the 1991-1994 CBA was reproduced in the 1994-2000 CBA.99[31]

96 97 98 99

Arturo Gabanton, PALs Senior Vice President for Flight Operations, testifying on PALs policy or practice on underwriting the training costs of its pilots at the time Almario was trained, with the expectation of benefiting therefrom in order to recover the cost of training, explained:

Atty. Parinas: Q: At the time the defendant was accepted for training as A300 First Officer, would you know what was the governing policy or practice of Philippine Airlines that was being employed regarding the training cost[s] for the pilots? Witness: A: The company has to spend for the training of the pilots and after that the company expecting that services will be rendered in order to recover the cost[s] of training. Atty. Parinas: Q: You stated that the pilot must serve the company after completing the training, for how long after completing the training? Witness: A: At least for three (3) years. Atty. Parinas: Q: What is your basis in saying that a pilot must serve the company after completing the training? Witness: A: That is embodied in the Collective Bargaining Agreement between Philippine Airlines and the Airline Pilot Association of the Philippines.100 [32] xxxx Atty. Parinas:

100

Q:

Can you point to the provision in this agreement relating to the three (3) year period you stated a while ago?

NOTE: Witness going over the document shown to him by counsel. Witness: A: It is on page 99 of the Collective Bargaining Agreement, Article 23, Miscellaneous. Atty. Parinas: I would like to manifest that this provision pointed out by the witness is already marked as Exhibit B-1 by the plaintiff. xxxx [Atty. Parinas] Q: Mr. witness, Exhibit B-1 states in part that Pilots, 57 years of age shall be frozen in their position. Pilots who are less than 57 years of age provided they have been previously qualified in any companys Turbo-Jet Aircraft shall be permitted to occupy any position in the companys Turbo-jet Fleet, why do you say this is the basis for the three (3) year period within which a pilot must render service to the company after completing the training? [Witness] A: The reason why 57 years old is placed here in the Collective Bargaining Agreement [is that] it is expected that you serve the position for three (3) years because the retirement age is at 60, therefore, if you are past 57 years old, it will fall short of the three (3) years recovery period for the company. So it was established that [anyone] past 57 years old will not be allowed to train for another position.101[33] (Emphasis and underscoring supplied)

It bears noting that when Almario took the training course, he was about 39 years old, 21 years away from the retirement age of 60. Hence, with the maturity, expertise, and experience he gained from the training course, he was expected to serve PAL for at least three years to offset the prohibitive costs thereof.

101

The pertinent provision of the CBA and its rationale aside, contrary to Almarios claim, Article 22 of the Civil Code which reads:

Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him,

applies.

This provision on unjust enrichment recognizes the principle that one may not enrich himself at the expense of another. An authority on Civil Law102[34] writes on the subject, viz:

Enrichment of the defendant consists in every patrimonial, physical, or moral advantage, so long as it is appreciable in money. It may consist of some positive pecuniary value incorporated into the patrimony of the defendant, such as: (1) the enjoyment of a thing belonging to the plaintiff; (2) the benefits from service rendered by the plaintiff to the defendant; (3) the acquisition of a right, whether real or personal; (4) the increase of value of property of the defendant; (5) the improvement of a right of the defendant, such as the acquisition of a right of preference; (6) the recognition of the existence of a right in the defendant; and (7) the improvement of the conditions of life of the defendant. xxxx The enrichment of the defendant must have a correlative prejudice, disadvantage, or injury to the plaintiff. This prejudice may consist, not only of the loss of property or the deprivation of its enjoyment, but also of non-payment of

102

compensation for a prestation or service rendered to the defendant without intent to donate on the part of the plaintiff, or the failure to acquire something which the latter would have obtained. The injury to the plaintiff, however, need not be the cause of the enrichment of the defendant. It is enough that there be some relation between them, that the enrichment of the defendant would not have been produced had it not been for the fact from which the injury to the plaintiff is derived. (Underscoring supplied)103[35]

Admittedly, PAL invested for the training of Almario to enable him to acquire a higher level of skill, proficiency, or technical competence so that he could efficiently discharge the position of A-300 First Officer. Given that, PAL expected to recover the training costs by availing of Almarios services for at least three years. The expectation of PAL was not fully realized, however, due to Almarios resignation after only eight months of service following the completion of his training course. He cannot, therefore, refuse to reimburse the costs of training without violating the principle of unjust enrichment.

Following the computation by the appellate court which was arrived at by offsetting the respective claims of the parties, viz:

Training Cost Less: Appellees corresponding 8 months Service after training [P850,107.00 divided by 36 months (3 years) = P23,640.86 x 8 months] Equals Less: Accrued Benefits

P851,107.00

189,126.88 P661,980.12 102,240.22

103

Net Reimbursable Amount or Appellees Outstanding Account

P559,739.90104[36] **********,

Almario must pay PAL the sum of P559,739.90, to bear the legal interest rate of 6% per annum from the filing of PALs complaint on February 11, 1997 until the finality of this decision.

In light of the foregoing discussions on the main issue, the Court finds it unnecessary to dwell on the other issues raised by Almario. Suffice it to state that the appellate courts disposition thereof is, as its decision reflects, well-taken.

WHEREFORE, the petition is DENIED and the decision appealed from is AFFIRMED.

Costs against petitioner.

SO ORDERED.
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION
104

G.R. No. 150925

May 27, 2004

SPOUSES JAMES TAN and FLORENCE TAN, petitioners, vs. CARMINA, REYNALDO, YOLANDA and ELISA, all surnamed MANDAP, respondents. DECISION QUISUMBING, J.: For review on certiorari is the decision1 dated August 10, 2001, of the Court of Appeals, in CAG.R. CV No. 59694, which affirmed in toto the decision,2 dated March 25, 1998, of the Regional Trial Court (RTC) of Manila, Branch 34, in Civil Case No. 89-50263. The trial court declared the sale of properties between Dionisio Mandap, Sr., and the spouses Crispulo and Elenita Vasquez simulated and thus void, and hence, the subsequent sale between the Vasquez spouses and petitioners herein, the spouses James and Florence Tan, similarly void. Likewise assailed by the petitioners is the resolution3 dated November 23, 2001 of the appellate court, denying their motion for reconsideration. The pertinent facts, as found by the trial court, are as follows: The respondents are the legitimate children of the marriage of Dionisio Mandap, Sr., and Maria Contreras Mandap. When the Mandap spouses parted ways, their children opted to stay with Maria. To help support the children, Maria filed Civil Case No. E-02380 in the former Juvenile and Domestic Relations Court of Manila for the dissolution and separation of the conjugal partnership. Two separate lots, each with an area of 88 square meters covered by TCT Nos. 44730 and 55847, respectively, located in Felix Huertas Street, Sta. Cruz, Manila, with improvements thereon, were adjudicated by the Juvenile and Domestic Relations Court in favor of Dionisio Mandap, Sr. Meanwhile, Dionisio Mandap, Sr., until his death on October 2, 1991 at age 64, lived with Diorita Dojoles, with whom he had two children. He suffered from diabetes since 1931, became totally blind in 1940, and was crippled for about 10 years until his death. However, before his death on May 25, 1989, he conveyed the subject properties to his common-law wifes sister, Elenita Dojoles Vasquez; and her husband, Crispulo Vasquez. As a result of this sale, TCT Nos. 44730 and 55847 were cancelled and TCT Nos. 186748 and 186749 covering the subject properties were issued in the name of Elenita Vasquez married to Crispulo Vasquez. On September 11, 1989, the Vasquez spouses conveyed the parcel of land covered by TCT No. 186748 in favor of petitioners. TCT No. 188862 covering the subject lot was then issued in favor of the latter. On September 5, 1989, prior to the sale to petitioners, the respondents filed an action for cancellation of title with damages, before the RTC of Manila against Diorita Dojoles and the Vasquez spouses, alleging that the sale of subject properties by their father was fictitious, and

without any consideration. Further, the consent of their father was vitiated due to his physical infirmities. The action was docketed as Civil Case No. 89-50263. On February 15, 1991, respondents filed a supplemental complaint, this time against the spouses Tan, for the nullification of the sale to the latter of subject lot. On March 25, 1998, the trial court decided Civil Case No. 89-50263 in favor of the herein respondents. The decretal part of its judgment reads as follows: WHEREFORE, premises considered judgment is hereby rendered as follows: IN CIVIL CASE NO. 89-50263 1. Declaring the Deeds of Sale (Exh. "A" and "A-1"; "B" and "B-1") both dated May 25, 1989 executed in favor of Elenita Vasquez married to Crispulo Vasquez as null and void and of no legal force and effect whatsoever; 2. Ordering the Register of Deeds of Manila to cancel TCT No. 186748 (Exh. "K" to "K-2") and TCT No. 186749 (Exh. "L" and "L-1") registered in the name of Elenita Vasquez married to Crispulo Vasquez having been issued thru a void and inexistent contract; further ordering the reconveyance of said title to the Estate of Dionisio Mandap, Sr.; 3. Ordering the plaintiffs or the Estate of Dionisio Mandap, Sr., to reimburse or return the sum of P570,000.00 representing the purchase price of the subject lot, plus legal rate of interest starting from the rendition of this decision until fully paid; 4. Ordering the defendants Spouses Crispulo and Elenita Vasquez and Diorita Dojoles to jointly and severally reimburse or return the fruits or earnings in the mentioned lots in the form of rentals which is hereby fixed at P10,000.00 per month from the date this complaint was filed until defendants restore and/or surrender the subject premises to the Estate of Dionisio Mandap, Sr.; 5. Ordering the defendants Spouses Crispulo and Elenita Vasquez and Diorita Dojoles to pay attorneys fees in the amount of P50,000.00 and to pay the costs of this suit. IN THE SUPPLEMENTAL COMPLAINT AGAINST SPOUSES JAMES AND FLORENCE TAN 1. Declaring the Deed of Sale dated September 11, 1989 (Exh. "Q" and "7", Tan) executed by Elenita Vasquez married to Crispulo Vasquez as null and void and of no force and effect whatsoever, the vendor having no valid title to dispose of the same;

2. Ordering the Register of Deeds of Manila to cancel TCT No. 188862 issued in the name of James Tan, the source of which having been declared null and void; 3. Ordering Spouses Crispulo and Elenita Vasquez to return the sum of P1,000,000.00 representing the purchase price of the lot covered by TCT No. 188862 with legal rate of interest from the date of this decision; 4. Ordering defendants James and Florence Tan to jointly and severally pay the sum of P15,000.00 as and for attorneys fees. IN BOTH CASES THE COUNTERCLAIMS INTERPOSED BY THE DEFENDANTS ARE DISMISSED FOR LACK OF MERIT. SO ORDERED.4 From the above judgment, petitioners appealed to the Court of Appeals in CA-G.R. CV No. 59694 on the ground that the trial court erred in not declaring them to be buyers in good faith and in not sustaining the validity of their title, TCT No. 188862. In its decision dated August 10, 2001, the Court of Appeals found the appeal bereft of merit and affirmed in toto the lower court decision, thus: WHEREFORE, the appeals interposed by appellants Dojoles, Sps. Vasquez and Sps. James and Florence Tan is without merit; the Decision of the lower court dated March 25, 1998 is AFFIRMED in toto. Costs against appellants. SO ORDERED.5 Petitioners seasonably moved for reconsideration, but it was denied by the appellate court. Hence, this petition for review, submitting the following issues for our resolution: I WHETHER OR NOT PETITIONERS HAVE THE LEGAL PERSONALITY TO BRING THE INSTANT PETITION. II WHETHER OR NOT THE SALE BETWEEN MANDAP SR. AND THE VASQUEZES IS VALID. III

WHETHER OR NOT THE SALE BETWEEN THE VASQUEZES AND PETITIONERS IS VALID. IV WHETHER OR NOT THE AWARD OF ATTORNEYS [FEES] HAS LEGAL BASIS.6 Anent the first issue, the petitioners submit that having been made parties-defendants by respondents via the supplemental complaint in Civil Case No. 89-50263, they have the right to appeal to this Court the adverse ruling of the appellate court against them, even if their codefendants did not appeal the said ruling of the Court of Appeals. Respondents counter that petitioners have no legal personality to appeal the decision of the appellate court voiding the sale between Dionisio Mandap, Sr., and the Vasquez spouses. They contend that inasmuch as the latter did not appeal the questioned decision, it had become final and executory. Respondents contend that petitioners, not being privy to said sale, cannot invoke its validity. We find for petitioners on this issue. The trial court voided the petitioners sale of subject lot, and on appeal that decision was affirmed by the Court of Appeals. Hence, as aggrieved parties, petitioners may elevate to the Supreme Court the controversy within the prescriptive period for appeal.7 They possess locus standi, or legal personality, to seek a review by this Court of the decision by the appellate court which they assail. Note that while petitioners elevated the trial courts decision to the appellate court, their co-defendants in Civil Case No. 89-50263 did not do so. Thus, the trial courts decision became final and executory only as to petitioners co-defendants in the trial court who did not appeal, namely Diorita Dojoles and the Vasquez spouses. With regard to the second issue, the petitioners insist the essential requisites of a contract of sale have been satisfied, namely, (1) consent of the contracting parties, (2) object certain, and (3) cause or consideration therefor. They have been satisfied first in the sale by Mandap, Sr., of the lots to the Vasquez spouses and subsequently, in the sale by the Vasquezes to petitioners. Hence, petitioners contend that it was error for the appellate court to declare the sale to them of the subject lot null and void. After careful consideration of the submission of the parties, we find in favor of respondents. Petitioners contentions lack merit. At the time Dionisio Mandap, Sr., purportedly sold the lots in question to the Vasquez spouses, he was already totally blind and paralyzed. He could not possibly have read the contents of the deeds of sale. He could not have consented to a contract whose terms he never knew nor understood. It cannot be presumed Mandap, Sr., knew the contents of the deeds of sale disposing of his properties. Article 1332 of the Civil Code is applicable in these circumstances, to wit: ART. 1332. When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.

As the party seeking to enforce the contract, the petitioners should have presented evidence showing that the terms of the deeds of sale to the Vasquez spouses were fully explained to Mandap, Sr. But petitioners failed to comply with the strict requirements of Article 1332, thereby casting doubt on the alleged consent of the vendor. Since the vendor in this case was totally blind and crippled at the time of the sale, entirely dependent on outside support, every care to protect his interest conformably with Article 24 of the Civil Code must be taken. Article 24 is clear on this. ART. 24. In all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection. Petitioners presented no evidence disproving that (1) Mandap, Sr. was totally blind and suffering from acute diabetes such that he could no longer discern the legal consequences of his acts, and (2) that undue influence was exerted upon him, which vitiated his consent. It is true that he who alleges a fact bears the burden of proving it. However, since fraud and undue influence are alleged by respondents, the burden shifts8 to petitioners to prove that the contents of the contract were fully explained to Mandap, Sr. Nothing, however, appears on record to show that this requirement was complied with. Thus, the presumption of fraud and undue influence was not rebutted. More important, evidence on record, in our view, prove the existence of fraud. On August 1, 1990, commissioners appointed by the lower court conducted an ocular inspection concerning the physical condition of Mandap, Sr. He stated on that occasion that he received P550,000 as first payment, another P550,000 as second payment, and P1,550,000 the remaining balance of the total selling price of what was loaned to the vendees. However, in the deeds of sale covering the subject properties, the prices indicated were P250,000 and P320,000, respectively or a total of only P570,000. This inconsistency in the amount of the consideration is unexplained. They point to fraud in the sale of the subject properties, to the prejudice of Mandap, Sr. Petitioners do not dispute the fact that the notary public who notarized the deeds of sale was not duly commissioned. But they contend the deeds validity were not affected. However, it bears stressing that even an apparently valid notarization of a document does not guarantee its validity.9 The crucial point here is that while Mandap, Sr., testified that he executed the deeds of sale in Las Pias, the said documents were actually notarized in Manila. Mandap, Sr., did not personally appear before a notary public. Yet the documents stated the contrary. Such falsity raises doubt regarding the genuineness of the vendors alleged consent to the deeds of sale. Petitioners also claim the purchase price was not grossly inadequate so as to invalidate the sale of subject properties. True, mere inadequacy of the price does not necessarily void a contract of sale. However, said inadequacy may indicate that there was a defect in the vendors consent.10 More important, it must be pointed out that the trial court and the Court of Appeals voided the sale of the subject properties not because the price was grossly inadequate, but because the presumptions of fraud and undue influence exerted upon the vendor had not been overcome by petitioners, the parties interested in enforcing the contract.

On the third issue, petitioners argue that since the sale of subject properties by Mandap, Sr. to the Vasquez spouses is valid, it follows that the subsequent sale of the property by the latter to petitioners is also valid. But this contention cannot be sustained, since we find that based on the evidence on record, the sale in favor of the Vasquez spouses is void. Hence, it follows that the sale to petitioners is also void, because petitioners merely stepped into the shoes of the Vasquez spouses. Since the Vasquezes as sellers had no valid title over the parcel of land they sold, petitioners as buyers thereof could not claim that the contract of sale is valid. On the last issue, petitioners contest the award of attorneys fees. Indeed, no premium should be placed on the right to litigate, and not every winning party is entitled to an automatic grant of attorneys fees.11 The party must show that he falls under one of the instances enumerated in Article 2208 of the Civil Code, to wit: ART. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (11) In any other case where the court deems it just and equitable that attorneys fees and expenses of litigation should be recovered. In this particular case, the award of attorneys fees is just and equitable, considering the circumstances herein. The court a quos order to pay P15,000 as attorneys fees does not appear to us unreasonable but just and equitable. WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals dated August 10, 2001 in CA-G.R. CV No. 59694, which sustained the decision dated March 25, 1998 of the Regional Trial Court of Manila, Branch 34, is AFFIRMED. Costs against petitioners. SO ORDERED. SECOND DIVISION

SPOUSES DOMINGO AND LOURDES PAGUYO, p e t i t i o n e r s,

G.R. No. 130982

Present: PUNO,

Chairman,

AUSTRIA-MARTINEZ,
- versus -

CALLEJO, SR., TINGA, and CHICO-NAZARIO, JJ .

Promulgated: PIERRE ASTORGA AND ST. ANDREW REALTY, INC., R e s p o n d e n t s. September 16, 2005

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DECISION

CHICO-NAZARIO, J .:

. . . Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose money by them ' indeed, all they have in the world; but not for that alone can the law intervene and restore. There must be, in addition, a violation of the law, the commission of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and remedy it. [1]

The case at bar demonstrates a long drawn-out litigation between parties who already entered into a valid contract that has subsisted for almost twenty (20) years but one of them later balks from being bound by it, alleging fraud, gross inadequacy of consideration, mistake, and undue influence.

This is a petition for review on certiorari where petitioner Spouses Domingo and Lourdes Paguyo seek the reversal of the Decision [2] and the Resolution, [3] dated 30 April 1997 and 12 September 1997, respectively, of the Court of Appeals in CAG.R. CV No. 47034, affirming in toto the Decision [4] dated 21 April 1994 of the Regional Trial Court (RTC), Branch 142 of Makati City. The Antecedents The undisputed facts, per summary of the Court of Appeals, follow. Herein petitioners, Spouses Domingo Paguyo and Lourdes Paguyo, were the owners of a small five-storey building known as the Paguyo Building located at Makati Avenue, corner Valdez Street, Makati City. With one (1) unit per floor, the building has an average area of 100 square meters per floor and is constructed on a land belonging to the Armas family. [5]

This lot on which the Paguyo Building stands was the subject of Civil Case No. 5715 entitled, Armas, et al., v. Paguyo, et al., wherein the RTC of Makati City, Branch 57, rendered a decision on 20 January 1988 approving a Compromise Agreement made

between the Armases and the petitioners. The compromise agreement provided that in consideration of the total sum of One Million Seven Hundred Thousand Pesos (P1,700,000.00), the Armases committed to execute in favor of petitioners a deed of sale and/or conveyance assigning and transferring unto said petitioners all their rights and interests over the parcel of land containing an area of 299 square meters. [6]

In order for the petitioners to complete their title and ownership over the lot in question, there was an urgent need to make complete payment to the Armases, which at that time stood at P917,470.00 considering that petitioners had previously made partial payments to the Armases.

On 29 November 1988, in order to raise the much needed amount, petitioner Lourdes Paguyo entered into an agreement captioned as Receipt of Earnest Money with respondent Pierre Astorga, for the sale of the former's property consisting of the lot which was to be purchased from the Armases, together with the improvements thereon, particularly, the existing building known as the Paguyo Building, under the following terms and conditions as stated in the document, to wit:

RECEIVED from MR. PIERRE M. ASTORGA the sum of FIFTY THOUSAND ( P 50,000.00) PESOS (U.C.P.B. Manager's Check No. 013085 dated November 29, 1988) as earnest money for the sale of our property consisting of a parcel of land designated as Lot 12 located at Makati Avenue, Makati, Metro Manila, covered by and described in T.C.T. No. 154806 together with the improvements thereon particularly the existing building known as the Paguyo Bldg. under the following terms and conditions: 1. The earnest money (Exh. 'D') shall be good for fifteen (15) days from date of this document during which period the owner is bound to sell the property to the buyer;

2. Should the buyer decide not to buy the subject property within the earnest/option period, the seller has the right to forfeit Fifteen Thousand ( P 15,000.00) pesos, and return the difference to the buyer; 3. The agreed total purchase price is SEVEN MILLION ( P 7,000,000.00) PESOS
PHILIPPINE CURRENCY;

4. Within fifteen (15) days from execution of this document, the buyer shall pay Fifty (50%) percent of the total purchase price less the aforesaid earnest money, upon payment of which the following documents shall be executed or caused to be executed as the case may be, namely: a. Deed of Absolute Sale of the Paguyo Bldg., in favor of the buyer. b. Deed of Absolute Sale to be executed by the Armases who still appear as the registered owners of the lot in favor of the buyer. c. Deed of Real Estate Mortgage of the same subject lot and Bldg. to secure the 50% balance of the total purchase price to be executed by the buyer in favor of the herein seller. 5. The Deed of Real Estate Mortgage shall contain the following provisions, namely: a. b.
payment of the 50% balance of the purchase price shall be payable within fifteen (15) days from actual vacating of the Armases from the subject lot.

During the period commencing from the execution of the documents mentioned under paragraph 4 (which should be done simultaneously) the buyer is entitled to one-half (1/2) of the rental due and actually received from the tenants of the Paguyo Bldg. plus the use of the penthouse while the seller shall retain possession and use of the basement free of rent until the balance of the purchase price is fully paid in accordance with the herein terms and conditions. The one-half (1/2) of the tenants' deposits shall be credited in favor of the buyer.

[7]

However, contrary to their express representation with respect to the subject lot, petitioners failed to comply with their obligation to acquire the lot from the Armas family despite the full financial support of respondents. Nevertheless, the parties maintained their business relationship under the terms and conditions of the above-mentioned Receipt of Earnest Money. [8]

On 12 December 1988, petitioners asked for and were given by respondents an additional P50,000.00 to meet the former's urgent need for money in connection with their construction business. Due also to the urgent necessity of obtaining money to finance their construction business, petitioner Lourdes Paguyo, who was also the attorney-in-fact of her husband, proposed to the respondents the separate sale of the building in question while she continued to work on the acquisition of the lot from the Armas family, assuring the respondents that she would succeed in doing so. [9]

Aware of the risk of buying an improvement on the lot of a third party who appeared ambivalent on whether to dispose their property in favor of the respondents, respondents took a big business gamble and, relying on the assurance of petitioners that they would eventually acquire the lot and transfer the same to respondents in accordance with their undertaking in the Receipt of Earnest Money, respondents agreed to petitioner Lourdes Paguyo's proposal to buy the building first. Thus, on 5 January 1989, the parties executed the four documents in question namely, the Deed of Absolute Sale of the Paguyo Building, the Mutual Undertaking, the Deed of Real Estate Mortgage, and the Deed of Assignment of Rights and Interest. [10] Simultaneously with the signing of the four documents, respondents paid petitioners the additional amount of P500,000.00. [11] Thereafter, the respondents renamed the Paguyo Building into GINZA Bldg. and registered the same in the name of respondent St. Andrew Realty, Inc. at the Makati Assessor's Office after paying accrued real estate taxes in the total amount of P169,174.95. Since 1990, respondents paid the real estate taxes on subject building as registered owners thereof. Further, respondents obtained fire insurance and applied for the conversion of Paguyo Building into a condominium. All of these acts of ownership exercised by respondents over the building were with the express knowledge and consent of the petitioners. [12]

Pursuant to their agreement contained in the aforecited documents, particularly in the Mutual Undertaking, [13] respondent company filed an ejectment case and obtained a favorable decision against petitioners in the Metropolitan Trial Court (MeTC) of Makati in Civil Case No. 40050. The case reached this Court which affirmed the decision of the MeTC in favor of respondent company. This decision had already been executed and the respondent company is now in possession of the building. Accordingly, respondents continued to exercise acts of full ownership, possession and use over the building. [14]

On 06 October 1989, petitioners filed a Complaint for the rescission of the Receipt of Earnest Money
[15] with the undertaking to return the sum of P 763,890.50. They also sought the rescission of the Deed

of Real Estate Mortgage, [16] the Mutual Undertaking, the Deed of Absolute Sale of Building, [17] and the Deed of Assignment of Rights and Interest. [18]

In their complaint, petitioners alleged that respondents Astorga and St. Andrew Realty, Inc., led them to believe that they would advance the P917,470.00, which was needed by petitioners to complete payment with the Armases, with the understanding that said amount would simply be deducted from the P7 Million total consideration due them for the sale of the lot and the building as agreed upon in their Receipt of Earnest Money. The same, however, did not materialize because instead of making available the check for the said amount, respondents did not produce the amount and even ordered the 'stop payment of the same before it could be deposited in court. [19]

Respondents, in their Answer, however, interjected that as gleaned from the Receipt of Earnest Money, the Mutual Undertaking, the Deed of Assignment of Rights and Interest, their original intention was

to purchase the Paguyo Building and the lot on which it stands simultaneously. Respondents interposed that at the time the decision on the compromise agreement between petitioners and Armases was rendered, petitioners were badly in need of money because they were financing their construction business and, with the balance payable to the Armases, the former were in a huff to produce an amount sufficient to cover both transactions. Thus, petitioners prevailed upon respondents to purchase the Paguyo Building first with the lot to follow after petitioners have successfully acquired it from the Armas family.

Respondents, likewise, stated in their Answer that sometime in July of 1989, petitioners asked respondent corporation to execute a check in the amount of P917,470.00 [20] for the final execution of the Deed of Conveyance of the lot, saying that they were finally able to negotiate the purchase of the lot owned by the Armases. To settle the transaction, respondent corporation again complied. After investigation, however, respondents learned that petitioners were not in the position to deliver the land, all the rights and interest thereof having allegedly been transferred already to spouses Rodolfo and Aurora Bacani. They were able to confirm this after obtaining a copy of a letter dated 22 September 1989 of petitioners' counsel (same counsel representing them presently) to the Register of Deeds of Makati a month prior to the filing of the instant case. The letter stated:

Ms. Mila Flores Register of Deeds Makati, Metro Manila Dear Ms. Flores: We represent the spouses Rodolfo and Aurora Bacani, who happen to be the assignees of all the rights and interests that the couple Domingo and Lourdes Paguyo have over that parcel of land located along Makati Avenue, the particulars

and description of which are indicated on TCT No. 154806 which, for reasons we perceive to be not legitimate, was cancelled. ...
(SGD.) HECTOR B. ALMEYDA

For the Firm [21] (Emphasis supplied.)

Respondents further explained in their Answer that because of this development, they were constrained to order stop payment of the P917,470.00 check, which was duly communicated to petitioners in a letter dated 14 July 1989, to wit:

I am very sorry to inform you that I have to stop payment on Philtrust Check No. 006759 because I was just reliably informed that you are no longer in a position to deliver the lot subject of our agreement. While the financier had already advanced half million pesos which was already placed in my account, I discouraged her from putting another million pesos to cover my check with you. I therefore find myself with no alternative but to order stop payment on my check to protect my rights and interests. [22]

The Ruling of the Trial Court

After trial, the RTC ruled in favor of respondents in a Decision [23] dated 21 April 1994, the dispositive portion of which reads:

Judgment is hereby rendered dismissing the complaint for lack of cause of action, the petition for preliminary injunction is hereby denied, judgment is rendered in favor of the defendants and ordering the plaintiff spouses Domingo and Lourdes

Paguyo to pay the defendants Pierre Astorga and St. Andrew Realty, Inc. on their counterclaim.
1. 2. 3. P400,000.00 for moral damages; P200,000.00 as exemplary damages; P100,00.00 for attorney's fees and litigation expenses and pay the cost of suit. [24]

The Ruling of the Court of Appeals

On appeal, the Court of Appeals promulgated its Decision [25] dated 30 April 1997 in CA-G.R. CV No. 47034 affirming the decision of the trial court, the dispositive portion of which reads as follows:

WHEREFORE, We find the lower court's decision in full accord with the facts and the law. Judgment is hereby rendered affirming the assailed decision dated April 21, 1994 in toto. [26]

Aggrieved by the ruling, petitioners elevated the matter to us via the instant petition, contending that the Court of Appeals erred:

1. IN CONCLUDING THAT THE SUPPOSED ACTS OF OWNERSHIP AND POSSESSION OF RESPONDENTS PRECLUDE PETITIONERS FROM SEEKING RESCISSION AND DECLARATION OF NULLITY OF DOCUMENTS SIGNED AND EXECUTED UNDER MISTAKEN PREMISES THAT WERE NOT ALL TRUE AND ACCURATE; 2. IN FAILING TO FIND THAT FRAUD, MISTAKE AND UNDUE INFLUENCE HAD BEEN EXERTED ON PETITIONER LOURDES PAGUYO TO MAKE HER A PARTY TO THE ASSAILED DOCUMENTS;

3. IN READING THE DOCUMENTS INVOLVED WITHOUT REGARD TO THE CONTEMPORANEOUS ACTS OF THE PARTIES PRIOR, DURING AND IMMEDIATELY AFTER THE SIGNING PROCESS;

4.

IN AFFIRMING THE DISMISSAL OF THE COMPLAINT; AND

5. IN AWARDING DAMAGES AND ATTORNEY'S FEES IN FAVOR OF THE RESPONDENTS. [27]

The questions the Court is now tasked to answer are: (1) Did the Court of Appeals err in upholding the trial court's decision denying petitioners' complaint for rescission? (2) Was the award of damages and attorney's fees to respondents proper?

On the first issue, petitioners claim that the 05 January 1989 documents, particularly the Deed of Absolute Sale of Building, Mutual Undertaking, Real Estate Mortgage, and Assignment of Rights and Interests read together with the 29 November 1988 Receipt of Earnest Money, were all designed, per the respondents' representations, to secure their exposure in the total sum of P763,890.50 which constituted their outlay in the projected purchase of the Paguyo lot and building.

Respondents dispute petitioners' line of reasoning. They say that the Deed of Absolute Sale over the building was absolute and unconditional. Our Ruling

Petitioners' contentions lack merit.

The right to rescind a contract involving reciprocal obligations is provided for in Article 1191 of the Civil Code. Article 1191 states: M

The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.

The law speaks of the right of the "injured party" to choose between rescission or fulfillment of the obligation, with the payment of damages in either case. [28]

Here, petitioners claim to be the injured party and consequently seek the rescission of the Deed of Absolute Sale of the Building and the other documents in question. Petitioners aver that they are entitled to cancel the Deed of Sale altogether in view of fraud, gross inadequacy of price, mistake, and undue influence.

To boost their claim that the Deed of Absolute Sale was intended merely to document the cash outlays of respondents, petitioners say that the P600,000.00 consideration as contained in the Deed of Absolute Sale of the 5-storey Paguyo building is a far cry from the P3 Million valuation attached to it by respondent

Astorga himself and the building's fair market value of P2,848,000.00 assessed by the Cuervo Appraisers, Inc.

We find no such inadequacy of consideration in the case at bar. For one, on top of the P600,000.00 which petitioners received, respondents had to shoulder the accrued real estate taxes of P169,174.95. For another, respondent Pierre Astorga explained that said price was what St. Andrew Realty, Inc., believed as value for their money inasmuch as the building stands on the lot owned by another and there were separate owners of the land, who appear reluctant to sell it. For a third, said amount was arrived at considering the depreciated value of the building and in view of the economic and political uncertainties in the country at that time, marked by a series of coup detat, which caused real estate prices to plummet. Respondent Astorga was explicit on this score '

ATTY. JOSE Q: There was statement here by Mrs. Paguyo that this document entitled the deed of absolute sale of a building marked Exhibit 9 was not expressive of the intention of the parties meaning to say that she did not intend to sell the said building and one of the reasons she tried to raise was the fact that the building was only sold for P500,000.00, what can you say to that? A: Well, the P500,000.00 amount that she would want to impress to be an inadequate amount is what we in St. Andrew's end believed as value for money for the reason that the building stands on the lot she does not own and there were separate owners and apparent conflict between them even the seeming impossibility of getting the lot ' Q: By the way, before the plaintiffs decided to dispose the building or sell the building by virtue of this deed of sale marked Exhibit '98 was your company ever interested in acquiring the said building?

A: The building alone, no. In fact, on December 21 when we had the problem as to acquiring the lot, we did not part with any payment to Mrs. Paguyo demonstrating that we had really and truly intended a simultaneous buy of the building and the lot to acquire the property simultaneously the building and as well as the lot. Q: Now, you mentioned that you are a realtor, I will ask you the same question, which Atty. Almeyda asked me when I was on the witness stand, as a realtor will you please tell the court what would be your appraisal of the value of the building? ATTY. COLOMA Objection, your Honor. May we know if the witness is going to express an opinion or is he testifying now as an expert realtor?

COURT As an opinion but it would not bind the Court.

WITNESS
I can explain to you.

ATTY. JOSE
Yes, please explain.

WITNESS A: Okay, appraisal can take many forms if its appraised value based on the construction cost it could be different from appraising per se the building. That is now existing in that address also appraisal will depend on where the building is and there is only one owner of the building and the lot. As the case here is, the building in a manner of speaking stands on thin air. That is so including depreciation and timing that we were doing in this transaction which was 1989, my appraisal will be in the range of a Million may be. Q: You made mentioned the word timing in 1989, why did you mention that? A: Well, '89 was not the best real estate year. In fact, we have a boom in 1988 but prices were already deep during this year such that it is in 1988 when it could have been another price. But this transaction happened or entered into in 1989, there were no interested buyers during that time, sir. Q: Why? A: coup de etat was one, and many other issue on hand that causes value to take deep. Q: You mentioned that word depreciation, will you please explain to us what that depreciation has got to do with that building?

A: In appraisal terms the building is in an economic line in every year of which a certain value is allocated as depreciation for wear and tear for breakdowns and all that is depreciation. This is deductible from the amount of the building (sic). Q: Before you went into this agreement with the plaintiff Paguyo have you inspected the building? A: Yes, sir. Thoroughly, sir. Q: Will you please explain to the court the size of the building and the description of the building? A: That building is five (5) storey it has only one (1) unit per floor, sir. There is a narrow stairway that leads up to the penthouse. It is, I would say, in an advance deteriorating stage, it needed some renovations here and there. [29] (Emphasis supplied.)

Moreover, Articles 1355 and 1470 of the Civil Code state:

Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence. (Emphasis supplied) Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract. (Emphasis supplied) Petitioners herein failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code, which would invalidate, or even affect, the Deed of Sale of the Building and the related documents. Indeed, there is no requirement that the price be equal to the exact value of the subject matter of sale. [30]

In Sps. Buenaventura v. Court of Appeals, [31] the Court was unequivocal: Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise investments, relieve him from

one-sided contracts, or annul the effects of foolish acts. Courts cannot constitute themselves guardians of persons who are not legally incompetent. Courts operate not because one person has been defeated or overcome by another, but because he has been defeated or overcome illegally. Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose money by them ' indeed, all they have in the world; but not for that alone can the law intervene and restore. There must be, in addition, a violation of the law, the commission of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and remedy it. (Emphases in the original)

What is more, petitioners would wish to convince this Court that petitioner Lourdes Paguyo was nave enough to accept at face value the assurance of respondent Astorga that the Deed of Sale was merely to document respondents' cash outlay.

Far from being the nave and easy to fleece lady that she wants this Court to perceive her to be, evidence on record reveals that petitioner Lourdes Paguyo is in reality an astute businesswoman, having insured that legal minds would be available at her disposal at the time she entered into the transactions she now impugns. As she herself admitted in her testimony before the trial court, during her receipt of the earnest money and during the transactions subject of the instant case, her lawyers, one Atty. Lalin and a certain Atty. Cario, assisted her. She testified as follows:

ATTY. JOSE Wait, wait, your Honor. I have one question. Now, madam witness, you mentioned that you were accompanied by a certain Atty. Molina when you executed the receipt of the earnest money with me. Now,

during the transaction of this subject matter, you will also recall that at times you were represented in dealing with me as counsel for defendant corporation by Atty. Lalin and Atty. Carino? A Yes, sir. [32]

Neither does the fact that the subject contracts have been prepared by respondents ipso facto entail that their validity and legality be strictly interpreted against them. Petitioner Lourdes Paguyo's insinuation that she was disadvantaged will not hold. True, Article 24 of the New Civil Code provides that '(i)n all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection. [33] Thus, the validity and/or enforceability of the impugned contracts will have to be determined by the peculiar circumstances obtaining in each case and the situation of the parties concerned.

Here, petitioner Lourdes Paguyo, being not only cultured but a person with great business acumen as well, cannot claim to be the weaker or disadvantaged party in the subject contract so as to call for a strict interpretation against respondents. More importantly, the parties herein went through a series of negotiations before the documents were signed and executed. [34]

Further, we find the stipulations in the subject documents plain and unambiguous. For instance, the Deed of Sale provides in no uncertain terms-

WHEREAS, the VENDOR is the true and absolute owner, free from any lien or encumbrance, of a concrete building presently known as the Paguyo Building, constructed on Lot 12, Blk. 4 (described in T.C.T No. 154806-Makati) located at No. 7856 Makati Ave. corner Valdez St., Makati, Metro Manila, covered by and described in Tax Declaration No. 93762 for the year 1984, and more particularly described as follows:

WHEREAS, the VENDOR is desirous of selling and the VENDEE is willing to buy the aforedescribed building; NOW THEREFORE, for and in consideration of the foregoing premises and of the sum of SIX HUNDRED THOUSAND (P600,000.00) PESOS, Philippine currency, the receipt of which is hereby acknowledged, the VENDOR hereby cedes, transfers, and conveys, by way of absolute sale, unto and in favor of the VENDEE, his successors and assigns, the aforementioned building with all the improvements therein. The Municipal Assessor of Makati is therefore hereby authorized to register this sale in the new Tax Declaration in the name of the VENDEE. IN WITNESS WHEREOF, the VENDOR hereby affixed his signature by his wife and attorney-in-fact, LOURDES S. Paguyo, this 5th day of January, 1989, in Pasay City. [35]
Inasmuch as the stipulations in the aforesaid contract and in the other contracts being questioned leave no room for interpretation, there was no cause for applying Article 24 of the New Civil Code.

In sum, in the case at bar, petitioners pray for rescission of the Deed of Sale of the building and offer to repay the purchase price after their liquidity position would have improved and after respondents would have refurbished the building, updated the real property taxes, and turned the building into a profitable business venture. This Court, however, will not allow itself to be an instrument to the dissolution of contract validly entered into. A party should not, after its opportunity to enjoy the benefits of an agreement, be allowed to later disown the arrangement when the terms thereof ultimately would prove to operate against its hopeful expectations. [36]

On the matter of damages, the Court of Appeals affirmed the trial court's award of damages and attorney's fees to respondents, namely P400,000 as moral damages, P200,000 as exemplary damages, P100,000 as attorney's fees and the costs of suit.

We have held that moral damages may be recovered in cases where one willfully causes injury to property, or in cases of breach of contract where the other party acts fraudulently or in bad faith. [37] ' There is no hard and fast rule in the determination of what would be a fair amount of moral damages, since each case must be governed by its own peculiar circumstances. [38] Exemplary damages, on the other hand, are imposed by way of example or correction for the public good, when the party to a contract acts in a wanton, fraudulent, oppressive or malevolent manner. [39] Attorney's fees are allowed when exemplary damages are awarded and when the party to a suit is compelled to incur expenses to protect his interest. [40]

While it has been sufficiently proven that the respondents are entitled to damages, the actual amounts awarded by the lower court must be reduced because damages are not intended for a litigant's enrichment, at the expense of the petitioners. [41] Judicial discretion granted to the courts in the assessment of damages must always be exercised with balanced restraint and measured objectivity. [42]

Thus, the amount of moral damages should be set at only P30,000.00, and the award of exemplary damages at only P20,000.00. The award of attorney's fees should also be reduced to P20,000.00 which, under the circumstances of this case, appears justified and reasonable.

All told, we find no reason to reverse the assailed decision of respondent court. The factual findings of the appellate court are conclusive on the parties and carry greater weight when they coincide with the factual findings of the trial court. [43]

This Court will not weigh the evidence anew lest there is a showing that the findings of the lower court are totally devoid of support or are clearly erroneous so as to constitute serious abuse of discretion. In the instant case, the trial court found that the documents, which petitioners seek to rescind, were entered into as a result of an arms-length transaction. These are factual findings that are now conclusive upon us. [44]

WHEREFORE, the Decision and the Resolution dated 30 April 1997 and 12 September 1997, respectively, of the Court of Appeals in CA-G.R. CV No. 47034, are hereby AFFIRMED with MODIFICATION as to the amount of damages' and attorney's fees recoverable, as follows: (1) moral damages is reduced to P30,000.00, (2) exemplary damages is reduced to P20,000.00, and (3) attorney's fees is reduced to P20,000.00. Costs against petitioners.

SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-4551 January 30, 1953

CHAN KIM LIAN alias JOSE U. CHAN, petitioner-appellant, vs. REPUBLIC OF THE PHILIPPINES, oppositor-appellee. Ramon Duterte, Cecilio V. Gillamac, Antolin C. Rubillos, and Gaud P. Montecillo for appellant. Office of the Solicitor General Pompeyo Dias and Solicitor Isidro C. Borromeo for appellee.

PARAS, C.J.: On July 26, 1946, the petitioner-appellant filed a petition for naturalization in the Court of First Instance of Misamis Oriental. In the course of the hearing, after the petitioner had testified in his own behalf, the oppositor-appellee filed a petition for dismissal, on the ground that the petitioner had not resided in Misamis Oriental for at least one year immediately preceding the filing of his petition, and that he had failed to establish that he owns real property in the Philippines worth not less than P5,000 or has some known lucrative trade, profession or lawful occupation. In its order of September 6, 1950, The Court of First Instance of Misamis Oriental dismissed the petition for want of jurisdiction, because the petitioner lacks the necessary one-year residence and has failed to show that he owns real property in the Philippines worth not less than P5,000. From its order the petitioner has appealed. From the evidence so far adduced, it appears that the petitioner arrived in the Philippines in the year 1915, at the age of seven years, with his father who had previously resided in the municipality of Mambajao, Misamis Oriental, wherein he owned several real properties. Since then the petitioner has lived with his father, having been baptized in the Roman Catholic Church and completed the elementary grades in said municipality. After the death of his father in 1933, the petitioner managed the real properties left by him in Camiguin Island, Misamis Oriental, until 1950 when the same were divided among the heirs. The petitioner's children, who were all born in Mambajao, have been attending school in said municipality. Prior to the last war the petitioner was a member of the parent-teacher's association and the treasurer of the rural credit association in Mambajao. The petitioner was caught by the Japanese invasion in the province of Cotabato while he was there for business, and returned to Misamis Oriental around March or April, 1956. The oppositor contended that the absence of the petitioner from Misamis Oriental during the entire period of the Japanese occupation resulted in the loss of his residence in said province. This contention is untenable, because such absence was sufficiently caused by the war. As claimed by the petitioner in particular, he was compelled to stay in Cotabato for the reason that, being a guerrilla, he was afraid to come out in the open, and that there was furthermore no available transportation from Cotabato to Mambajao which is situated in Camiguin Island off the northern coast of Mindanao. Apart from this explanation, we cannot deduce from the evidence that the petitioner had over intended to abandoned his residence in Misamis Oriental, especially in view of the fact that before the war he always returned once or twice a month to Mambajao to look after the real estates left by his deceased father, and that his purpose in going to and staying in the province of Cotabato before the last war was merely for business. More than mere absence is necessary for one to lose his residence. As now admitted by the oppositor, the trial court erred in making any pronouncement as to the qualification of the petitioner before the final termination of the hearing. WHEREFORE, the appealed order is hereby reversed and set aside and the case is remanded to the court below for further proceedings. Without costs. Feria, Pablo, Bengzon, Padilla, Tuason, Montemayor, Reyes, Jugo, Bautista Angelo and Labrador, JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 93833 September 28, 1995 SOCORRO D. RAMIREZ, petitioner, vs. HONORABLE COURT OF APPEALS, and ESTER S. GARCIA, respondents.

KAPUNAN, J.: A civil case damages was filed by petitioner Socorro D. Ramirez in the Regional Trial Court of Quezon City alleging that the private respondent, Ester S. Garcia, in a confrontation in the latter's office, allegedly vexed, insulted and humiliated her in a "hostile and furious mood" and in a manner offensive to petitioner's dignity and personality," contrary to morals, good customs and public policy." 1 In support of her claim, petitioner produced a verbatim transcript of the event and sought moral damages, attorney's fees and other expenses of litigation in the amount of P610,000.00, in addition to costs, interests and other reliefs awardable at the trial court's discretion. The transcript on which the civil case was based was culled from a tape recording of the confrontation made by petitioner. 2 The transcript reads as follows:
Plaintiff Soccoro D. Ramirez (Chuchi) Good Afternoon M'am. Defendant Ester S. Garcia (ESG) Ano ba ang nangyari sa 'yo, nakalimot ka na kung paano ka napunta rito, porke member ka na, magsumbong ka kung ano ang gagawin ko sa 'yo. CHUCHI Kasi, naka duty ako noon. ESG Tapos iniwan no. (Sic) CHUCHI Hindi m'am, pero ilan beses na nila akong binalikan, sabing ganoon ESG Ito and (sic) masasabi ko sa 'yo, ayaw kung (sic) mag explain ka, kasi hanggang 10:00 p.m., kinabukasan hindi ka na pumasok. Ngayon ako ang babalik sa 'yo, nag-aaply ka sa States, nag-aaply ka sa review mo, kung kakailanganin ang certification mo, kalimutan mo na kasi hindi ka sa akin makakahingi.

CHUCHI Hindi M'am. Kasi ang ano ko talaga noon i-cocontinue ko up to 10:00 p.m. ESG Bastos ka, nakalimutan mo na kung paano ka pumasok dito sa hotel. Magsumbong ka sa Union kung gusto mo. Nakalimutan mo na kung paano ka nakapasok dito "Do you think that on your own makakapasok ka kung hindi ako. Panunumbyoyan na kita (Sinusumbatan na kita). CHUCHI Itutuloy ko na M'am sana ang duty ko. ESG Kaso ilang beses na akong binabalikan doon ng mga no (sic) ko. ESG Nakalimutan mo na ba kung paano ka pumasok sa hotel, kung on your own merit alam ko naman kung gaano ka "ka bobo" mo. Marami ang nag-aaply alam kong hindi ka papasa. CHUCHI Kumuha kami ng exam noon. ESG Oo, pero hindi ka papasa. CHUCHI Eh, bakit ako ang nakuha ni Dr. Tamayo ESG Kukunin ka kasi ako. CHUCHI Eh, di sana ESG Huwag mong ipagmalaki na may utak ka kasi wala kang utak. Akala mo ba makukuha ka dito kung hindi ako. CHUCHI Mag-eexplain ako. ESG Huwag na, hindi ako mag-papa-explain sa 'yo, makaalala ka kung paano ka puma-rito. "Putang-ina" sasabi-sabihin mo kamag-anak ng nanay at tatay mo ang mga magulang ko. ESG Wala na akong pakialam, dahil nandito ka sa loob, nasa labas ka puwede ka ng hindi pumasok, okey yan nasaloob ka umalis ka doon. CHUCHI Kasi M'am, binbalikan ako ng mga taga Union. ESG Nandiyan na rin ako, pero huwag mong kalimutan na hindi ka makakapasok kung hindi ako. Kung hindi mo kinikilala yan okey lang sa akin, dahil tapos ka na. CHUCHI Ina-ano ko m'am na utang na loob. ESG Huwag na lang, hindi mo utang na loob, kasi kung baga sa no, nilapastangan mo ako. CHUCHI Paano kita nilapastanganan?

ESG Mabuti pa lumabas ka na. Hindi na ako makikipagusap sa 'yo. Lumabas ka na. Magsumbong ka. 3

As a result of petitioner's recording of the event and alleging that the said act of secretly taping the confrontation was illegal, private respondent filed a criminal case before the Regional Trial Court of Pasay City for violation of Republic Act 4200, entitled "An Act to prohibit and penalize wire tapping and other related violations of private communication, and other purposes." An information charging petitioner of violation of the said Act, dated October 6, 1988 is quoted herewith:
INFORMATION The Undersigned Assistant City Fiscal Accusses Socorro D. Ramirez of Violation of Republic Act No. 4200, committed as follows: That on or about the 22nd day of February, 1988, in Pasay City Metro Manila, Philippines, and within the jurisdiction of this honorable court, the above-named accused, Socorro D. Ramirez not being authorized by Ester S. Garcia to record the latter's conversation with said accused, did then and there willfully, unlawfully and feloniously, with the use of a tape recorder secretly record the said conversation and thereafter communicate in writing the contents of the said recording to other person. Contrary to law. Pasay City, Metro Manila, September 16, 1988. MARIANO M. CUNETA Asst. City Fiscal

Upon arraignment, in lieu of a plea, petitioner filed a Motion to Quash the Information on the ground that the facts charged do not constitute an offense, particularly a violation of R.A. 4200. In an order May 3, 1989, the trial court granted the Motion to Quash, agreeing with petitioner that 1) the facts charged do not constitute an offense under R.A. 4200; and that 2) the violation punished by R.A. 4200 refers to a the taping of a communication by a person other than a participant to the communication. 4 From the trial court's Order, the private respondent filed a Petition for Review on Certiorari with this Court, which forthwith referred the case to the Court of Appeals in a Resolution (by the First Division) of June 19, 1989. On February 9, 1990, respondent Court of Appeals promulgated its assailed Decision declaring the trial court's order of May 3, 1989 null and void, and holding that:
[T]he allegations sufficiently constitute an offense punishable under Section 1 of R.A. 4200. In thus quashing the information based on the ground that the facts alleged do not constitute an offense, the respondent judge acted in grave abuse of discretion correctible by certiorari. 5

Consequently, on February 21, 1990, petitioner filed a Motion for Reconsideration which respondent Court of Appeals denied in its Resolution 6 dated June 19, 1990. Hence, the instant petition. Petitioner vigorously argues, as her "main and principal issue" 7 that the applicable provision of Republic Act 4200 does not apply to the taping of a private conversation by one of the parties to the conversation. She contends that the provision merely refers to the unauthorized taping of a private conversation by a party other than those involved in the communication. 8 In relation to this, petitioner avers that the substance or content of the conversation must be alleged in the Information, otherwise the facts charged would not constitute a violation of R.A. 4200. 9 Finally, petitioner agues that R.A. 4200 penalizes the taping of a "private communication," not a "private conversation" and that consequently, her act of secretly taping her conversation with private respondent was not illegal under the said act. 10 We disagree. First, legislative intent is determined principally from the language of a statute. Where the language of a statute is clear and unambiguous, the law is applied according to its express terms, and interpretation would be resorted to only where a literal interpretation would be either impossible 11 or absurb or would lead to an injustice. 12 Section 1 of R.A. 4200 entitled, " An Act to Prohibit and Penalized Wire Tapping and Other Related Violations of Private Communication and Other Purposes," provides:
Sec. 1. It shall be unlawfull for any person, not being authorized by all the parties to any private communication or spoken word, to tap any wire or cable, or by using any other device or arrangement, to secretly overhear, intercept, or record such communication or spoken word by using a device commonly known as a dictaphone or dictagraph or detectaphone or walkie-talkie or tape recorder, or however otherwise described.

The aforestated provision clearly and unequivocally makes it illegal for any person, not authorized by all the parties to any private communication to secretly record such communication by means of a tape recorder. The law makes no distinction as to whether the party sought to be penalized by the statute ought to be a party other than or different from those involved in the private communication. The statute's intent to penalize all persons unauthorized to make such recording is underscored by the use of the qualifier "any". Consequently, as respondent Court of Appeals correctly concluded, "even a (person) privy to a communication who records his private conversation with another without the knowledge of the latter (will) qualify as a violator" 13 under this provision of R.A. 4200. A perusal of the Senate Congressional Records, moreover, supports the respondent court's conclusion that in enacting R.A. 4200 our lawmakers indeed contemplated to make illegal, unauthorized tape recording of private conversations or communications taken either by the parties themselves or by third persons. Thus:

xxx xxx xxx Senator Taada: That qualified only "overhear". Senator Padilla: So that when it is intercepted or recorded, the element of secrecy would not appear to be material. Now, suppose, Your Honor, the recording is not made by all the parties but by some parties and involved not criminal cases that would be mentioned under section 3 but would cover, for example civil cases or special proceedings whereby a recording is made not necessarily by all the parties but perhaps by some in an effort to show the intent of the parties because the actuation of the parties prior, simultaneous even subsequent to the contract or the act may be indicative of their intention. Suppose there is such a recording, would you say, Your Honor, that the intention is to cover it within the purview of this bill or outside? Senator Taada: That is covered by the purview of this bill, Your Honor. Senator Padilla: Even if the record should be used not in the prosecution of offense but as evidence to be used in Civil Cases or special proceedings? Senator Taada: That is right. This is a complete ban on tape recorded conversations taken without the authorization of all the parties. Senator Padilla: Now, would that be reasonable, your Honor? Senator Taada: I believe it is reasonable because it is not sporting to record the observation of one without his knowing it and then using it against him. It is not fair, it is not sportsmanlike. If the purpose; Your honor, is to record the intention of the parties. I believe that all the parties should know that the observations are being recorded. Senator Padilla: This might reduce the utility of recorders. Senator Taada: Well no. For example, I was to say that in meetings of the board of directors where a tape recording is taken, there is no objection to this if all the parties know. It is but fair that the people whose remarks and observations are being made should know that the observations are being recorded. Senator Padilla: Now, I can understand. Senator Taada: That is why when we take statements of persons, we say: "Please be informed that whatever you say here may be used against you." That is fairness and that is what we demand. Now, in spite of that warning, he makes damaging statements against his own interest, well, he cannot complain any more. But if you are going to take a recording of the observations and remarks of a person without him knowing that it is being taped or recorded, without him knowing that what is being recorded may be used against him, I think it is unfair. xxx xxx xxx (Congression Record, Vol. III, No. 31, p. 584, March 12, 1964) Senator Diokno: Do you understand, Mr. Senator, that under Section 1 of the bill as now worded, if a party secretly records a public speech, he would be penalized under Section 1? Because the speech is public, but the recording is done secretly.

Senator Taada: Well, that particular aspect is not contemplated by the bill. It is the communication between one person and another person not between a speaker and a public. xxx xxx xxx (Congressional Record, Vol. III, No. 33, p. 626, March 12, 1964) xxx xxx xxx

The unambiguity of the express words of the provision, taken together with the abovequoted deliberations from the Congressional Record, therefore plainly supports the view held by the respondent court that the provision seeks to penalize even those privy to the private communications. Where the law makes no distinctions, one does not distinguish. Second, the nature of the conversations is immaterial to a violation of the statute. The substance of the same need not be specifically alleged in the information. What R.A. 4200 penalizes are the acts of secretly overhearing, intercepting or recording private communications by means of the devices enumerated therein. The mere allegation that an individual made a secret recording of a private communication by means of a tape recorder would suffice to constitute an offense under Section 1 of R.A. 4200. As the Solicitor General pointed out in his COMMENT before the respondent court: "Nowhere (in the said law) is it required that before one can be regarded as a violator, the nature of the conversation, as well as its communication to a third person should be professed." 14 Finally, petitioner's contention that the phrase "private communication" in Section 1 of R.A. 4200 does not include "private conversations" narrows the ordinary meaning of the word "communication" to a point of absurdity. The word communicate comes from the latin word communicare, meaning "to share or to impart." In its ordinary signification, communication connotes the act of sharing or imparting signification, communication connotes the act of sharing or imparting, as in a conversation, 15 or signifies the "process by which meanings or thoughts are shared between individuals through a common system of symbols (as language signs or gestures)" 16 These definitions are broad enough to include verbal or non-verbal, written or expressive communications of "meanings or thoughts" which are likely to include the emotionally-charged exchange, on February 22, 1988, between petitioner and private respondent, in the privacy of the latter's office. Any doubts about the legislative body's meaning of the phrase "private communication" are, furthermore, put to rest by the fact that the terms "conversation" and "communication" were interchangeably used by Senator Taada in his Explanatory Note to the bill quoted below:
It has been said that innocent people have nothing to fear from their conversations being overheard. But this statement ignores the usual nature of conversations as well the undeniable fact that most, if not all, civilized people have some aspects of their lives they do not wish to expose. Free conversations are often characterized by exaggerations, obscenity, agreeable falsehoods, and the expression of anti-social desires of views not intended to be taken seriously. The right to the privacy of communication, among others, has expressly been assured by our Constitution. Needless to state here, the framers of our

Constitution must have recognized the nature of conversations between individuals and the significance of man's spiritual nature, of his feelings and of his intellect. They must have known that part of the pleasures and satisfactions of life are to be found in the unaudited, and free exchange of communication between individuals free from every unjustifiable intrusion by whatever means. 17

In Gaanan vs. Intermediate Appellate Court, 18 a case which dealt with the issue of telephone wiretapping, we held that the use of a telephone extension for the purpose of overhearing a private conversation without authorization did not violate R.A. 4200 because a telephone extension devise was neither among those "device(s) or arrangement(s)" enumerated therein, 19 following the principle that "penal statutes must be construed strictly in favor of the accused." 20 The instant case turns on a different note, because the applicable facts and circumstances pointing to a violation of R.A. 4200 suffer from no ambiguity, and the statute itself explicitly mentions the unauthorized "recording" of private communications with the use of tape-recorders as among the acts punishable. WHEREFORE, because the law, as applied to the case at bench is clear and unambiguous and leaves us with no discretion, the instant petition is hereby DENIED. The decision appealed from is AFFIRMED. Costs against petitioner. SO ORDERED. Padilla, Davide, Jr. and Bellosillo JJ., concur. Hermosisima, Jr., J., is on leave. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION
G.R. No. L-69809 October 16, 1986 EDGARDO A. GAANAN, petitioner, vs. INTERMEDIATE APPELLATE COURT and PEOPLE OF THE PHILIPPINES, respondents.

GUTIERREZ, JR., J.: This petition for certiorari asks for an interpretation of Republic Act (RA) No. 4200, otherwise known as the Anti-Wiretapping Act, on the issue of whether or not an extension telephone is among the prohibited devices in Section 1 of the Act, such that its use to overhear a private conversation would constitute unlawful interception of communications between the two parties using a telephone line. The facts presented by the People and narrated in the respondent court's decision are not disputed by the petitioner. In the morning of October 22, 1975, complainant Atty. Tito Pintor and his client Manuel Montebon were in the living room of complainant's residence discussing the terms for the withdrawal of the complaint for direct assault which they filed with

the Office of the City Fiscal of Cebu against Leonardo Laconico. After they had decided on the proposed conditions, complainant made a telephone call to Laconico (tsn, August 26, 1981, pp. 3-5). That same morning, Laconico telephoned appellant, who is a lawyer, to come to his office and advise him on the settlement of the direct assault case because his regular lawyer, Atty. Leon Gonzaga, went on a business trip. According to the request, appellant went to the office of Laconico where he was briefed about the problem. (Exhibit 'D', tsn, April 22, 1982, pp. 4-5). When complainant called up, Laconico requested appellant to secretly listen to the telephone conversation through a telephone extension so as to hear personally the proposed conditions for the settlement. Appellant heard complainant enumerate the following conditions for withdrawal of the complaint for direct assault. (a) the P5,000.00 was no longer acceptable, and that the figure had been increased to P8,000.00. A breakdown of the P8,000.00 had been made together with other demands, to wit: (a) P5,000.00 no longer for the teacher Manuel Montebon, but for Atty. Pintor himself in persuading his client to withdraw the case for Direct Assault against Atty. Laconico before the Cebu City Fiscal's Office; (b) Public apology to be made by Atty. Laconico before the students of Don Bosco Technical High School; (c) Pl,000.00 to be given to the Don Bosco Faculty club; (d) transfer of son of Atty. Laconico to another school or another section of Don Bosco Technical High School; (e) Affidavit of desistance by Atty. Laconico on the Maltreatment case earlier filed against Manuel Montebon at the Cebu City Fiscal's Office, whereas Montebon's affidavit of desistance on the Direct Assault Case against Atty. Laconico to be filed later; (f) Allow Manuel Montebon to continue teaching at the Don Bosco Technical School; (g) Not to divulge the truth about the settlement of the Direct Assault Case to the mass media; (h) P2,000.00 attorney s fees for Atty. Pintor. (tsn, August 26, 1981, pp. 47-48). Twenty minutes later, complainant called up again to ask Laconico if he was agreeable to the conditions. Laconico answered 'Yes'. Complainant then told Laconico to wait for instructions on where to deliver the money. (tsn, March 10, 1983, pp. 2-12). Complainant called up again and instructed Laconico to give the money to his wife at the office of the then Department of Public Highways. Laconico who earlier alerted his friend Colonel Zulueta of the Criminal Investigation Service of the Philippine Constabulary, insisted that complainant himself should receive the money. (tsn, March 10, 1982, pp. 26-33). When he received the money at the Igloo Restaurant, complainant was arrested by agents of the Philippine Constabulary. Appellant executed on the following day an affidavit stating that he heard complainant demand P8,000.00 for the withdrawal of the case for direct assault. Laconico attached the affidavit of appellant to the complainant for robbery/extortion which he filed against complainant. Since appellant listened to the telephone conversation without complainant's consent, complainant charged appellant and Laconico with violation of the Anti-Wiretapping Act. After trial on the merits, the lower court, in a decision dated November 22, 1982, found both Gaanan and Laconico guilty of violating Section 1 of Republic Act No. 4200. The two were each sentenced to one (1) year imprisonment with costs. Not satisfied with the decision, the petitioner appealed to the appellate court. On August 16, 1984, the Intermediate Appellate Court affirmed the decision of the trial court, holding that the communication between the complainant and accused Laconico was private in nature and, therefore, covered by Rep. Act No. 4200; that the petitioner overheard such communication without the knowledge and consent of the complainant; and that the extension telephone which was used by the petitioner to overhear the telephone conversation between complainant and Laconico is covered in the term "device' as provided in Rep. Act No. 4200. In this petition for certiorari, the petitioner assails the decision of the appellate court and raises the following issues; (a) whether or not the telephone conversation between the complainant and accused Laconico was private in nature; (b) whether or not an extension telephone is covered by the term "device or arrangement" under Rep. Act No. 4200; (c) whether or not the petitioner had authority to listen or overhear said telephone conversation and (d) whether or not Rep. Act No. 4200 is ambiguous and, therefore, should be construed in favor of the petitioner. Section 1 of Rep. Act No. 4200 provides:

Section 1. It shall be unlawful for any person, not being authorized by all the parties to any private communication or spoken word, to tap any wire or cable or by using any other device or arrangement, to secretly overhear, intercept, or record such communication or spoken word by using a device commonly known as a dictaphone or dictagraph or detectaphone or walkie-talkie or tape-recorder, or however otherwise described: It shall be unlawful for any person, be he a participant or not in the act or acts penalized in the next preceeding sentence, to knowingly possess any tape record, wire record, disc record, or any other such record, or copies thereof, of any communication or spoken word secured either before or after the effective date of this Act in the manner prohibited by this law; or to replay the same for any other person or persons; or to communicate the contents thereof, either verbally or in writing, or to furnish transcriptions thereof, whether complete or partial, to any other person: Provided, that the use of such record or any copies thereof as evidence in any civil, criminal investigation or trial of offenses mentioned in Section 3 hereof, shall not be covered by this prohibition. We rule for the petitioner. We are confronted in this case with the interpretation of a penal statute and not a rule of evidence. The issue is not the admissibility of evidence secured over an extension line of a telephone by a third party. The issue is whether or not the person called over the telephone and his lawyer listening to the conversation on an extension line should both face prison sentences simply because the extension was used to enable them to both listen to an alleged attempt at extortion. There is no question that the telephone conversation between complainant Atty. Pintor and accused Atty. Laconico was "private" in the sense that the words uttered were made between one person and another as distinguished from words between a speaker and a public. It is also undisputed that only one of the parties gave the petitioner the authority to listen to and overhear the caller's message with the use of an extension telephone line. Obviously, complainant Pintor, a member of the Philippine bar, would not have discussed the alleged demand for an P8,000.00 consideration in order to have his client withdraw a direct assault charge against Atty. Laconico filed with the Cebu City Fiscal's Office if he knew that another lawyer was also listening. We have to consider, however, that affirmance of the criminal conviction would, in effect, mean that a caller by merely using a telephone line can force the listener to secrecy no matter how obscene, criminal, or annoying the call may be. It would be the word of the caller against the listener's. Because of technical problems caused by the sensitive nature of electronic equipment and the extra heavy loads which telephone cables are made to carry in certain areas, telephone users often encounter what are called "crossed lines". An unwary citizzen who happens to pick up his telephone and who overhears the details of a crime might hesitate to inform police authorities if he knows that he could be accused under Rep. Act 4200 of using his own telephone to secretly overhear the private communications of the would be criminals. Surely the law was never intended for such mischievous results. The main issue in the resolution of this petition, however, revolves around the meaning of the phrase "any other device or arrangement." Is an extension of a telephone unit such a device or arrangement as would subject the user to imprisonment ranging from six months to six years with the accessory penalty of perpetual absolute disqualification for a public officer or deportation for an alien? Private secretaries with extension lines to their bosses' telephones are sometimes asked to use answering or recording devices to record business conversations between a boss and another businessman. Would transcribing a recorded message for the use of the boss be a proscribed offense? or for that matter, would a "party line" be a device or arrangement under the law? The petitioner contends that telephones or extension telephones are not included in the enumeration of "commonly known" listening or recording devices, nor do they belong to the same class of enumerated electronic devices contemplated by law. He maintains that in 1964, when Senate Bill No. 9 (later Rep. Act No. 4200) was being considered in the Senate, telephones and extension telephones were already widely used instruments, probably the most popularly known communication device. Whether or not listening over a telephone party line would be punishable was discussed on the floor of the Senate. Yet, when the bill was finalized into a statute, no mention was made of telephones in the enumeration of devices "commonly known as a dictaphone or dictagraph, detectaphone or walkie talkie or tape recorder or however otherwise described." The omission was not a mere oversight. Telephone party lines were intentionally deleted from the provisions of the Act. The respondent People argue that an extension telephone is embraced and covered by the term "device" within the context of the aforementioned law because it is not a part or portion of a complete set of a telephone apparatus. It is a separate device and distinct set of a movable apparatus consisting of a wire and a set of telephone receiver not forming part of a main telephone set which can be detached or removed and can be transferred away from one place to another and to be plugged or attached to a main telephone line to get the desired communication corning from the other party or end. The law refers to a "tap" of a wire or cable or the use of a "device or arrangement" for the purpose of secretly overhearing, intercepting, or recording the communication. There must be either a physical interruption through a wiretap or the deliberate installation of a device or arrangement in order to overhear, intercept, or record the spoken words. An extension telephone cannot be placed in the same category as a dictaphone, dictagraph or the other devices enumerated in Section 1 of RA No. 4200 as the use thereof cannot be considered as "tapping" the wire or cable of a telephone line. The telephone extension in this case was not installed for that purpose. It just happened to be there for ordinary office use. It is a rule in statutory construction that in order to determine the true intent of the legislature, the particular clauses and phrases of the statute should not be taken as detached and isolated expressions, but the whole and every part thereof must be considered in fixing the meaning of any of its parts. (see Commissioner of Customs v. Esso Estandard Eastern, Inc., 66 SCRA 113,120).

In the case of Empire Insurance Com any v. Rufino (90 SCRA 437, 443-444), we ruled: Likewise, Article 1372 of the Civil Code stipulates that 'however general the terms of a contract may be, they shall not be understood to comprehend things that are distinct and cases that are different from those upon which the parties intended to agree.' Similarly, Article 1374 of the same Code provides that 'the various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly. xxx xxx xxx Consequently, the phrase 'all liabilities or obligations of the decedent' used in paragraph 5(c) and 7(d) should be then restricted only to those listed in the Inventory and should not be construed as to comprehend all other obligations of the decedent. The rule that 'particularization followed by a general expression will ordinarily be restricted to the former' is based on the fact in human experience that usually the minds of parties are addressed specially to the particularization, and that the generalities, though broad enough to comprehend other fields if they stood alone, are used in contemplation of that upon which the minds of the parties are centered. (Hoffman v. Eastern Wisconsin R., etc., Co., 134 Wis. 603, 607, 115 NW 383, cited in Francisco, Revised Rules of Court (Evidence), 1973 ed, pp. 180-181). Hence, the phrase "device or arrangement" in Section 1 of RA No. 4200, although not exclusive to that enumerated therein, should be construed to comprehend instruments of the same or similar nature, that is, instruments the use of which would be tantamount to tapping the main line of a telephone. It refers to instruments whose installation or presence cannot be presumed by the party or parties being overheard because, by their very nature, they are not of common usage and their purpose is precisely for tapping, intercepting or recording a telephone conversation. An extension telephone is an instrument which is very common especially now when the extended unit does not have to be connected by wire to the main telephone but can be moved from place ' to place within a radius of a kilometer or more. A person should safely presume that the party he is calling at the other end of the line probably has an extension telephone and he runs the risk of a third party listening as in the case of a party line or a telephone unit which shares its line with another. As was held in the case of Rathbun v. United States (355, U.S. 107, 2 L Ed 2d 137-138): Common experience tells us that a call to a particular telephone number may cause the bell to ring in more than one ordinarily used instrument. Each party to a telephone conversation takes the risk that the other party may have an extension telephone and may allow another to overhear the conversation. When such takes place there has been no violation of any privacy of which the parties may complain. Consequently, one element of 605, interception, has not occurred. In the same case, the Court further ruled that the conduct of the party would differ in no way if instead of repeating the message he held out his hand-set so that another could hear out of it and that there is no distinction between that sort of action and permitting an outsider to use an extension telephone for the same purpose. Furthermore, it is a general rule that penal statutes must be construed strictly in favor of the accused. Thus, in case of doubt as in the case at bar, on whether or not an extension telephone is included in the phrase "device or arrangement", the penal statute must be construed as not including an extension telephone. In the case of People v. Purisima, 86 SCRA 542, 562, we explained the rationale behind the rule: American jurisprudence sets down the reason for this rule to be the tenderness of the law of the rights of individuals; the object is to establish a certain rule by conformity to which mankind would be safe, and the discretion of the court limited. (United States v. Harris, 177 US 305, 44 L Ed 780, 20 S Ct 609; Braffith v. Virgin Islands (CA3) 26 F2d 646; Caudill v. State, 224 Ind 531, 69 NE2d; Jennings v. Commonwealth, 109 VA 821,63 SE 1080, all cited in 73 Am Jur 2d 452). The purpose is not to enable a guilty person to escape punishment through a technicality but to provide a precise definition of forbidden acts." (State v. Zazzaro, 20 A 2d 737, quoted in Martin's Handbook on Statutory Construction, Rev. Ed. pp. 183-184). In the same case of Purisima, we also ruled that on the construction or interpretation of a legislative measure, the primary rule is to search for and determine the intent and spirit of the law. A perusal of the Senate Congressional Records will show that not only did our lawmakers not contemplate the inclusion of an extension telephone as a prohibited device or arrangement" but of greater importance, they were more concerned with penalizing the act of recording than the act of merely listening to a telephone conversation. xxx xxx xxx Senator Taada. Another possible objection to that is entrapment which is certainly objectionable. It is made possible by special amendment which Your Honor may introduce. Senator Diokno.Your Honor, I would feel that entrapment would be less possible with the amendment than without it, because with the amendment the evidence of entrapment would only consist of government testimony as against the testimony of the defendant. With this amendment, they would have the right, and the government officials and the person in fact would have the right to tape record their conversation.

Senator Taada. In case of entrapment, it would be the government. Senator Diokno. In the same way, under this provision, neither party could record and, therefore, the court would be limited to saying: "Okay, who is more credible, the police officers or the defendant?" In these cases, as experienced lawyers, we know that the Court go with the peace offices. (Congressional Record, Vol. 111, No. 33, p. 628, March 12, 1964). xxx xxx xxx Senator Diokno. The point I have in mind is that under these conditions, with an agent outside listening in, he could falsify the testimony and there is no way of checking it. But if you allow him to record or make a recording in any form of what is happening, then the chances of falsifying the evidence is not very much. Senator Taada. Your Honor, this bill is not intended to prevent the presentation of false testimony. If we could devise a way by which we could prevent the presentation of false testimony, it would be wonderful. But what this bill intends to prohibit is the use of tape record and other electronic devices to intercept private conversations which later on will be used in court. (Congressional Record, Vol. III, No. 33, March 12, 1964, p. 629). It can be readily seen that our lawmakers intended to discourage, through punishment, persons such as government authorities or representatives of organized groups from installing devices in order to gather evidence for use in court or to intimidate, blackmail or gain some unwarranted advantage over the telephone users. Consequently, the mere act of listening, in order to be punishable must strictly be with the use of the enumerated devices in RA No. 4200 or others of similar nature. We are of the view that an extension telephone is not among such devices or arrangements. WHEREFORE, the petition is GRANTED. The decision of the then Intermediate Appellate Court dated August 16, 1984 is ANNULLED and SET ASIDE. The petitioner is hereby ACQUITTED of the crime of violation of Rep. Act No. 4200, otherwise known as the Anti-Wiretapping Act. SO ORDERED. Feria (Chairman), Fernan, Alampay and Paras, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 74930 February 13, 1989 RICARDO VALMONTE, OSWALDO CARBONELL, DOY DEL CASTILLO, ROLANDO BARTOLOME, LEO OBLIGAR, JUN GUTIERREZ, REYNALDO BAGATSING, JUN "NINOY" ALBA, PERCY LAPID, ROMMEL CORRO and ROLANDO FADUL, petitioners, vs. FELICIANO BELMONTE, JR., respondent. Ricardo C. Valmonte for and in his own behalf and his co-petitioners. The Solicitor General for respondent.

CORTES, J.: Petitioners in this special civil action for mandamus with preliminary injunction invoke their right to information and pray that respondent be directed:

(a) to furnish petitioners the list of the names of the Batasang Pambansa members belonging to the UNIDO and PDP-Laban who were able to secure clean loans immediately before the February 7 election thru the intercession/marginal note of the then First Lady Imelda Marcos; and/or (b) to furnish petitioners with certified true copies of the documents evidencing their respective loans; and/or (c) to allow petitioners access to the public records for the subject information. (Petition, pp. 4-5; paragraphing supplied.]

The controversy arose when petitioner Valmonte wrote respondent Belmonte the following letter:
June 4, 1986 Hon. Feliciano Belmonte GSIS General Manager Arroceros, Manila Sir: As a lawyer, member of the media and plain citizen of our Republic, I am requesting that I be furnished with the list of names of the opposition members of (the) Batasang Pambansa who were able to secure a clean loan of P2 million each on guarranty (sic) of Mrs. Imelda Marcos. We understand that OIC Mel Lopez of Manila was one of those aforesaid MPs. Likewise, may we be furnished with the certified true copies of the documents evidencing their loan. Expenses in connection herewith shall be borne by us. If we could not secure the above documents could we have access to them? We are premising the above request on the following provision of the Freedom Constitution of the present regime. The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents and papers pertaining to official acts, transactions or decisions, shall be afforded the citizen subject to such limitation as may be provided by law. (Art. IV, Sec. 6). We trust that within five (5) days from receipt hereof we will receive your favorable response on the matter. Very truly yours,

(Sgd.) RICARD O C. VALMO NTE [Rollo, p. 7.]

To the aforesaid letter, the Deputy General Counsel of the GSIS replied:
June 17, 1986 Atty. Ricardo C. Valmonte 108 E. Benin Street Caloocan City Dear Compaero: Possibly because he must have thought that it contained serious legal implications, President & General Manager Feliciano Belmonte, Jr. referred to me for study and reply your letter to him of June 4, 1986 requesting a list of the opposition members of Batasang Pambansa who were able to secure a clean loan of P2 million each on guaranty of Mrs. Imelda Marcos. My opinion in this regard is that a confidential relationship exists between the GSIS and all those who borrow from it, whoever they may be; that the GSIS has a duty to its customers to preserve this confidentiality; and that it would not be proper for the GSIS to breach this confidentiality unless so ordered by the courts. As a violation of this confidentiality may mar the image of the GSIS as a reputable financial institution, I regret very much that at this time we cannot respond positively to your request. Very truly yours, (Sgd.) MEYNARDO A. TIRO Deputy General Counsel [Rollo, p. 40.]

On June 20, 1986, apparently not having yet received the reply of the Government Service and Insurance System (GSIS) Deputy General Counsel, petitioner Valmonte wrote respondent another letter, saying that for failure to receive a reply, "(W)e are now considering ourselves free to do whatever action necessary within the premises to pursue our desired objective in pursuance of public interest." [Rollo, p. 8.] On June 26, 1986, Valmonte, joined by the other petitioners, filed the instant suit. On July 19, 1986, the Daily Express carried a news item reporting that 137 former members of the defunct interim and regular Batasang Pambansa, including ten (10) opposition members, were granted housing loans by the GSIS [Rollo, p. 41.]

Separate comments were filed by respondent Belmonte and the Solicitor General. After petitioners filed a consolidated reply, the petition was given due course and the parties were required to file their memoranda. The parties having complied, the case was deemed submitted for decision. In his comment respondent raises procedural objections to the issuance of a writ of mandamus, among which is that petitioners have failed to exhaust administrative remedies. Respondent claims that actions of the GSIS General Manager are reviewable by the Board of Trustees of the GSIS. Petitioners, however, did not seek relief from the GSIS Board of Trustees. It is therefore asserted that since administrative remedies were not exhausted, then petitioners have no cause of action. To this objection, petitioners claim that they have raised a purely legal issue, viz., whether or not they are entitled to the documents sought, by virtue of their constitutional right to information. Hence, it is argued that this case falls under one of the exceptions to the principle of exhaustion of administrative remedies. Among the settled principles in administrative law is that before a party can be allowed to resort to the courts, he is expected to have exhausted all means of administrative redress available under the law. The courts for reasons of law, comity and convenience will not entertain a case unless the available administrative remedies have been resorted to and the appropriate authorities have been given opportunity to act and correct the errors committed in the administrative forum. However, the principle of exhaustion of administrative remedies is subject to settled exceptions, among which is when only a question of law is involved [Pascual v. Provincial Board, 106 Phil. 466 (1959); Aguilar v. Valencia, et al., G.R. No. L-30396, July 30, 1971, 40 SCRA 210; Malabanan v. Ramento, G.R. No. L-2270, May 21, 1984, 129 SCRA 359.] The issue raised by petitioners, which requires the interpretation of the scope of the constitutional right to information, is one which can be passed upon by the regular courts more competently than the GSIS or its Board of Trustees, involving as it does a purely legal question. Thus, the exception of this case from the application of the general rule on exhaustion of administrative remedies is warranted. Having disposed of this procedural issue, We now address ourselves to the issue of whether or not mandamus hes to compel respondent to perform the acts sought by petitioners to be done, in pursuance of their right to information. We shall deal first with the second and third alternative acts sought to be done, both of which involve the issue of whether or not petitioners are entitled to access to the documents evidencing loans granted by the GSIS. This is not the first time that the Court is confronted with a controversy directly involving the constitutional right to information. In Taada v. Tuvera, G.R. No. 63915, April 24,1985, 136 SCRA 27 and in the recent case of Legaspi v. Civil Service Commission, G.R. No. 72119, May 29, 1987,150 SCRA 530, the Court upheld the people's

constitutional right to be informed of matters of public interest and ordered the government agencies concerned to act as prayed for by the petitioners. The pertinent provision under the 1987 Constitution is Art. 111, Sec. 7 which states:
The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.

The right of access to information was also recognized in the 1973 Constitution, Art. IV Sec. 6 of which provided:
The right of the people to information on 'matters of public concern shall be recognized. Access to official records, and to documents and papers pertaining to official acts, transactions, or decisions, shall be afforded the citizen subject to such limitations as may be provided by law.

An informed citizenry with access to the diverse currents in political, moral and artistic thought and data relative to them, and the free exchange of ideas and discussion of issues thereon, is vital to the democratic government envisioned under our Constitution. The cornerstone of this republican system of government is delegation of power by the people to the State. In this system, governmental agencies and institutions operate within the limits of the authority conferred by the people. Denied access to information on the inner workings of government, the citizenry can become prey to the whims and caprices of those to whom the power had been delegated. The postulate of public office as a public trust, institutionalized in the Constitution (in Art. XI, Sec. 1) to protect the people from abuse of governmental power, would certainly be were empty words if access to such information of public concern is denied, except under limitations prescribed by implementing legislation adopted pursuant to the Constitution. Petitioners are practitioners in media. As such, they have both the right to gather and the obligation to check the accuracy of information the disseminate. For them, the freedom of the press and of speech is not only critical, but vital to the exercise of their professions. The right of access to information ensures that these freedoms are not rendered nugatory by the government's monopolizing pertinent information. For an essential element of these freedoms is to keep open a continuing dialogue or process of communication between the government and the people. It is in the interest of the State that the channels for free political discussion be maintained to the end that the government may perceive and be responsive to the people's will. Yet, this open dialogue can be effective only to the extent that the citizenry is informed and thus able to formulate its will intelligently. Only when the participants in the discussion are aware of the issues and have access to information relating thereto can such bear fruit. The right to information is an essential premise of a meaningful right to speech and expression. But this is not to say that the right to information is merely an adjunct of and therefore restricted in application by the exercise of the freedoms of speech and of the

press. Far from it. The right to information goes hand-in-hand with the constitutional policies of full public disclosure * and honesty in the public service. ** It is meant to enhance the widening role of the citizenry in governmental decision-making as well as in checking abuse in government. Yet, like all the constitutional guarantees, the right to information is not absolute. As stated in Legaspi, the people's right to information is limited to "matters of public concern," and is further "subject to such limitations as may be provided by law." Similarly, the State's policy of full disclosure is limited to "transactions involving public interest," and is "subject to reasonable conditions prescribed by law." Hence, before mandamus may issue, it must be clear that the information sought is of "public interest" or "public concern," and is not exempted by law from the operation of the constitutional guarantee [Legazpi v. Civil Service Commission, supra, at p. 542.] The Court has always grappled with the meanings of the terms "public interest" and "public concern". As observed in Legazpi:
In determining whether or not a particular information is of public concern there is no rigid test which can be applied. "Public concern" like "public interest" is a term that eludes exact definition. Both terms embrace a broad spectrum of subjects which the public may want to know, either because these directly affect their lives, or simply because such matters naturally arouse the interest of an ordinary citezen. In the final analysis, it is for the courts to determine on a case by case basis whether the matter at issue is of interest or importance, as it relates to or affects the public. [Ibid. at p. 541]

In the Taada case the public concern deemed covered by the constitutional right to information was the need for adequate notice to the public of the various laws which are to regulate the actions and conduct of citezens. In Legaspi, it was the "legitimate concern of citezensof ensure that government positions requiring civil service eligibility are occupied only by persons who are eligibles" [Supra at p. 539.] The information sought by petitioners in this case is the truth of reports that certain Members of the Batasang Pambansa belonging to the opposition were able to secure "clean" loans from the GSIS immediately before the February 7, 1986 election through the intercession of th eformer First Lady, Mrs. Imelda Marcos. The GSIS is a trustee of contributions from the government and its employees and the administrator of various insurance programs for the benefit of the latter. Undeniably, its funds assume a public character. More particularly, Secs. 5(b) and 46 of P.D. 1146, as amended (the Revised Government Service Insurance Act of 1977), provide for annual appropriations to pay the contributions, premiums, interest and other amounts payable to GSIS by the government, as employer, as well as the obligations which the Republic of the Philippines assumes or guarantees to pay. Considering the nature of its funds, the GSIS is expected to manage its resources with utmost prudence and in strict compliance with the pertinent laws or rules and regulations. Thus, one of the reasons that prompted the revision of the old GSIS law (C.A. No. 186, as amended) was the necessity "to preserve at all times the actuarial solvency of the funds administered by

the System" [Second Whereas Clause, P.D. No. 1146.] Consequently, as respondent himself admits, the GSIS "is not supposed to grant 'clean loans.'" [Comment, p. 8.] It is therefore the legitimate concern of the public to ensure that these funds are managed properly with the end in view of maximizing the benefits that accrue to the insured government employees. Moreover, the supposed borrowers were Members of the defunct Batasang Pambansa who themselves appropriated funds for the GSIS and were therefore expected to be the first to see to it that the GSIS performed its tasks with the greatest degree of fidelity and that an its transactions were above board. In sum, the public nature of the loanable funds of the GSIS and the public office held by the alleged borrowers make the information sought clearly a matter of public interest and concern. A second requisite must be met before the right to information may be enforced through mandamus proceedings, viz., that the information sought must not be among those excluded by law. Respondent maintains that a confidential relationship exists between the GSIS and its borrowers. It is argued that a policy of confidentiality restricts the indiscriminate dissemination of information. Yet, respondent has failed to cite any law granting the GSIS the privilege of confidentiality as regards the documents subject of this petition. His position is apparently based merely on considerations of policy. The judiciary does not settle policy issues. The Court can only declare what the law is, and not what the law should be. Under our system of government, policy issues are within the domain of the political branches of the government, and of the people themselves as the repository of all State power. Respondent however contends that in view of the right to privacy which is equally protected by the Constitution and by existing laws, the documents evidencing loan transactions of the GSIS must be deemed outside the ambit of the right to information. There can be no doubt that right to privacy is constitutionally protected. In the landmark case of Morfe v. Mutuc [130 Phil. 415 (1968), 22 SCRA 424], this Court, speaking through then Mr. Justice Fernando, stated:
... The right to privacy as such is accorded recognition independently of its identification with liberty; in itself, it is fully deserving of constitutional protection. The language of Prof. Emerson is particularly apt: "The concept of limited government has always included the idea that governmental powers stop short of certain intrusions into the personal life of the citizen. This is indeed one of the basic distinctions between absolute and limited government. UItimate and pervasive control of the individual, in all aspects of his life, is the hallmark of the absolute. state, In contrast, a system of limited government safeguards a private sector, which belongs to the individual, firmly distinguishing it from the public sector, which the state can control. Protection of this private sector protection, in other words, of the dignity and integrity of the individual has become increasingly important as modem society has developed. All the forces of technological age industrialization, urbanization,

and organization operate to narrow the area of privacy and facilitate intrusion into it. In modern terms, the capacity to maintain and support this enclave of private life marks the difference between a democratic and a totalitarian society." [at pp. 444-445.]

When the information requested from the government intrudes into the privacy of a citizen, a potential conflict between the rights to information and to privacy may arise. However, the competing interests of these rights need not be resolved in this case. Apparent from the above-quoted statement of the Court in Morfe is that the right to privacy belongs to the individual in his private capacity, and not to public and governmental agencies like the GSIS. Moreover, the right cannot be invoked by juridical entities like the GSIS. As held in the case of Vassar College v. Loose Wills Biscuit Co. [197 F. 982 (1912)], a corporation has no right of privacy in its name since the entire basis of the right to privacy is an injury to the feelings and sensibilities of the party and a corporation would have no such ground for relief. Neither can the GSIS through its General Manager, the respondent, invoke the right to privacy of its borrowers. The right is purely personal in nature [Cf. Atkinson v. John Doherty & Co., 121 Mich 372, 80 N.W. 285, 46 L.RA. 219 (1899); Schuyler v. Curtis, 147 N.Y. 434, 42 N.E. 22, 31 L.R.A. 286 (1895)), and hence may be invoked only by the person whose privacy is claimed to be violated. It may be observed, however, that in the instant case, the concerned borrowers themselves may not succeed if they choose to invoke their right to privacy, considering the public offices they were holding at the time the loans were alleged to have been granted. It cannot be denied that because of the interest they generate and their newsworthiness, public figures, most especially those holding responsible positions in government, enjoy a more limited right to privacy as compared to ordinary individuals, their actions being subject to closer public scrutiny [Cf. Ayer Productions Pty. Ltd. v. Capulong, G.R. Nos. 82380 and 82398, April 29, 1988; See also Cohen v. Marx, 211 P. 2d 321 (1949).] Respondent next asserts that the documents evidencing the loan transactions of the GSIS are private in nature and hence, are not covered by the Constitutional right to information on matters of public concern which guarantees "(a)ccess to official records, and to documents, and papers pertaining to official acts, transactions, or decisions" only. It is argued that the records of the GSIS, a government corporation performing proprietary functions, are outside the coverage of the people's right of access to official records. It is further contended that since the loan function of the GSIS is merely incidental to its insurance function, then its loan transactions are not covered by the constitutional policy of full public disclosure and the right to information which is applicable only to "official" transactions.

First of all, the "constituent ministrant" dichotomy characterizing government function has long been repudiated. In ACCFA v. Confederation of Unions and Government Corporations and Offices (G.R. Nos. L-21484 and L-23605, November 29, 1969, 30 SCRA 6441, the Court said that the government, whether carrying out its sovereign attributes or running some business, discharges the same function of service to the people. Consequently, that the GSIS, in granting the loans, was exercising a proprietary function would not justify the exclusion of the transactions from the coverage and scope of the right to information. Moreover, the intent of the members of the Constitutional Commission of 1986, to include government-owned and controlled corporations and transactions entered into by them within the coverage of the State policy of fun public disclosure is manifest from the records of the proceedings:
xxx xxx xxx THE PRESIDING OFFICER (Mr. Colayco). Commissioner Suarez is recognized. MR. SUAREZ. Thank you. May I ask the Gentleman a few question? MR. OPLE. Very gladly. MR. SUAREZ. Thank you. When we declare a "policy of full public disclosure of all its transactions" referring to the transactions of the State and when we say the "State" which I suppose would include all of the various agencies, departments, ministries and instrumentalities of the government.... MR. OPLE. Yes, and individual public officers, Mr. Presiding Officer. MR. SUAREZ. Including government-owned and controlled corporations. MR. OPLE. That is correct, Mr. Presiding Officer. MR. SUAREZ. And when we say "transactions" which should be distinguished from contracts, agreements, or treaties or whatever, does the Gentleman refer to the steps leading to the consummation of the contract, or does he refer to the contract itself? MR. OPLE. The "transactions" used here I suppose is generic and, therefore, it can cover both steps leading to a contract, and already a consummated contract, Mr. Presiding Officer.

MR. SUAREZ. This contemplates inclusion of negotiations leading to the consummation of the transaction. MR. OPLE. Yes, subject only to reasonable safeguards on the national interest. MR. SUAREZ. Thank you. [V Record of the Constitutional Commission 24-25.] (Emphasis supplied.)

Considering the intent of the framers of the Constitution which, though not binding upon the Court, are nevertheless persuasive, and considering further that government-owned and controlled corporations, whether performing proprietary or governmental functions are accountable to the people, the Court is convinced that transactions entered into by the GSIS, a government-controlled corporation created by special legislation are within the ambit of the people's right to be informed pursuant to the constitutional policy of transparency in government dealings. In fine, petitioners are entitled to access to the documents evidencing loans granted by the GSIS, subject to reasonable regulations that the latter may promulgate relating to the manner and hours of examination, to the end that damage to or loss of the records may be avoided, that undue interference with the duties of the custodian of the records may be prevented and that the right of other persons entitled to inspect the records may be insured [Legaspi v. Civil Service Commission, supra at p. 538, quoting Subido v. Ozaeta, 80 Phil. 383, 387.] The petition, as to the second and third alternative acts sought to be done by petitioners, is meritorious. However, the same cannot be said with regard to the first act sought by petitioners, i.e., "to furnish petitioners the list of the names of the Batasang Pambansa members belonging to the UNIDO and PDP-Laban who were able to secure clean loans immediately before the February 7 election thru the intercession/marginal note of the then First Lady Imelda Marcos." Although citizens are afforded the right to information and, pursuant thereto, are entitled to "access to official records," the Constitution does not accord them a right to compel custodians of official records to prepare lists, abstracts, summaries and the like in their desire to acquire information on matters of public concern. It must be stressed that it is essential for a writ of mandamus to issue that the applicant has a well-defined, clear and certain legal right to the thing demanded and that it is the imperative duty of defendant to perform the act required. The corresponding duty of the respondent to perform the required act must be clear and specific [Lemi v. Valencia, G.R. No. L-20768, November 29,1968,126 SCRA 203; Ocampo v. Subido, G.R. No. L28344, August 27, 1976, 72 SCRA 443.] The request of the petitioners fails to meet this standard, there being no duty on the part of respondent to prepare the list requested. WHEREFORE, the instant petition is hereby granted and respondent General Manager of the Government Service Insurance System is ORDERED to allow petitioners access

to documents and records evidencing loans granted to Members of the former Batasang Pambansa, as petitioners may specify, subject to reasonable regulations as to the time and manner of inspection, not incompatible with this decision, as the GSIS may deem necessary. SO ORDERED. Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Grio-Aquino, Medialdea and Regalado, JJ., concur.

Separate Opinions

CRUZ, J., concurring: Instead of merely affixing my signature to signify my concurrence, I write this separate opinion simply to say I have nothing to add to Justice Irene R. Cortes' exceptionally eloquent celebration of the right to information on matters of public concern.

Separate Opinions CRUZ, J., concurring: Instead of merely affixing my signature to signify my concurrence, I write this separate opinion simply to say I have nothing to add to Justice Irene R. Cortes' exceptionally eloquent celebration of the right to information on matters of public concern. Footnotes
* Art. II, Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its transactions involving public interest. ** Art XI, 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 partriotism and justice, and lead modest lives. The following provisions of the 1987 Constitution are further indicative of the policy of transparency: Art. VII, Sec. 12. In case of serious illness of the President, the public shall be informed of the state of his health. The members of the cabinet in charge of national security and foreign relations and the Chief of Staff of the Armed Forces of the Philippines shall not be denied access to the President during such illness.

Art. XI, Sec. 17. A public officer or employee shall, upon assumption of office and as often thereafter as may be required by law, submit a declaration under oath or his assets liabilities, and net worth. In the case of the President, the VicePresident, the Members of the Cabinet, the Congress, the Supreme Court, the Constitutional Commissions and other constitutional offices, and officers of the armed forces with general or flag rank, the declaration shall be disclosed to the public in the manner provided by law. Art. XII, Sec. 21. Foreign loans may only be incurred in accordance with law and the regulation of the monetary authority. Information on foreign loans obtained or guaranteed by the Government shall be made available to the public.

FIRST DIVISION [G.R. No. 180832, July 23, 2008] JEROME CASTRO, PETITIONER, VS. PEOPLE OF THE PHILIPPINES, RESPONDENT. RESOLUTION CORONA, J.: This petition for review on certiorari[1] emanated from the complaint for grave oral defamation[2] filed by Albert P. Tan against petitioner Jerome Castro. The facts follow. On November 11, 2002, Reedley International School (RIS) dismissed Tan's son, Justin Albert (then a Grade 12 student), for violating the terms of his disciplinary probation.[3] Upon Tan's request, RIS reconsidered its decision but imposed "non-appealable" conditions such as excluding Justin Albert from participating in the graduation ceremonies. Aggrieved, Tan filed a complaint in the Department of Education (Dep-Ed) for violation of the Manual of Regulation of Private Schools, Education Act of 1982 and Article 19 of the Civil Code[4] against RIS. He alleged that the dismissal of his son was undertaken with malice, bad faith and evident premeditation. After investigation, the Dep-Ed found that RIS' code violation point system allowed the summary imposition of unreasonable sanctions (which had no basis in fact and in law). The system therefore violated due process. Hence, the Dep-Ed nullified it. [5] Meanwhile, on November 20, 2002, the Dep-Ed ordered RIS to readmit Justin Albert without any condition.[6] Thus, he was able to graduate from RIS and participate in the commencement ceremonies held on March 30, 2003. After the graduation ceremonies, Tan met Bernice C. Ching, a fellow parent at RIS. In the course of their conversation, Tan intimated that he was contemplating a suit against the officers of RIS in their personal capacities, including petitioner who was the assistant headmaster. Ching telephoned petitioner sometime the first week of April and told him that Tan was planning to sue the officers of RIS in their personal capacities. Before they hung up, petitioner told Ching: Okay, you too, take care and be careful talking to [Tan], that's dangerous.

Ching then called Tan and informed him that petitioner said "talking to him was dangerous." Insulted, Tan filed a complaint for grave oral defamation in the Office of the City Prosecutor of Mandaluyong City against petitioner on August 21, 2003. On November 3, 2003, petitioner was charged with grave oral defamation in the Metropolitan Trial Court (MeTC) of Mandaluyong City, Branch 60[7] under the following Information: That on or about the 13th day of March, 2003 in the City of Mandaluyong, Philippines, a place within the jurisdiction of this Honorable Court, the above-named [petitioner], with deliberate intent of bringing ATTY. ALBERT P. TAN, into discredit, dishonor, disrepute and contempt, did then and there, willfully, unlawfully and feloniously speak and utter the following words to Ms. Bernice C. Ching: "OK, YOU TOO, YOU TAKE CARE AND BE CAREFUL TALKING TO [TAN], THAT'S DANGEROUS." and other words of similar import of a serious and insulting nature. CONTRARY TO LAW. Petitioner pleaded not guilty during arraignment. The prosecution essentially tried to establish that petitioner depicted Tan as a "dangerous person." Ching testified that petitioner warned her that talking to Tan was dangerous. Tan, on the other hand, testified that petitioner's statement shocked him as it portrayed him as "someone capable of committing undesirable acts." He added that petitioner probably took offense because of the complaint he filed against RIS in the Dep-Ed. For his defense, petitioner denied harboring ill-feelings against Tan despite the latter's complaint against RIS in the Dep-Ed. Although he admitted conversing with Ching (whom he considered as a close acquaintance) on the telephone a few days after RIS' 2003 commencement exercises, petitioner asserted that he never said or insinuated that Tan or talking to Tan was dangerous. On cross-examination, however, he did not categorically deny the veracity of Ching's statement. The MeTC found that Ching's statements in her affidavit and in open court were consistent and that she did not have any motive to fabricate a false statement. Petitioner, on the other hand, harbored personal resentment, aversion and ill-will against Tan since the Dep-Ed compelled RIS to readmit his son. Thus, the MeTC was convinced that petitioner told Ching talking to Tan was dangerous and that he uttered the statement with the intention to insult Tan and tarnish his social and professional reputation. In a decision dated December 27, 2005, the MeTC found petitioner guilty beyond reasonable doubt of grave oral defamation:[8] WHEREFORE, judgment is hereby rendered finding accused, Jerome Castro GUILTY beyond reasonable doubt of the crime of Grave Oral Defamation, sentencing him therefore, in accordance to Article 358(1) of the Revised Penal Code and applying the Indeterminate Sentence Law to suffer the penalty of imprisonment of 1 month and 1 day of arresto mayor as minimum to 4 months and 1 day of arresto mayor as maximum. On appeal, the Regional Trial Court (RTC) affirmed the factual findings of the MeTC. However, in view of the animosity between the parties, it found petitioner guilty only of slight oral defamation.

But because Tan filed his complaint in the Office of the City Prosecutor of Mandaluyong City only on August 21, 2003 (or almost five months from discovery), the RTC ruled that prescription had already set in; it therefore acquitted petitioner on that ground. [9] On April 19, 2007, the Office of the Solicitor General (OSG) filed a petition for certiorari in the Court of Appeals (CA) assailing the decision of the RTC.[10] It contended that the RTC acted with grave abuse of discretion when it downgraded petitioner's offense to slight oral defamation. The RTC allegedly misappreciated the antecedents which provoked petitioner to utter the allegedly defamatory statement against Tan. The CA found that the RTC committed grave abuse of discretion when it misapprehended the totality of the circumstances and found petitioner guilty only of slight oral defamation. Thus, the CA reinstated the MeTC decision.[11] Petitioner moved for reconsideration but it was denied.[12] Hence, this recourse. Petitioner basically contends that the CA erred in taking cognizance of the petition for certiorari inasmuch as the OSG raised errors of judgment (i.e., that the RTC misappreciated the evidence presented by the parties) but failed to prove that the RTC committed grave abuse of discretion. Thus, double jeopardy attached when the RTC acquitted him. We grant the petition. No person shall be twice put in jeopardy of punishment for the same offense.[13] This constitutional mandate is echoed in Section 7 of Rule 117 of the Rules of Court which provides: Section 7. Former conviction or acquittal; double jeopardy. - When an accused has been convicted or acquitted or the case against him dismissed or otherwise terminated without his express consent by a court of competent jurisdiction, upon a valid complaint or in information or other formal charge sufficient in form and substance to sustain a conviction and after the accused had pleaded to the charge, the conviction or acquittal of the accused or the dismissal of the case shall be a bar to another prosecution for the offense charged or for any attempt to commit the same or frustration thereof, or for any offense which necessarily includes or is necessarily included in the offense charged in the former complaint or information. xxx xxx xxx Under this provision, double jeopardy occurs upon (1) a valid indictment (2) before a competent court (3) after arraignment (4) when a valid plea has been entered and (5) when the accused was acquitted or convicted or the case was dismissed or otherwise terminated without the express consent of the accused.[14] Thus, an acquittal, whether ordered by the trial or appellate court, is final and unappealable on the ground of double jeopardy.[15] The only exception is when the trial court acted with grave abuse of discretion or, as we held in Galman v. Sandiganbayan,[16] when there was mistrial. In such instances, the OSG can assail the said judgment in a petition for certiorari establishing that the State was deprived of a fair opportunity to prosecute and prove its case.[17]

The rationale behind this exception is that a judgment rendered by the trial court with grave abuse of discretion was issued without jurisdiction. It is, for this reason, void. Consequently, there is no double jeopardy. In this case, the OSG merely assailed the RTC's finding on the nature of petitioner's statement, that is, whether it constituted grave or slight oral defamation. The OSG premised its allegation of grave abuse of discretion on the RTC's "erroneous" evaluation and assessment of the evidence presented by the parties. What the OSG therefore questioned were errors of judgment (or those involving misappreciation of evidence or errors of law). However, a court, in a petition for certiorari, cannot review the public respondent's evaluation of the evidence and factual findings.[18] Errors of judgment cannot be raised in a Rule 65 petition as a writ of certiorari can only correct errors of jurisdiction (or those involving the commission of grave abuse of discretion).[19] Because the OSG did not raise errors of jurisdiction, the CA erred in taking cognizance of its petition and, worse, in reviewing the factual findings of the RTC.[20] We therefore reinstate the RTC decision so as not to offend the constitutional prohibition against double jeopardy. At most, petitioner could have been liable for damages under Article 26 of the Civil Code[21]: Article 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief: xxx xxx xxx

(3) Intriguing to cause another to be alienated from his friends; xxx xxx xxx Petitioner is reminded that, as an educator, he is supposed to be a role model for the youth. As such, he should always act with justice, give everyone his due and observe honesty and good faith.
[22]

WHEREFORE, the petition is hereby GRANTED. The August 29, 2007 decision and December 5, 2007 resolution of the Court of Appeals in CA-G.R. SP No. 98649 are REVERSED and SET ASIDE. The November 20, 2006 decision of the Regional Trial Court of Mandaluyong City, Branch 212 is REINSTATED. Petitioner Jerome Castro is ACQUITTED of slight oral defamation as defined and penalized in Article 358 of the Revised Penal Code. No pronouncement as to costs. SO ORDERED. Puno, C.J., (Chairperson), Carpio, Azcuna, and Leonardo-De Castro, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 82380 April 29, 1988 AYER PRODUCTIONS PTY. LTD. and McELROY & McELROY FILM PRODUCTIONS, petitioners, vs. HON.IGNACIO M. CAPULONG and JUAN PONCE ENRILE, respondents. G.R. No. 82398 April 29, 1988 HAL MCELROY petitioner, vs. HON. IGNACIO M. CAPULONG, in his capacity as Presiding Judge of the Regional Trial Court of Makati, Branch 134 and JUAN PONCE ENRILE, respondents.

FELICIANO, J.: Petitioner Hal McElroy an Australian film maker, and his movie production company, Petitioner Ayer Productions pty Ltd. (Ayer Productions), 1 envisioned, sometime in 1987, the for commercial viewing and for Philippine and international release, the histolic peaceful struggle of the Filipinos at EDSA (Epifanio de los Santos Avenue). Petitioners discussed this Project with local movie producer Lope V. Juban who suggested th they consult with the appropriate government agencies and also with General Fidel V. Ramos and Senator Juan Ponce Enrile, who had played major roles in the events proposed to be filmed. The proposed motion picture entitled "The Four Day Revolution" was endorsed by the Movie Television Review and Classification Board as wel as the other government agencies consulted. General Fidel Ramos also signified his approval of the intended film production. In a letter dated 16 December 1987, petitioner Hal McElroy informed private respondent Juan Ponce Enrile about the projected motion picture enclosing a synopsis of it, the full text of which is set out below:
The Four Day Revolution is a six hour mini-series about People Powera unique event in modern history that-made possible the Peaceful revolution in the Philippines in 1986.

Faced with the task of dramatising these rerkble events, screenwriter David Williamson and history Prof Al McCoy have chosen a "docu-drama" style and created [four] fictitious characters to trace the revolution from the death of Senator Aquino, to the Feb revolution and the fleeing of Marcos from the country. These character stories have been woven through the real events to help our huge international audience understand this ordinary period inFilipino history. First, there's Tony O'Neil, an American television journalist working for major network. Tony reflects the average American attitude to the Phihppinence once a colony, now the home of crucially important military bases. Although Tony is aware of the corruption and of Marcos' megalomania, for him, there appears to be no alternative to Marcos except the Communists. Next, Angie Fox a fiery Australian photo-journalist. A 'new girl in town,' she is quickly caught up in the events as it becomes dear that the time has come for a change. Through Angle and her relationship with one of the Reform Army Movement Colonels (a fictitious character), we follow the developing discontent in the armed forces. Their dislike for General Ver, their strong loyalty to Defense Minister Enrile, and ultimately their defection from Marcos. The fourth fictitious character is Ben Balano, a middle-aged editor of a Manila newspaper who despises the Marcos regime and is a supporter an promoter of Cory Aquino. Ben has two daughters, Cehea left wing lawyer who is a secret member of the New People's Army, and Eva--a -P.R. girl, politically moderate and very much in love with Tony. Ultimately, she must choose between her love and the revolution. Through the interviews and experiences of these central characters, we show the complex nature of Filipino society, and thintertwining series of events and characters that triggered these remarkable changes. Through them also, we meet all of the principal characters and experience directly dramatic recreation of the revolution. The story incorporates actual documentary footage filmed during the period which we hope will capture the unique atmosphere and forces that combined to overthrow President Marcos. David Williamson is Australia's leading playwright with some 14 hugely successful plays to his credit(Don's Party,' 'The Club,' Travelling North) and 11 feature films (The Year of Living Dangerously,' Gallipoli,' 'Phar Lap'). Professor McCoy (University of New South Wales) is an American historian with a deep understanding of the Philippines, who has worked on the research for this project for some 18 months. Together with Davi Wilhamgon they have developed a script we believe accurately depicts the complex issues and events that occurred during th period . The six hour series is a McElroy and McElroy co-production with Home Box Office in American, the Australian Broadcast Corporation in Australia and Zenith Productions in the United Kingdom

The proposed motion picture would be essentially a re-enact. ment of the events that made possible the EDSA revolution; it is designed to be viewed in a six-hour mini-series television play, presented in a "docu-drama" style, creating four (4) fictional characters interwoven with real events, and utilizing actual documentary footage as background.

On 21 December 1987, private respondent Enrile replied that "[he] would not and will not approve of the use, appropriation, reproduction and/or exhibition of his name, or picture, or that of any member of his family in any cinema or television production, film or other medium for advertising or commercial exploitation" and further advised petitioners that 'in the production, airing, showing, distribution or exhibition of said or similar film, no reference whatsoever (whether written, verbal or visual) should not be made to [him] or any member of his family, much less to any matter purely personal to them. It appears that petitioners acceded to this demand and the name of private respondent Enrile was deleted from the movie script, and petitioners proceeded to film the projected motion picture. On 23 February 1988, private respondent filed a Complaint with application for Temporary Restraining Order and Wilt of Pretion with the Regional Trial Court of Makati, docketed as Civil Case No. 88-151 in Branch 134 thereof, seeking to enjoin petitioners from producing the movie "The Four Day Revolution". The complaint alleged that petitioners' production of the mini-series without private respondent's consent and over his objection, constitutes an obvious violation of his right of privacy. On 24 February 1988, the trial court issued ex-parte a Temporary Restraining Order and set for hearing the application for preliminary injunction. On 9 March 1988, Hal McElroy flied a Motion to Dismiss with Opposition to the Petition for Preliminary Injunction contending that the mini-series fim would not involve the private life of Juan Ponce Enrile nor that of his family and that a preliminary injunction would amount to a prior restraint on their right of free expression. Petitioner Ayer Productions also filed its own Motion to Dismiss alleging lack of cause of action as the mini-series had not yet been completed. In an Order 2 dated 16 March 1988, respondent court issued a writ of Preliminary Injunction against the petitioners, the dispositive portion of which reads thus:
WHEREFORE, let a writ of preliminary injunction be issued, ordering defendants, and all persons and entities employed or under contract with them, including actors, actresses and members of the production staff and crew as well as all persons and entities acting on defendants' behalf, to cease and desist from producing and filming the mini-series entitled 'The Four Day Revolution" and from making any reference whatsoever to plaintiff or his family and from creating any fictitious character in lieu of plaintiff which nevertheless is based on, or bears rent substantial or marked resemblance or similarity to, or is otherwise Identifiable with, plaintiff in the production and any similar film or photoplay, until further orders from this Court, upon plaintiff's filing of a bond in the amount of P 2,000,000.00, to answer for whatever damages defendants may suffer by reason of the injunction if the Court should finally decide that plaintiff was not entitled thereto. xxx xxx xxx (Emphasis supplied)

On 22 March 1988, petitioner Ayer Productions came to this Court by a Petition for certiorari dated 21 March 1988 with an urgent prayer for Preliminary Injunction or Restraining Order, which petition was docketed as G.R. No. L-82380. A day later, or on 23 March 1988, petitiioner Hal McElroy also filed separate Petition for certiorari with Urgent Prayer for a Restraining Order or Preliminary Injunction, dated 22 March 1988, docketed as G.R. No. L-82398. By a Resolution dated 24 March 1988, the petitions were consolidated and private respondent was required to file a consolidated Answer. Further, in the same Resolution, the Court granted a Temporary Restraining Order partially enjoining the implementation of the respondent Judge's Order of 16 March 1988 and the Writ of Preliminary Injunction issued therein, and allowing the petitioners to resume producing and filming those portions of the projected mini-series which do not make any reference to private respondent or his family or to any fictitious character based on or respondent. Private respondent seasonably filed his Consolidated Answer on 6 April 1988 invoking in the main a right of privacy. I The constitutional and legal issues raised by the present Petitions are sharply drawn. Petitioners' claim that in producing and "The Four Day Revolution," they are exercising their freedom of speech and of expression protected under our Constitution. Private respondent, upon the other hand, asserts a right of privacy and claims that the production and filming of the projected mini-series would constitute an unlawful intrusion into his privacy which he is entitled to enjoy. Considering first petitioners' claim to freedom of speech and of expression the Court would once more stress that this freedom includes the freedom to film and produce motion pictures and to exhibit such motion pictures in theaters or to diffuse them through television. In our day and age, motion pictures are a univesally utilized vehicle of communication and medium Of expression. Along with the press, radio and television, motion pictures constitute a principal medium of mass communication for information, education and entertainment. In Gonzales v. Katigbak, 3 former Chief Justice Fernando, speaking for the Court, explained:
1. Motion pictures are important both as a medium for the communication of Ideas and the expression of the artistic impulse. Their effect on the perception by our people of issues and public officials or public figures as well as the pre cultural traits is considerable. Nor as pointed out in Burstyn v. Wilson (343 US 495 [19421) is the Importance of motion pictures as an organ of public opinion lessened by the fact that they are designed to entertain as well as to inform' (Ibid, 501). There is no clear dividing line between what involves knowledge and what affords pleasure. If such a distinction were sustained, there is a diminution of the basic right to free expression. ... 4

This freedom is available in our country both to locally-owned and to foreign-owned motion picture companies. Furthermore the circumstance that the production of motion

picture films is a commercial activity expected to yield monetary profit, is not a disqualification for availing of freedom of speech and of expression. In our community as in many other countries, media facilities are owned either by the government or the private sector but the private sector-owned media facilities commonly require to be sustained by being devoted in whole or in pailt to revenue producing activities. Indeed, commercial media constitute the bulk of such facilities available in our country and hence to exclude commercially owned and operated media from the exerciseof constitutionally protected om of speech and of expression can only result in the drastic contraction of such constitutional liberties in our country. The counter-balancing of private respondent is to a right of privacy. It was demonstrated sometime ago by the then Dean Irene R. Cortes that our law, constitutional and statutory, does include a right of privacy. 5 It is left to case law, however, to mark out the precise scope and content of this right in differing types of particular situations. The right of privacy or "the right to be let alone," 6 like the right of free expression, is not an absolute right. A limited intrusion into a person's privacy has long been regarded as permissible where that person is a public figure and the information sought to be elicited from him or to be published about him constitute of apublic character. 7 Succinctly put, the right of privacy cannot be invoked resist publication and dissemination of matters of public interest. 8 The interest sought to be protected by the right of privacy is the right to be free from unwarranted publicity, from the wrongful publicizing of the private affairs and activities of an individual which are outside the realm of legitimate public concern. 9 Lagunzad v. Vda. de Gonzales, 10 on which private respondent relies heavily, recognized a right to privacy in a context which included a claim to freedom of speech and of expression. Lagunzad involved a suit fortion picture producer as licensee and the widow and family of the late Moises Padilla as licensors. This agreement gave the licensee the right to produce a motion Picture Portraying the life of Moises Padilla, a mayoralty candidate of the Nacionalista Party for the Municipality of Magallon, Negros Occidental during the November 1951 elections and for whose murder, Governor Rafael Lacson, a member of the Liberal Party then in power and his men were tried and convicted. 11 In the judgment of the lower court enforcing the licensing agreement against the licensee who had produced the motion picture and exhibited it but refused to pay the stipulated royalties, the Court, through Justice Melencio-Herrera, said:
Neither do we agree with petitioner's subon that the Licensing Agreement is null and void for lack of, or for having an illegal cause or consideration, while it is true that petitioner bad pled the rights to the book entitled "The Moises Padilla Story," that did not dispense with the need for prior consent and authority from the deceased heirs to portray publicly episodes in said deceased's life and in that of his mother and the member of his family. As held in Schuyler v. Curtis, ([1895],147 NY 434,42 NE 31 LRA 286.49 Am St Rep 671), 'a privilege may be given the surviving relatives of a deperson to protect his memory, but the privilege wts for the benefit of the living, to protect their feelings and to preventa violation of their own rights in the character and memory of the deceased.' Petitioners averment that private respondent did not have any property right over the life of Moises Padilla since the latter was a public figure, is neither well taken. Being a public figure ipso facto does not automatically destroy in toto a person's right to privacy. The right to invade a person's privacy to disseminate public information does not extend to a fictional

or novelized representation of a person, no matter how public a he or she may be (Garner v. Triangle Publications, DCNY 97 F. Supp., SU 549 [1951]). In the case at bar, while it is true that petitioner exerted efforts to present a true-to-life Story Of Moises Padilla, petitioner admits that he included a little romance in the film because without it, it would be a drab story of torture and brutality. 12

In Lagunzad, the Court had need, as we have in the instant case, to deal with contraposed claims to freedom of speech and of expression and to privacy. Lagunzad the licensee in effect claimed, in the name of freedom of speech and expression, a right to produce a motion picture biography at least partly "fictionalized" of Moises Padilla without the consent of and without paying pre-agreed royalties to the widow and family of Padilla. In rejecting the licensee's claim, the Court said:
Lastly, neither do we find merit in petitioners contention that the Licensing Agreement infringes on the constitutional right of freedom of speech and of the press, in that, as a citizen and as a newspaperman, he had the right to express his thoughts in film on the public life of Moises Padilla without prior restraint.The right freedom of expression, indeed, occupies a preferred position in the "hierarchy of civil liberties" (Philippine Blooming Mills Employees Organization v. Philippine Blooming Mills Co., Inc., 51 SCRA 191 [1963]). It is not, however, without limitations. As held in Gonzales v. Commission on Elections, 27 SCRA 835, 858 [1960]: xxx xxx xxx The prevailing doctine is that the clear and present danger rule is such a limitation. Another criterion for permissible limitation on freedom of speech and the press, which includes such vehicles of the mass media as radio, television and the movies, is the "balancing of interest test" (Chief Justice Enrique M. Fernando on the Bill of Rights, 1970 ed. p. 79). The principle "requires a court to take conscious and detailed consideration of the interplay of interests observable in given situation or type of situation" (Separation Opinion of the late Chief Justice Castro in Gonzales v. Commission on Elections, supra, p. 899). In the case at bar, the interests observable are the right to privacy asserted by respondent and the right of freedom of expression invoked by petitioner. taking into account the interplay of those interests, we hold that under the particular circumstances presented, and considering the obligations assumed in the Licensing Agreement entered into by petitioner, the validity of such agreement will have to be upheld particularly because the limits of freedom of expression are reached when expression touches upon matters of essentially private concern." 13

Whether the "balancing of interests test" or the clear and present danger test" be applied in respect of the instant Petitions, the Court believes that a different conclusion must here be reached: The production and filming by petitioners of the projected motion picture "The Four Day Revolution" does not, in the circumstances of this case, constitute an unlawful intrusion upon private respondent's "right of privacy." 1. It may be observed at the outset that what is involved in the instant case is a prior and direct restraint on the part of the respondent Judge upon the exercise of speech and of expression by petitioners. The respondent Judge has restrained petitioners from filming and producing the entire proposed motion picture. It is important to note that in Lagunzad, there was no prior restrain of any kind imposed upon the movie producer

who in fact completed and exhibited the film biography of Moises Padilla. Because of the speech and of expression, a weighty presumption of invalidity vitiates. 14 The invalidity of a measure of prior restraint doesnot, of course, mean that no subsequent liability may lawfully be imposed upon a person claiming to exercise such constitutional freedoms. The respondent Judge should have stayed his hand, instead of issuing an ex-parte Temporary Restraining Order one day after filing of a complaint by the private respondent and issuing a Preliminary Injunction twenty (20) days later; for the projected motion picture was as yet uncompleted and hence not exhibited to any audience. Neither private respondent nor the respondent trial Judge knew what the completed film would precisely look like. There was, in other words, no "clear and present danger" of any violation of any right to privacy that private respondent could lawfully assert. 2. The subject matter of "The Four Day Revolution" relates to the non-bloody change of government that took place at Epifanio de los Santos Avenue in February 1986, and the trian of events which led up to that denouement. Clearly, such subject matter is one of public interest and concern. Indeed, it is, petitioners' argue, of international interest. The subject thus relates to a highly critical stage in the history of this countryand as such, must be regarded as having passed into the public domain and as an appropriate subject for speech and expression and coverage by any form of mass media. The subject mater, as set out in the synopsis provided by the petitioners and quoted above, does not relate to the individual life and certainly not to the private life of private respondent Ponce Enrile. Unlike in Lagunzad, which concerned the life story of Moises Padilla necessarily including at least his immediate family, what we have here is not a film biography, more or less fictionalized, of private respondent Ponce Enrile. "The Four Day Revolution" is not principally about, nor is it focused upon, the man Juan Ponce Enrile' but it is compelled, if it is to be historical, to refer to the role played by Juan Ponce Enrile in the precipitating and the constituent events of the change of government in February 1986. 3. The extent of the instrusion upon the life of private respondent Juan Ponce Enrile that would be entailed by the production and exhibition of "The Four Day Revolution" would, therefore, be limited in character. The extent of that intrusion, as this Court understands the synopsis of the proposed film, may be generally described as such intrusion as is reasonably necessary to keep that film a truthful historical account. Private respondent does not claim that petitioners threatened to depict in "The Four Day Revolution" any part of the private life of private respondent or that of any member of his family. 4. At all relevant times, during which the momentous events, clearly of public concern, that petitioners propose to film were taking place, private respondent was what Profs. Prosser and Keeton have referred to as a "public figure:"
A public figure has been defined as a person who, by his accomplishments, fame, or mode of living, or by adopting a profession or calling which gives the public a legitimate interest in his doings, his affairs, and his character, has become a 'public personage.' He is, in other words, a celebrity. Obviously to be included in this category are those who have achieved some degree of reputation by appearing before the public, as in the case of an actor, a professional baseball player, a pugilist, or any other entertainment. The list is, however, broader than this. It includes public officers, famous inventors and explorers, war heroes

and even ordinary soldiers, an infant prodigy, and no less a personage than the Grand Exalted Ruler of a lodge. It includes, in short, anyone who has arrived at a position where public attention is focused upon him as a person. Such public figures were held to have lost, to some extent at least, their tight to privacy. Three reasons were given, more or less indiscrimately, in the decisions" that they had sought publicity and consented to it, and so could not complaint when they received it; that their personalities and their affairs has already public, and could no longer be regarded as their own private business; and that the press had a privilege, under the Constitution, to inform the public about those who have become legitimate matters of public interest. On one or another of these grounds, and sometimes all, it was held that there was no liability when they were given additional publicity, as to matters legitimately within the scope of the public interest they had aroused. The privilege of giving publicity to news, and other matters of public interest, was held to arise out of the desire and the right of the public to know what is going on in the world, and the freedom of the press and other agencies of information to tell it. "News" includes all events and items of information which are out of the ordinary hum-drum routine, and which have 'that indefinable quality of information which arouses public attention.' To a very great extent the press, with its experience or instinct as to what its readers will want, has succeeded in making its own definination of news, as a glance at any morning newspaper will sufficiently indicate. It includes homicide and othe crimes, arrests and police raides, suicides, marriages and divorces, accidents, a death from the use of narcotics, a woman with a rare disease, the birth of a child to a twelve year old girl, the reappearance of one supposed to have been murdered years ago, and undoubtedly many other similar matters of genuine, if more or less deplorable, popular appeal. The privilege of enlightening the public was not, however, limited, to the dissemination of news in the scene of current events. It extended also to information or education, or even entertainment and amusement, by books, articles, pictures, films and broadcasts concerning interesting phases of human activity in general, as well as the reproduction of the public scene in newsreels and travelogues. In determining where to draw the line, the courts were invited to exercise a species of censorship over what the public may be permitted to read; and they were understandably liberal in allowing the benefit of the doubt.
15

Private respondent is a "public figure" precisely because, inter alia, of his participation as a principal actor in the culminating events of the change of government in February 1986. Because his participation therein was major in character, a film reenactment of the peaceful revolution that fails to make reference to the role played by private respondent would be grossly unhistorical. The right of privacy of a "public figure" is necessarily narrower than that of an ordinary citizen. Private respondent has not retired into the seclusion of simple private citizenship. he continues to be a "public figure." After a successful political campaign during which his participation in the EDSA Revolution was directly or indirectly referred to in the press, radio and television, he sits in a very public place, the Senate of the Philippines. 5. The line of equilibrium in the specific context of the instant case between the constitutional freedom of speech and of expression and the right of privacy, may be marked out in terms of a requirement that the proposed motion picture must be fairly truthful and historical in its presentation of events. There must, in other words, be no knowing or reckless disregard of truth in depicting the participation of private respondent

in the EDSA Revolution. 16 There must, further, be no presentation of the private life of the unwilling private respondent and certainly no revelation of intimate or embarrassing personal facts. 17 The proposed motion picture should not enter into what Mme. Justice Melencio-Herrera in Lagunzad referred to as "matters of essentially private concern." 18 To the extent that "The Four Day Revolution" limits itself in portraying the participation of private respondent in the EDSA Revolution to those events which are directly and reasonably related to the public facts of the EDSA Revolution, the intrusion into private respondent's privacy cannot be regarded as unreasonable and actionable. Such portrayal may be carried out even without a license from private respondent. II In a Manifestation dated 30 March 1988, petitioner Hal McElroy informed this Court that a Temporary Restraining Order dated 25 March 1988, was issued by Judge Teofilo Guadiz of the Regional Trial Court of Makati, Branch 147, in Civil Case No. 88-413, entitled "Gregorio B. Honasan vs. Ayer Productions Pty. Ltd., McElroy Film Productions, Hal McElroy, Lope Juban and PMP Motion for Pictures Production" enjoining him and his production company from further filimg any scene of the projected mini-series film. Petitioner alleged that Honasan's complaint was a "scissors and paste" pleading, cut out straight grom the complaint of private respondent Ponce Enrile in Civil Case No. 88151. Petitioner Ayer Productions, in a separate Manifestation dated 4 April 1988, brought to the attention of the Court the same information given by petitoner Hal McElroy, reiterating that the complaint of Gregorio B. Honasan was substantially identical to that filed by private respondent herein and stating that in refusing to join Honasan in Civil Case No. 88-151, counsel for private respondent, with whom counsel for Gregorio Honasan are apparently associated, deliberately engaged in "forum shopping." Private respondent filed a Counter-Manifestation on 13 April 1988 stating that the "slight similarity" between private respondent's complaint and that on Honasan in the construction of their legal basis of the right to privacy as a component of the cause of action is understandable considering that court pleadings are public records; that private respondent's cause of action for invasion of privacy is separate and distinct from that of Honasan's although they arose from the same tortious act of petitioners' that the rule on permissive joinder of parties is not mandatory and that, the cited cases on "forum shopping" were not in point because the parties here and those in Civil Case No. 88413 are not identical. For reasons that by now have become clear, it is not necessary for the Court to deal with the question of whether or not the lawyers of private respondent Ponce Enrile have engaged in "forum shopping." It is, however, important to dispose to the complaint filed by former Colonel Honasan who, having refused to subject himself to the legal processes of the Republic and having become once again in fugitive from justice, must be deemed to have forfeited any right the might have had to protect his privacy through court processes.

WHEREFORE, a) the Petitions for Certiorari are GRANTED DUE COURSE, and the Order dated 16 March 1988 of respondent trial court granting a Writ of Preliminary Injunction is hereby SET ASIDE. The limited Temporary Restraining Order granted by this Court on 24 March 1988 is hereby MODIFIED by enjoining unqualifiedly the implementation of respondent Judge's Order of 16 March 1988 and made PERMANENT, and b) Treating the Manifestations of petitioners dated 30 March 1988 and 4 April 1988 as separate Petitions for Certiorari with Prayer for Preliminary Injunction or Restraining Order, the Court, in the exercise of its plenary and supervisory jurisdiction, hereby REQUIRES Judge Teofilo Guadiz of the Regional Trial Court of Makati, Branch 147, forthwith to DISMISS Civil Case No. 88-413 and accordingly to SET ASIDE and DISSOLVE his Temporary Restraining Order dated 25 March 1988 and any Preliminary Injunction that may have been issued by him. No pronouncement as to costs. SO ORDERED. Yap, C.J., Fernan, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Gancayco, Padilla, Bidin, Sarmiento, Cortes and Grio-Aquino, JJ., concur.

Footnotes
1 On April 7, 1988, petitioners, in G.R. No. 82380 asked for deletion Production's as party petitioner qqqt company but merely a corporate tradename used by Ayer Productions. "McElroy and McElroy Film Production's" will therefore be disregarded in this Decision. 2 Annex "A" of the Petitions. 3 137 SCRA 717 (1985). 4 137 SCRA at 723. 5 The Constitutional Foundations of Privacy," in Cortes, Emerging Trends in Law, pp.1-70 (Univ. of the Philippines Press, 1983). This lecture was originally delivered in 1970. 6 See Cortes, supra, Note 5 at 12 et seq. where she traces the history of the development of privacy as a concept 7 Prosser and Keeton on Torts, 5th ed., pp. 854-863 (1984); and see, e.g., Strykers v. Republic Producers Corp., 238 P. 2d 670 (1952). 8 Nixon v. Administrator of General Services, 433 U.S. 425, 63 L Ed. 2d 867 (1977). 9 Smith v. National Broadcasting Co., 292 P 2d 600 (1956); underscoring supplied. 10 92 SCRA 476 (1979). 11 People v. Lacson, et al., 111 Phil. 1 (1961).

12 92 SCRA 486-487. 13 92 SCRA at 488-489; Emphasis supplied. 14 Mutuc v. Commission on Elections, 36 SCRA 228 (1970); New York Items Co. v. United States, 403 U.S. 713, 29 L Ed, 2d 822 (1971); Times Film Corporation v. City of Chicago, 365 U.S. 43 5 L Ed. 2d 403 (1961); Near v. Minnesota, 283 U.S. 67 L Ed. 1357 (1931). 15 Prosper and Keeton on Torts, 5th ed. at 859-861 (1984); underscoring supplied

Republic of the Philippines SUPREME COURT Manila G.R. No. 92541 November 13, 1991 MA. CARMEN G. AQUINO-SARMIENTO, petitioner, vs. MANUEL L. MORATO (in his capacity as Chairman of the MTRCB) and the MOVIE & TELEVISION REVIEW AND CLASSIFICATION BOARD, respondents. Araullo, Zambrano, Gruba, Chua Law Firm for petitioner. Francisco Ma. Chanco for respondents.

BIDIN, J.:p At issue in this petition is the citizen's right of access to official records as guaranteed by the constitution. In February 1989, petitioner, herself a member of respondent Movie and Television Review and Classification Board (MTRCB), wrote its records officer requesting that she be allowed to examine the board's records pertaining to the voting slips accomplished by the individual board members after a review of the movies and television productions. It is on the basis of said slips that films are either banned, cut or classified accordingly. Acting on the said request, the records officer informed petitioner that she has to secure prior clearance from respondent Manuel Morato, as chairman of MTRCB, to gain access to the records sought to be examined. Petitioner's request was eventually denied by respondent Morato on the ground that whenever the members of the board sit in judgment over a film, their decisions as reflected in the individual voting slips partake the nature of conscience votes and as such, are purely and completely private and personal. It is the submission of respondents that the individual voting slips is the exclusive property of the member

concerned and anybody who wants access thereto must first secure his (the member's) consent, otherwise, a request therefor may be legally denied. Petitioner argues, on the other hand, that the records she wishes to examine are public in character and other than providing for reasonable conditions regulating the manner and hours of examination, respondents Morato and the classification board have no authority to deny any citizen seeking examination of the board's records. On February 27, 1989, respondent Morato called an executive meeting of the MTRCB to discuss, among others, the issue raised by petitioner. In said meeting, seventeen (17) members of the board voted to declare their individual voting records as classified documents which rendered the same inaccessible to the public without clearance from the chairman. Thereafter, respondent Morato denied petitioner's request to examine the voting slips. However, it was only much later, i.e., on July 27, 1989, that respondent Board issued Resolution No. 10-89 which declared as confidential, private and personal, the decision of the reviewing committee and the voting slips of the members. Petitioner brought the matter to the attention of the Executive Secretary, which in turn, referred the same to respondent Morato for appropriate comment. Another incident which gave rise to this petition occurred in a board meeting held on June 22, 1989. In that meeting, respondent Morato told the board that he has ordered some deletions on the movie "Mahirap ang Magmahal" notwithstanding the fact that said movie was earlier approved for screening by the Board with classification "R-18 without cuts". He explained that his power to unilaterally change the decision of the Review Committee is authorized by virtue of MTRCB Resolution No. 88-1-25 (dated June 22,1988) which allows the chairman of the board "to downgrade a film (already) reviewed especially those which are controversial." Petitioner informed the Board, however, that respondent Morato possesses no authority to unilaterally reverse a decision of the review committee under PD 1986 (Creating the Movie and Television Review and Classification Board). After the matter was referred by the Deputy Executive Secretary to the Justice Secretary, the latter opined that PD 1896 does not vest respondent Morato any authority to unilaterally reverse the decision of the review committee but declined to comment on the constitutionality of Res. No. 10-89 on the ground that the resolution thereof is a judicial prerogative (Rollo, pp. 38-42). The Justice Secretary's opinion to the contrary notwithstanding, respondent Morato opted to ignore it. Hence, this petition anchored on the following: A. MORATO AND THE MTRCB BY APPROVING AND ENFORCING RESOLUTION NO. 10-89 ACTED WITH GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK

OF JURISDICTION BECAUSE THE SAME VIOLATES ARTICLE III SECTION 7 OF THE 1987 CONSTITUTION. B. MTRCB RESOLUTION NO. 88-1-25 HAS NO LEGAL BASIS AND CONSTITUTES AN UNLAWFUL DELEGATION OF DISCRETIONARY POWERS. C. MORATO AND THE MTRCB BY REFUSING TO ABIDE BY OPINION NO. 1 SERIES OF 1990 OF THE SECRETARY OF JUSTICE AND BY INSISTING ON THE VALIDITY OF RESOLUTION NO. 88-1-25 ACTED CAPRICIOUSLY, ARBITRARILY, IN BAD FAITH, IN EXCESS OF THEIR JURISDICTION, AND WITH GRAVE ABUSE OF DISCRETION. Petitioner therefore seeks the nullification of 1) MTRCB Resolution No. 88-1-25 which allows the Chairman of the Board to unilaterally downgrade a film (already) reviewed especially those which are controversial and 2) MTRCB RESOLUTION No. 10-89 (dated July 27, 1989) declaring as strictly confidential, private and personal a) the decision of a reviewing committee which previously reviewed a certain film and b) the individual voting slips of the members of the committee that reviewed the film. Respondents argue at the outset that the instant petition should be dismissed outright for having failed to comply with the doctrine of exhaustion of administrative remedies. We disagree. The doctrine of exhaustion of administrate remedies simply provides that before a party litigant is allowed resort to the courts, he is required to comply with all administrative remedies available under the law (Rosales v. Court of Appeals, 165 SCRA 344 [1988]). The rationale behind this salutory principle is that for reasons of practical considerations, comity and convenience, the courts of law will not entertain a case until all the available administrative remedies provided by law have been resorted to and the appropriate authorities have been given ample opportunity to act and to correct the errors committed in the administrative level. If the error is rectified, judicial intervention would then be unnecessary. Nonetheless, the doctrine of exhaustion of administrative remedies is not absolute. The applicability of the principle admits of certain exceptions, such as: 1) when no administrative review is provided by law; 2) when the only question involved is one of law (Valmonte v. Valmonte, 170 SCRA 256 [1989], citing Aguilar v. Valencia, 40 SCRA 210 [1971]; Malabanan v. Ramento, 129 SCRA 359 [1984]; Bagatsing v. Ramirez, 74 SCRA 306; Del Mar v. Philippine Veterans Administration, 51 SCRA 340 [1973]; Pascual v. Provincial Board, 106 Phil. 466 [1959]; 3) where the party invoking the doctrine is guilty of estoppel (Vda. de Tan v. Veterans' Backpay Commission [1969]; 4) where the challenged administrative action is patently illegal, arbitrary and oppressive (Azur v. Provincial Board, 27 SCRA 50 [1969]; National Development Co. v. Collector of Customs of Manila, 9 SCRA 429 [1963]; 5) where there is unreasonable delay or official inaction that would greatly prejudice the complainant (Gravador v. Mamigo, 20 SCRA 742 [1967]; Azuelo v. Arnaldo, 108 Phil. 293 [1960]; 6) where to exhaust administrative review is impractical and unreasonable (Cipriano v. Marcelino, 43 SCRA 291); and 7)

where the rule of qualified political agency applies (Demaisip v. Court of Appeals, 106 Phil. 237 [1906]). The issue raised in the instant petition is one of law, hence the doctrine of nonexhaustion of administrative remedy relied upon by respondents is inapplicable and cannot be given any effect. At any rate, records are replete with events pointing to the fact that petitioner adhered to the administrative processes in the disposition of the assailed resolutions of public respondents prior to filing the instant petition by, among others, writing the Executive Secretary and bringing the matter to the attention of the Office of the President (Rollo, pp. 145-147). Respondents' claim that petitioner failed to exhaust administrative remedies must therefore fail. Having disposed of the procedural objection raised by respondents, We now proceed to resolve the issues raised by petitioner. In this regard, We find respondents' refusal to allow petitioner to examine the records of respondent MTRCB, pertaining to the decisions of the review committee as well as the individual voting slips of its members, as violative of petitioner's constitutional right of access to public records. More specifically, Sec. 7, Art. III of the Constitution provides that:
The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law. (emphasis supplied)

As We held in Legaspi v. Civil Service Commission (150 SCRA 530 [1987]), this constitutional provision is self-executory and supplies "the rules by means of which the right to information may be enjoyed (Cooley, A Treatise on Constitutional Limitations 167 [1927]) by guaranteeing the right and mandating the duty to afford access to sources of information. Hence, the fundamental right therein recognized may be asserted by the people upon the ratification of the constitution without need for any ancillary act of the Legislature (Id. at 165). What may be provided for by the Legislature are reasonable conditions and limitations upon the access to be afforded which must, of necessity, be consistent with the declared State Policy of full public disclosure of all transactions involving public interest (Constitution, Art. II, Sec. 28)." (See also Taada v. Tuvera, 136 SCRA 27 [1985]; Valmonte v. Belmonte, Jr., 170 SCRA 256 [1989]). Respondents contend, however, that what is rendered by the members of the board in reviewing films and reflected in their individual voting slip is their individual vote of conscience on the motion picture or television program and as such, makes the individual voting slip purely private and personal; an exclusive property of the member concerned. The term private has been defined as "belonging to or concerning, an individual person, company, or interest"; whereas, public means "pertaining to, or belonging to, or affecting a nation, state, or community at large" (People v. Powell, 274 NW 372 [1937]). May the decisions of respondent Board and the individual members concerned, arrived

at in an official capacity, be considered private? Certainly not. As may be gleaned from the decree (PD 1986) creating the respondent classification board, there is no doubt that its very existence is public is character; it is an office created to serve public interest. It being the case, respondents can lay no valid claim to privacy. The right to privacy belongs to the individual acting in his private capacity and not to a governmental agency or officers tasked with, and acting in, the discharge of public duties (See Valmonte v. Belmonte, Jr., supra.) There can be no invasion of privacy in the case at bar since what is sought to be divulged is a product of action undertaken in the course of performing official functions. To declare otherwise would be to clothe every public official with an impregnable mantle of protection against public scrutiny for their official acts. Further, the decisions of the Board and the individual voting slips accomplished by the members concerned are acts made pursuant to their official functions, and as such, are neither personal nor private in nature but rather public in character. They are, therefore, public records access to which is guaranteed to the citizenry by no less than the fundamental law of the land. Being a public right, the exercise thereof cannot be made contingent on the discretion, nay, whim and caprice, of the agency charged with the custody of the official records sought to be examined. The constitutional recognition of the citizen's right of access to official records cannot be made dependent upon the consent of the members of the board concerned, otherwise, the said right would be rendered nugatory. As stated by this Court in Subido v. Ozaeta (80 Phil. 383 [1948]):
Except, perhaps when it is clear that the purpose of the examinations is unlawful, or sheer, idle curiosity, we do not believe it is the duty under the law of registration officers to concern themselves with the motives, reasons, and objects of the person seeking access to the records. It is not their prerogative to see that the information which the records contain is not flaunted before public gaze, or that scandal is not made of it. If it be wrong to publish the contents of the records, it is the legislature and not the officials having custody thereof which is called upon to devise a remedy. (emphasis supplied)

It is significant to point out that this Court in the 1948 case of Subido v. Ozaeta, supra, upheld the right to information based on the statutory right then provided in Sec. 56 of the Land Registration Act (Act 496, as amended). Consequently, We see no cogent reason why said right, now constitutionalized, should be given less efficacy and primacy than what the fundament law mandates. The Court is not unaware of RA 6713 (Code of Conduct and Ethical Standards for Public Officials and Employees) which provides, among others, certain exceptions as regards the availability of official records or documents to the requesting public, e.g., closed door Cabinet sessions and deliberations of this Court. Suffice it to state, however, that the exceptions therein enumerated find no application in the case at bar. Petitioner request is not concerned with the deliberations of respondent Board but with its documents or records made after a decision or order has been rendered. Neither will the examination involve disclosure of trade secrets or matters pertaining to national security which would otherwise limit the right of access to official records (See Legaspi v. Civil Service Commission, supra).

We are likewise not impressed with the proposition advanced by respondents that respondent Morato is empowered by PD 1986 to unilaterally downgrade or upgrade a film reviewed especially those which are controversial. The pertinent provisions of said decree provides:
Sec 4. Decision. The decision of the BOARD either approving or disapproving for exhibition in the Philippines a motion picture, television program, still and other pictorial advertisement submitted to it for examination and preview must be rendered within a period of ten (10) days which shall be counted from the date of receipt by the BOARD of an application for the purpose . . . For each review session, the Chairman of the Board shall designate a sub-committee composed of at least three BOARD members to undertake the work of review. Any disapproval or deletion must be approved by a majority of the sub-committee members so designated. After receipt of the written decision of the sub-committee, a motion for reconsideration in writing may be made, upon which the Chairman of the Board shall designate a sub-committee of five BOARD members to undertake a second review session, whose decision on behalf of the Board shall be rendered through a majority of the sub-committee members so designated and present at the second review session. This second review session shall be presided over by the Chairman, or the Vice-Chairman. The decision of the BOARD in the second review session shall be rendered within five (5) days from the date of receipt of the motion for reconsideration. Every decision of the BOARD disapproving a motion picture, television program or publicity material for exhibition in the Philippines must be in writing, and shall state the reasons or grounds for such disapproval. No film or motion picture intended for exhibition at the moviehouses or theaters or on television shall be disapproved by reason of its topic, theme or subject matter, but upon the merits of each picture or program considered in its entirety. The second decision of the BOARD shall be final, with the exception of a decision disapproving or prohibiting a motion picture or television program in its entirety which shall be appealable to the President of the Philippines, who may himself decide the appeal, or be assisted either by an ad hoe committee he may create or by the Appeals Committee herein created. An Appeals Committee in the Office of the President of the Philippines is hereby created composed of a Chairman and four (4) members to be appointed by the President of the Philippines, which shall submit its recommendation to the President. The Office of the Presidential Assistant for Legal Affairs shall serve as the Secretariat of the Appeals Committee. The decision of the President of the Philippines on any appealed matter shall be final.

Implementing Rules and Regulations

Sec 11. Review by Sub-Committee of Three. a) A proper application having been filed, the Chairman of the Board shall, as the exigencies of the service may permit, designate a Sub-Committee of at least three Board Members who shall meet, with notice to the applicant, within ten days from receipt of the completed application. The Sub-Committee shall then preview the motion picture subject of the application. b) Immediately after the preview, the applicant or his representative shall withdraw to await the results of the deliberation of the Sub-Committee. After reaching a decision, the Sub-

Committee shall summon the applicant or his representative and inform him of its decision giving him an opportunity either to request reconsideration or to offer certain cuts or deletions in exchange for a better classification. The decision shall be in writing, stating, in case of disapproval of the film or denial of the classification rating desired or both, the reason or reasons for such disapproval or denial and the classification considered by the Sub-Committee member dissenting from the majority opinion may express his dissent in writing. c) The decision including the dissenting opinion, if any, shall immediately be submitted to the Chairman of the Board for transmission to the applicant. Sec 12. Review by Sub-Committee of Five. Within five days from receipt of a copy of the decision of the Sub-Committee referred to in the preceding section, the applicant may file a motion for reconsideration in writing of that decision. On receipt of the motion, the Chairman of the Board shall designate a Sub-Committee of Five Board Members which shall consider the motion and, within five days of receipt of such motion, conduct a second preview of the film. The review shall, to the extent applicable, follow the same procedure provided in the preceding section. Sec 13. Reclassification. An applicant desiring a change in the classification rating given his film by either the Sub-Committee of Three? or Committee of Five mentioned in the immediately preceeding two sections may re-edit such film and apply anew with the Board for its review and reclassification. Sec 14. Appeal. The decision of the Committee of Five Board Members in the second review shall be final, with the exception of a decision disapproving or prohibiting a motion picture in its entirety which shall be appealable to the President of the Philippines who may himself decide the appeal or refer it to the Appeals Committee in the Office of the President for adjudication.

On the other hand, the powers and functions of the MTRCB Chairman are found in Section 5 of the same decree as follows:
Sec. 5. Executive Officer. The Chairman of the BOARD shall be the Chief Executive Officer of the BOARD. He shall exercise the following functions, powers and duties: (a) Execute, implement and enforce the decisions, orders, awards, rules and regulations issued by the BOARD; (b) Direct and supervise the operations and the internal affairs of the BOARD; (c) Establish the internal organization and administrative procedures of the BOARD, and recommend to the BOARD the appointment of the necessary administrative and subordinate personnel; and (d) Exercise such other powers and functions and perform such duties as are not specifically lodged in the BOARD.

It is at once apparent from a reading of the above provisions of PD 1986 that respondent Morato, as Chairman of the MTRCB, is not vested with any authority to reverse or overrule by himself alone a decision rendered by a committee which conducted a review of motion pictures or television programs.

The power to classify motion pictures into categories such as "General Patronage" or "For Adults Only" is vested with the respondent Board itself and not with the Chairman thereof (Sec. 3 [e], PD 1986). As Chief Executive Officer, respondent Morato's function as Chairman of the Board calls for the implementation and execution, not modification or reversal, of the decisions or orders of the latter (Sec. 5 [a], Ibid.). The power of classification having been reposed by law exclusively with the respondent Board, it has no choice but to exercise the same as mandated by law, i.e., as a collegial body, and not transfer it elsewhere or discharge said power through the intervening mind of another. Delegata potestas non potest delegari a delegated power cannot be delegated. And since the act of classification involves an exercise of the Board's discretionary power with more reason the Board cannot, by way of the assailed resolution, delegate said power for it is an established rule in administrative law that discretionary authority cannot be a subject of delegation. WHEREFORE, the instant petition is GRANTED. Resolution Nos. 10-89 and 88-1-25 issued by the respondent Board are hereby declared null and void. SO ORDERED. Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Medialdea, Regalado and Davide, Jr., JJ., concur. Grio-Aquino and Romero, JJ., took no part. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-46061 November 14, 1984 ST. LOUIS REALTY CORPORATION, petitioner, vs. COURT OF APPEALS and CONRADO J. ARAMIL, respondents. Romeo Z. Comia for petitioner. Roman R. Bersamin for private respondent.

AQUINO, J.:

This case is about the recovery of damages for a wrongful advertisement in the Sunday Times where Saint Louis Realty Corporation misrepresented that the house of Doctor Conrado J. Aramil belonged to Arcadio S. Arcadio. St. Louis Realty caused to be published with the permission of Arcadio S. Arcadio (but without permission of Doctor Aramil) in the issue of the Sunday Times of December 15, 1968 an advertisement with the heading "WHERE THE HEART IS". Below that heading was the photograph of the residence of Doctor Aramil and the Arcadio family and then below the photograph was the following write-up:
Home is where the heart is. And the hearts of MR. AND MRS. ARCADIO S. ARCADIO and their family have been captured by BROOKSIDE HILLS. They used to rent a small 2bedroom house in a cramped neighborhood, sadly inadequate and unwholesome for the needs of a large family. They dream(ed) of a more pleasant place free from the din and dust of city life yet near all facilities. Plans took shape when they heard of BROOKSIDE HILLS. With thrift and determination, they bought a lot and built their dream house ... for P31,000. The Arcadios are now part of the friendly, thriving community of BROOKSIDE HILLS... a beautiful first-class subdivision planned for wholesome family living.

The same advertisement appeared in the Sunday Times dated January 5, 1969. Doctor Aramil a neuropsychiatrist and a member of the faculty of the U. E. Ramon Magsaysay Memorial Hospital, noticed the mistake. On that same date, he wrote St. Louis Realty the following letter of protest:
Dear Sirs: This is anent to your advertisements appearing in the December 15, 1968 and January 5, 1969 issues of the Sunday Times which boldly depicted my house at the above-mentioned address and implying that it belonged to another person. I am not aware of any permission or authority on my part for the use of my house for such publicity. This unauthorized use of my house for your promotional gain and much more the apparent distortions therein are I believe not only transgression to my private property but also damaging to my prestige in the medical profession I have had invited in several occasions numerous medical colleagues, medical students and friends to my house and after reading your December 15 advertisement some of them have uttered some remarks purporting doubts as to my professional and personal integrity. Such sly remarks although in light vein as "it looks like your house," "how much are you renting from the Arcadios?", " like your wife portrayed in the papers as belonging to another husband," etc., have resulted in no little mental anguish on my part. I have referred this matter to the Legal Panel of the Philippine Medical Association and their final advice is pending upon my submission of supporting ownership papers. I will therefore be constrained to pursue court action against your corporation unless you could satisfactorily explain this matter within a week upon receipt of this letter.

The letter was received by Ernesto Magtoto, an officer of St. Louis Realty in charge of advertising. He stopped publication of the advertisement. He contacted Doctor Aramil and offered his apologies. However, no rectification or apology was published.

On February 20, 1969, Aramil's counsel demanded from St. Louis Realty actual, moral and exemplary damages of P110,000 (Exh. D). In its answer dated March 10, St. Louis Realty claimed that there was an honest mistake and that if Aramil so desired, rectification would be published in the Manila Times (Exh. 3). It published in the issue of the Manila Times of March 18, 1969 a new advertisement with the Arcadio family and their real house. But it did not publish any apology to Doctor Aramil and an explanation of the error. On March 29, Aramil filed his complaint for damages. St. Louis Realty published in the issue of the Manila Times of April 15, 1969 the following "NOTICE OF RECTIFICATION" in a space 4 by 3 inches:
This will serve as a notice that our print ad 'Where the Heart is' which appeared in the Manila Times issue of March 18, 1969 is a rectification of the same ad that appeared in the Manila Times issues rectification of the same ad that appeal of December 15, 1968 and January 5, 1969 wherein a photo of the house of another Brookside Homeowner (Dr. Aramil-private respondent) was mistakenly used as a background for the featured homeowner's the Arcadio family. The ad of March 18, 1969 shows the Arcadio family with their real house in the background, as was intended all along.

Judge Jose M. Leuterio observed that St. Louis Realty should have immediately published a rectification and apology. He found that as a result of St. Louis Realty's mistake, magnified by its utter lack of sincerity, Doctor Aramil suffered mental anguish and his income was reduced by about P1,000 to P1,500 a month. Moreover, there was violation of Aramil's right to privacy (Art. 26, Civil Code). The trial court awarded Aramil P8,000 as actual damages, P20,000 as moral damages and P2,000 as attorney's fees. St. Louis Realty appealed to the Court of Appeals. The Appellate Court affirmed that judgment, with Acting Presiding Justice Magno S. Gatmaitan as ponente, and Justices Sixto A. Domondon and Samuel F. Reyes concurring. The Appellate Court reasoned out that St. Louis Realty committed an actionable quasidelict under articles 21 and 26 of the Civil Code because the questioned advertisements pictured a beautiful house which did not belong to Arcadio but to Doctor Aramil who, naturally, was annoyed by that contretemps. In this appeal, St. Louis Realty contends that the Appellate Court ignored certain facts and resorted to surmises and conjectures. This contention is unwarranted. The Appellate Court adopted the facts found by the trial court. Those factual findings are binding on this Court. St. Louis Realty also contends that the decision is contrary to law and that the case was decided in a way not in conformity with the rulings of this Court. It argues that the case

is not covered by article 26 which provides that "every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons". "Prying into the privacy of another's residence" and "meddling with or disturbing the private life or family relations of another" and "similar acts", "though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief". The damages fixed by Judge Leuterio are sanctioned by Articles 2200, 2208 and 2219 of the Civil Code. Article 2219 allows moral damages for acts and actions mentioned in Article 26. As lengthily explained by Justice Gatmaitan, the acts and omissions of the firm fan under Article 26. St. Louis Realty's employee was grossly negligent in mixing up the Aramil and Arcadio residences in a widely circulated publication like the Sunday Times. To suit its purpose, it never made any written apology and explanation of the mix-up. It just contented itself with a cavalier "rectification ". Persons, who know the residence of Doctor Aramil, were confused by the distorted, lingering impression that he was renting his residence from Arcadio or that Arcadio had leased it from him. Either way, his private life was mistakenly and unnecessarily exposed. He suffered diminution of income and mental anguish. WHEREFORE, the judgment of the Appellate Court is affirmed. Costs against the petitioner. SO ORDERED. Makasiar, Concepcion, Jr., Abad Santos, Escolin and Cuevas, JJ., concur.

FIRST DIVISION
[G.R. No. 128845. June 1, 2000]

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs. HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary of Labor and Employment; DR. BRIAN MACCAULEY in his capacity as the Superintendent of International School-Manila; and INTERNATIONAL SCHOOL, INC., respondents. DECISION
KAPUNAN, J.: Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent School, mostly Filipinos, cry discrimination. We agree. That the local-hires

are paid more than their colleagues in other schools is, of course, beside the point. The point is that employees should be given equal pay for work of equal value. That is a principle long honored in this jurisdiction. That is a principle that rests on fundamental notions of justice. That is the principle we uphold today. Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents. [1] To enable the School to continue carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree authorizes the School to
105

employ its own teaching and management personnel selected by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their employment, except laws that have been or will be enacted for the protection of employees. Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire: a.....What is one's domicile? b.....Where is one's home economy? c.....To which country does one owe economic allegiance? d.....Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that individual to the Philippines?
[2]

106

Should the answer to any of these queries point to the Philippines, the faculty member is classified as a local hire; otherwise, he or she is deemed a foreign-hire. The School grants foreign-hires certain benefits not accorded local-hires. These include housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than localhires. The School justifies the difference on two "significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The School explains:

105[1] Issued on June 19, 1975 (authorizing International School, Inc. to Donate Its Real Properties to the Government of the Republic of the Philippines and Granting It Certain Rights.) 106[2] Rollo, p. 328.

A foreign-hire would necessarily have to uproot himself from his home country, leave his family and friends, and take the risk of deviating from a promising career path-all for the purpose of pursuing his profession as an educator, but this time in a foreign land. The new foreign hire is faced with economic realities: decent abode for oneself and/or for one's family, effective means of transportation, allowance for the education of one's children, adequate insurance against illness and death, and of course the primary benefit of a basic salary/retirement compensation. Because of a limited tenure, the foreign hire is confronted again with the same economic reality after his term: that he will eventually and inevitably return to his home country where he will have to confront the uncertainty of obtaining suitable employment after a long period in a foreign land. The compensation scheme is simply the School's adaptive measure to remain competitive on an international level in terms of attracting competent professionals in the field of international education. [3]
107

When negotiations for a new collective bargaining agreement were held on June 1995, petitioner International School Alliance of Educators, "a legitimate labor union and the collective bargaining representative of all faculty members" [4] of the School, contested the difference in salary rates between foreign and local-hires. This issue, as well as the question of whether foreign-hires should be included in the appropriate bargaining unit, eventually caused a deadlock between the parties.
108

On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation and Mediation Board to bring the parties to a compromise prompted the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. On June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and representation issues in favor of the School. Then DOLE Secretary Leonardo A. Quisumbing subsequently denied petitioner's motion for reconsideration in an Order dated March 19, 1997. Petitioner now seeks relief in this Court. Petitioner claims that the point-of-hire classification employed by the School is discriminatory to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination. The School disputes these claims and gives a breakdown of its faculty members, numbering 38 in all, with nationalities other than Filipino, who have been hired locally

107[3] Id., at 324. 108[4] Id., at 8.

and classified as local hires. [5]The Acting Secretary of Labor found that these nonFilipino local-hires received the same benefits as the Filipino local-hires:
109

The compensation package given to local-hires has been shown to apply to all, regardless of race. Truth to tell, there are foreigners who have been hired locally and who are paid equally as Filipino local hires. [6]
110

The Acting Secretary upheld the point-of-hire classification for the distinction in salary rates: The principle "equal pay for equal work" does not find application in the present case. The international character of the School requires the hiring of foreign personnel to deal with different nationalities and different cultures, among the student population. We also take cognizance of the existence of a system of salaries and benefits accorded to foreign hired personnel which system is universally recognized. We agree that certain amenities have to be provided to these 109[5] Id., at 325. The breakdown is as follows:
Americans Australian Belgian British Burmese Canadian Chinese French German Indian Japanese Malaysian New Zealander Spanish- 17 -2 -1 -2 -1 -2 -2 -1 -1 -5 -1 -1 -1 -1

110[6] Id., at 39.

people in order to entice them to render their services in the Philippines and in the process remain competitive in the international market. Furthermore, we took note of the fact that foreign hires have limited contract of employment unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and other benefits would also require parity in other terms and conditions of employment which include the employment contract. A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary and professional compensation wherein the parties agree as follows: All members of the bargaining unit shall be compensated only in accordance with Appendix C hereof provided that the Superintendent of the School has the discretion to recruit and hire expatriate teachers from abroad, under terms and conditions that are consistent with accepted international practice. Appendix C of said CBA further provides: The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary schedule. The 25% differential is reflective of the agreed value of system displacement and contracted status of the OSRS as differentiated from the tenured status of Locally Recruited Staff (LRS). To our mind, these provisions demonstrate the parties' recognition of the difference in the status of two types of employees, hence, the difference in their salaries. The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an established principle of constitutional law that the guarantee of equal protection of the laws is not violated by legislation or private covenants based on reasonable classification. A classification is reasonable if it is based on substantial distinctions and apply to all members of the same class. Verily, there is a substantial distinction between foreign hires and local hires, the former enjoying only a limited tenure, having no amenities of their own in the Philippines and have to be given a good compensation package in order to attract them to join the teaching faculty of the School. [7]
111

We cannot agree. 111[7] Id., at 38-39.

That public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws reflect the policy against these evils. The Constitution [8] in the Article on Social Justice and Human Rights exhorts Congress to "give highest priority to the enactment of measures that protect and enhance the right of all people to human dignity, reduce social, economic, and political inequalities." The very broad Article 19 of the Civil Code requires every person, "in the exercise of his rights and in the performance of his duties, [to] act with justice, give everyone his due, and observe honesty and good faith."
112

International law, which springs from general principles of law, [9] likewise proscribes discrimination. General principles of law include principles of equity, [10] i.e., the general principles of fairness and justice, based on the test of what is reasonable. [11] The Universal Declaration of Human Rights, [12] the International Covenant on Economic, Social, and Cultural Rights, [13] the International Convention on the Elimination of All Forms of Racial Discrimination, [14] the Convention against Discrimination in Education, [15] the Convention (No. 111) Concerning Discrimination in Respect of
113 114 115 116 117 118 119

112[8] In Section 1, Article XIII thereof. 113[9] Statute of the International Court of Justice, art. 38. 114[10] M. DEFENSOR-SANTIAGO, International Law 75 (1999), citing Judge Hudson in River Meuse Case, (1937) Ser. A/B No. 70. 115[11] Ibid., citing Rann of Kutch Arbitration (India vs. Pakistan), 50 ILR 2 (1968) 116[12] Adopted by the General Assembly of the United Nations on December 10, 1948. Article 1 thereof states: "All human beings are born free and equal in dignity and rights." Article 2 provides, "1. Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status." 117[13] Adopted by the General of the United Nations in Resolution 2200 (XXI) of 16 December 1966. Article 2 provides: "2. The States Parties to the present Covenant undertake to guarantee that the rights enunciated in the present Covenant will be exercised without discrimination of any kind as to race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status." 118[14] Adopted by the General assembly of the United Nations in Resolution 2106 (XX) 21 December 1965. Article 2 of the Convention states: "States Parties condemn racial discrimination and undertake to pursue by all appropriate means and without delay a policy of eliminating racial discrimination in all its forms and promoting understanding among all races xxx." 119[15] Adopted at Paris, December 14, 1960. Under Article 3, the States Parties undertake, among others, "to abrogate any statutory provisions and any administrative instructions and to discontinue any administrative practices which involve discrimination in education." Under Article 4, "The States Parties to this Convention undertake further more to formulate, develop and apply a national

Employment and Occupation [16] - all embody the general principle against discrimination, the very antithesis of fairness and justice. The Philippines, through its Constitution, has incorporated this principle as part of its national laws.
120

In the workplace, where the relations between capital and labor are often skewed in favor of capital, inequality and discrimination by the employer are all the more reprehensible. The Constitution [17] specifically provides that labor is entitled to "humane conditions of work." These conditions are not restricted to the physical workplace - the factory, the office or the field - but include as well the manner by which employers treat their employees.
121

The Constitution [18] also directs the State to promote "equality of employment opportunities for all." Similarly, the Labor Code [19] provides that the State shall "ensure equal work opportunities regardless of sex, race or creed." It would be an affront to both the spirit and letter of these provisions if the State, in spite of its primordial obligation to promote and ensure equal employment opportunities, closes its eyes to unequal and discriminatory terms and conditions of employment. [20]
122 123 124

Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for example, prohibits and penalizes [21] the payment of lesser compensation to a female employee as against a male employee for work of equal value. Article 248 declares it an unfair labor practice for an employer to discriminate in regard to wages in order to encourage or discourage membership in any labor organization.
125

policy which, by methods appropriate to the circumstances and to national usage, will tend to promote equality of opportunity and of treatment in the matter of education xxx." 120[16] Adopted by the General Conference of the International Labor Organization at Geneva, June 25, 1958. Article 2 provides that, "Each Member for which this Convention is in force undertakes to declare and pursue a national policy designed to promote, by methods appropriate to national condition and practice, equality of opportunity and treatment in respect of employment and occupation, with a view to eliminating any discrimination in respect thereof." 121[17] In Article XIII, Section 3 thereof. 122[18] Id. 123[19] In Article 3 thereof. 124[20] E.g., Article 135 of the Labor Code declares it unlawful for the employer to require, not only as a condition of employment, but also as a condition for the continuation of employment, that a woman shall not get married. 125[21] In relation to Articles 288 and 289 of the same Code.

Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work, which ensure, in particular: a.....Remuneration which provides all workers, as a minimum, with: i.....Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work; x x x. The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. [22] This rule applies to the School, its "international character" notwithstanding.
126

The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-hires. [23] The Court finds this argument a little cavalier. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. This presumption is borne by logic and human experience. If the employer pays one employee less than the rest, it is not for that employee to explain why he receives less or why the others receive more. That would be adding insult to injury. The employer has discriminated against that employee; it is for the employer to explain why the employee is treated unfairly.
127

The employer in this case has failed to discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities, which they perform under similar working conditions.

126[22] Indeed, the government employs this rule in fixing the compensation of government employees. Thus, Republic Act No. 6758 (An Act Prescribing a Revised Compensation and Position Classification System in the Government and for Other Purposes) declares it "the policy of the State to provide equal pay for substantially equal work and to base differences in pay upon substantive differences in duties and responsibilities, and qualification requirements of the positions. See also the Preamble of Presidential Decree No. 985 (A Decree Revising the Position Classification and Compensation Systems in the National Government, and Integrating the same) 127[23] Rollo, p. 491.

The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinction in salary rates without violating the principle of equal work for equal pay. "Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration paid at regular intervals for the rendering of services." In Songco v. National Labor Relations Commission, [24] we said that:
128

"salary" means a recompense or consideration made to a person for his pains or industry in another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services rendered. (Emphasis supplied.) While we recognize the need of the School to attract foreign-hires, salaries should not be used as an enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping costs, taxes and home leave travel allowances. The Constitution enjoins the State to "protect the rights of workers and promote their welfare," [25] "to afford labor full protection." [26] The State, therefore, has the right and duty to regulate the relations between labor and capital. [27] These relations are not merely contractual but are so impressed with public interest that labor contracts, collective bargaining agreements included, must yield to the common good. [28] Should such contracts contain stipulations that are contrary to public policy, courts will not hesitate to strike down these stipulations.
129 130 131 132

In this case, we find the point-of-hire classification employed by respondent School to justify the distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is no reasonable distinction between the services rendered by foreign-hires and local-hires. The practice of the School of according higher salaries to 128[24] 183 SCRA 610 (1990) 129[25] In Section 18, Article II thereof. 130[26] In Section 3, Article XIII thereof. See also Article 3 of the Labor Code. 131[27] See Sec. 3, Article XIII, Constitution. Article 3 of the Labor Code. 132[28] Article 1700, Civil Code.

foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of this Court. We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-hires. A bargaining unit is "a group of employees of a given employer, comprised of all or less than all of the entire body of employees, consistent with equity to the employer indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." [29] The factors in determining the appropriate collective bargaining unit are (1) the will of the employees (Globe Doctrine); (2) affinity and unity of the employees' interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. [30] The basic test of an asserted bargaining unit's acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights. [31]
133 134 135

It does not appear that foreign-hires have indicated their intention to be grouped together with local-hires for purposes of collective bargaining. The collective bargaining history in the School also shows that these groups were always treated separately. Foreign-hires have limited tenure; local-hires enjoy security of tenure. Although foreignhires perform similar functions under the same working conditions as the local-hires, foreign-hires are accorded certain benefits not granted to local-hires. These benefits, such as housing, transportation, shipping costs, taxes, and home leave travel allowance, are reasonably related to their status as foreign-hires, and justify the exclusion of the former from the latter. To include foreign-hires in a bargaining unit with local-hires would not assure either group the exercise of their respective collective bargaining rights. WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN PART. The Orders of the Secretary of Labor and Employment dated June 10, 1996 and March 19, 1997, are hereby REVERSED and SET ASIDE insofar as they uphold the practice of respondent School of according foreign-hires higher salaries than localhires. SO ORDERED. Puno, and Pardo, JJ., concur. 133[29] Toyota Motor Philippines Corporation vs. Toyota Motor Philippines Federation Labor Union and the Secretary of Labor and Employment, 268 SCRA 573 (1997); San Miguel Corporation vs. Laguesma, 236 SCRA 595 (1994) 134[30] San Miguel Corporation vs. Laguesma, supra. 135[31] Belyca Corporation vs. Ferrer-Calleja, 168 SCRA 184 (1988)

Davide, Jr., C.J., (Chairman), on official leave. Ynares-Santiago, J., on leave.

SECOND DIVISION
[G.R. No. 120706. January 31, 2000]

RODRIGO CONCEPCION, petitioner, vs. COURT OF APPEALS and SPS. NESTOR NICOLAS and ALLEM NICOLAS, respondents. DECISION
BELLOSILLO, J.: Petitioner Rodrigo Concepcion assails in this petition for review on certiorari the Decision of the Court of Appeals dated 12 December 1994 which affirmed the decision of the Regional Trial Court of Pasig City ordering him to pay respondent spouses Nestor Nicolas and Allem Nicolas the sums of P50,000.00 for moral damages, P25,000.00 for exemplary damages and P10,000.00 for attorneys fees, plus the costs of suit. Petitioner claims absence of factual and legal basis for the award of damages.
*

The courts a quo found that sometime in 1985 the spouses Nestor Nicolas and Allem Nicolas resided at No. 51 M. Concepcion St., San Joaquin, Pasig City, in an apartment leased to them by the owner thereof, Florence "Bing" Concepcion, who also resided in the same compound where the apartment was located. Nestor Nicolas was then engaged in the business of supplying government agencies and private entities with office equipment, appliances and other fixtures on a cash purchase or credit basis. Florence Concepcion joined this venture by contributing capital on condition that after her capital investment was returned to her, any profit earned would be divided equally between her and Nestor. Jksm Sometime in the second week of July 1985 Rodrigo Concepcion, brother of the deceased husband of Florence, angrily accosted Nestor at the latters apartment and accused him of conducting an adulterous relationship with Florence. He shouted, "Hoy Nestor, kabit ka ni Bing! x x x Binigyan ka pa pala ni Bing Concepcion ng P100,000.00 para umakyat ng Baguio. Pagkaakyat mo at ng asawa mo doon ay bababa ka uli para magkasarilinan kayo ni Bing." [1]
136

* Decision penned by Judge Alfredo C. Flores, RTC-Br. 167, Pasig City. 136[1] Translation: " Nestor, you are Bings paramour! So she gave you P100,000.00 which you, together with your wife, brought to Baguio and you came back leaving your wife behind so that you and Bing could spend all the time together for your immoral purposes."

To clarify matters, Nestor went with Rodrigo, upon the latters dare, to see some relatives of the Concepcion family who allegedly knew about the relationship. However, those whom they were able to see denied knowledge of the alleged affair. The same accusation was hurled by Rodrigo against Nestor when the two (2) confronted Florence at the terrace of her residence. Florence denied the imputations and Rodrigo backtracked saying that he just heard the rumor from a relative. Thereafter, however, Rodrigo called Florence over the telephone reiterating his accusation and threatening her that should something happen to his sick mother, in case the latter learned about the affair, he would kill Florence. Chief As a result of this incident, Nestor Nicolas felt extreme embarrassment and shame to the extent that he could no longer face his neighbors. Florence Concepcion also ceased to do business with him by not contributing capital anymore so much so that the business venture of the Nicolas spouses declined as they could no longer cope with their commitments to their clients and customers. To make matters worse, Allem Nicolas started to doubt Nestors fidelity resulting in frequent bickerings and quarrels during which Allem even expressed her desire to leave her husband. Consequently, Nestor was forced to write Rodrigo demanding public apology and payment of damages. Rodrigo pointedly ignored the demand, for which reason the Nicolas spouses filed a civil suit against him for damages. In his defense, Rodrigo denied that he maligned Nestor by accusing him publicly of being Florence's lover. He reasoned out that he only desired to protect the name and reputation of the Concepcion family which was why he sought an appointment with Nestor through Florence's son Roncali to ventilate his feelings about the matter. Initially, he discussed with Nestor certain aspects of the joint venture in a friendly and amiable manner, and then only casually asked the latter about his rumored affair with his sister-in-law. In contesting the decision of the appellate court, petitioner Rodrigo Concepcion raises the following issues: (a) whether there is basis in law for the award of damages to private respondents, the Nicolas spouses; and, (b) whether there is basis to review the facts which are of weight and influence but which were overlooked and misapplied by the respondent appellate court. Esm Petitioner argues that in awarding damages to private respondents, the Court of Appeals was without legal basis to justify its verdict. The alleged act imputed to him by respondent spouses does not fall under Arts. 26 [2] and 2219 [3] of the Civil Code since it does not constitute libel,
137 138

137[2] Art. 26. - Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief: (1) Prying into the privacy of anothers residence; (2) Meddling with or disturbing the private life or family relations of another; (3) Intriguing or humiliating another on account of his religious beliefs, lowly station in life, place of birth, physical defect, or other personal condition. 138[3] Art. 2219. Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in Art. 309 (referring to disrespect for the dead or

slander, or any other form of defamation. Neither does it involve prying into the privacy of anothers residence or meddling with or disturbing the private life or family relation of another. Petitioner also insists that certain facts and circumstances of the case were manifestly overlooked, misunderstood or glossed over by respondent court which, if considered, would change the verdict. Impugning the credibility of the witnesses for private respondents and the manner by which the testimonial evidence was analyzed and evaluated by the trial court, petitioner criticized the appellate court for not taking into account the fact that the trial judge who penned the decision was in no position to observe first-hand the demeanor of the witnesses of respondent spouses as he was not the original judge who heard the case. Thus, his decision rendered was flawed. Esmsc The Court has ruled often enough that its jurisdiction in a petition for review on certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless the factual findings complained of are devoid of support by the evidence on record or the assailed judgment is based on misapprehension of facts. [4] The reason behind this is that the Supreme Court respects the findings of the trial court on the issue of credibility of witnesses, considering that it is in a better position to decide the question, having heard the witnesses themselves and observed their deportment and manner of testifying during the trial. [5] Thus it accords the highest respect, even finality, to the evaluation made by the lower court of the testimonies of the witnesses presented before it. Esmmis
139 140

The Court is also aware of the long settled rule that when the issue is on the credibility of witnesses, appellate courts will not generally disturb the findings of the trial court; however, its factual findings may nonetheless be reversed if by the evidence on record or lack of it, it appears that the trial court erred. [6] In this respect, the Court is not generally inclined to review the findings of fact of the Court of Appeals unless its findings are erroneous, absurd, speculative, conjectural, conflicting, tainted with grave abuse of discretion, or contrary to the findings culled by the trial court of origin. [7] This rule of course cannot be unqualifiedly applied to a case where the judge who penned the decision was not the one who heard the case, because not having heard the testimonies himself, the judge would not be in a better position than the appellate courts to make such determination. [8]
141 142 143

However, it is also axiomatic that the fact alone that the judge who heard the evidence was not the one who rendered the judgment but merely relied on the record of the case does not render his wrongfully interfering in a funeral); (10) Acts or actions referred to in Arts. 21, 26, 27, 28, 29, 30, 32, 34, and 35 x x x x 139[4] Congregation of the Religious of the Virgin Mary v. CA, G.R. No. 126363, 26 June 1998, 291 SCRA 385; Sarmiento v. CA, G.R. No. 110871, 2 July 1998, 291 SCRA 656. 140[5] People v. Aquino, G. R. No. 125906, 16, January 1998, 284 SCRA 369. 141[6] People v. Lagao, G. R. No. 120279, 27 February 1998, 286 SCRA 610. 142[7] Ramirez v. Court of Appeals, G. R. No. 96412, 24 August 1998, 294 SCRA 512. 143[8] People v. Gecomo, G.R. Nos. 115035-36, 21 February 1996, 254 SCRA 82.

judgment erroneous or irregular. This is so even if the judge did not have the fullest opportunity to weigh the testimonies not having heard all the witnesses speak nor observed their deportment and manner of testifying. Thus the Court generally will not find any misapprehension of facts as it can be fairly assumed under the principle of regularity of performance of duties of public officers that the transcripts of stenographic notes were thoroughly scrutinized and evaluated by the judge himself. Has sufficient reason then been laid before us by petitioner to engender doubt as to the factual findings of the court a quo? We find none. A painstaking review of the evidence on record convinces us not to disturb the judgment appealed from. The fact that the case was handled by different judges brooks no consideration at all, for preponderant evidence consistent with their claim for damages has been adduced by private respondents as to foreclose a reversal. Otherwise, everytime a Judge who heard a case, wholly or partially, dies or lives the service, the case cannot be decided and a new trial will have to be conducted. That would be absurb; inconceivable. Esmso According to petitioner, private respondents evidence is inconsistent as to time, place and persons who heard the alleged defamatory statement. We find this to be a gratuitous observation, for the testimonies of all the witnesses for the respondents are unanimous that the defamatory incident happened in the afternoon at the front door of the apartment of the Nicolas spouses in the presence of some friends and neighbors, and later on, with the accusation being repeated in the presence of Florence, at the terrace of her house. That this finding appears to be in conflict with the allegation in the complaint as to the time of the incident bears no momentous significance since an allegation in a pleading is not evidence; it is a declaration that has to be proved by evidence. If evidence contrary to the allegation is presented, such evidence controls, not the allegation in the pleading itself, although admittedly it may dent the credibility of the witnesses. But not in the instant case.
Msesm

It is also argued by petitioner that private respondents failed to present as witnesses the persons they named as eyewitnesses to the incident and that they presented instead one Romeo Villaruel who was not named as a possible witness during the pre-trial proceedings. Charging that Villaruels testimony is not credible and should never have been accorded any weight at all, petitioner capitalizes on the fact that a great distance separates Villaruels residence and that of private respondents as reflected in their house numbers, the formers number being No. 223 M. Concepcion St., while that of the Nicolas spouses, No. 51 along the same street. This being so, petitioner concludes, Villaruel could not have witnessed the ugly confrontation between Rodrigo and Nestor. It appears however from Villaruels testimony that at the time of the incident complained of, he was staying in an apartment inside the compound adjacent to that of the Nicolas spouses. Whether his apartment was then numbered 223 is not stated. What is definite and clear is his statement that he and Nestor Nicolas were neighbors on 14 July 1985. There are other inconsistencies pointed out by petitioner in the testimonial evidence of private respondents but these are not of such significance as to alter the finding of facts of the lower court. Minor inconsistencies even guarantee truthfulness and candor, for they erase any suspicion of a

rehearsed testimony. [9] Inconsistencies in the testimonies of witnesses with on minor details and collateral matters do not affect the substance of their testimonies. [10]
144 145

All told, these factual findings provide enough basis in law for the award of damages by the Court of Appeals in favor of respondents. We reject petitioners posture that no legal provision supports such award, the incident complained of neither falling under Art. 2219 nor Art. 26 of the Civil Code. It does not need further elucidation that the incident charged of petitioner was no less than an invasion on the right of respondent Nestor as a person. The philosophy behind Art. 26 underscores the necessity for its inclusion in our civil law. The Code Commission stressed in no uncertain terms that the human personality must be exalted. The sacredness of human personality is a concomitant consideration of every plan for human amelioration. The touchstone of every system of law, of the culture and civilization of every country, is how far it dignifies man. If the statutes insufficiently protect a person from being unjustly humiliated, in short, if human personality is not exalted - then the laws are indeed defective. [11] Thus, under this article, the rights of persons are amply protected, and damages are provided for violations of a persons dignity, personality, privacy and peace of mind. Exsm
146

It is petitioners position that the act imputed to him does not constitute any of those enumerated in Arts 26 and 2219. In this respect, the law is clear. The violations mentioned in the codal provisions are not exclusive but are merely examples and do not preclude other similar or analogous acts. Damages therefore are allowable for actions against a persons dignity, such as profane, insulting, humiliating, scandalous or abusive language. [12] Under Art. 2217 of the Civil Code, moral damages which include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury, although incapable of pecuniary computation, may be recovered if they are the proximate result of the defendants wrongful act or omission.
147

There is no question that private respondent Nestor Nicolas suffered mental anguish, besmirched reputation, wounded feelings and social humiliation as a proximate result of petitioners abusive, scandalous and insulting language. Petitioner attempted to exculpate himself by claiming that he made an appointment to see Nestor through a nephew, Roncali, the son of Florence, so he could talk with Nestor to find out the truth about his rumored illicit relationship with Florence. He said that he wanted to protect his nephews and nieces and the name of his late brother (Florences husband). [13] How he could be convinced by some way other than a denial by Nestor, and how he would protect his nephews and nieces and his familys name if the rumor were true, he did not say. Petitioner admitted that he had already talked with Florence herself over the telephone about the issue, with the latter vehemently denying the alleged immoral relationship. Yet, he could not let the
148

144[9] People v. Obello, G. R. No. 108772, 14 January 1998, 284 SCRA 79. 145[10] People v. Ebrada, G. R. No. 122774, 25 September 1998, 296 SCRA 353. 146[11] Report of the Civil Code Commission, p. 32. 147[12] Caguioa, Eduaro, P., Comments and Cases on Civil Law, Vol. I, 1959 Ed., p.41. 148[13] TSN, 4 March 1988, p. 14.

matter rest on the strength of the denial of his sister-in-law. He had to go and confront Nestor, even in public, to the latter's humiliation. Kyle Testifying that until that very afternoon of his meeting with Nestor he never knew respondent, had never seen him before, and was unaware of his business partnership with Florence, his subsequent declarations on the witness stand however belie this lack of knowledge about the business venture for in that alleged encounter he asked Nestor how the business was going, what were the collection problems, and how was the money being spent. He even knew that the name of the business, Floral Enterprises, was coined by combining the first syllables of the name Florence and Allem, the name of Nestors wife. He said that he casually asked Nestor about the rumor between him and Florence which Nestor denied. Not content with such denial, he dared Nestor to go with him to speak to his relatives who were the source of his information. Nestor went with him and those they were able to talk to denied the rumor. Kycalr We cannot help noting this inordinate interest of petitioner to know the truth about the rumor and why he was not satisfied with the separate denials made by Florence and Nestor. He had to confront Nestor face to face, invade the latters privacy and hurl defamatory words at him in the presence of his wife and children, neighbors and friends, accusing him - a married man - of having an adulterous relationship with Florence. This definitely caused private respondent much shame and embarrassment that he could no longer show himself in his neighborhood without feeling distraught and debased. This brought dissension and distrust in his family where before there was none. This is why a few days after the incident, he communicated with petitioner demanding public apology and payment of damages, which petitioner ignored. Calrky If indeed the confrontation as described by private respondents did not actually happen, then there would have been no cause or motive at all for them to consult with their lawyer, immediately demand an apology, and not obtaining a response from petitioner, file an action for damages against the latter. That they decided to go to court to seek redress bespeaks of the validity of their claim. On the other hand, it is interesting to note that while explaining at great length why Florence Concepcion testified against him, petitioner never advanced any reason why the Nicolas spouses, persons he never knew and with whom he had no dealings in the past, would sue him for damages. It also has not escaped our attention that, faced with a lawsuit by private respondents, petitioner sent his lawyer, a certain Atty. Causapin, to talk not to the Nicolas spouses but to Florence, asking her not to be involved in the case, otherwise her name would be messily dragged into it. Quite succinctly, Florence told the lawyer that it was not for her to decide and that she could not do anything about it as she was not a party to the court case. WHEREFORE, in light of the foregoing premises, the assailed Decision of the Court of Appeals affirming the judgment of the Regional Trial Court of Pasig City, Br. 167, holding Rodrigo Concepcion liable to the spouses Nestor Nicolas and Allem Nicolas for P50,000.00 as moral damages, P25,000.00 for exemplary damages, P10,000.00 for attorney's fees, plus costs of suit, is AFFIRMED. Mesm SO ORDERED. Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 106341 September 2, 1994 DELFIN G. VILLARAMA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND GOLDEN DONUTS, INC., respondents. Rogelio R. Udarbe for petitioner. Armando V. Ampil for private respondent.

PUNO, J.: Sexual harassment abounds in all sick societies. It is reprehensible enough but more so when inflicted by those with moral ascendancy over their victims. We rule that it is a valid cause for separation from service. First, the facts. On November 16, 1987, petitioner DELFIN VILLARAMA was employed by private respondent GOLDEN DONUTS, INC., as its Materials Manager. His starting salary was P6,500.00 per month, later increased to P8,500.00. On July 15, 1989, petitioner Villarama was charged with sexual harassment by Divina Gonzaga, a clerk-typist assigned in his department. The humiliating experience compelled her to resign from work. Her letter-resignation, dated July 15, 1989, reads:
MR. LEOPOLDO H. PRIETO President Golden Donuts, Inc. Dear Sir: I would like to tender my resignation from my post as Clerk Typist of Materials Department effective immediately.

It is really my regret to leave this company which has given me all the opportunity I long desired. My five (5) months stay in the company have been very gratifying professionally and financially and I would not entertain the idea of resigning except for the most shocking experience I have had in my whole life. Last Friday, July 7, 1989, Mr. Delfin Villarama and Mr. Jess de Jesus invited all the girls of Materials Department for a dinner when in (sic) the last minute the other three (3) girls decided not to join the groupp anymore. I do (sic) not have second thought(s) in accepting their invitation for they are my colle(a)gues and I had nothing in mind that would in any manner prompt me to refuse to what appeared to me as a simple and cordial invitation. We went to a restaurant along Makati Avenue where we ate our dinner. Mr. Villarama, Mr. Olaybar and Mr. Jess de Jesus were drinking while we were eating and (they) even offered me a few drinks and when we were finished, they decided to bring me home. While on my way, I found out that Mr. Villarama was not driving the way to my house. I was wondering why we were taking the wrong way until I found out that we were entering a motel. I was really shock(ed). I did not expect that a somewhat reputable person like Mr. Villarama could do such a thing to any of his subordinates. I should have left the company without any word but I feel that I would be unfair to those who might be similarly situated. I hope that you would find time to investigate the veracity of my allegations and make each (sic) responsible for is own deed. (emphasis ours) Thank you very much and more power. V e r y r e s p e c t f u l l y y o u r s , D I V I N A

G O N Z A G A

The letter prompted Mr. Leopoldo Prieto, President of Golden Donuts, Inc., to call petitioner to a meeting on August 4, 1989. Petitioner was then required to explain the letter against him. It appears that petitioner agreed to tender his resignation. Private respondent moved swiftly to separate petitioner. Thus, private respondent approved petitioner's application for leave of absence with pay from August 5-28, 1989. It also issued an inter-office memorandum, dated August 4, 1989, advising "all concerned" that petitioner was no longer connected with the company effective August 5, 1989. 1 Two (2) days later, or on August 7, 1989, Mr. Prieto sent a letter to petitioner confirming their agreement that petitioner would be officially separated from the private respondent. The letter reads:
Dear Mr. Villarama: This is to officially confirm our discussion last Friday, August 4, 1989, regarding your employment with us. As per our agreement, you will be officially separated from the company effective August 23, 1989. May I, therefore, request you to please submit or send us your resignation letter on or before the close of business hours of August 22, 1989. Please see the Personnel & Industrial Relations Office for your clearance. Very truly yours, (SGD). LEOPOLDO H. PRIETO, JR. President

In the interim, petitioner had a change of mind. In a letter dated August 16, 1989, petitioner sought reconsideration of the management's decision to terminate him, viz.:
DEAR SIR: MAY I REQUEST FOR A RECONSIDERATION ON THE DECISION HANDED DURING OUR MEETING OF AUGUST 4, 1989, TERMINATING MY SERVICES WITH THE COMPANY EFFECTIVE AUGUST 5, 1989. THE SIGNIFICANT CONTRIBUTION OF THE MATERIALS DEPARTMENT, WHICH I HAD BEEN HEADING FOR THE PAST 21 MONTHS, TO THE PERFORMANCE OF THE COMPANY FAR OUTWEIGHS THE ERROR THAT I HAD COMMITTED. AN ERROR THAT MUST NOT BE A BASIS FOR SUCH A DRASTIC DECISION.

AS I AM STILL OFFICIALLY ON LEAVE UNTIL THE 29th, OF THIS MONTH, MAY I EXPECT THAT I WILL RESUME MY REGULAR DUTY ON THE 29th? ANTICIPATING YOUR FAVORABLE REPLY. VERY TRULY YOURS, (SGD.) DELFIN G. VILLARAMA

For his failure to tender his resignation, petitioner was dismissed by private respondent on August 23, 1989. Feeling aggrieved, petitioner filed an illegal dismissal case 2 against private respondent. In a decision dated January 23, 1991, Labor Arbiter Salimar V. Nambi held that due process was not observed in the dismissal of petitioner and there was no valid cause for dismissal. Private respondent GOLDEN DONUTS, INC. was ordered to: (1) reinstate petitiner DELFIN G. VILLARAMA to his former position, without loss of seniority rights, and pay his backwages at the rate of P8,500.00 per month from August 1989, until actual reinstatement; (2) pay petitioner the amount of P24,866.66, representing his unused vacation leave and proportionate 13th month pay; (3) pay petitioner P100,000.00, as moral damages, and P20,000.00, as exemplary damages; and (3) pay the attorney's fees equivalent to ten percent of the entire monetary award. Private respondent appealed to the National Labor Relations Commission. On July 16, 1992, public respondent reversed the decision of the labor arbiter. The dispositive portion of its Resolution reads:
WHEREFORE, premises considered, the decision appealed from is hereby set aside and a new one entered declaring the cause of dismissal of complainant as valid; however, for the procedural lapses, respondent (Golden Donuts, Inc.) is hereby ordered to indemnify complainant (petitioner) in the form of separation pay equivalent to two month's (sic) pay (for his two years of service, as appears (sic) in the records), or the amount of P17,000.00. SO ORDERED.

Hence, this petition where the following arguments are raised:

THE ALLEGED IMMORALITY CHARGED AGAINST PETITIONER IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE ON RECORD. THE MERE ADMISSION OF THE VIOLATION OF DUE PROCESS ENTITLES PETITIONER TO REINSTATEMENT. IN ANY EVENT, PETITIONER IS ENTITLED TO HIS SALARIES FROM RECEIPT BY PRIVATE RESPONDENT OF THE DECISION OF THE LABOR ARBITER ON 4 FEBRUARY 1991 TO (sic) AT LEAST THE PROMULGATION OF THE ASSAILED RESOLUTION ON (sic) 16 JULY 1992.

IN ANY EVENT, PETITIONER IS ALSO ENTITLED TO HIS UNUSED VACATION LEAVE AND PROPORTIONATE 13TH MONTH PAY IN THE TOTAL AMOUNT OF P24,866.66, ADJUDGED BY THE LABOR ARBITER. THE AWARD OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES BY THE LABOR ARBITER IS JUSTIFIED.

We affirm with modification the impugned Resolution. At the outset, we note that the Petition was not accompanied by a certified true copy of the assailed July 16, 1992 NLRC Resolution, 3 in violation of Revised Circular No. 1-88. Neither was there any certification under oath that "petitioner has not commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals or different Divisions thereof, or any other tribunal or agency, and that to the best of his knowledge, no such action or proceeding is pending in the Supreme Court, the Court of Appeals, or different Divisions thereof or any other tribunal or agency," as required under Circular No. 28-91. It is settled that non-compliance with the provisions of Revised Circular No. 1-88 and Circular No. 28-91, would result in the outright dismissal of the petition. 4 In addition, under Rule 65 of the Revised Rules of Court, the special civil action for certiorari is available in cases where the concerned "tribunal, board or officer exercising judicial functions had acted without or in excess of its jurisdiction, or with grave abuse of discretion and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law." In Antonio v. National Labor Relations Commission, 5 we held that the plain and adequate remedy expressly provided by law is a motion for reconsideration of the assailed decision, and the resolution thereof, which is not only expected to be but would actually have provided adequate and more speedy remedy than a petition for certiorari. The rationale for this requirement is to enable the court or agency concerned to pass upon and correct its mistakes without the intervention of a higher court. 6 In this case, the assailed July 16, 1992 Resolution of the National Labor Relations Commission was received by petitioner's counsel on July 23, 1992. 7 Petitioner did not file a motion for reconsideration, instead, he commenced this special civil action for certiorari. Be that as it may, we allowed the petition to enable us to rule on the significant issues raised before us, viz.: (1) whether or not petitioner's right to procedural due process was violated, and (2) whether or not he was dismissed for a valid or just cause. The procedure for terminating an employee is found in Article 277 (b) of the Labor Code, viz.:
xxx xxx xxx (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be

heard and to defend himself with the assistance of his counsel if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. . . . (emphasis supplied)

This procedure protects not only rank-and-file employees but also managerial employees. Both have the right to security of tenure as provided for in Section 3, Article XIII of the 1987 Constitution. In the case at bench, petitioner decided to seek reconsideration of the termination of his service thru his August 16, 1989 letter. While admitting his error, he felt that its gravity did not justify his dismissal. Considering this stance, and in conformity with the aforequoted Article 277 (b) of the Labor Code, petitioner should have been formally charged and given an opportunity to refute the charges. Under the facts in field, we hold that petitioner was denied procedural due process. We now come to the more important issue of whether there was valid cause to terminate petitioner. Petitioner claims that his alleged immoral act was unsubstantiated, hence, he could not be dismissed. We hold otherwise. The records show that petitioner was confronted with the charge against him. Initially, he voluntarily agreed to be separated from the company. He took a leave of absence preparatory to this separation. This agreement was confirmed by the letter to him by Mr. Prieto dated August 7, 1989. A few days after, petitioner reneged on the agreement. He refused to be terminated on the ground that the seriousness of his offense would not warrant his separation from service. So he alleged in his letter to Mr. Prieto dated August 16, 1989. But even in this letter, petitioner admitted his "error" vis-a-vis Miss Gonzaga. As a manager, petitioner should know the evidentiary value of his admissions. Needless to stress, he cannot complain there was no valid cause for his separation. Moreover, loss of trust and confidence is a good ground for dismissing a managerial employee. It can be proved by substantial evidence which is present in the case at bench. As further observed by the Solicitor General:
. . . assuming arguendo that De Jesus and Gonzaga were sweethearts and that petitioner merely acceded to the request of the former to drop them in the motel, petitioner acted in collusion with the immoral designs of De Jesus and did not give due regard to Gonzaga's feeling on the matter and acted in chauvinistic disdain of her honor, thereby justifying public respondent's finding of sexual harassment. Thus, petitioner not only failed to act accordingly as a good father of the family because he was not able to maintain his moral ascendancy and authority over the group in the matter of morality and discipline of his subordinates, but he actively facilitated the commission of immoral conduct of his subordinates by driving his car into the motel. (Comment, April 29, 1993, p. 9)

As a managerial employee, petitioner is bound by a more exacting work ethics. He failed to live up to this higher standard of responsibility when he succumbed to his moral perversity. And when such moral perversity is perpetrated against his subordinate, he provides justifiable ground for his dismissal for lack of trust and confidence. It is the right, nay, the duty of every employer to protect its employees from over sexed superiors. To be sure, employers are given wider latitude of discretion in terminating the employment of managerial employees on the ground of lack of trust and confidence. 8 We next rule on the monetary awards due to petitioner. The public respondent erred in awarding separation pay of P17,000.00 as indemnity for his dismissal without due process of law. The award of separation pay is proper in the cases enumerated under Articles 283 and 284 of the Labor Code, 9 and in cases where there is illegal dismissal (for lack of valid cause) and reinstatement is no longer feasible. But this is not to state that an employer cannot be penalized for failure to give formal notice and conduct the necessary investigation before dismissing an employee. 10 Thus, in Wenphil vs. NLRC 11 and Pacific Mills, Inc. vs. Alonzo, 12 this Court awarded P1,000.00 as penalty for nonobservance of due process. Petitioner is not also entitled to moral and exemplary damages. There was no bad faith or malice on the part of private respondent in terminating the services of petitioner. 13 Petitioner is entitled, however, to his unused vacation/sick leave and proportionate 13th month pay, as held by the labor arbiter. These are monies already earned by petitioner and should be unaffected by his separation from the service. WHEREFORE, premises considered, the assailed resolution of public respondent is hereby AFFIRMED WITH MODIFICATION that the award of separation pay is DELETED. Private respondent is ordered to pay petitioner the amount of P1,000.00 for non-observance of due process, and the equivalent amount of his unused vacation/sick leave and proportionate 13th month pay. No pronouncement as to costs. SO ORDERED. Narvasa, C.J., Padilla, Regalado and Mendoza, J.J., concur.

#Footnotes

1 The effectivity of petitioner's separation was August 23, 1989, but he was no longer considered connected with private respondent effective August 5, 1989, as per the office memorandum. 2 Docketed as NLRC Case No. 00-01-04771-89.

3 Petitioner, however, submitted a certified xerox copy of the "Notice of Decision or Resolution Entered," (re: Resolution dated July 16, 1992). 4 Gallardo v. Rimando, G.R. No. 91718; Adm. Mat. No. RTJ-90-577, Gallardo v. Quintos, 18 April 1991, En Banc, Minute Resolution; Imperial Textile Mills Inc., v. National Labor Relations Commission, et al., First Division, January 13, 1993, Minute Resolution. 5 G.R. No. 101755, Minute Resolution, January 27, 1992. 6 Zurbano vs. National Labor Relations Commission, et al, G.R. No. 103679, December 17, 1993. 7 Rollo, p. 2. 8 Dolores vs. NLRC, G.R. No. 87673, January 24, 1992; SMC vs. NLRC, G.R. No. 88088, January 24, 1992, 205 SCRA 348. 9 In Del Monte Philippines, Inc. vs. NLRC, G.R. No. 87371, August 6, 1990, 188 SCRA 370, 375, we reiterated the rule that "separation pay shall be allowed as a social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character." 10 Aurelio vs. NLRC, G.R. No. 99034, April 12, 1993, 221 SCRA 443. 11 G.R. No. 80587, February 8, 1989, 170 SCRA 69. 12 G.R. No. 78090, July 26, 1991, 199 SCRA 617. 13 Suario vs. BPI and NLRC, G.R. No. 50459, August 25, 1989 176 SCRA 689; Dolores vs. NLRC, G.R. No. 87673, January 24, 1992; SMC vs. NLRC, G.R. No. 88088, January 24, 1992, 205 SCRA 348.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 124617 April 28, 2000 PHILIPPINE AEOLUS AUTO-MOTIVE UNITED CORPORATION and/or FRANCIS CHUA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and ROSALINDA C. CORTEZ, respondents.

BELLOSILLO, J.

This petition seeks to set aside the Decision of 15 February 1996 and the Resolution of 28 March 1996 of public respondent National Labor Relations Commission in NLRC NCR CA No. 00975395 (NLRC NCR Case No. 00-12-08759-94) which modified the decision of the Labor Arbiter finding petitioners not guilty of illegal dismissal. Petitioner Philippine Aeolus Automotive United Corporation (PAAUC) is a corporation duly organized and existing under Philippine laws, petitioner Francis Chua is its President while private respondent Rosalinda C. Cortez was a company nurse1 of petitioner corporation until her termination on 7 November 1994. On 5 October 1994 a memorandum was a issued by Ms. Myrna Palomares, Personnel Manager of petitioner corporation, addressed to private respondent Rosalinda C. Cortez requiring her to explain within forty-eight (48) hours why no disciplinary action should be taken against her (a) for throwing a stapler at Plant Manager William Chua, her superior, and uttering invectives against him on 2 August 1994; (b) for losing the amount of P1,488.00 entrusted to her by Plant Manager Chua to be given to Mr. Fang of the CLMC Department on 23 August 1994; and, (c) for asking a co-employee to punch-in her time card thus making it appear that she was in the office in the morning of 6 September 1944 when in fact she was not. The memorandum however was refused by private respondent although it was read to her and discussed with her by a co-employee. She did not also submit the required explanation, so that while her case pending investigation the company placed her under preventive suspension for thirty (30) days effective 9 October 1994 to 7 November 1994. On 20 October 1994, while Cortez was still under preventive suspension, another memorandum was issued by petitioner corporation giving her seventy-two (72) hours to explain why no disciplinary action should be taken against her for allegedly failing to process the ATM applications of her nine (9) co-employees with the Allied Banking Corporation. On 21 October 1994 private respondent also refused to receive the second memorandum although it was read to her by a co-employee. A copy of the memorandum was also sent by the Personnel Manager to private respondent at her last known address by registered mail. Meanwhile, private respondent submitted a written explanation with respect to the loss of the P1,488.00 and the punching-in of her time card by a co-employee. On 3 November 1994 a third memorandum was issued to private respondent, this time informing her of her termination from the service effective 7 November 1994 on grounds of gross and habitual neglect of duties, serious misconduct and fraud or willful breach of trust.2 On 6 December 1994 private respondent filed with the Labor Arbiter a complaint for illegal dismissal, non-payment of annual service incentive leave pay, 13th month pay and damages against PAAUC and its president Francis Chua.3 On 10 July 1995 the Labor Arbiter rendered a decision holding the termination of Cortez as valid and legal, at the same time dismissing her claim for damages for lack of merit.4

On appeal to the NLRC, public respondent reversed on 15 February 1996 the decision of the Labor Arbiter and found petitioner corporation guilty of illegal dismissal of private respondent Cortez. The NLRC ordered petitioner PAAUC to reinstate respondent Cortez to her former position with back wages computed from the time of dismissal up to her actual reinstatement.5 On 11 March 1996 petitioners moved for reconsideration. On 28 March 1996 the motion was denied;6 hence, this petition for certiorari challenging the NLRC Decision and Resolution. The crux of the controversy may be narrowed down to two (2) main issues: whether the NLRC gravely abused its discretion in holding as illegal the dismissal of private respondent, and whether she is entitled to damages in the event that the illegality of her dismissal is sustained. The Labor Code as amended provides specific grounds by which an employer may validly terminate the services of an employee 7 which grounds should be strictly construed since a person's employment constitutes "property" under the context of the constitutional protection that "no person shall be deprived of life, liberty or property without due process of law" and, as such, the burden of proving that there exists a valid ground for termination of the employment rests upon the employer.8 Likewise, in light of the employee's right to security of tenure, where a penalty less punitive than dismissal will suffice, whatever missteps may have been committed by labor ought not to be visited with a consequence so severe.9 A perusal of the termination letter indicates that private respondent was discharged from employment for "serious misconduct, gross and habitual neglect of duties and fraud or willful breach of trust." Specifically 1. On August 2, 1994, you committed acts constituting gross disrespect to your superior Mr. William Chua, the Plant Manager. 2. On August 23, 1994, the Plant Manager entrusted you the amount of P1,488.00 to be sent to CLMC for Mr. Fang but the money was allegedly lost in your possession and was not recovered. 3. On September 6, 1994, you caused someone else to punch-in your time card to show that you were at work when in fact you were doing a personal errand for Richard Tan. As per time card you were in at 8:02 A.M. but you only arrived at 12:35 P.M. 4. On July 28, 1994, you received an amount of P900.00 from Miss Lucy Lao to open an ATM card of nine (9) employees. On September 24, 1994, one of the employees complained by the name of Tirso Aquino about the status of his ATM Card and upon query from the bank it was found out that no application and no deposit for said person has been made. Likewise, it was found out that you did not open the ATM Card and deposit the P800.00 for the 8 other employees. It turned out that said deposit was made after a month later. 10

As to the first charge, respondent Cortez claims that as early as her first year of employment her Plant Manager, William Chua, already manifested a special liking for her, so much so that she was receiving special treatment from him who would oftentimes invite her "for a date," which she would as often refuse. On many occasions, he would make sexual advances touching her hands, putting his arms around her shoulders, running his fingers on her arms and telling her she looked beautiful. The special treatment and sexual advances continued during her employment for four (4) years but she never reciprocated his flirtations, until finally, she noticed that his attitude towards her changed. He made her understand that if she would not give in to his sexual advances he would cause her termination from the service; and he made good his threat when he started harassing her. She just found out one day that her table which was equipped with telephone and intercom units and containing her personal belongings was transferred without her knowledge to a place with neither telephone nor intercom, for which reason, an argument ensued when she confronted William Chua resulting in her being charged with gross disrespect. 11 Respondent Cortez explains, as regards the second charge, that the money entrusted to her for transmittal was not lost; instead, she gave it to the company personnel in-charge for proper transmittal as evidenced by a receipt duly signed by the latter. 12 With respect to the third imputation, private respondent admits that she asked someone to punch-in her time card because at that time she was doing an errand for one of the company's officers, Richard Tan, and that was with the permission of William Chua. She maintains that she did it in good faith believing that she was anyway only accommodating the request of a company executive and done for the benefit of the company with the acquiescence of her boss, William Chua. Besides, the practice was apparently tolerated as the employees were not getting any reprimand for doing so. 13 As to the fourth charge regarding her alleged failure to process the ATM cards of her coemployees, private respondent claims that she has no knowledge thereof and therefore denies it. After all, she was employed as a company nurse and not to process ATM cards for her coemployees. The Supreme Court, in a litany of decisions on serious misconduct warranting dismissal of an employee, has ruled that for misconduct or improper behavior to be a just cause for dismissal (a) it must be serious; (b) must relate to the performance of the employee's duties; and, (c) must show that the employee has become unfit to continue working for the employer. 14 The act of private respondent in throwing a stapler and uttering abusive language upon the person of the plant manager may be considered, from a lay man's perspective, as a serious misconduct. However, in order to consider it a serious misconduct that would justify dismissal under the law, it must have been done in relation to the performance of her duties as would show her to be unfit to continue working for her employer. The acts complained of, under the circumstances they were done, did not in any way pertain to her duties as a nurse. Her employment identification card discloses the nature of her employment as a nurse and no other. 15 Also, the memorandum informing her that she was being preventively suspended pending investigation of her case was addressed to her as a nurse. 16

As regards the third alleged infraction, i.e., the act of private respondent in asking a co-employee to punch-in her time card, although a violation of company rules, likewise does not constitute serious misconduct. Firstly, it was done by her in good faith considering that she was asked by an officer to perform a task outside the office, which was for the benefit of the company, with the consent of the plant manager. Secondly, it was her first time to commit such infraction during her five (5)-year service in the company. Finally, the company did not lose anything by reason thereof as the offense was immediately known and corrected. On alleged infraction No. 4, as may be gleaned from and admitted in the memorandum of petitioners to private respondent dated 20 October 1994 17 and the notice of termination dated 3 November 1994, the money entrusted to her was in fact deposited in the respective accounts of the employees concerned, although belatedly. We agree with the submission of the Solicitor General that The mere delay/failure to open an ATM account for nine employees is not sufficient, by itself, to support a conclusion that Rosalinda is guilty of gross and habitual neglect of duties. First, petitioner did not show that opening an ATM is one of her primary duties as company nurse. Second, petitioner failed to show that Rosalinda intentionally, knowingly, and purposely delayed the opening of ATM accounts for petitioner's employees. It is of common knowledge that a bank imposes upon an applicant certain requirements before an ATM account can be opened, i.e. properly filled up application forms, identification cards, minimum deposit etc. In the instant case, petitioner did not prove that the delay was caused by Rosalinda's neglect or willful act (emphasis supplied). 18 Gross negligence implies a want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. 19 The negligence, to warrant removal from service, should not merely be gross but also habitual. Likewise, the ground "willful breach by the employee of the trust reposed in him by his employer" must be founded on facts established by the employer who must clearly and convincingly prove by substantial evidence the facts and incidents upon which loss of confidence in the employee may fairly be made to rest. 20 All these requirements prescribed by law and jurisprudence are wanting in the case at bar. On the issue of moral and exemplary damages, the NLRC ruled that private respondent was not entitled to recover such damages for her failure to prove that petitioner corporation had been motivated by malice or bad faith or that it acted in a wanton, oppressive or malevolent manner in terminating her services. In disbelieving the explanation proffered by private respondent that the transfer of her table was the response of a spurned lothario, public respondent quoted the Labor Arbiter Complainant's assertion that the cause of the altercation between her and the Plant Manager where she threw a stapler to him and uttered invectives against him was her refusal to submit to his advances to her which started from her early days of employment and lasted for almost four years, is hardly believable. For indeed, if there was such harassment, why was there no complaints (sic) from her during that

period? Why did she stay there for so long? Besides, it could not have taken that period for the Plant Manager to react. This assertion of the complainant deserves no credence at all. 21 Public respondent in thus concluding appears baffled why it took private respondent more than four (4) years to expose William Chua's alleged sexual harassment. It reasons out that it would have been more prepared to support her position if her act of throwing the stapler and uttering invectives on William Chua were her immediate reaction to his amorous overtures. In that case, according to public respondent, she would have been justified for such outburst because she would have been merely protecting her womanhood, her person and her rights. We are not persuaded. The gravamen of the offense in sexual harassment is not the violation of the employee's sexuality but the abuse of power by the employer. Any employee, male or female, may rightfully cry "foul" provided the claim is well substantiated. Strictly speaking, there is no time period within which he or she is expected to complain through the proper channels. The time to do so may vary depending upon the needs, circumstances, and more importantly, the emotional threshold of the employee. Private respondent admittedly allowed four (4) years to pass before finally coming out with her employer's sexual impositions. Not many women, especially in this country, are made of the stuff that can endure the agony and trauma of a public, even corporate, scandal. If petitioner corporation had not issued the third memorandum that terminated the services of private respondent, we could only speculate how much longer she would keep her silence. Moreover, few persons are privileged indeed to transfer from one employer to another. The dearth of quality employment has become a daily "monster" roaming the streets that one may not be expected to give up one's employment easily but to hang on to it, so to speak, by all tolerable means. Perhaps, to private respondent's mind, for as long as she could outwit her employer's ploys she would continue on her job and consider them as mere occupational hazards. This uneasiness in her place of work thrived in an atmosphere of tolerance for four (4) years, and one could only imagine the prevailing anxiety and resentment, if not bitterness, that beset her all that time. But William Chua faced reality soon enough. Since he had no place in private respondent's heart, so must she have no place in his office. So, he provoked her, harassed her, and finally dislodged her; and for finally venting her pent-up anger for years, he "found" the perfect reason to terminate her. In determining entitlement to moral and exemplary damages, we restate the bases therefor. In moral damages, it suffices to prove that the claimant has suffered anxiety, sleepless nights, besmirched reputation and social humiliation by reason of the act complained of. 22 Exemplary damages, on the other hand, are granted in addition to, inter alia, moral damages "by way of example or correction for the public good" 23 if the employer ''acted in a wanton, fraudulent, reckless, oppressive or malevolent manner." 24 Anxiety was gradual in private respondent's five (5)-year employment. It began when her plant manager showed an obvious partiality for her which went out of hand when he started to make it clear that he would terminate her services if she would not give in to his sexual advances. Sexual harassment is an imposition of misplaced "superiority" which is enough to dampen an employee's spirit in her capacity for advancement. It affects her sense of judgment; it changes her life. If for

this alone private respondent should be adequately compensated. Thus, for the anxiety, the seen and unseen hurt that she suffered, petitioners should also be made to pay her moral damages, plus exemplary damages, for the oppressive manner with which petitioners effected her dismissal from the service, and to serve as a forewarning to lecherous officers and employers who take undue advantage of their ascendancy over their employees. All told, the penalty of dismissal is too excessive and not proportionate to the alleged infractions committed considering that it does not appear that private respondent was an incorrigible offender or that she inflicted serious damage to the company, nor would her continuance in the service be patently inimical to her employer's interest. 25 Even the suspension imposed upon her while her case was pending investigation appears to be unjustified and uncalled for. WHEREFORE, the Decision of public respondent National Labor Relations Commssion finding the dismissal of private respondent Rosalinda C. Cortez to be without just cause and ordering petitioners Philippine Aeolus Automotive United Corporation and/or Francis Chua to pay her back wages computed from the time of her dismissal, which should be full back wages, is AFFIRMED. However, in view of the strained relations between the adverse parties, instead of reinstatement ordered by public respondent, petitioners should pay private respondent separation pay equivalent to one (1) month salary for every year of service until finality of this judgment. In addition, petitioners are ordered to pay private respondent P25,000.00 for moral damages and P10,000.00 for exemplary damages. Costs against petitioners. SO ORDERED. Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur.1wphi1.nt Footnotes 1 See private respondent Cortez. Employment Identification Card, Annex "A;" Original Records, p. 18. 2 Memorandum of petitioner, pp. 2-5; Rollo, pp. 142-145. 3 Rollo, p. 203. 4 Decision penned by Labor Arbiter Eduardo J. Carpio; Rollo, p. 56. 5 Decision penned by Commissioner Vicente S. E. Veloso, concurred in by Presiding Commissioner Bartolome S. Carale and, Commissioner Alberto R. Quimpo, Rollo, p. 31. 6 Rollo, pp. 33-34. 7 Art. 282. Termination by Employer. An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful

breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employee against the person of his employer or any immediate member of his family or his duly authorized representative; and, (e) Other causes analogous to the foregoing. 8 Agoy v. NLRC, G.R. No. 112096, 30 January 1996, 252 SCRA 588. 9 Almira v. B.F. Goodrich Philippines, Inc., No. L-39474, 25 July 1974, 58 SCRA 120. 10 Original, Records, p. 20. 11 Id., pp. 11-12. 12 Id., p. 12. 13 Id., p. 13. 14 Molato v. NLRC, G.R. No. 113085, 2 January, 1997, 266 SCRA 42, Aris Philippine Inc. v. NLRC, G.R. No. 97817, 10 November 1994, 238 SCRA 59. 15 See Note 1. 16 See Memorandum on Preventive Suspension; Rollo, p. 37. 17 Memorandum requiring her to explain the declared application of the ATM cards. 18 Memorandum of the Solicitor General, p. 7; Rollo, p. 225. 19 Samar II Electric Cooperative, Inc. v. NLRC, G.R. No. 116692, 21 March 1997, 270 SCRA 290. 20 Equitable Banking Corporation v. NLRC, G.R. No. 102467, 273 SCRA 352. 21 Rollo, p. 55. 22 Art. 2217, New Civil Code of the Philippines. 23 Art. 2229, id. 24 Art. 2232, id. 25 Rubberworld (Phils.), Inc. v. NLRC, G.R. No. 75704, 19 July 1989, 175 SCRA 450. The Lawphil Project - Arellano Law Foundation

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-18919 December 29, 1962

ABELARDO JAVELLANA, TOMAS JONCO, RUDICO HABANA, EXEQUIEL GOLEZ, ALFREDO ANG, and FILIPINAS SOLEDAD, in their capacities as Councilors of the Municipal Municipality of Buenavista, Province of Iloilo, petitioners appellees, vs. SUSANO TAYO, as Mayor of the Municipal Municipality of Buenavista, Iloilo, respondentappellant. Ramon A. Gonzales for petitioners-appellees. Rico & Tia for respondent-appellant. BARRERA, J.: This is a direct appeal taken by respondent Susano Tayo (Mayor of the Municipality of Buenavista, Iloilo) from the decision of the Court of First Instance of Iloilo (in Civil Case No. 5558, for mandamus) declaring legal and validity the regular session held by petitioners Abelardo Javellano Tomas Jonco, Rudico Habana, Exequiel Golez, Alfredo Ang, and Filipinas Soledad, constituting a majority of the elected councilors of said municipality, and ordering respondent to give due course to the resolutions and or ordinances passed thereat, and to sign the payrolls corresponding to the session days of June 1, June 15, July 6, July 20, August 3, August 17, September 7, and September 21, 1960 for payment of the per diems of petitioner as councilors; to pay said Councilor Golez the sum of P100.00 as moral damages; and to pay P100.00 as attorney' fees plus costs. The case was submitted on the following Stipulation of Facts: I That the petitioners are duly elected and qualified a members of the Municipal Council of the Municipality of Buenavista, Province of Iloilo, Philippines; and that the respondent at the time the acts hereinbelow complained of took place, was and still is the duly-elected and qualified Mayor of the Municipality of Buenavista, Province of Iloilo Philippines where he resides and may be served with summons. II On February 8, 1960. the Municipal Council of the Municipality of Buenavista, Iloilo, unanimously approved Resolution No. 5, Series of 1960, dated February 8, 1960, a copy of which is hereto attached to form an integral part hereon as Annex 'A', which set the regular sessions of the Municipality Council of Buenavista on every first and third Wednesday of

every month, and which resolution was duly approved by the respondent, in his capacity as Mayor of the Municipality of Buenavista. III That on June 1, 1960, at the time and place set for the regular session of the Municipal Council, the Mayor, Vice-Mayor, No. 1 and No. 2 Councilors, and the Secretary were absent. IV That the six councilors, who are the petitioners in this case, were present and they proceeded to elect among themselves a temporary presiding officer and Acting Secretary to take notes of the proceedings. Having thus elected a temporary presiding officer and a secretary of the Council, they proceeded to do business. V That on June 15. 1960, at the time and place designated in Resolution No. 5, series of 1960, dated February 8, 1960 above referred to, the petitioners acting as duly elected and qualified councilors were present and again, in view of the absence of the Mayor, ViceMayor said to councilor and the Secretary proceeded to elect a temporary presiding officer and temporary secretary from among them, and did business as a Municipal Council of Buenavista. VI That again on July 6, and July 21, 1960, on August 3, and August 17, September 7, and on September 21, 1960, the petitioners met at the place and time designated in Resolution No. 5, series of 1960, and proceeded to elect a temporary Secretary among themselves, and did business as the Municipal Council of Buenavista, in view again of the absence of the Mayor Vice-Mayor, 2 councilors, and the Secretary. VII That when the minutes of the proceedings of June 1, June 15. July 6, July 20, August 17, September 7, and September 21, 1960 of the Municipal Council were presented to the respondent for action, the respondent Mayor refused to act upon said minutes, or particularly to approve or disapprove the resolution as approved by the municipal Council, the Mayor declaring the sessions above referred to as null and void and not in accordance with. VIII That the petitioners made repeated demands for payment of their per diems for the of June 1, June 15, July 6, July 20, August 3, August 17, September 7, 1960, by representing the

payrolls; Provincial Forms No. 38(A) to the respondent Mayor for the latter signature, but that the respondent refused to affix his signature to the payrolls thus presented, covering the per diems of the petitioner alleging that the proceedings were illegal due to his absence. IX That the petitioners, acting through Atty. Bartolome T. Tina, addressed a letter dated August 8, 1960 to the Honorable Provincial Fiscal of the Province of Iloilo, asking of the latter's opinion on the validity of the acts of the herein petitioners, acting as the Municipal Council in the absence of the Mayor, Vice-Mayor, said two councilors and the secretary, a copy which letter is herewith attached as Annex 'B' and made an integral part of this petition. X That on August 9, 1960, the Honorable Provincial Fiscal of the Province of Iloilo in his indorsement, rendered an opinion upholding the validity of the controverted sessions of the Municipal Council, a copy, of which communication is, likewise attached herein is Annex 'C' and made an integral part of this petition. XI That despite the opinion of the Provincial Fiscal, the respondent Mayor refused and still refuses to act upon the resolution petitions presented to him and to sign the payrolls covering the per diems of the herein petitioners. XII That the respondent brought the matter to the attention of the Provincial Board, of the Province of Iloilo, by means of a letter questioning the legality of the minutes of the regular possession of the Municipal Council without his presence individual that the Provincial Board resolved on September 23, 1960 to return the minutes of the regular session of the Municipal Council of Buenavista, Iloilo, informing the Mayor that per the opinion of the Legal Assistant, said minutes is legal. XIII That despite the resolution of the Provincial Board, the Mayor refused and still refuses to recognize the validity of the acts of the Municipal Council and the legality of its regular session held in his absence. On the basis of the foregoing Stipulation of Facts (plus the testimony of Councilor Exequiel Golez), the trial court (on July 26, 1961) rendered the decision above adverted to, partly stating: This Court, after perusal of all the records of this case has reached the conclusion that the sessions held by the petitioner during the absence of the respondent Mayor were perfectly

valid and legal. The attendance of the Mayor is not essential to the validity of the session as long as there is quorum constituted in accordance with law. To declare that the proceedings of the petitioners were null and void, is to encourage recalcitrant public officials who would frustrate valid session for political end or consideration. Public interest will immensely suffer, if a mayor who belongs to one political group refuses to call or attend a session, because the Council is controlled by another political group. In a democrats the minority should respect the majority and inasmuch as the petitioners constitute the majority political group, it is but natural that they could validly hold a valid session, in order to devise means for public interest. The respondent here as Municipal Mayor should have given good example, by calling and attending regular session on the dates fixed by the Council. In the discharge of his of official duty, he should consider the Session Hall of the Municipal Council as the sanctuary and depository of public interest and public welfare. Any member of the Council should enter the Session Hall, not as a representative of any political part or group, but as a representative of the people of the municipality whose interest and welfare should be safeguarded by the Council. In entering this Hall, he must lay aside his political affiliation, interest, and consideration, because it is the sworn duty of every councilor to perform his duty with justice and impartiality. Not to attend a meeting, constitutes an abandonment of the people's welfare. One may be in the minority group, but he can discharge his duty with honor and prestige as a fiscalizer, to fiscalize the doings and actuations of the majority. He may be overwhelmed in his plan or project by superior numerical majority but if he could adduce good reasons and arguments in favor of the welfare of the people, his task as a fiscalizer is thereby attained. There is no fear on attending any session because if your project is not carried out, you may have the remedy, either by administrative or judicial relief, by questioning and ordinance or resolution passed by the majority, which may be null and void because they are excessive and unreasonable. So, there is no reason why the respondent in this case had refused to attend the session of the Council. Petitioners here claim moral damages pursuant to the provisions of Article 2219, in connection with Article 21 and Article 27 of the new Civil Code. Said Article 27 provides as follows: '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 my be taken.'lawphil.net But in support of the allegations in the petition, only petitioner Exequiel Golez was presented as a witness who prove moral damages he suffered as a consequence of the refusal the respondent Susano Tayo to perform his official duty. such, of all the petitioners, only Exequiel Golez is entitled receive moral damages in the sum of P100.00. IN VIEW OF THE FOREGOING, the petition for a writ of mandamus is hereby granted, and the respondent is here ordered to give due course to the resolutions and ordinance passed by the petitioners in the regular sessions during the absence of the respondent, to

give due course and sign the payrolls covering the periods of June 1, June 15, July 6, July 20, August 3, August 17, September 7, and September 21, 196 for the payment of per diems of the petitioners as Municipal Councilors; to pay to said Exequiel Golez, the sum of P100.00 as moral damage, to pay the sum of P100.00 as attorney's fee and to pay the costs of the proceeding. SO ORDERED. Respondent-appellant claims, in this appeal, that the trial court erred in holding that the sessions held by petitioners-appellees during his absence and during the absence of his Vice-Mayor and the No. 1 and No. 2 Councilors the Municipal Council of Buenavista, Iloilo were valid an legal. The claim is untenable. In the first place, there is no question that the sessions at issue were held on the days set for regular sessions of the council, as authorized an approved in a previous resolution. Secondly, it is not disputed that a majority of the members of the council (six out of ten) were present in these sessions. Consequently, pursuant to Section 2221 of the Revised Administrative Code which provides: SEC. 2221. Quorum of council Enforcing Attendance of absent members. The majority of the council elected shall constitute a quorum to do business; .... there was a quorum to do business in all the sessions in question. The term "quorum" has been defined as that number of members of the body which, when legally as assembled in their proper places, will enable the body to transact its proper business, or, in other words, that number that makes a lawful body and gives it power to pass a law or ordinance or do any other valid corporate act. (4 McQuillin, Municipal Corporation [3rd Ed 478]; see also State vs. Wilkesville Tp., 20 Ohio St. 288). Appellant, however asserts that while under Section 2221 of the Revised Administrative Code, the majority of the members of the council constitutes a quorum to do business, the council "shall be presided by the Mayor and no one else", inasmuch as it is one of the duties imposed upon him under Section 2194(d) of the Revised Administrative Code. 1 The argument would be correct if the mayor (herein appellant) were present at the sessions in question and was prevented from presiding therein, but not where, as in the instant case, he absented himself therefrom. Appellant likewise invokes Section 7 (third paragraph) of Republic Act No. 9264, 2 in support of his view that the sessions in question were null and void, as they were not presided by him or by his Vice-Mayor, or by the councilor who obtained the largest number of votes.lawphil.net It is true that this section mentions only the vice-mayor, or in his place, the councilor who obtained the largest number of votes who could perform the duties of the mayor, in the event of the latter's temporary incapacity to do so, except the power to appoint, suspend, or dismiss employees. Ordinarily, this enumeration would be in interpreted as exclusive, following the general principle of inclusio unius, est exclusio alterius, but there are cogent reasons to disregard this rule in this case, since to adopt it would cause inconvenience, hardship, and injury to public interest, as it would place in the hands of mayor, vice-mayor, and the councilor receiving the highest number of

votes an instrument to defeat the law investing the legislative power in the municipal council, by simply boycotting, as they continuously did for 4 months, regular sessions of the council. It is to be noted that same section 7 of Republic Act No. 2264 invoked by appellant provides, in case of permanent incapacity of mayor, vice-mayor, and the councilor obtaining the largest number of votes, to assume and perform the duties of mayor, the councilor receiving the next largest number of votes, and so on, can assume and perform such duties. We see no strong reason why the same procedure should not be followed in case of temporary incapacity, there being no express prohibition against its observance. The legal provision being therefore susceptible of two in interpretations, we adopt the one in consonance with the resumed intention of the legislature to give its enactmentthe most reasonable and beneficial construction, the that will render them operative and effective and harmonious with other provisions of law. This is imperative because, as already pointed out heretofore, under the law "the majority of the council elected shall constitute a quorum to do business", and this would be defeated if adopt the literal interpretation of appellant that only mayor, vice-mayor, or the councilor receiving the largest number of votes could preside the council's meeting, to legal, irrespective of the presence of a quorum or majority of the councilors elected. Such an interpretation would, indeed, be fraught with dangerous consequences. For it would, in effect, deprive the municipal council its function, namely, the enactment of ordinances design for the general welfare of its inhabitants. As the trial court aptly observed, "To declare that the proceedings of thepetitioners (herein appellees) were null and void, is to encourage recalcitrant public officials who would frustrate valid sessions for political end or consideration. Public interest will immensely suffer, if a mayor who belong to one political group refused to call or attend a session because the council is controlled by another political group." Lastly, appellant contests the award of moral damage to appellee councilor Exequiel Golez. We find said award proper under Article 27 of the new Civil Code, 3 considering that according to the trial court, he (Golez) was able to prove that he suffered the same, as a consequence of appellant's refusal to perform his official duty, not withstanding the action taken by the Provincial Fiscal an the Provincial Board upholding the validity of the session in question. WHEREFORE, the decision appealed from is hereby affirmed with costs against respondentappellant. So ordered. Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L.,Paredes and Makalintal, JJ. concur. Dizon and Regala, JJ., took no part. 1"SEC. 2194. Mayor as chief executive of municipality. ... He shall have the following duties:

"(d) He shall preside at the meetings of the municipal council and shall recommend to said body from time to time, such measures connected with the public health, cleanliness or ornament of the municipality or the improvement of its finances as he shall deem expedient." 2 "SEC. 7. The city, municipal, and municipal district vice-mayor and succession to the office of mayor. ... In the event of temporary incapacity of the mayor to perform the duties of his office

on account of absence on leave, sickness or and temporary incapacity, the vice-mayor shall perform the duties and exercise the powers of the mayor except the power to appoint suspend or dismiss employees. In the even the vice-mayor is temporarily incapacitated to perform the duties of the office of mayor, the councilor who obtained the largest number of votes among the incumbent councilors in the local elections immediately preceding shall perform the duties and exercise the powers of the mayor except the power to appoint, suspend or dismiss employees. ..." 3 "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. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-14986 July 31, 1962

CORNELIO AMARO and JOSE AMARO, plaintiffs-appellants, vs. AMBROSIO SUMANGUIT, defendant-appellee. Jose B. Gamboa for plaintiffs-appellants. L. G. Lopez for defendant-appellee. MAKALINTAL, J.: Appellants filed suit for damages in the Court of First Instance of Negros Occidental against the chief of police of the City of Silay. Although not specifically alleged in the complaint, it is admitted by both parties, as shown in their respective briefs, that the action is predicated on Articles 21 and/or 27 of the Civil Code, which provide: 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. 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. The complaint was dismissed upon appellee's motion in the court below on the ground that it does not state facts sufficient to constitute a cause of action. The only question now before us refers to correctness of the order dismissal.

The pertinent allegations in the complaint are that on October 5, 1958 appellant Jose Amaro was assaulted and shot at near the city government building of Silay; that the following day he, together with his father (Cornelio Amaro) and his witnesses, "went to the office of the defendant but instead of obtaining assistance to their complaint they were harassed and terrorized;" that in view thereof they "gave up and renounced their right and interest in the prosecution of the crime . . . .;" that upon advice of the City Mayor given to appellee an investigation (of said crime) was conducted and as a result the city attorney of Silay was about to file or had already filed an information for illegal discharge of firearm against the assailant; and that "having finished the investigation of the crime complained of, the defendant chief of police is now harassing the plaintiffs in their daily work, ordering them thru his police to appear in his office when he is absent, and he is about to order the arrest of the plaintiffs to take their signatures in prepared affidavits exempting the police from any dereliction of duty in their case against the perpetrator of the crime." We are of the opinion that the facts set out constitute an actionable dereliction on appellee's part in the light of Article 27 of the Civil Code. That appellants were "harrased and terrorized" may be a conclusion of law and hence improperly pleaded. Their claim for relief, however, is not based on the fact of harassment and terrorization but on appellee's refusal to give them assistance, which it was his duty to do as an officer of the law. The requirement under the aforesaid provision that such refusal must be "without just cause" is implicit in the context of the allegation. The statement of appellee's dereliction is repeated in a subsequent paragraph of the complaint, where it is alleged that "he is about to order the arrest of the plaintiffs" to make them sign affidavits of exculpation in favor of the policemen. The complaint is, without doubt, imperfectly drafted. It suffers from vagueness and generalization. But all that the Rules require is that there be a showing by a statement of ultimate facts, that the plaintiff his a right and that such right has been violated by the defendant. An action should not be dismissed upon mere ambiguity, indefiniteness or uncertainty, for these are not grounds for a motion to dismiss, under Rule 8, but rather for a bill of particulars according to Rule 16. Moran, Comments on the Rules of Court, 1957 ed., Vol. I, p. 111. In two cases decided by this Court, it was observed: Under the new Rules of Court, an action cannot be dismissed upon the ground that the complaint is vague, ambiguous, or indefinite (see Rule 8, section 1), because the defendant, in such case, may ask for more particulars (Rule 16) or he may compel the plaintiff to disclose more relevant facts under the different methods of discovery provided by the Rules. (Rules 18, 20, 21, 22 and 23.) Professor Sunderland once said "The real test of good pleading under the new rules is whether the information given is sufficient to enable the party to plead and prepare for trial. A legal conclusion may serve the purpose of pleading as well as anything else if it gives the proper information. If the party wants more he may ask for more details in regard to the particular matter that is stated too generally (Vol. XIII, Cincinnati Law Review, January 1939.) Co Tiamco vs. Diaz, 75 Phil. 672. At any rate, if respondent's complaint, which was clear enough, had created confusion in petitioner's mind as to the foundation of her cause of action, then it should have moved for a more definite statement of the same before the trial. De Leon Brokerage Co., Inc. vs. The Court of Appeals, et al., G.R. No. L-15247, Feb. 28, 1962.

The fact, cited by the court below in the order subject to review, that appellants have another recourse (in connection with the crime of illegal discharge of firearm supposedly committed against one of them) as by filing their complaint directly with the city attorney of Silay or by lodging an administrative charge against appellee herein, does not preclude this action for damages under Article 27 of the Civil Code and hence does not justify its dismissal. THE ORDER APPEALED from is set aside and the case is remanded to the Court of origin for further proceedings. Costs against appellee. Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon and Regala, JJ., concur. Reyes, J.B.L., J., took no part. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-30745 January 18, 1978 PHILIPPINE MATCH CO., LTD., plaintiff-appellant, vs. THE CITY OF CEBU and JESUS E. ZABATE, Acting City Treasurer, defendantsappellees. Pelaez, Pelaez & Pelaez for appellant. Nazario Pacquiao, Metudio P. Belarmino & Ceferino Jomuad for appellees.

AQUINO, J.: This case is about the legality of the tax collected by the City of Cebu on sales of matches stored by the Philippine Match Co., Ltd. in Cebu City but delivered to customers outside of the City. Ordinance No. 279 of Cebu City (approved by the mayor on March 10, 1960 and also approved by the provincial board) is "an ordinance imposing a quarterly tax on gross sales or receipts of merchants, dealers, importers and manufacturers of any commodity doing business" in Cebu City. It imposes a sales tax of one percent (1%) on the gross sales, receipts or value of commodities sold, bartered, exchanged or manufactured in the city in excess of P2,000 a quarter.

Section 9 of the ordinance provides that, for purposes of the tax, "all deliveries of goods or commodities stored in the City of Cebu, or if not stored are sold" in that city, "shall be considered as sales" in the city and shall be taxable. Thus, it would seem that under the tax ordinance sales of matches consummated outside of the city are taxable as long as the matches sold are taken from the company's stock stored in Cebu City. The Philippine Match Co., Ltd., whose principal office is in Manila, is engaged in the manufacture of matches. Its factory is located at Punta, Sta. Ana, Manila. It ships cases or cartons of matches from Manila to its branch office in Cebu City for storage, sale and distribution within the territories and districts under its Cebu branch or the whole Visayas-Mindanao region. Cebu City itself is just one of the eleven districts under the company's Cebu City branch office. The company does not question the tax on the matches of matches consummated in Cebu City, meaning matches sold and delivered within the city. It assails the legality of the tax which the city treasurer collected on out-of- town deliveries of matches, to wit: (1) sales of matches booked and paid for in Cebu City but shipped directly to customers outside of the city; (2) transfers of matches to newsmen assigned to different agencies outside of the city and (3) shipments of matches to provincial customers pursuant to salesmen's instructions. The company paid under protest to the city t the sum of P12,844.61 as one percent sales tax on those three classes of out-of-town deliveries of matches for the second quarter of 1961 to the second quarter of 1963. In paying the tax the company accomplished the verified forms furnished by the city treasurers office. It submitted a statement indicating the four kinds of transactions enumerated above, the total sales, and a summary of the deliveries to the different agencies, as well as the invoice numbers, names of customers, the value of the sales, the transfers of matches to salesmen outside of Cebu City, and the computation of taxes. Sales of matches booked and paid for in Cebu City but shipped directly to customers outside of the city refer to orders for matches made in the city by the company's customers, by means of personal or phone calls, for which sales invoices are issued, and then the matches are shipped from the bodega in the city, where the matches had been stored, to the place of business or residences of the customers outside of the city, duly covered by bills of lading The matches are used and consumed outside of the city. Transfers of matches to salesmen assigned to different agencies outside of the city embrace equipments of matches from the branch office in the city to the salesmen (provided with panel cars) assigned within the province of Cebu and in the different districts in the Visayas and Mindanao under the jurisdiction or supervision of the Cebu

City branch office. The shipments are covered by bills of lading. No sales invoices whatever are issued. The matches received by the salesmen constitute their direct cash accountability to the company. The salesmen sell the matches within their respective territories. They issue cash sales invoices and remit the proceeds of the sales to the company's Cebu branch office. The value of the unsold matches constitutes their stock liability. The matches are used and consumed outside of the city. Shipments of matches to provincial customers pursuant to newsmens instructions embrace orders, by letter or telegram sent to the branch office by the company's salesmen assigned outside of the city. The matches are shipped from the company's bodega in the city to the customers residing outside of the city. The salesmen issue the sales invoices. The proceeds of the sale, for which the salesmen are accountable are remitted to the branch office. As in the first and seconds of transactions abovementioned, the matches are consumed and used outside of the city. The company in its letter of April 15, 1961 to the city treasurer sought the refund of the sales tax paid for out-of-town deliveries of matches. It invoked Shell Company of the Philippines, Ltd. vs. Municipality of Sipocot, Camarines Sur, 105 Phil. 1263. In that case sales of oil and petroleum products effected outside the territorial limits of Sipocot, were held not to be subject to the tax imposed by an ordinance of that municipality. The city treasurer denied the request. His stand is that under section 9 of the ordinance all out-of-town deliveries of latches stored in the city are subject to the sales tax imposed by the ordinance. On August 12, 1963 the company filed the complaint herein, praying that the ordinance be d void insofar as it taxed the deliveries of matches outside of Cebu City, that the city be ordered to refund to the company the said sum of P12,844.61 as excess sales tax paid, and that the city treasurer be ordered to pay damages. After hearing, the trial court sustained the tax on the sales of matches booked and paid for in Cebu City although the matches were shipped directly to customers outside of the city. The lower court held that the said sales were consummated in Cebu City because delivery to the carrier in the city is deemed to be a delivery to the customers outside of the city. But the trial court invalidated the tax on transfers of matches to salesmen assigned to different agencies outside of the city and on shipments of matches to provincial customers pursuant to the instructions of the newsmen It ordered the defendants to refund to the plaintiff the sum of P8,923.55 as taxes paid out the said out-of-town deliveries with legal rate of interest from the respective dates of payment. The trial court characterized the tax on the other two transactions as a "storage tax" and not a sales tax. It assumed that the sales were consummated outside of the city and, hence, beyond the city's taxing power.

The city did not appeal from that decision. The company appealed from that portion of the decision upholding the tax on sales of matches to customers outside of the city but which sales were booked and paid for in Cebu City, and also from the dismissal of its claim for damages against the city treasurer. The issue is whether the City of Cebu can tax sales of matches which were perfected and paid for in Cebu City but the matches were delivered to customers outside of the City. We hold that the appeal is devoid of merit bemuse the city can validly tax the sales of matches to customers outside of the city as long as the orders were booked and paid for in the company's branch office in the city. Those matches can be regarded as sold in the city, as contemplated in the ordinance, because the matches were delivered to the carrier in Cebu City. Generally, delivery to the carrier is delivery to the buyer (Art. 1523, Civil Code; Behn, Meyer & Co. vs. Yangco, 38 Phil. 602). A different interpretation would defeat the tax ordinance in question or encourage tax evasion through the simple expedient of arranging for the delivery of the matches at the out. skirts of the city through the purchase were effected and paid for in the company's branch office in the city. The municipal board of Cebu City is empowered "to provide for the levy and collection of taxes for general and purposes in accordance with law" (Sec. 17[a], Commonwealth Act No. 58; Sec. 31[l], Rep. Act No. 3857, Revised Charter of Cebu city). The taxing power validly delegated to cities and municipalities is defined in the Local Autonomy Act, Republic Act No. 2264 (Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. Municipality of Tanauan, Leyte, L-31156, February 27, 1976, 69 SCRA 460), which took effect on June 19, 1959 and which provides:
SEC. 2. Taxation. Any provision of law to the contrary notwithstanding, all chartered cities, municipalities and municipal districts shall have authority to impose municipal license taxes or fees upon persons engaged in any occupation or business, or exercising privileges in chartered cities,. municipalities or municipal districts by requiring them to secure licenses at rates fixed by the municipal board or city council of the city, the municipal council of the municipality, or the municipal district council of the municipal district; to collect fees and charges for services rendered by the city, municipality or municipal district; to regulate and impose reasonable fees for services rendered in connection with any business, profession or occupation being conducted within the city, municipality or municipal district and otherwise to levy for public purposes, just and uniform taxes, licenses or fees; Provided, That municipalities and municipal districts shall, in no case, impose any percentage tax on sales or other taxes in any form based thereon nor impose taxes on articles subject to specific tax, except gasoline, under the provisions of the National International Revenue Code; Provided, however, That no city, municipality or municipal districts may levy or impose any of the following: (here follows an enumeration of internal revenue taxes)

xxx xxx xxx *

Note that the prohibition against the imposition of percentage taxes (formerly provided for in section 1 of Commonwealth Act No. 472) refers to municipalities and municipal districts but not to chartered cities. (See Local Tax Code, P.D. No. 231. Marinduque Iron Mines Agents, Inc. vs. Municipal Council of Hinabangan Samar, 120 Phil. 413; Ormoc Sugar Co., Inc. vs. Treasurer of Ormoc City, L-23794, February 17, 1968, 22 SCRA 603). Note further that the taxing power of cities, municipalities and municipal districts may be used (1) "upon any person engaged in any occupation or business, or exercising any privilege" therein; (2) for services rendered by those political subdivisions or rendered in connection with any business, profession or occupation being conducted therein, and (3) to levy, for public purposes, just and uniform taxes, licenses or fees (C. N. Hodges vs. Municipal Board of the City of Iloilo, 117 Phil. 164, 167. See sec. 31[251, Revised Charter of Cebu City). Applying that jurisdictional test to the instant case, it is at once obvious that sales of matches to customers outside oil Cebu City, which sales were booked and paid for in the company's branch office in the city, are subject to the city's taxing power. The instant case is easily distinguishable from the Shell Company case where the price of the oil sold was paid outside of the municipality of Sipocot, the entity imposing the tax. On the other hand, the ruling in Municipality of Jose Panganiban, Province of Camarines Norte vs. Shell Company of the Philippines, Ltd., L-18349, July 30, 1966, 17 SCRA 778 that the place of delivery determines the taxable situs of the property to be taxed cannot properly be invoked in this case. Republic Act No. 1435, the law which enabled the Municipality of Jose Panganiban to levy the sales tax involved in that case, specifies that the tax may be levied upon oils "distributed within the limits of the city or municipality", meaning the place where the oils were delivered. That feature of the Jose Panganiban case distinguished it from this case. The sales in the instant case were in the city and the matches sold were stored in the city. The fact that the matches were delivered to customers, whose places of business were outside of the city, would not place those sales beyond the city's taxing power. Those sales formed part of the merchandising business being assigned on by the company in the city. In essence, they are the same as sales of matches fully consummated in the city. Furthermore, because the sellers place of business is in Cebu City, it cannot be sensibly argued that such sales should be considered as transactions subject to the taxing power of the political subdivisions where the customers resided and accepted delivery of the matches sold. The company in its second assignment of error contends that the trial court erred in not ordering defendant acting city treasurer to pay exemplary damages of P20,000 and attorney's fees.

The claim for damages is predicated on articles 19, 20, 21, 27 and 2229 of the Civil Code. It is argued that the city treasurer refused and neglected without just cause to perform his duty and to act with justice and good faith. The company faults the city treasurer for not following the opinion of the city fiscals, as legal adviser of the city, that all out-of-town deliveries of matches are not subject to sales tax because such transactions were effected outside of the city's territorial limits. In reply, it is argued for defendant city treasurer that in enforcing the tax ordinance in question he was simply complying with his duty as collector of taxes (Sec. 50, Revised Charter of Cebu City). Moreover, he had no choice but to enforce the ordinance because according to section 357 of the Revised Manual of Instruction to Treasurer's "a tax ordinance win be enforced in accordance with its provisions" until d illegal or void by a competent court, or otherwise revoked by the council or board from which it originated. Furthermore, the Secretary of Finance had reminded the city treasurer that a tax ordinance approved by the provincial board is operative and must be enforced without prejudice to the right of any affected taxpayer to assail its legality in the judicial forum. The fiscals opinion on the legality of an ordinance is merely advisory and has no binding effect. Article 27 of the Civil Code provides that "any person suffering material or moral lose 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." Article 27 presupposes that the refuse or omission of a public official is attributable to malice or inexcusable negligence. In this case, it cannot be said that the city treasurer acted wilfully or was grossly t in not refunding to the plaintiff the taxes which it paid under protest on out-of-town sales of matches. The record clearly reveals that the city treasurer honestly believed that he was justified under section 9 of the tax ordinance in collecting the sales tax on out-of-town deliveries, considering that the company's branch office was located in Cebu City and that all outof-town purchase order for matches were filled up by the branch office and the sales were duly reported to it. The city treasurer acted within the scope of his authority and in consonance with his bona fide interpretation of the tax ordinance. The fact that his action was not completely sustained by the courts would not him liable for We have upheld his act of taxing sales of matches booked and paid for in the city. "As a rule, a public officer, whether judicial ,quasi-judicial or executive, is not y liable to one injured in consequence of an act performed within the scope of his official authority, and in the line of his official duty." "Where an officer is invested with discretion and is empowered to exercise his judgment in matters brought before him. he is sometimes

called a quasi-judicial officer, and when so acting he is usually given immunity from liability to persons who may be injured as the result or an erroneous or mistaken decision, however erroneous his judgment may be. provided the acts complained of are done within the scope of the officer's authority and without malice, or corruption." (63 Am Jur 2nd 798, 799 cited in Philippine Racing Club, Inc. vs. Bonifacio, 109 Phil. 233, 240-241). It has been held that an erroneous interpretation of an ordinance does not constitute nor does it amount to bad faith that would entitle an aggrieved party to an award for damages (Cabungcal vs. Cordovan 120 Phil. 667, 572-3). That salutary in addition to moral temperate, liquidated or compensatory damages (Art. 2229, Civil Code). Attorney's fees are being claimed herein as actual damages. We find that it would not be just and equitable to award attorney's fees in this case against the City of Cebu and its (See Art. 2208, Civil Code). WHEREFORE, the trial court's judgment is affirmed. No costs. SO ORDERED. Fernando (Chairman), Antonio and Concepcion, Jr., JJ., concur. Santos, J., is on leave.

Separate Opinions

BARREDO, J., concurring: Anent appellant's claim for damages, it should be happy the trial court did not the city fully, which in my opinion, could have been possible.

Separate Opinions BARREDO, J., concurring: Anent appellant's claim for damages, it should be happy the trial court did not the city fully, which in my opinion, could have been possible.

Footnotes
* Sec. 5, Article XI of the Constitution provides that "each sale government unit shall have the power to create its own sources of revenue and to levy taxes, subject to such limitations as may be provided by law". That Constitutional provision was implemented by Presidential Decree No. 231, the Local Tax Code, which took effect on July 1, 1973.

i ii iii iv vRepublic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-69866 April 15, 1988 ROGELIO ABERCA, RODOLFO BENOSA, NESTOR BODINO NOEL ETABAG DANILO DE LA FUENTE, BELEN DIAZ-FLORES, MANUEL MARIO GUZMAN, ALAN JAZMINEZ, EDWIN LOPEZ, ALFREDO MANSOS, ALEX MARCELINO, ELIZABETH PROTACIO-MARCELINO, JOSEPH OLAYER, CARLOS PALMA, MARCO PALO, ROLANDO SALUTIN, BENJAMIN SESGUNDO, ARTURO TABARA, EDWIN TULALIAN and REBECCA TULALIANpetitioners, vs. MAJ. GEN. FABIAN VER, COL. FIDEL SINGSON, COL. ROLANDO ABADILLA, COL. GERARDO B. LANTORIA, COL. GALILEO KINTANAR, 1ST LT. COL. PANFILO M. LACSON, MAJ. RODOLFO AGUINALDO, CAPT. DANILO PIZARRO, 1ST LT. PEDRO TANGO, 1ST LT. ROMEO RICARDO, 1ST LT. RAUL BACALSO, MSGT BIENVENIDO BALABA and REGIONAL TRIAL COURT, National Capital Judicial Region, Branch XCV (95), Quezon City,respondents.

YAP, J.: This petition for certiorari presents vital issues not heretofore passed upon by this Court. It poses the question whether the suspension of the privilege of the writ of habeas corpus bars a civil action for damages for illegal searches conducted by military personnel and other violations of rights and liberties guaranteed under the Constitution. If such action for damages may be maintained, who can be held liable for such violations: only the military personnel directly involved and/or their superiors as well. This case stems from alleged illegal searches and seizures and other violations of the rights and liberties of plaintiffs by various intelligence units of the Armed Forces of the Philippines, known as Task Force Makabansa (TFM) ordered by General Fabian Ver "to conduct pre-emptive strikes against known communist-terrorist (CT) underground houses in view of increasing reports about CT plans to sow disturbances in Metro Manila," Plaintiffs allege, among others, that complying with said order, elements of the TFM raided several places, employing in most cases defectively issued judicial search warrants; that during these raids, certain members of the raiding party confiscated a number of purely personal

items belonging to plaintiffs; that plaintiffs were arrested without proper warrants issued by the courts; that for some period after their arrest, they were denied visits of relatives and lawyers; that plaintiffs were interrogated in violation of their rights to silence and counsel; that military men who interrogated them employed threats, tortures and other forms of violence on them in order to obtain incriminatory information or confessions and in order to punish them; that all violations of plaintiffs constitutional rights were part of a concerted and deliberate plan to forcibly extract information and incriminatory statements from plaintiffs and to terrorize, harass and punish them, said plans being previously known to and sanctioned by defendants. Plaintiffs sought actual/compensatory damages amounting to P39,030.00; moral damages in the amount of at least P150,000.00 each or a total of P3,000,000.00; exemplary damages in the amount of at least P150,000.00 each or a total of P3,000,000.00; and attorney's fees amounting to not less than P200,000.00. A motion to dismiss was filed by defendants, through their counsel, then Solicitor-General Estelito Mendoza, alleging that (1) plaintiffs may not cause a judicial inquiry into the circumstances of their detention in the guise of a damage suit because, as to them, the privilege of the writ of habeas corpus is suspended; (2) assuming that the courts can entertain the present action, defendants are immune from liability for acts done in the performance of their official duties; and (3) the complaint states no cause of action against the defendants. Opposition to said motion to dismiss was filed by plaintiffs Marco Palo, Danilo de la Fuente, Benjamin Sesgundo, Nel Etabag, Alfredo Mansos and Rolando Salutin on July 8, 1983, and by plaintiffs Edwin Lopez, Manuel Mario Guzman, Alan Jasminez, Nestor Bodino, Carlos Palma, Arturo Tabara, Joseph Olayer, Rodolfo Benosa, Belen Diaz, Flores, Rogelio Aberca, Alex Marcelino and Elizabeth Marcelino on July 21, 1983. On November 7, 1983, a Consolidated Reply was filed by defendants' counsel. Then, on November 8, 1983, the Regional Trial Court, National Capital Region, Branch 95, Judge Willelmo C. Fortun, Presiding, 1 issued a resolution granting the motion to dismiss. I sustained, lock, stock and barrel, the defendants' contention (1) the plaintiffs may not cause a judicial inquiry into the circumstances of their detention in the guise of a damage suit because, as to them, the privilege of the writ of habeas corpus is suspended; (2) that assuming that the court can entertain the present action, defendants are immune from liability for acts done in the performance of their official duties; and (3) that the complaint states no cause of action against defendants, since there is no allegation that the defendants named in the complaint confiscated plaintiffs' purely personal properties in violation of their constitutional rights, and with the possible exception of Major Rodolfo Aguinaldo and Sergeant Bienvenido Balabo committed acts of torture and maltreatment, or that the defendants had the duty to exercise direct supervision and control of their subordinates or that they had vicarious liability as employers under Article 2180 of the Civil Code. The lower court stated, "After a careful study of defendants' arguments, the court finds the same to be meritorious and must, therefore, be granted. On the other hand, plaintiffs' arguments in their opposition are lacking in merit." A motion to set aside the order dismissing the complaint and a supplemental motion for reconsideration was filed by the plaintiffs on November 18, 1983, and November 24, 1983,

respectively. On December 9, 1983, the defendants filed a comment on the aforesaid motion of plaintiffs, furnishing a copy thereof to the attorneys of all the plaintiffs, namely, Attys. Jose W. Diokno, Procopio Beltran, Rene Sarmiento, Efren Mercado, Auguso Sanchez, Antonio L. Rosales, Pedro B. Ella Jr., Arno V. Sanidad, Alexander Padilla, Joker Arroyo, Rene Saguisag, Ramon Esguerra and Felicitas Aquino. On December 15, 1983, Judge Fortun issued an order voluntarily inhibiting himself from further proceeding in the case and leaving the resolution of the motion to set aside the order of dismissal to Judge Lising, "to preclude any suspicion that he (Judge Fortun) cannot resolve [the] aforesaid pending motion with the cold neutrality of an impartial judge and to put an end to plaintiffs assertion that the undersigned has no authority or jurisdiction to resolve said pending motion." This order prompted plaintiffs to reesolve an amplificatory motion for reconsideration signed in the name of the Free Legal Assistance Group (FLAG) of Mabini Legal Aid Committee, by Attys. Joker P. Arroyo, Felicitas Aquino and Arno Sanidad on April 12, 1984. On May 2,1984, the defendants filed a comment on said amplificatory motion for reconsideration. In an order dated May 11, 1984, the trial court, Judge Esteban Lising, Presiding, without acting on the motion to set aside order of November 8, 1983, issued an order, as follows: It appearing from the records that, indeed, the following plaintiffs, Rogelio Aberca, Danilo de la Fuente and Marco Palo, represented by counsel, Atty. Jose W. Diokno, Alan Jasminez represented by counsel, Atty. Augusta Sanchez, Spouses Alex Marcelino and Elizabeth Protacio-Marcelino, represented by counsel, Atty. Procopio Beltran, Alfredo Mansos represented by counsel, Atty. Rene Sarmiento, and Rolando Salutin, represented by counsel, Atty. Efren Mercado, failed to file a motion to reconsider the Order of November 8, 1983, dismissing the complaint, nor interposed an appeal therefrom within the reglementary period, as prayed for by the defendants, said Order is now final against said plaintiffs. Assailing the said order of May 11, 1984, the plaintiffs filed a motion for reconsideration on May 28,1984, alleging that it was not true that plaintiffs Rogelio Aberca, Danilo de la Fuente, Marco Palo, Alan Jasminez, Alex Marcelino, Elizabeth Protacio-Marcelino, Alfredo Mansos and Rolando Salutin failed to file a motion to reconsider the order of November 8, 1983 dismissing the complaint, within the reglementary period. Plaintiffs claimed that the motion to set aside the order of November 8, 1983 and the amplificatory motion for reconsideration was filed for all the plaintiffs, although signed by only some of the lawyers. In its resolution of September 21, 1984, the respondent court dealt with both motions (1) to reconsider its order of May 11, 1984 declaring that with respect to certain plaintiffs, the resolution of November 8, 1983 had already become final, and (2) to set aside its resolution of November 8, 1983 granting the defendants' motion to dismiss. In the dispositive portion of the order of September 21, 1984, the respondent court resolved: (1) That the motion to set aside the order of finality, dated May 11, 1984, of the Resolution of dismissal of the complaint of plaintiffs Rogelio Aberca, Danilo de la Fuente, Marco Palo, Alan Jasminez Alex Marcelino, Elizabeth Protacio-Marcelino, Alfredo Mansos and Rolando Salutin is deed for lack of merit;

(2) For lack of cause of action as against the following defendants, to wit: 1. Gen Fabian Ver 2. Col. Fidel Singson 3. Col. Rolando Abadilla 4. Lt. Col. Conrado Lantoria, Jr. 5. Col. Galileo Montanar 6. Col. Panfilo Lacson 7. Capt. Danilo Pizaro 8. 1 Lt Pedro Tango 9. Lt. Romeo Ricardo 10. Lt. Raul Bacalso the motion to set aside and reconsider the Resolution of dismissal of the present action or complaint, dated November 8, 1983, is also denied but in so far as it affects and refers to defendants, to wit: 1. Major Rodolfo Aguinaldo, and 2. Master Sgt. Bienvenido Balaba the motion to reconsider and set aside the Resolution of dismissal dated November 3, 1983 is granted and the Resolution of dismissal is, in this respect, reconsidered and modified. Hence, petitioners filed the instant petition for certiorari on March 15, 1985 seeking to annul and set aside the respondent court's resolution of November 8, 1983, its order of May 11, 1984, and its resolution dated September 21, 1984. Respondents were required to comment on the petition, which it did on November 9, 1985. A reply was filed by petitioners on August 26, 1986. We find the petition meritorious and decide to give it due course. At the heart of petitioners' complaint is Article 32 of the Civil Code which provides: ART. 32. Any public officer or employee, or any private individual who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: (1) Freedom of religion; (2) Freedom of speech; (3) Freedom to write for the press or to maintain a periodical publication;

(4) Freedom from arbitrary or illegal detention; (5) Freedom of suffrage; (6) The right against deprivation of property without due process (7) of law; (8) The right to a just compensation when private property is taken for public use; (9) The right to the equal protection of the laws; (10) The right to be secure in one's person, house, papers, and effects against unreasonable searches and seizures; (11) The liberty of abode and of changing the same; (12) The privacy of cmmunication and correspondence; (13) The right to become a member of associations or societies for purposes not contrary to law; (14) The right to take part in a peaceable assembly to petition the Government for redress of grievances; (15) The right to be free from involuntary servitude in any form; (16) The rigth of the accused against excessive bail; (17) The rigth of the aaccused to be heard by himself and counsel, to be informed of the nature and cause of the accusation against him, to have a speedy and public trial, to meet the witnesses face to face, and to have compulsory process to secure the attendance of witness in behalf; (18) Freedom from being compelled to be a witness against ones self, or from being forced to confess guilt, or from being induced by a promise of immunity or reward to make such confession, except when the person confessing becomes a State witness; (19) Freedom from excessive fines or cruel and unusual punishment, unless the same is imposed or inflicted in accordance with a statute which has not been judicially declared unconstitutional; and (20) Freedom of access to the courts. In any of the cases referred to in this article, whether or not the defendant's act or omission constitutes a criminal offense, the against grieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil action shall proceed independently of any criminal prosecution (if the latter be instituted), and may be proved by a preponderance of evidence. The indemnity shall include moral damages. Exemplary damages may also be adjudicated.

The responsibility herein set forth is not demandable from a judge unless his act or omission constitutes a violation of the Penal Code or other penal statute. It is obvious that the purpose of the above codal provision is to provide a sanction to the deeply cherished rights and freedoms enshrined in the Constitution. Its message is clear; no man may seek to violate those sacred rights with impunity. In times of great upheaval or of social and political stress, when the temptation is strongest to yield borrowing the words of Chief Justice Claudio Teehankee to the law of force rather than the force of law, it is necessary to remind ourselves that certain basic rights and liberties are immutable and cannot be sacrificed to the transient needs or imperious demands of the ruling power. The rule of law must prevail, or else liberty will perish. Our commitment to democratic principles and to the rule of law compels us to reject the view which reduces law to nothing but the expression of the will of the predominant power in the community. "Democracy cannot be a reign of progress, of liberty, of justice, unless the law is respected by him who makes it and by him for whom it is made. Now this respect implies a maximum of faith, a minimum of Idealism. On going to the bottom of the matter, we discover that life demands of us a certain residuum of sentiment which is not derived from reason, but which reason nevertheless controls. 2 Seeking to justify the dismissal of plaintiffs' complaint, the respondents postulate the view that as public officers they are covered by the mantle of state immunity from suit for acts done in the performance of official duties or function In support of said contention, respondents maintain that Respondents are members of the Armed Forces of the Philippines. Their primary duty is to safeguard public safety and order. The Constitution no less provides that the President may call them "to prevent or supress lawless violence, invasion, insurrection or rebellion, or imminent danger thereof." (Constitution, Article VII, Section 9). On January 17, 1981, the President issued Proclamation No. 2045 lifting martial law but providing for the continued suspension of the privilege of the writ of habeas corpus in view of the remaining dangers to the security of the nation. The proclamation also provided "that the call to the Armed Forces of the Philippines to prevent or suppress lawless violence, insuitection rebellion and subversion shall continue to be in force and effect." Petitioners allege in their complaint that their causes of action proceed from respondent General Ver's order to Task Force Makabansa to launch pre-emptive strikes against communist terrorist underground houses in Metro Manila. Petitioners claim that this order and its subsequent implementation by elements of the task force resulted in the violation of their constitutional rights against unlawful searches, seizures and arrest, rights to counsel and to silence, and the right to property and that, therefore, respondents Ver and the named members of the task force should be held liable for damages. But, by launching a pre-emptive strike against communist terrorists, respondent members of the armed forces merely performed their official and constitutional duties. To allow petitioners to recover from respondents by way of damages for acts performed in the exercise of such duties run contrary to the policy considerations to shield respondents as public officers from undue interference with their duties and from potentially disabling

threats of hability (Aarlon v. Fitzgerald 102 S. Ct. 2731-1 Forbes v. Chuoco Tiaco, 16 Phil. 634), and upon the necessity of protecting the performance of governmental and public functions from being harassed unduly or constantly interrupted by private suits (McCallan v. State, 35 Cal. App. 605; Metran v. Paredes, 79 Phil. 819). xxx xxx xxx The immunity of public officers from liability arising from the performance of their duties is now a settled jurisprudence Alzua v. Johnson, 21 Phil. 308; Zulueta v. Nicolas, 102 Phil. 944; Spalding v. Vilas, 161 US 483; 40 L. Ed. 780, 16 S. Ct. 631; Barr v. Mateo, 360; Butz v. Economon, 438 US 478; 57 L. Ed. 2d 895, 98 S. Ct. 2894; Scheuer v. Rhodes, 416 US 232; Forbes v. Chuoco Tiaco, supra; Miller v. de Leune, 602 F. 2d 198; Sami v. US, 617 F. 2d 755). Respondents-defendants who merely obeyed the lawful orders of the President and his call for the suppression of the rebellion involving petitioners enjoy such immunity from Suit. 3 We find respondents' invocation of the doctrine of state immunity from suit totally misplaced. The cases invoked by respondents actually involved acts done by officers in the performance of official duties written the ambit of their powers. As held in Forbes, etc. vs. Chuoco Tiaco and Crossfield: 4 No one can be held legally responsible in damages or otherwise for doing in a legal manner what he had authority, under the law, to do. Therefore, if the Governor-General had authority, under the law to deport or expel the defendants, and circumstances justifying the deportation and the method of carrying it out are left to him, then he cannot be held liable in damages for the exercise of this power. Moreover, if the courts are without authority to interfere in any manner, for the purpose of controlling or interferring with the exercise of the political powers vested in the chief executive authority of the Government, then it must follow that the courts cannot intervene for the purpose of declaring that he is liable in damages for the exeercise of this authority. It may be that the respondents, as members of the Armed Forces of the Philippines, were merely responding to their duty, as they claim, "to prevent or suppress lawless violence, insurrection, rebellion and subversion" in accordance with Proclamation No. 2054 of President Marcos, despite the lifting of martial law on January 27, 1981, and in pursuance of such objective, to launch pre- emptive strikes against alleged communist terrorist underground houses. But this cannot be construed as a blanket license or a roving commission untramelled by any constitutional restraint, to disregard or transgress upon the rights and liberties of the individual citizen enshrined in and protected by the Constitution. The Constitution remains the supreme law of the land to which all officials, high or low, civilian or military, owe obedience and allegiance at all times. Article 32 of the Civil Code which renders any public officer or employee or any private individual liable in damages for violating the Constitutional rights and liberties of another, as enumerated therein, does not exempt the respondents from responsibility. Only judges are excluded from liability under the said article, provided their acts or omissions do not constitute a violation of the Penal Code or other penal statute.

This is not to say that military authorities are restrained from pursuing their assigned task or carrying out their mission with vigor. We have no quarrel with their duty to protect the Republic from its enemies, whether of the left or of the right, or from within or without, seeking to destroy or subvert our democratic institutions and imperil their very existence. What we are merely trying to say is that in carrying out this task and mission, constitutional and legal safeguards must be observed, otherwise, the very fabric of our faith will start to unravel. In the battle of competing Ideologies, the struggle for the mind is just as vital as the struggle of arms. The linchpin in that psychological struggle is faith in the rule of law. Once that faith is lost or compromised, the struggle may well be abandoned. We do not find merit in respondents' suggestion that plaintiffs' cause of action is barred by the suspension of the privilege of the writ of habeas corpus. Respondents contend that "Petitioners cannot circumvent the suspension of the privilege of the writ by resorting to a damage suit aimed at the same purpose-judicial inquiry into the alleged illegality of their detention. While the main relief they ask by the present action is indemnification for alleged damages they suffered, their causes of action are inextricably based on the same claim of violations of their constitutional rights that they invoked in the habeas corpus case as grounds for release from detention. Were the petitioners allowed the present suit, the judicial inquiry barred by the suspension of the privilege of the writ will take place. The net result is that what the courts cannot do, i.e. override the suspension ordered by the President, petitioners will be able to do by the mere expedient of altering the title of their action." We do not agree. We find merit in petitioners' contention that the suspension of the privilege of the writ of habeas corpus does not destroy petitioners' right and cause of action for damages for illegal arrest and detention and other violations of their constitutional rights. The suspension does not render valid an otherwise illegal arrest or detention. What is suspended is merely the right of the individual to seek release from detention through the writ of habeas corpus as a speedy means of obtaining his liberty. Moreover, as pointed out by petitioners, their right and cause of action for damages are explicitly recognized in P.D. No. 1755 which amended Article 1146 of the Civil Code by adding the following to its text: However, when the action (for injury to the rights of the plaintiff or for a quasi-delict) arises from or out of any act, activity or conduct of any public officer involving the exercise of powers or authority arising from Martial Law including the arrest, detention and/or trial of the plaintiff, the same must be brought within one (1) year. Petitioners have a point in contending that even assuming that the suspension of the privilege of the writ of habeas corpus suspends petitioners' right of action for damages for illegal arrest and detention, it does not and cannot suspend their rights and causes of action for injuries suffered because of respondents' confiscation of their private belongings, the violation of their right to remain silent and to counsel and their right to protection against unreasonable searches and seizures and against torture and other cruel and inhuman treatment.

However, we find it unnecessary to address the constitutional issue pressed upon us. On March 25, 1986, President Corazon C. Aquino issued Proclamation No. 2, revoking Proclamation Nos. 2045 and 2045-A and lifting the suspension of the privilege of the writ of habeas corpus. The question therefore has become moot and academic. This brings us to the crucial issue raised in this petition. May a superior officer under the notion of respondent superior be answerable for damages, jointly and severally with his subordinates, to the person whose constitutional rights and liberties have been violated? Respondents contend that the doctrine of respondent superior is applicable to the case. We agree. The doctrine of respondent superior has been generally limited in its application to principal and agent or to master and servant (i.e. employer and employee) relationship. No such relationship exists between superior officers of the military and their subordinates. Be that as it may, however, the decisive factor in this case, in our view, is the language of Article 32. The law speaks of an officer or employee or person 'directly' or "indirectly" responsible for the violation of the constitutional rights and liberties of another. Thus, it is not the actor alone (i.e. the one directly responsible) who must answer for damages under Article 32; the person indirectly responsible has also to answer for the damages or injury caused to the aggrieved party. By this provision, the principle of accountability of public officials under the Constitution 5 acquires added meaning and asgilrnes a larger dimension. No longer may a superior official relax his vigilance or abdicate his duty to supervise his subordinates, secure in the thought that he does not have to answer for the transgressions committed by the latter against the constitutionally protected rights and liberties of the citizen. Part of the factors that propelled people power in February 1986 was the widely held perception that the government was callous or indifferent to, if not actually responsible for, the rampant violations of human rights. While it would certainly be go naive to expect that violators of human rights would easily be deterred by the prospect of facing damage suits, it should nonetheless be made clear in no ones terms that Article 32 of the Civil Code makes the persons who are directly, as well as indirectly, responsible for the transgression joint tortfeasors. In the case at bar, the trial court dropped defendants General Fabian Ver, Col. Fidel Singson, Col. Rolando Abadilla, Col. Gerardo Lantoria, Jr., Col. Galileo Kintanar, Col. Panfilo Lacson, Capt. Danilo Pizarro, lst Lt. Pedro Tango, Lt. Romeo Ricardo and Lt. Ricardo Bacalso from the acts of their subordinates. Only Major Rodolfo Aguinaldo and Master Sgt. Bienvenido Balaba were kept as defendants on the ground that they alone 'have been specifically mentioned and Identified to have allegedly caused injuries on the persons of some of the plaintiff which acts of alleged physical violence constitute a delict or wrong that gave rise to a cause of action. But such finding is not supported by the record, nor is it in accord with law and jurisprudence. Firstly, it is wrong to at the plaintiffs' action for damages 5 Section 1, Article 19. to 'acts of alleged physical violence" which constituted delict or wrong. Article 32 clearly specifies as actionable the act of violating or in any manner impeding or impairing any of the constitutional rights and liberties enumerated therein, among others

1. Freedom from arbitrary arrest or illegal detention; 2. The right against deprivation of property without due process of law; 3. The right to be secure in one's person, house, papers and effects against unreasonable searches and seizures; 4. The privacy of communication and correspondence; 5. Freedom from being compelled to be a witness against one's self, or from being forced to confess guilt, or from being induced by a promise of immunity or reward to make a confession, except when the person confessing becomes a state witness. The complaint in this litigation alleges facts showing with abundant clarity and details, how plaintiffs' constitutional rights and liberties mentioned in Article 32 of the Civil Code were violated and impaired by defendants. The complaint speaks of, among others, searches made without search warrants or based on irregularly issued or substantially defective warrants; seizures and confiscation, without proper receipts, of cash and personal effects belonging to plaintiffs and other items of property which were not subversive and illegal nor covered by the search warrants; arrest and detention of plaintiffs without warrant or under irregular, improper and illegal circumstances; detention of plaintiffs at several undisclosed places of 'safehouses" where they were kept incommunicado and subjected to physical and psychological torture and other inhuman, degrading and brutal treatment for the purpose of extracting incriminatory statements. The complaint contains a detailed recital of abuses perpetrated upon the plaintiffs violative of their constitutional rights. Secondly, neither can it be said that only those shown to have participated "directly" should be held liable. Article 32 of the Civil Code encompasses within the ambit of its provisions those directly, as well as indirectly, responsible for its violation.

The responsibility of the defendants, whether direct or indirect, is amply set forth in the complaint. It is well established in our law and jurisprudence that a motion to dismiss on the ground that the complaint states no cause of action must be based on what appears on the face of the complaint. 6 To determine the sufficiency of the cause of action, only the facts alleged in the complaint, and no others, should be considered. 7 For this purpose, the motion to dismiss must hypothetically admit the truth of the facts alleged in the complaint. 8 Applying this test, it is difficult to justify the trial court's ruling, dismissing for lack of cause of action the complaint against all the defendants, except Major Rodolfo Aguinaldo and Master Sgt. Bienvenido Balaba. The complaint contained allegations against all the defendants which, if admitted hypothetically, would be sufficient to establish a cause or causes of action against all of them under Article 32 of the Civil Code. This brings us to the last issue. Was the trial court correct in dismissing the complaint with respect to plaintiffs Rogelio Aberca, Danilo de la Puente, Marco Palo, Alan Jazminez, Alex Marcelino, Elizabeth Protacio-Marcelino, Alfredo Mansos and Rolando Salutin, on the basis

of the alleged failure of said plaintiffs to file a motion for reconsideration of the court's resolution of November 8, 1983, granting the respondent's motion to dismiss? It is undisputed that a timely motion to set aside said order of November 8, 1983 was filed by 'plaintiffs, through counsel. True, the motion was signed only by Atty. Joker P. Arroyo, counsel for Benjamin Sesgulido; Atty. Antonio Rosales, counsel for Edwin Lopez and Manuel Martin Guzman; Atty. Pedro B. Ella, Jr., counsel for Nestor Bodino and Carlos Palma; Atty. Arno V. Sanidad, counsel for Arturo Tabara; Atty. Felicitas S. Aquino, counsel for Joseph Olayer; and Atty. Alexander Padilla, counsel for Rodolfo Benosa. But the body of the motion itself clearly indicated that the motion was filed on behalf of all the plaintiffs. And this must have been also the understanding of defendants' counsel himself for when he filed his comment on the motion, he furnished copies thereof, not just to the lawyers who signed the motion, but to all the lawyers of plaintiffs, to wit: Attys. Jose Diokno, Procopio Beltran, Rene Sarmiento, Efren Mercado, Augusto Sanchez, Antonio Rosales, Pedro Efla Jr., Arno Sanidad, Alexander Padilla, Joker Arroyo, Rene Saguisag, Ramon Esguerra and Felicitas S. Aquino. In filing the motion to set aside the resolution of November 8, 1983, the signing attorneys did so on behalf of all the plaintiff. They needed no specific authority to do that. The authority of an attorney to appear for and in behalf of a party can be assumed, unless questioned or challenged by the adverse party or the party concerned, which was never done in this case. Thus, it was grave abuse on the part of respondent judge to take it upon himself to rule that the motion to set aside the order of November 8, 1953 dismissing the complaint was filed only by some of the plaintiffs, when by its very language it was clearly intended to be filed by and for the benefit of all of them. It is obvious that the respondent judge took umbrage under a contrived technicality to declare that the dismissal of the complaint had already become final with respect to some of the plaintiffs whose lawyers did not sign the motion for reconsideration. Such action tainted with legal infirmity cannot be sanctioned. Accordingly, we grant the petition and annul and set aside the resolution of the respondent court, dated November 8, 1983, its order dated May 11, 1984 and its resolution dated September 21, 1984. Let the case be remanded to the respondent court for further proceedings. With costs against private respondents. SO ORDERED. Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes and Grio-Aquino, JJ., concur. Gutierrez, Jr., J., concur in the result. Padilla, J., took no part.

Separate Opinions

TEEHANKEE, C.J., concurring: The Court's judgment at bar makes clear that all persons, be they public officers or employees, or members of the military or police force or private individuals who directly or indirectly obstruct, defeat, violate or in any manner impede or impair the constitutional rights and civil liberties of another person, stand liable and may be sued in court for damages as provided in Art. 32 of the Civil Code. The case at bar specifically upholds and reinstates the civil action for damages filed in the court below by petitioners-plaintiffs for illegal searches conducted by military personnel and other violations of their constitutional rights and liberties. At the same time it rejects the automatic application of the principle of respondeat superior or command responsibility that would hold a superior officer jointly and severally accountable for damages, including moral and exemplary, with his subordinates who committed such transgressions. However, the judgment gives the caveat that a superior officer must not abdicate his duty to properly supervise his subordinates for he runs the risk of being held responsible for gross negligence and of being held under the cited provision of the Civil Code as indirectly and solidarily accountable with the tortfeasor. The rationale for this rule of law was best expressed by Brandeis in wise: "In a government of laws, existence of the government be imperilled following it fails to observe the law scrupulously. Our government is the potent omnipresent teacher. For good or ill, it teaches the whole people by example. Crime is contagious. If the government becomes the law breaker, it breeds contempt for the law, it invites every man to become a law unto himself, it invites anarchy. To declare that in the administration of criminal law the end justifies the means ... would bring terrible retribution." 1 As the writer stress in Hildawa vs. Enrile 2 Which Was an action to enjoin the operations of the dreaded secret marshals during the past regime, 'In a democratic state, you don't stoop to the level of criminals. If we stoop to what they do, then we're no better than they ... there would be no difference. ... The Supreme Court stands as the guarantor of the Constitutional and human rights of all persons within its jurisdiction and cannot abdicate its basic role under the Constitution that these rights be respected and enforced. The spirit and letter of the Constitution negates as contrary to the basic precepts of human rights and freedom that a person's life be snuffed out without due process in a split second even if he is caught in flagrante delicto unless it was caned for as an act of self-defense by the law agents using reasonable means to prevent or repel an unlawful aggression on the part of the deceased. Needless to say, the criminal acts of the "Sparrow Units" or death squads of the NPA which have infutrated the cities and suburbs and performed their despicable killings of innocent civilians and military and police officers constitute an equally perverse violation of the

sanctity of human life and must be severely condemned by all who adhere tothe Rule of the Law. It need only be pointed out that one of the first acts of the present government under President Corazon C. Aquino after her assumption of office in February, 1986 was to file our government's ratification and access to all human rights instruments adopted under the auspices of the United Nations, declaring thereby the government's commitment to observe the precepts of the United Nations Charter and the Universal Declaration of Human Rights. More than this, pursuant to our Constitution which the people decisively ratified on February 2, 1987, the independent office of the Commission on Human Rights hats been created and organized with ample powers to investigate human rights violations and take remedial measures against all such violations by the military as well as by the civilian groups.

Separate Opinions TEEHANKEE, C.J., concurring: The Court's judgment at bar makes clear that all persons, be they public officers or employees, or members of the military or police force or private individuals who directly or indirectly obstruct, defeat, violate or in any manner impede or impair the constitutional rights and civil liberties of another person, stand liable and may be sued in court for damages as provided in Art. 32 of the Civil Code. The case at bar specifically upholds and reinstates the civil action for damages filed in the court below by petitioners-plaintiffs for illegal searches conducted by military personnel and other violations of their constitutional rights and liberties. At the same time it rejects the automatic application of the principle of respondeat superior or command responsibility that would hold a superior officer jointly and severally accountable for damages, including moral and exemplary, with his subordinates who committed such transgressions. However, the judgment gives the caveat that a superior officer must not abdicate his duty to properly supervise his subordinates for he runs the risk of being held responsible for gross negligence and of being held under the cited provision of the Civil Code as indirectly and solidarily accountable with the tortfeasor. The rationale for this rule of law was best expressed by Brandeis in wise: "In a government of laws, existence of the government be imperilled following it fails to observe the law scrupulously. Our government is the potent omnipresent teacher. For good or ill, it teaches the whole people by example. Crime is contagious. If the government becomes the law breaker, it breeds contempt for the law, it invites every man to become a law unto himself, it invites anarchy. To declare that in the administration of criminal law the end justifies the means ... would bring terrible retribution." 1 As the writer stress in Hildawa vs. Enrile 2 Which Was an action to enjoin the operations of the dreaded secret marshals during the past regime, 'In a democratic state, you don't stoop

to the level of criminals. If we stoop to what they do, then we're no better than they ... there would be no difference. ... The Supreme Court stands as the guarantor of the Constitutional and human rights of all persons within its jurisdiction and cannot abdicate its basic role under the Constitution that these rights be respected and enforced. The spirit and letter of the Constitution negates as contrary to the basic precepts of human rights and freedom that a person's life be snuffed out without due process in a split second even if he is caught in flagrante delicto unless it was caned for as an act of self-defense by the law agents using reasonable means to prevent or repel an unlawful aggression on the part of the deceased. Needless to say, the criminal acts of the "Sparrow Units" or death squads of the NPA which have infutrated the cities and suburbs and performed their despicable killings of innocent civilians and military and police officers constitute an equally perverse violation of the sanctity of human life and must be severely condemned by all who adhere tothe Rule of the Law. It need only be pointed out that one of the first acts of the present government under President Corazon C. Aquino after her assumption of office in February, 1986 was to file our government's ratification and access to all human rights instruments adopted under the auspices of the United Nations, declaring thereby the government's commitment to observe the precepts of the United Nations Charter and the Universal Declaration of Human Rights. More than this, pursuant to our Constitution which the people decisively ratified on February 2, 1987, the independent office of the Commission on Human Rights hats been created and organized with ample powers to investigate human rights violations and take remedial measures against all such violations by the military as well as by the civilian groups.

Footnotes 1 The Presiding Judge of Branch 95, Judge Esteban M. Lising was allowed to go on leave, per resolution of the Supreme Court on October 18, 1983, and Judge Willelmo C. Fortun was authorized to take cognizance of all kinds of cases of Branch 95 during the former's absence. 2 Joseph Charmont French Legal Philosophy, Mcmillan Co., New York, 1921, pp. 72-73. 3 Rollo, pp. 240-241; 244, 4 16 Phil. 534, 578. 5 Section 1, Article XI. 6 Azur v. Provincial Board, 27 SCRA 50, 57; Garcon v. Redemptorist tourist Fathers, 17 SCRA 341. 7 Adamos v. J. M. Tuazon, 25 SCRA 529; Socorro v. Vargas, 25 SCRA 592, 596; La Suerte Cigar & Cigarette Factory vs. Central Azuearera de Davao, 23 SCRA 686, 690.

8 Garcon vs. Redemptorist Fathers, supra; PNB vs. Hipolito, 13 SCRA 20. Teehankee, J., concurring: 1 Olmstead vs, U.S. 277 U.S. 438; dissenting opinion. _ 2 138 SCRA 146, 161. G.R. No. L-63559 May 30, 1986 NEWSWEEK, INC., petitioner, vs. THE INTERMEDIATE APPELLATE COURT, and NATIONAL FEDERATION OF SUGARCANE PLANTERS INC., BINALBAGAN-ISABELA PLANTERS ASSOCIATION, INC., ASOCIACION DE AGRICULTORES DE LA CARLOTA, LA CASTELLANA y PONTEVEDRA, INC., DONEDCO PLANTERS ASSOCIATION INC., ARMANDO GUSTILO, ENRIQUE ROJAS, ALFREDO MONTELIBANO, JR., PABLO SOLA, JOSE MONTALVO, VICENTE GUSTILO, JOSEPH MARANON, ROBERTO CUENCA, JOSE SICANGCO, FLORENCIO ALONSO, MIGUEL GATUSLAO, PEDRO YULO, MARINO RUBIN and BENJAMIN BAUTISTA, respondents. San Juan, Africa, Gonzales & San Agustin Law Offices for private respondents.

FERIA, J.: Petitioner, Newsweek, Inc., a foreign corporation licensed to do business in the Philippines, in this special action for certiorari, prohibition with preliminary injunction, seeks to annul the decision of the Intermediate Appellate Court dated December 17, 1982 sustaining the Order of the then Court of First Instance of Bacolod City which denied petitioner's Motion to Dismiss the complaint for libel filed by private respondents (Civil Case No. 15812), and the Resolution dated March 10, 1983 which denied its Motion for Reconsideration. It appears that on March 5, 1981, private respondents, incorporated associations of sugarcane planters in Negros Occidental claiming to have 8,500 members and several individual sugar planters, filed Civil Case No. 15812 in their own behalf and/or as a class suit in behalf of all sugarcane planters in the province of Negros Occidental, against petitioner and two of petitioners' non-resident correspondents/reporters Fred Bruning and Barry Came. The complaint alleged that petitioner and the other defendants committed libel against them by the publication of the article "An Island of Fear" in the February 23, 1981 issue of petitioner's weekly news magazine Newsweek. The article supposedly portrayed the island province of Negros Occidental as a place dominated by big landowners or sugarcane planters who not only exploited the impoverished and underpaid sugarcane workers/laborers, but also brutalized and killed them with imprunity. Complainants therein alleged that said article, taken as a whole, showed a deliberate and malicious use of falsehood, slanted presentation and/or misrepresentation of facts intended to put them (sugarcane planters) in bad light, expose them to public ridicule, discredit and humiliation here in the Philippines and abroad, and make them objects of hatred, contempt and

hostility of their agricultural workers and of the public in general. They prayed that defendants be ordered to pay them PlM as actual and compensatory damages, and such amounts for moral, exemplary and corrective damages as the court may determine, plus expenses of litigation, attorney's fees and costs of suit. A photo copy of the article was attached to the complaint. On November 5, 1981, petitioner filed a motion to dismiss on the grounds that (1) the printed article sued upon is not actionable in fact and in law; and (2) the complaint is bereft of allegations that state, much less support a cause of action. It pointed out the nonlibelous nature of the article and, consequently, the failure of the complaint to state a cause of action. Private respondents filed an Opposition to the motion to dismiss and petitioner filed a reply. On March 17, 1982, the trial court denied the motion to dismiss, stating that the grounds on which the motion to dismiss are predicated are not indubitable as the complaint on its face states a valid cause of action; and the question as to whether the printed article sued upon its actionable or not is a matter of evidence. Petitioner's motion for reconsideration was denied on May 28, 1982. On June 18, 1982, petitioner filed a petition for certiorari with respondent Court (CA-G. R. No. 14406) seeking the annulment of the aforecited trial court's Orders for having been issued with such a grave abuse of discretion as amounting to lack of jurisdiction and praying for the dismissal of the complaint for failure to state a cause of action. As earlier stated, respondent Court affirmed the trial court's Orders in a Decision dated December 17, 1982 and ordered the case to be tried on the merits on the grounds that -(1) the complaint contains allegations of fact which called for the presentation of evidence; and (2) certiorari under Rule 65 cannot be made to substitute for an appeal where an appeal would lie at a proper time. Subsequently, on March 10, 1983, the respondent Court denied petitioner's Motion for Reconsideration of the aforesaid decision, hence this petition. The proper remedy which petitioner should have taken from the decision of respondent Court is an appeal by certiorari under Rule 45 of the Rules of Court and not the special civil action of certiorari and prohibition under Rule 65 of said Rules. However, since the petition was filed on time within fifteen days from notice of the Resolution denying the motion for reconsideration, we shall treat the same as a petition for review on certiorari. The two (2) issues raised in the petition are: (1) whether or not the private respondents' complaint failed to state a cause of action; and (2) whether or not the petition for certiorari and prohibition is proper to question the denial of a motion to dismiss for failure to state a cause of action. First, petitioner argues that private respondents' complaint failed to state a cause of action because the complaint made no allegation that anything contained in the article complained of regarding sugarcane planters referred specifically to any one of the private respondents; that libel can be committed only against individual reputation; and that in cases where libel is claimed to have been directed at a group, there is actionable defamation only if the libel can be said to reach beyond the mere collectivity to do damage to a specific, individual group member's reputation.

We agree with petitioner. In the case of Corpus vs. Cuaderno, Sr. (16 SCRA 807) this Court ruled that "in order to maintain a libel suit, it is essential that the victim be identifiable (People vs. Monton, L16772, November 30, 1962), although it is not necessary that he be named (19 A.L.R. 116)." In an earlier case, this Court declared that" ... defamatory matter which does not reveal the Identity of the person upon whom the imputation is cast, affords no ground of action unless it be shown that the readers of the libel could have Identified the personality of the individual defamed." (Kunkle vs. Cablenews-American and Lyons 42 Phil. 760). This principle has been recognized to be of vital importance, especially where a group or class of persons, as in the case at bar, claim to have been defamed, for it is evident that the larger the collectivity, the more difficult it is for the individual member to prove that the defamatory remarks apply to him. (Cf. 70 ALR 2d. 1384). In the case of Uy Tioco vs. Yang Shu Wen , 32 Phil. 624, this Court held as follows: Defamatory remarks directed at a class or group of persons in general language only, are not actionable by individuals composing the class or group unless the statements are sweeping; and it is very probable that even then no action would lie where the body is composed of so large a number of persons that common sense would tell those to whom the publication was made that there was room for persons connected with the body to pursue an upright and law abiding course and that it would be unreasonable and absurd to condemn all because of the actions of a part. (supra p. 628). It is evident from the above ruling that where the defamation is alleged to have been directed at a group or class, it is essential that the statement must be so sweeping or allembracing as to apply to every individual in that group or class, or sufficiently specific so that each individual in the class or group can prove that the defamatory statement specifically pointed to him, so that he can bring the action separately, if need be. We note that private respondents filed a "class suit" in representation of all the 8,500 sugarcane planters of Negros Occidental. Petitioner disagrees and argues that the absence of any actionable basis in the complaint cannot be cured by the filing of a class suit on behalf of the aforesaid sugar planters. We find petitioner's contention meritorious. The case at bar is not a class suit. It is not a case where one or more may sue for the benefit of all (Mathay vs. Consolidated Bank and Trust Company, 58 SCRA 559) or where the representation of class interest affected by the judgment or decree is indispensable to make each member of the class an actual party (Borlaza vs. Polistico, 47 Phil. 348). We have here a case where each of the plaintiffs has a separate and distinct reputation in the community. They do not have a common or general interest in the subject matter of the controversy. The disputed portion of the article which refers to plaintiff Sola and which was claimed to be libelous never singled out plaintiff Sola as a sugar planter. The news report merely stated that the victim had been arrested by members of a special police unit brought into

the area by Pablo Sola, the mayor of Kabankalan. Hence, the report, referring as it does to an official act performed by an elective public official, is within the realm of privilege and protected by the constitutional guarantees of free speech and press. The article further stated that Sola and the commander of the special police unit were arrested. The Court takes judicial notice of this fact. (People vs. Sola, 103 SCRA 393.) The second issue to be resolved here is whether or not the special civil action of certiorari or prohibition is available to petitioner whose motion to dismiss the complaint and subsequent motion for reconsideration were denied. As a general rule, an order denying a motion to dismiss is merely interlocutory and cannot be subject of appeal until final judgment or order is rendered. (Sec. 2 of Rule 4 1). The ordinary procedure to be followed in such a case is to file an answer, go to trial and if the decision is adverse, reiterate the issue on appeal from the final judgment. The same rule applies to an order denying a motion to quash, except that instead of filing an answer a plea is entered and no appeal lies from a judgment of acquittal. This general rule is subject to certain exceptions. If the court, in denying the motion to dismiss or motion to quash, acts without or in excess of jurisdiction or with grave abuse of discretion, then certiorari or prohibition lies. The reason is that it would be unfair to require the defendant or accused to undergo the ordeal and expense of a trial if the court has no jurisdiction over the subject matter or offense, or is not the court of proper venue, or if the denial of the motion to dismiss or motion to quash is made with grave abuse of discretion or a whimsical and capricious exercise of judgment. In such cases, the ordinary remedy of appeal cannot be plain and adequate. The following are a few examples of the exceptions to the general rule. In De Jesus vs. Garcia (19 SCRA 554), upon the denial of a motion to dismiss based on lack of jurisdiction over the subject matter, this Court granted the petition for certiorari and prohibition against the City Court of Manila and directed the respondent court to dismiss the case. In Lopez vs. City Judge (18 SCRA 616), upon the denial of a motion to quash based on lack of jurisdiction over the offense, this Court granted the petition for prohibition and enjoined the respondent court from further proceeding in the case. In Enriquez vs. Macadaeg (84 Phil. 674), upon the denial of a motion to dismiss based on improper venue, this Court granted the petition for prohibition and enjoined the respondent judge from taking cognizance of the case except to dismiss the same. In Manalo vs. Mariano (69 SCRA 80), upon the denial of a motion to dismiss based on bar by prior judgment, this Court granted the petition for certiorari and directed the respondent judge to dismiss the case. In Yuviengco vs. Dacuycuy (105 SCRA 668), upon the denial of a motion to dismiss based on the Statute of Frauds, this Court granted the petition for certiorari and dismissed the amended complaint.

In Tacas vs. Cariaso (72 SCRA 527), this Court granted the petition for certiorari after the motion to quash based on double jeopardy was denied by respondent judge and ordered him to desist from further action in the criminal case except to dismiss the same. In People vs. Ramos (83 SCRA 11), the order denying the motion to quash based on prescription was set aside on certiorari and the criminal case was dismissed by this Court. Respondent Court correctly stated the general rule and its exceptions. However, it ruled that none of the exceptions is present in the case at bar and that the case appears complex and complicated, necessitating a full-blown trial to get to the bottom of the controversy. Petitioner's motion to dismiss is based on the ground that the complaint states no cause of action against it by pointing out the non-libelous nature of the article sued upon. There is no need of a trial in view of the conclusion of this Court that the article in question is not libelous. The specific allegation in the complaint, to the effect that the article attributed to the sugarcane planters the deaths and brutalization of sugarcane workers, is not borne out by a perusal of the actual text. The complaint contains a recital of the favorable working conditions of the agricultural workers in the sugar industry and the various foundations and programs supported by planters' associations for the benefit of their workers. Undoubtedly, the statements in the article in question are sweeping and exaggerated; but, paraphrasing the ruling in the Uy Tioco case above quoted, it would be unreasonable and absurd to condemn the majority of the sugarcane planters, who have at heart the welfare of their workers, because of the actions of a part. Nonetheless, articles such as the one in question may also serve to prick the consciences of those who have but are not doing anything or enough for those who do not have. On the other hand, petitioner would do well to heed the admonition of the President to media that they should check the sources of their information to ensure the publication of the truth. Freedom of the press, like all freedoms, should be exercised with responsibility. WHEREFORE, the decision of the Intermediate Appellate Court is reversed and the complaint in Civil Case No. 15812 of the Court of First Instance of Negros Occidental is dismissed, without pronouncement as to costs. SO ORDERED. Teehankee, C.J., Abad Santos, Yap, Fernan, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr., Cruz and Paras, JJ., concur. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. L-45031 October 21, 1991

NANERICO D. SANTOS, petitioner, vs. THE COURT OF APPEALS, respondents. Siguion Reyna, Montecillo & Ongsiako Law Offices for petitioner.

FERNAN, C.J.:p Petition for review of the decision of the Court of Appeal promulgated on August 25, 1976 which affirmed the judgment of the then Court of First Instance of Rizal, Branch VIII (Pasig) convicting Nanerico D. Santos of the crime of libel and sentencing him to pay a fine of P6,000.00 with subsidiary imprisonment in case of insolvency, to indemnify the private offended parties Carlos Moran Sison and Luis F. Sison in the amount of P50,000.00 by way of actual, consequential and exemplary damages and costs. 1 The instant petition raises the ultimate issue of whether or not the publication of a complaint filed with the Securities and Exchange Commission before any judicial action is taken thereon is privileged as a report of a judicial proceeding. On February 23, 1970, petitioner Nanerico D. Santos as a columnist of the then Manila Daily Bulletin wrote and published in his weekly column an article entitled "Charges Against CMS Stock Brokerage, Inc." which article was quoted verbatim from an unverified complaint filed with the Securities and Exchange Commission on February 13,1970 by Rosario Sison Sandejas and her daughters charging CMS Stock Brokerage Inc., particularly its board chairman and controlling stockholder Carlos Moran Sison and its president-general manager Luis F. Sison, of engaging in fraudulent practices in the stock market. On the very day that the news item appeared, Carlos Moran Sison sought a meeting with petitioner Santos so that he could submit to the columnist his reply which he wanted published "the very next day" and in the same column. They met at about 6:15 in the evening at the Andres-Soriano Executive Center in Makati, Rizal where petitioner promised Sison that he would have the reply published, not on the next day, but in the February 25, 1970 issue of the Manila Daily Bulletin because " it was already past the deadline for the next day's issue." The reply was not published on February 25, 1970 as petitioner had promised and so Carlos Moran Sison called petitioner by phone to tell him not to publish the reply anymore as it would only rekindle the talks. Sison also informed petitioner that he would be sued for libel, to which statement petitioner retorted: "Well, sue me for libel." 2 About a week later when Carlos Moran Sison chanced upon petitioner at the Hotel Intercontinental lobby, the latter asked Sison: "When will you sue me?" Petitioner received his answer on March 4,1970 when the appropriate complaint for libel was lodged against him by Carlos Moran Sison and Luis F. Sison before the Office of the Provincial Fiscal of Rizal. Charge together with petitioner were Mariano B. Quimson, Jr., Hans M. Menzi, M.M. de

los Reyes, Felix G. Gonzales and Ben Rodriguez, also of the Manila Daily Bulletin. Subsequently, the corresponding information was filed before the Court of First Instance of Rizal (Pasig) on November 16, 1970. 3 It is interesting to note that a few weeks following the publication of the complaint, Santos' weekly column was stopped, ostensibly to cut down on overhead expenses brought about by the adoption of the floating rate in foreign exchange .4 On January 26, 1971, upon motion of the trial fiscal and with the conformity of the offended parties, the lower court dismissed the case against all the accused, with the exception of petitioner Nanerico D. Santos. In due time, the trial court rendered its judgment of conviction. In affirming the decision, respondent Appellate Court declared: The article in question is not a privileged communication. At the time the complaint filed with the Securities and Exchange Commission was published in the column of the accused there was as yet no proceeding at which both parties had an opportunity to be present and to be heard. (Barreto vs. Philippine Publishing Co., 30 Phil. 88). Publishing an article based upon a complaint filed in a Court of First Instance before any judicial action is taken thereon is not privileged as a report of a judicial proceeding. (Choa Tek Hee vs. Philippine Publishing Co., 34 Phil, 447). The article in question is libelous. It imputes a crime to the private offended parties, that of 'willful violation of the provisions of the Securities Act and the implementing Rules and Regulations issued by the commission'which is penalized by imprisonment or fine or both and said published article of the accused imputes to the private offended parties, as stockbrokers, fraudulent acts and illegal purchases/sales and manipulations of securities to the prejudice of their customers and the general investing public, which acts actually caused the dishonor, discredit or contempt of the private offended parties. (Annex "D", Rollo, pp. 6-7). The case is now before us for resolution. The applicable provision of law is Article 354 of the Revised Penal Code which states as follows: Art. 354. Requirement for publicity. Every defamatory imputation is presumed to be malicious, even if it be true, if no good intention and justifiable motive for making it is shown, except in the following cases: 1. A private communication made by any person to another in the performance of any legal, moral or social duty; and 2. A fair and true report, made in good faith, without any comments or remarks, of any judicial, legislative or other official proceedings which are of confidential nature, or of any statement, report or speech delivered in said proceedings, or of any other act performed by public officers in the exercise of their functions.

Generally, malice is presumed (malice in law) in every defamatory imputation. This presumption, however, does not arise if the communication is privileged under Article 354. Paragraphs 1 and 2 of Article 354 refer to qualifiedly privileged communications. 5 The character of the privilege is a matter of defense which may be lost by positive proof of express malice. In other words, the onus of proving actual malice is placed on the plaintiff who must then convince the court that the offender was prompted by malice or ill will. Once this is accomplished, the defense of privilege is unavailing. Thus, under Article 362 of the Revised Penal Code, it is provided that: Art. 362. Libelous remarks. Libelous remarks or comments connected with the matter privileged under the provisions of article 354, if made with malice, shall not exempt the author nor the editor or managing editor of a newspaper from criminal liability. (Emphasis supplied) Petitioner now insists that the published article is privileged, being a fair and true report of a judicial proceeding, without comments or remarks, and therefore not punishable. He maintains that the alleged libelous news report which came out in the Manila Daily Bulletin was merely lifted from a complaint word for word, except for the last innocuous paragraph which he added to the effect that "(i)nvestors and Sison's fellow brokers are eagerly awaiting developments on these charges". Moreover, he contends that the cited rulings in the cases of Barreto vs. Philippine Publishing Co., 30 Phil. 88 and Choa Tek Hee vs. Philippine Publishing Co., 34 Phil. 447, are no longer valid. Petitioner's arguments are welltaken. It must be recalled that in holding petitioner liable for libel, both the trial court and the Appellate Court applied the doctrine established in the aforementioned 1915-1916 cases. Briefly: An answer to a complaint filed in court, containing libelous matter, is not privileged so as to exempt a newspaper from prosecution under the Libel Act for a publication thereof, no action having been taken by the court thereon. (Barretto vs. Philippine Publishing Co., supra). Publishing an article based upon a complaint filed in a Court of First Instance before any judicial action. is taken thereon is not privileged as a report of a judicial proceeding. (Choa Tek Hee vs. Philippine Publishing Co., supra). The Court, through Justice Moreland, gave the rationale: The foundation of the right of the public to know what is going on in the courts is not the fact that the public, or a portion of it, is curious, or that what goes on in the court is news, or would be interesting, or would furnish topics of conversation; but is simply that it has a right to know whether a public officer is properly performing his duty. In other words, the right of the public to be informed of the proceedings in court is not founded in the desire or necessity of people to know about the doings of others, but in the necessity of knowing whether its servant, the judge, is properly performing his duty. Only clear provisions of law can justify a newspaper, or an individual, in spreading baseless charges of fraud or

corruption made by one man against another, wherever such charges may be found. The fact that such charges are contained in a paper filed in court gives no inherent right to an individual to peddle its contents from door to door or spread them broadcast; and a newspaper has no more privileges than an individual. Between the newspaper and the individual there is no difference of right. The real difference between them lies in the ability of the one to spread the publication more quickly, more extensively, and more thoroughly than the other. Unless, therefore, the statute plainly confers that right, the publication of such charges is actionable unless justified. . . . It is generally agreed that the privilege, the right to publish without liability for damages, does not extend to mere pleadings filed in court, as, for example, bills in equity, upon which there has been no action. (Cited cases). The reason for this rule is thus stated in Park v Detroit Free Press Co.: There is no rule of law which authorizes any but the parties interested to handle the files or publish the contents of their matters in litigation. The parties, and none but the parties, control them. One of the reasons why parties are privileged from suit for accusations made in their pleadings is that the pleadings are addressed to courts where the facts can be fairly tried, and to no other readers. If pleadings and the documents can be published to the world by any one who gets access to them, no more effectual way of doing malicious mischief with impunity could be devised than filling papers containing false and scurrilous charges, and getting these printed news. . . . (Barreto vs. Philippine Publishing Co., supra, pp. 92-93, 105-106). However, it would seem that the passage of time has worked to petitioner's great advantage. In 1976, the doctrine so fervently and eloquently espoused by Justice Moreland in the Barreto case was overturned by this Court through Justice Esguerra in Cuenco vs, Cuenco, No. L-29560, March 31, 1976 70 SCRA 212, 234-235. Thus: The reason for the rule that pleadings in judicial proceedings are considered privileged is not only because said pleadings have become part of public record open to the public to scrutinize, but also due to the undeniable fact that said pleadings are presumed to contain allegations and assertions lawful and legal in nature, appropriate to the disposition of issues ventilated before the courts for the proper administration of justice and, therefore, of general public concern. Moreover, pleadings are presumed to contain allegations substantially true because they can be supported by evidence presented in good faith, the contents of which would be under the scrutiny of courts, and therefore, subject to be purged of all improprieties and illegal statements contained therein. We are firmly convinced that the correct rule on the matter should be that a fair and true report of a complaint filed in court without remarks nor comments even before an answer is filed or a decision promulgated should be covered by the privilege. In Manuel vs. Pano, supra, the Court, speaking through Justice Cruz, categorically stated that the publication of a complaint, being a true and fair report of a judicial proceeding, made in good faith and without comments or remarks, is privileged and comes under Item 2 of Article 354. It is no longer correct to state that Article 354 is not applicable because the published complaint as filed would not by itself constitute a judicial proceeding, as the issues have not as yet been joined. That doctrine established in the Barretto and Choa Tek

Hee cases is no longer controlling and has been superseded by the Cuenco case. Moreover, it could also be argued that the complaint, by itself, is a public record and may be published as such under Rule 135, Section 2 of the Rules of Court unless the court directs otherwise in the interest of morality or decency. We now come to the all-important consideration of whether the prosecution, in an effort to remove the protection of privilege, was able to establish that the columnist charged with libel was in fact motivated by malice. It is plainly evident from a reading of the published article itself that it is but a faithful reproduction of a pleading filed before a quasi-judicial body. There are no embellishments, wild imputations, distortions or defamatory comments calculated to damage the reputation of the offended parties and expose them to public contempt. What petitioner has done was to simply furnish the readers with the information that a complaint has been filed against a brokerage firm. Then he proceeded to reproduce that pleading verbatim in his column. Now this is decidely part and parcel of petitioner's job as a columnist whose "beat" happens to be the stock market. He is obligated to keep the public abreast of the current news in that particular field. On this crucial point, the Court is inclined to resolve all doubts in favor of petitioner and declare that there is no libel. It may be well for us to keep in mind that the rule on privileged communications in defamation cases developed because "public policy, the welfare of society and the orderly administration of justice" have demanded protection for public opinion. Therefore, they should not be subjected to microscopic examination to discover grounds of malice and falsehood. Such excessive scrutiny would defeat the protection which the law throws over privileged communications. 6 The controversial publication being a fair and true report of a judicial proceeding and made without malice, we find the author entitled to the protection and immunity of the rule on privileged matters under Article 354 (2). It follows that he cannot be held criminally liable for libel. WHEREFORE, the conviction of petitioner Nanerico D. Santos is SET ASIDE and he is hereby ACQUITTED of the crime of libel. No costs. SO ORDERED. Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.

# Footnotes 1 Criminal Case No. 1643, Annex "C", Rollo, p. 78. 2 TSN, February 16,1971, p. 40. 3 Original Records, pp. 1-2. 4 TSN, March 8,1971, p. 26.

5 Manuel v. Pano, No. L-46079, April 17, 1989, 172 SCRA 225;Ubarra v. Biscom, No. L25332, October 14,1968, 25 SCRA 498. 6 US v. Felipe Bustos, 37 Phil. 731; 743 with cited cases. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 126466 January 14, 1999 ARTURO BORJAL a.k.a. ART BORJAL and MAXIMO SOLIVEN, petitioners, vs. COURT OF APPEALS and FRANCISCO WENCESLAO, respondents.

BELLOSILLO, J.: PERPETUALLY HAGRIDDEN as the public is about losing one of the most basic yet oft hotly contested freedoms of man, the issue of the right of free expression be stirs and presents itself time and again, in cyclic occurrence, to inveigle, nay, challenge the courts to resurvey its ever shifting terrain, explore and furrow its heretofore uncharted moors and valleys and finally redefine the metes and bounds of its controversial domain. This, prominently, is one such case. Perhaps, never in jurisprudential history has any freedom of man undergone radical doctrinal metamorphoses than his right to freely and openly express his views. Blackstone's pontifical comment that "where blasphemous, immoral, treasonable, schismatical, seditious, or scandalous libels are punished by English law ... the liberty of the press, properly understood, is by no means infringed or violated," found kindred expression in the landmark opinion of England's Star Chamber in the Libelis Famosis case in 1603. 1 That case established two major propositions in the prosecution of defamatory remarks: first, that libel against a public person is a greater offense than one directed against an ordinary man, and second, that it is immaterial that the libel be true. Until republicanism caught fire in early America, the view from the top on libel was no less dismal. Even the venerable Justice Holmes appeared to waffle as he swayed from the concept of criminal libel liability under the clear and present danger rule, to the other end of the spectrum in defense of the constitutionally protected status of unpopular opinion in free society.

Viewed in modern times and the current revolution in information and communication technology, libel principles formulated at one time or another have waxed and waned through the years in the constant ebb and flow of judicial review. At the very least, these principles have lost much of their flavor, drowned and swamped as they have been by the ceaseless cacophony and din of thought and discourse emanating from just about every source and direction, aided no less by an increasingly powerful and irrepressible mass media. Public discourse, laments Knight, has been devalued by its utter commonality; and we agree, for its logical effect is to benumb thought and sensibility on what may be considered as criminal illegitimate encroachments on the right of persons to enjoy a good, honorable and reputable name. This may explain the imperceptible demise of criminal prosecutions for libel and the trend to rely instead on indemnity suits to repair any damage on one's reputation. In this petition for review, we are asked to reverse the Court of Appeals in "Francisco Wenceslao v. Arturo Borjal and Maximo Soliven," CA-G.R. No. 40496, holding on 25 March 1996 that petitioners Arturo Borjal and Maximo Soliven are solidarily liable for damages for writing and publishing certain articles claimed to be derogatory and offensive to private respondent Francisco Wenceslao. Petitioners Arturo Borjal and Maximo Soliven are among the incorporators of Philippines Today, Inc. (PTI), now PhilSTAR Daily, Inc., owner of The Philippine Star, a daily newspaper. At the time the complaint was filed, petitioner Borjal was its President while Soliven was (and still is) Publisher and Chairman of its Editorial Board. Among the regular writers of The Philippine Star is Borjal who runs the column Jaywalker. Private respondent Francisco Wenceslao, on the other hand, is a civil engineer, businessman, business consultant and journalist by profession. In 1988 he served as a technical adviser of Congressman Fabian Sison, then Chairman of the House of Representatives Sub-Committee on Industrial Policy. During the congressional hearings on the transport crisis sometime in September 1988 undertaken by the House Sub-Committee on Industrial Policy, those who attended agreed to organize the First National Conference on Land Transportation (FNCLT) to be participated in by the private sector in the transport industry and government agencies concerned in order to find ways and means to solve the transportation crisis. More importantly, the objective of the FNCLT was to draft an omnibus bill that would embody a long-term land transportation policy for presentation to Congress. The conference which, according to private respondent, was estimated to cost around P1,815,000.00 would be funded through solicitations from various sponsors such as government agencies, private organizations, transport firms, and individual delegates or participants. 2 On 28 February 1989, at the organizational meeting of the FNCLT, private respondent Francisco Wenceslao was elected Executive Director. As such, he wrote numerous solicitation letters to the business community for the support of the conference. Between May and July 1989 a series of articles written by petitioner Borjal was published on different dates in his column Jaywalker. The articles dealt with the alleged anomalous activities of an "organizer of a conference" without naming or identifying private

respondent. Neither did it refer to the FNCLT as the conference therein mentioned. Quoted hereunder are excerpts from the articles of petitioner together with the dates they were published. 3 31 May 1989 Another self-proclaimed "hero" of the EDSA Revolution goes around organizing "seminars and conferences" for a huge fee. This is a simple ploy coated in jazzy letterheads and slick prose. The "hero" has the gall to solicit fees from anybody with bucks to spare. Recently, in his usual straightforward style, Transportation Secretary Rainerio "Ray" Reyes, asked that his name, be stricken off from the letterheads the "hero" has been using to implement one of his pet "seminars." Reyes said: "I would like to reiterate my request that you delete my name." Note that Ray Reyes is an honest man who would confront anybody eyeball to eyeball without blinking. 9 June 1989 Another questionable portion of the so-called conference is its unauthorized use of the names of President Aquino and Secretary Ray Reyes. The conference program being circulated claims that President Aquino and Reyes will be main speakers in the conference. Yet, the word is that Cory and Reyes have not accepted the invitation to appear in this confab. Ray Reyes even says that the conference should be unmasked as a moneymaking gimmick. 19 June 1989 . . . some 3,000 fund solicitation letters were sent by the organizer to every Tom, Dick and Harry and to almost all government agencies. And the letterheads carried the names of Reyes and Periquet. Agrarian Reform Secretary on leave Philip Juico received one, but he decided to find out front Reyes himself what the project was all about. Ray Reyes, in effect, advised Juico to put the fund solicitation letter in the waste basket. Now, if the 3,000 persons and agencies approached by the organizer shelled out 1,000 each, that's easily P3 million to a project that seems so unsophisticated. But note that one garment company gave P100,000, after which the Garments Regulatory Board headed by Trade and Industry Undersecretary Gloria Macapagal-Arroyo was approached by the organizer to expedite the garment license application of the P100,000 donor. 21 June 1989 A "conference organizer" associated with shady deals seems to have a lot of trash tucked inside his closet. The Jaywalker continues to receive information about the man's dubious deals. His notoriety, in according to reliable sources, has reached the Premier Guest House where his name is spoken like dung. xxx xxx xxx The first information says that the "organizer" tried to mulct half a million pesos from a garment producer and exporter who was being investigated for violation of the rules of the Garments, Textile, Embroidery and Apparel Board. The "organizer" told the garment

exporter that the case could be fixed for a sum of P500,000.00. The organizer got the shock of his life when the exporter told him: "If I have that amount. I will hire the best lawyers, not you." The organizer left in a huff, his thick face very pale. xxx xxx xxx Friends in government and the private sector have promised the Jaywalker more "dope" on the "organizer." It seems that he was not only indiscreet; he even failed to cover his tracks. You will be hearing more of the "organizer's" exploits from this corner soon. 22 June 1989 The scheming "organizer" we have been writing about seems to have been spreading his wings too far. A congressional source has informed the Jaywalker that the schemer once worked for a congressman from the North as some sort of a consultant on economic affairs. The first thing the "organizer" did was to initiate hearings and round-the-table discussions with people from the business, export and his favorite the garments sector. xxx xxx xxx The "organizer's" principal gamely went along, thinking that his "consultant" had nothing but the good of these sectors in mind. It was only later that he realized that the "consultant" was acting with a burst of energy "in aid of extortion." The "consultant" was fired. xxx xxx xxx There seems to be no end to what a man could do to pursue his dubious ways. He has tried to operate under a guise of a well-meaning, reformist. He has intellectual pretensions and sometimes he succeeds in getting his thoughts in the inside pages of some newspapers, with the aid of some naive newspaper people. He has been turning out a lot of funny-looking advice on investments, export growth, and the like. xxx xxx xxx A cabinet secretary has one big wish. He is hoping for a broad power to ban crooks and influence-peddlers from entering the premises of his department. But the Cabinet man might not get his wish. There is one "organizer" who, even if physically banned, call still concoct ways of doing his thing. Without a tinge of remorse, the "organizer" could fill up his letterheads with, names of Cabinet members, congressmen, and reputable people from the private sector to shore up his shady reputation and cover up his notoriety. 3 July 1989 A supposed conference on transportation was a big failure. The attendance was very poor and the few who participated in, the affair were mostly leaders of jeepney drivers' groups. None of the government officials involved in regulating public transportation was there. The big names in the industry also did not participate. With such a poor attendance, one wonders why the conference organizers went ahead with the affair and tried so hard to convince 3,000 companies and individuals to contribute to the affair.

xxx xxx xxx The conference was doomed from the start. It was bound to fail. The personalities who count in the field of transpiration refused to attend the affair or withdrew their support after finding out the background of the organizer of the conference. How could a conference on transportation succeed without the participation of the big names in the industry and government policy-makers? Private respondent reacted to the articles. He sent a letter to The Philippine Star insisting that he was the "organizer" alluded to in petitioner Borjal's columns. 4 In a subsequent letter to The Philippine Star, private respondent refuted the matters contained in petitioner Borjal's columns and openly challenged him in this manner To test if Borjal has the guts to back up his holier than thou attitude, I am prepared to relinquish this position in case it is found that I have misappropriated even one peso of FNCLT money. On the other hand, if I can prove that Borjal has used his column as a "hammer" to get clients for his PR Firm, AA Borjal Associates, he should resign from the STAR and never again write a column. Is it a deal? 5 Thereafter, private respondent filed a complaint with the National Press Club (NPC) against petitioner Borjal for unethical conduct. He accused petitioner Borjal of using his column as a form of leverage to obtain contracts for his public relations firm, AA Borjal Associates. 6 In turn, petitioner Borjal published a rejoinder to the challenge of private respondent not only to protect his name and honor but also to refute the claim that he was using his column for character assassination. 7 Apparently not satisfied with his complaint with the NPC, private respondent filed a criminal case for libel against petitioners Borjal and Soliven, among others. However, in a Resolution dated 7 August 1990, the Assistant Prosecutor handling the case dismissed the complaint for insufficiency of evidence. The dismissal was sustained by the Department of Justice and later by the Office of the President. On 31 October 1990 private respondent instituted against petitioners a civil action for damages based on libel subject of the instant case. 8 In their answer, petitioners interposed compulsory counterclaims for actual, moral and exemplary damages, plus attorney's fees and costs. After due consideration, the trial court decided in favor of private respondent Wenceslao and ordered petitioners Borjal and Soliven to indemnify private respondent P1,000,000.00 for actual and compensatory damages, in addition to P200,000.00 for moral damages, P100,000.00 for exemplary damages, P200,000.00 for attorney's fees, and to pay the costs of suit. The Court of Appeals affirmed the decision of the court a quo but reduced the amount of the monetary award to P110,000.00 actual damages, P200,000.00 moral damages and P75,000.00 attorney's fees plus costs. In a 20-page Decision promulgated 25 March 1996, the appellate court ruled inter alia that private respondent was sufficiently identifiable, although not named, in the questioned articles; that private respondent was in fact defamed by petitioner Borjal by describing him variously as a "self-proclaimed hero," "a conference organizer associated with shady deals who has a lot of trash tucked inside his

closet," "thick face," and "a person with dubious ways;" that petitioner's claim of privilege communication was unavailing since the privileged character of the articles was lost by their publication in a newspaper of general circulation; that petitioner could have performed his officer as a newspaperman without necessarily transgressing the rights of Wenceslao by calling the attention of the government offices concerned to examine the authority by which Wenceslao acted, warning the public against contributing to a conference that, according to his perception, lacked the univocal indorsement of the responsible government officials, or simply informing the public of the letters Wenceslao wrote and the favors he requested or demanded; and, that when he imputed dishonesty, falsehood and misrepresentation, shamelessness and intellectual pretentions to Wenceslao, petitioner Borjal crossed the thin but clear line that separated fair comment from actionable defamation. Private respondent manifested his desire to appeal that portion of the appellate court's decision which reduced the amount of damages awarded him by filing with this Court a Petition for Extension of Time to File Petition and a Motion for Suspension of Time to File Petition. 9 However, in a Resolution dated 27 May 1996, the Second Division denied both motions: the first, for being premature, and the second, for being a wrong remedy. On 20 November 1996 when the First Division consolidated and transferred the present case to the Second Division, there was no longer any case thereat with which to consolidate this case since G.R. No. 124396 had already been disposed of by the Second Division almost six (6) months earlier. On their part, petitioners filed a motion for reconsideration but the Court of Appeals denied the motion in its Resolution of 12 September 1996. Hence the instant petition for review. The petitioners contend that the Court of Appeals erred: (a) in ruling that private respondent Wenceslao was sufficiently identified by petitioner Borjal in the questioned articles; (b) in refusing to accord serious consideration to the findings of the Department of Justice and the Office of the President that private respondent Wenceslao was not sufficiently identified in the questioned articles, this notwithstanding that the degree of proof required in a preliminary investigation is merely prima facieevidence which is significantly less than the preponderance of evidence required in civil cases; (c) in ruling that the subject articles do not constitute qualifiedly privileged communication; (d) in refusing to apply the "public official doctrine" laid down in New York Times v. Sullivan; (e) in ruling that the questioned articles lost their privileged character because of their publication in a newspaper of general circulation; (f) in ruling that private respondent has a valid cause of action for libel against petitioners although he failed to prove actual malice on their part, and that the prosecutors of the City of Manila, the Department of Justice, and eventually, the Office of the President, had already resolved that there was no sufficient evidence to prove the existence of libel; and, (g) assuming arguendo that Borjal should be held liable, in adjudging petitioner Soliven solidarily liable with him. Thus, petitioners pray for the reversal of the appellate court's ruling, the dismissal of the complaint against them for lack of merit, and the award of damages on their counterclaim. The petition is impressed with merit. In order to maintain a libel suit, it is essential that the victim be identifiable although it is not necessary that he be named. It is also not sufficient

that the offended party recognized himself as the person attacked or defamed, but it must be shown that at least a third person could identify him as the object of the libelous publication. 10 Regrettably, these requisites have not been complied with in the case at bar. In ruling for private respondent, the Court of Appeals found that Borjal's column writings sufficiently identified Wenceslao as the "conference organizer." It cited the First National Conference on Land Transportation, the letterheads used listing different telephone numbers, the donation of P100,000.00 from Juliano Lim and the reference to the '"organizer of the conference" the very same appellation employed in all the column items as having sufficiently established the identity of private respondent Wenceslao for those who knew about the FNCLT who were present at its inception, and who had pledged their assistance to it. We hold otherwise. These conclusions are at variance with the evidence at hand. The questioned articles written by Borjal do not identify private respondent Wenceslao as the organizer of the conference. The first of theJaywalker articles which appeared in the 31 May 1989 issue of The Philippine Star yielded nothing to indicate that private respondent was the person referred to therein. Surely, as observed by petitioners, there were millions of "heroes" of the EDSA Revolution and anyone of them could be "self-proclaimed" or an "organizer of seminars and conferences." As a matter of fact, in his 9 June 1989 column petitioner Borjal wrote about the "so-called First National Conference on Land Transportation whose principal organizers are not specified" (emphasis supplied). 11Neither did the FNCLT letterheads 12 disclose the identity of the conference organizer since these contained only an enumeration of names where private respondent Francisco Wenceslao was described as Executive Director and Spokesman and not as a conference organizer. 13 The printout 14 and tentative program 15 of the conference were devoid of any indication of Wenceslao as organizer. The printout which contained an article entitled "Who Organized the NCLT?" did not even mention private respondent's name, while the tentative program only denominated private respondent as "Vice Chairman and Executive Director," and not as organizer. No less than private respondent himself admitted that the FNCLT had several organizers and that he was only a part of the organization, thus I would like to clarify for the record that I was only a part of the organization. I was invited then because I was the head of the technical panel of the House of Representatives SubCommittee on Industrial Policy that took care of congressional hearings. 16 Significantly, private respondent himself entertained doubt that he was the person spoken of in Borjal's columns. The former even called up columnist Borjal to inquire if he (Wenceslao) was the one referred to in the subject articles. 17 His letter to the editor published in the 4 June 1989 issue of The Philippine Star even showed private respondent Wenceslao's uncertainty Although he used a subterfuge, I was almost certain that Art Borjal referred to the First National Conference on Land Transportation (June 29-30) and me in the second paragraph of his May 31 column . . . 18

Identification is grossly inadequate when even the alleged offended party is himself unsure that he was the object of the verbal attack. It is well to note that the revelation of the identity of the person alluded to came not from petitioner Borjal but from private respondent himself; when he supplied the information through his 4 June 1989 letter to the editor. Had private respondent not revealed that he was the "organizer" of the FNCLT referred to in the Borjal articles, the public would have remained in blissful ignorance of his identity. It is therefore clear that on the element of identifiability alone the case falls. The above disquisitions notwithstanding, and on the assumption arguendo that private respondent has been sufficiently identified as the subject of Borjal's disputed comments, we now proceed to resolve the other issues and pass upon the pertinent findings of the courts a quo. The third, fourth, fifth and sixth assigned errors all revolve around the primary question of whether the disputed articles constitute privileged communications as to exempt the author from liability. The trial court ruled that petitioner Borjal cannot hide behind the proposition that his articles are privileged in character under the provisions of Art. 354 of The Revised Penal Code which state Art. 354. Requirement for publicity. Every defamatory imputation is presumed to be malicious, even if it be true, if no good intention and justifiable motive for making it is shown, except in the following cases: 1) A private communication made by any person to another in the performance of any legal, moral or social duty; and, 2) A fair and true report, made in good faith, without any comments or remarks, of any judicial or other official proceedings which are not of confidential nature, or of any statement, report or speech delivered in said proceedings, or of any other act performed by public officers in the exercise of their functions. Respondent court explained that the writings in question did not fall under any of the exceptions described in the above-quoted article since these were neither "private communications" nor "fair and true report . . . without any comments or remarks." But this is incorrect. A privileged communication may be either absolutely privileged or qualifiedly privileged. Absolutely privileged communications are those which are not actionable even if the author has acted in bad faith. An example is found in Sec. 11, Art.VI, of the 1987 Constitution which exempts a member of Congress from liability for any speech or debate in the Congress or in any Committee thereof. Upon the other hand, qualifiedly privileged communications containing defamatory imputations are not actionable unless found to have been made without good intention justifiable motive. To this genre belong "private communications" and "fair and true report without any comments or remarks." Indisputably, petitioner Borjal's questioned writings are not within the exceptions of Art. 354 of The Revised Penal Code for, as correctly observed by the appellate court, they are

neither private communications nor fair and true report without any comments or remarks. However this does not necessarily mean that they are not privileged. To be sure, the enumeration under Art. 354 is not an exclusive list of qualifiedly privileged communications since fair commentaries on matters of public interest are likewise privileged. The rule on privileged communications had its genesis not in the nation's penal code but in the Bill of Rights of the Constitution guaranteeing freedom of speech and of the press. 19 As early as 1918, in United States v. Caete, 20 this Court ruled that publications which are privileged for reasons of public policy are protected by the constitutional guaranty of freedom of speech. This constitutional right cannot be abolished by the mere failure of the legislature to give it express recognition in the statute punishing libels. The concept of privileged communications is implicit in the freedom of the press. As held in Elizalde v. Gutierrez 21and reiterated in Santos v. Court of Appeals 22 To be more specific, no culpability could be imputed to petitioners for the alleged offending publication without doing violence to the concept of privileged communications implicit in the freedom of the press. As was so well put by Justice Malcolm in Bustos: "Public policy, the welfare of society, and the orderly administration of government have demanded protection of public opinion. The inevitable and incontestable result has been the development and adoption of the doctrine of privilege." The doctrine formulated in these two (2) cases resonates the rule that privileged communications must, sui generis, be protective of public opinion. This closely adheres to the democratic theory of free speech as essential to collective self-determination and eschews the strictly libertarian view that it is protective solely of self-expression which, in the words of Yale Sterling Professor Owen Fiss, 23 makes its appeal to the individualistic ethos that so dominates our popular and political culture. It is therefore clear that the restrictive interpretation vested by the Court of Appeals on the penal provision exempting from liability only private communications and fair and true report without comments or remarks defeats, rather than promotes, the objective of the rule on privileged communications, sadly contriving as it does, to suppress the healthy effloresence of public debate and opinion as shining linchpins of truly democratic societies. To reiterate, fair commentaries on matters of public interest are privileged and constitute a valid defense in an action for libel or slander. The doctrine of fair comment means that while in general every discreditable imputation publicly made is deemed false, because every man is presumed innocent until his guilt is judicially proved, and every false imputation is deemed malicious, nevertheless, when the discreditable imputation is directed against a public person in his public capacity, it is not necessarily actionable. In order that such discreditable imputation to a public official may be actionable, it must either be a false allegation of fact or a comment based on a false supposition. If the comment is an expression of opinion, based on established facts, then it is immaterial that the opinion happens to be mistaken, as long as it might reasonably be inferred from the facts. 21 There is no denying that the questioned articles dealt with matters of public interest. In his testimony, private respondent spelled out the objectives of the conference thus

. . . The principal conference objective is to come up with a draft of an Omnibus Bill that will embody a long term land transportation policy for presentation to Congress in its next regular session in July. Since last January, the National Conference on Land Transportation (NCLT), the conference secretariat, has been enlisting support from all sectors to ensure the success of the project. 25 Private respondent likewise testified that the FNCLT was raising funds through solicitation from the public Q: Now, in this first letter, you have attached a budget and it says here that in this seminar of the First National Conference on Land Transportation, you will need around One million eight hundred fifteen thousand pesos, is that right? A: That was the budget estimate, sir. Q: How do you intend as executive officer, to raise this fund of your seminar? A: Well, from sponsors such as government agencies and private sectors or organizations as well as individual transport firms and from individual delegates/participants. 26 The declared objective of the conference, the composition of its members and participants, and the manner by which it was intended to be funded no doubt lend to its activities as being genuinely imbued with public interest. An organization such as the FNCLT aiming to reinvent and reshape the transportation laws of the country and seeking to source its funds for the project from the public at large cannot dissociate itself from the public character of its mission. As such, it cannot but invite close scrutiny by the media obliged to inform the public of the legitimacy of the purpose of the activity and of the qualifications and integrity of the personalities behind it. This in effect is the strong message in New York Times v. Sullivan 27 which the appellate court failed to consider or, for that matter, to heed. It insisted that private respondent was not, properly speaking, a "public official" nor a "public figure," which is why the defamatory imputations against him had nothing to do with his task of organizing the FNCLT. New York Times v. Sullivan was decided by the U. S. Supreme Court in the 1960s at the height of the bloody rioting in the American South over racial segregation. The then City Commissioner L. B. Sullivan of Montgomery, Alabama, sued New York Times for publishing a paid political advertisement espousing racial equality and describing police atrocities committed against students inside a college campus. As commissioner having charge over police actions Sullivan felt that he was sufficiently identified in the ad as the perpetrator of the outrage; consequently, he sued New York Times on the basis of what he believed were libelous utterances against him. The U. S. Supreme Court speaking through Mr. Justice William J. Brennan Jr. ruled against Sullivan holding that honest criticisms on the conduct of public officials and public figures are insulated from libel judgments. The guarantees of freedom of speech and press prohibit a public official or public figure from recovering damages for a defamatory falsehood relating to his official conduct unless he proves that the statement was made with actual malice, i.e., with knowledge that it was false or with reckless disregard of whether it was

false or not. The raison d' tre for the New York Times doctrine was that to require critics of official conduct to guarantee the truth of all their factual assertions on pain of libel judgments would lead to self-censorship, since would be critics would be deterred from, voicing out their criticisms even if such were believed to be true, or were in fact true, because of doubt whether it could be proved or because of fear of the expense of having to prove it. 28 In the present case, we deem private respondent a public figure within the purview of the New York Times ruling. At any rate, we have also defined "public figure" in Ayers Production Pty., Ltd. v. Capulong 29 as . . . . a person who, by his accomplishments, fame, mode of living, or by adopting a profession or calling which gives the public a legitimate interest in his doings, his affairs and his character, has become a "public personage." He is, in other words, a celebrity. Obviously to be included in this category are those who have achieved some degree of reputation by appearing before the public, as in the case of an actor, a professional baseball player, a pugilist, or any other entertainer. The list is, however, broader than this. It includes public officers, famous inventors and explorers, war heroes and even ordinary soldiers, infant prodigy, and no less a personage than the Great Exalted Ruler of the lodge. It includes, in short, anyone who has arrived at a position where the public attention is focused upon him as a person. The FNCLT was air undertaking infused with public interest. It was promoted as a joint project of the government and the private sector, and organized by top government officials and prominent businessmen. For this reason, it attracted media mileage and drew public attention not only to the conference itself but to the personalities behind as well. As its Executive Director and spokesman, private respondent consequently assumed the status of a public figure. But even assuming ex-gratia argumenti that private respondent, despite the position he occupied in the FNCLT, would not qualify as a public figure, it does not necessarily follow that he could not validly be the subject of a public comment even if he was not a public official or at least a public figure, for he could be, as long as he was involved in a public issue. If a matter is a subject of public or general interest, it cannot suddenly became less so merely because a private individual is involved or because in some sense the individual did not voluntarily choose to become involved. The public's primary interest is in the event; the public focus is on the conduct of the participant and the content, effect and significance of the conduct, not the participant's prior anonymity or notoriety. 30 There is no denying that the questioned articles dealt with matters of public interest. A reading of the imputations of petitioner Borjal against respondent Wenceslao shows that all these necessarily bore upon the latter's official conduct and his moral and mental fitness as Executive Director of the FNCLT. The nature and functions of his position which included solicitation of funds, dissemination of information about the FNCLT in order to generate interest in the conference, and the management and coordination of the various activities of the conference demanded from him utmost honesty, integrity and competence. These are matters about which the public has the right to be informed, taking into account the

very public character of the conference itself. Concededly, petitioner Borjal may have gone overboard in the language employed describing the "organizer of the conference." One is tempted to wonder if it was by some mischievous gambit that he would also dare test the limits of the "wild blue yonder" of free speech in this jurisdiction. But no matter how intemperate or deprecatory the utterances appear to be, the privilege is not to be defeated nor rendered inutile for, as succinctly expressed by Mr. Justice Brennan in New York Times v. Sullivan, "[D]ebate on public issues should be uninhibited, robust and wide open, and that it may well include vehement, caustic and sometimes unpleasantly sharp attacks on the government and public officials. 31 The Court of Appeals concluded that since malice is always presumed in the publication of defamatory matters in the absence of proof to the contrary, the question of privilege is immaterial. We reject this postulate. While, generally, malice can be presumed from defamatory words, the privileged character of a communication destroys the presumption of malice. 32 The onus of proving actual malice then lies on plaintiff, private respondent Wenceslao herein. He must bring home to the defendant, petitioner Borjal herein, the existence of malice as the true motive of his conduct. 33 Malice connotes ill will or spite and speaks not in response to duty but merely to injure the reputation of the person defamed, and implies an intention to do ulterior and unjustifiable harm. 34 Malice is bad faith or bad motive. 35 It is the essence of the crime of libel. 36 In the milieu obtaining, can it be reasonably inferred that in writing and publishing the articles in question petitioner Borjal acted with malice? Primarily, private respondent failed to substantiate by preponderant evidence that petitioner was animated by a desire to inflict unjustifiable harm on his reputation, or that the articles were written and published without good motives or justifiable ends. On the other hand, we find petitioner Borjal to have acted in good faith. Moved by a sense of civic duty and prodded by his responsibility as a newspaperman, he proceeded to expose and denounce what he perceived to be a public deception. Surely, we cannot begrudge him for that. Every citizen has the right to enjoy a good name and reputation, but we do not consider that petitioner Borjal has violated that right in this case nor abused his press freedom. Furthermore, to be considered malicious, the libelous statements must be shown to have been written or published with the knowledge that they are false or in reckless disregard of whether they are false or not. 37 "Reckless disregard of what is false or not" means that the defendant entertains serious doubt as to the truth of the publication, 38 or that he possesses a high degree of awareness of their probable falsity. 39 The articles subject of the instant case can hardly be said to have been written with knowledge that these are false or in reckless disregard of what is false or not. This is not to say however that the very serious allegations of petitioner Borjal assumed by private

respondent to be directed against him are true. But we nevertheless find these at least to have been based on reasonable grounds formed after the columnist conducted several personal interviews and after considering the varied documentary evidence provided him by his sources. Thus, the following are supported by documentary evidence: (a) that private respondent requested Gloria Macapagal-Arroyo, then head of the Garments and Textile Export Board (GTEB), to expedite the processing and release of the import approval and certificate of availability of a garment firm in exchange for the monetary contribution of Juliano Lim, which necessitated a reply from the office of Gloria Macapagal-Arroyo explaining the procedure of the GTEB in processing applications and clarifying that all applicants were treated equally; 40 (b) that Antonio Periquet was designated Chairman of the Executive Committee of the FNCLT notwithstanding that he had previously declined the offer; 41 and, (c) that despite the fact that then President Aquino and her Secretary of Transportation Rainerio Reyes declined the invitation to be guest speakers in the conference, their names were still included in the, printout of the FNCLT. 42 Added to these are the admissions of private respondent that: (a) he assisted Juliano Lim in his application for a quota allocation with the GTEB in exchange for monetary contributions to the FNCLT; 43 (b) he included the name of then Secretary of Transportation Rainerio Reyes in the promotional materials of the conference notwithstanding the latter's refusal to lend his name to and participate in the FNCLT; 44 and, (c) he used different letterheads and telephone numbers. 45 Even assuming that the contents of the articles are false, mere error, inaccuracy or even falsity alone does not prove actual malice. Errors or misstatements are inevitable in any scheme of truly free expression and debate. Consistent with good faith and reasonable care, the press should not be held to account, to a point of suppression, for honest mistakes or imperfections in the choice of language. There must be some room for misstatement of fact as well as for misjudgment. Only by giving them much leeway and tolerance can they courageously and effectively function as critical agencies in our democracy. 46 In Bulletin Publishing Corp. v. Noel47 we held A newspaper especially one national in reach and coverage, should be free to report on events and developments in which the public has a legitimate interest with minimum fear of being hauled to court by one group or another on criminal or civil charges for libel, so long as the newspaper respects and keeps within the standards of morality and civility prevailing within the general community. To avoid the self-censorship that would necessarily accompany strict liability for erroneous statements, rules governing liability for injury to reputation are required to allow an adequate margin of error by protecting some inaccuracies. It is for the same reason that the New York Times doctrine requires that liability for defamation of a public official or public figure may not be imposed in the absence of proof of "actual malice" on the part of the person making the libelous statement. At any rate, it may be salutary for private respondent to ponder upon the advice of Mr. Justice Malcolm expressed in U.S. v. Bustos, 48 that "the interest of society and the maintenance of good government demand a full discussion of public affairs. Complete

liberty to comment on the conduct of public men is a scalpel in the case of free speech. The sharp incision of its probe relieves the abscesses of officialdom. Men in public life may suffer under a hostile and unjust accusation; the wound may be assuaged by the balm of a clear conscience. A public official must not be too thin-skinned with reference to comments upon his official acts." The foregoing disposition renders the second and seventh assigned errors moot and academic, hence, we find no necessity to pass upon them. We must however take this opportunity to likewise remind media practitioners of the high ethical standards attached to and demanded by their noble profession. The danger of an unbridled irrational exercise of the right of free speech and press, that is, in utter contempt of the rights of others and in willful disregard of the cumbrous responsibilities inherent in it, is the eventual self-destruction of the right and the regression of human society into a veritable Hobbesian state of nature where life is short, nasty and brutish. Therefore, to recognize that there can be no absolute "unrestraint" in speech is to truly comprehend the quintessence of freedom in the marketplace of social thought and action, genuine freedom being that which is limned by the freedom of others. If there is freedom of the press, ought there not also be freedom from the press? It is in this sense that self-regulation as distinguished from self-censorship becomes the ideal mean for, as Mr. Justice Frankfurter has warned, "[W]ithout . . . a lively sense of responsibility, a free press may readily become a powerful instrument of injustice." 49 Lest we be misconstrued, this is not to diminish nor constrict that space in which expression freely flourishes and operates. For we have always strongly maintained, as we do now, that freedom of expression is man's birthright -constitutionally protected and guaranteed, and that it has become the singular role of the press to act as its "defensor fidei" in a democratic society such as ours. But it is also worth keeping in mind that the press is the servant, not the master, of the citizenry, and its freedom does not carry with it an restricted hunting license to prey on the ordinary citizen. 50 On petitioners' counterclaim for damages, we find the evidence too meager to sustain any award. Indeed, private respondent cannot be said to have instituted the present suit in abuse of the legal processes and with hostility to the press; or that he acted maliciously, wantonly, oppressively, fraudulently and for the sole purpose of harassing petitioners, thereby entitling the latter to damages. On the contrary, private respondent acted within his rights to protect his honor from what he perceived to be malicious imputations against him. Proof and motive that the institution of the action was prompted by a sinister design to vex and humiliate a person must be clearly and preponderantly established to entitle the victim to damages. The law could not have meant to impose a penalty on the right to litigate, nor should counsel's fees be awarded every time a party wins a suit. 51 For, concluding with the wisdom in Warren v. Pulitzer Publishing Co. 52

Every man has a right to discuss matters of public interest. A clergyman with his flock, an admiral with his fleet, a general with his army, a judge with his jury; we are, all of us, the subject of public discussion. The view of our court has been thus stated: "It is only in despotisms that one must speaksub rosa, or in whispers, with bated breath, around the corner, or in the dark on a subject touching the common welfare. It is the brightest jewel in the crown of the law to speak and maintain the golden mean between defamation, on one hand, and a healthy and robust right of free public discussion, on the other. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals of 25 March 1996 and its Resolution of 12 September 1996 denying reconsideration are, REVERSED and SET ASIDE, and the complaint for damages against petitioners is DISMISSED. Petitioners' counterclaim for damages is likewise DISMISSED for lack of merit. No costs.1wphi1.nt SO ORDERED. Puno, Mendoza, Martinez and Buena, JJ., concur. Footnotes 1 Alfred H. Knight, The Life of the Law, Crown Publisher, Inc., New York 1996, pp. 102, 230 and 231. 2 Decision of the Court of Appeals in CA-G.R. No. 40496, Records, pp. 114-116. 3 Id., pp. 144-149; Exhs. "A" to "G." 4 Published in the 4 June 1989 issue of the Philippine Star; see Exh. "R." 5 TSN, 18 May 1992, p. 43; Exh. "1." 6 Id., pp. 60-64; Exh. "21." 7 Exh. "16." 8 Docketed as Civil Case No. Q-90-70581, raffled to RTC-Br. 98, Quezon City. 9 Wenceslao v. Court of Appeals, G.R. No. 124396. 10 Kunkle v. Cablenews-American, 42 Phil. 757 (1922). See also Corpus v. Cuaderno, Sr., No. L-16969, 30 April 1966, 16 SCRA 807; People v. Monton, No. L-16772, 30 November 1962, 6 SCRA 801. 11 Exh. "B." 12 Exh. "8;" Annexes "3" and "5." 13 Exh. "SSS-1." 14 Annex "C," Complaint. 15 Annex "B," id.

16 TSN, 9 September 1991, p. 5. 17 Id., 18 May 1992, p. 20. 18 Annex "R." 19 Art. III, Sec. 4, provides: No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people to peaceably assemble and petition the government for redress of grievances. 20 38 Phil. 253, 265 (1918). 21 No. L-33615, 22 April 1977, 76 SCRA 448, 454. 22 G.R. No. 45031, 21 October 1991, 203 SCRA 110, 117. 23 Author of "The Irony of free Speech," Harvard University Press, Cambridge, Massachusetts, 1996. 24 People v. Velasco, 40 O.G., No. 18, p. 3694. 25 TSN, 29 July 1991, p. 15. 26 Id., September 1991, pp. 11-12. 27 376, US 254. 28 NAACP v. Button, 371 US 415. 29 G.R. Nos. 82380 and 82396, 29 April 1988, 160 SCRA 861. 30 Rosenbloom v. Metromedia, 403 US 296. 31 See Note 27; see also Terminiello v. Chicago, 337 US 1, 4, 93 L Ed 1131, 69 S.Ct. 894. 32 Lu Chu Sing v. Lu Tiong Gui, 76 Phil. 669 (1946). 33 See People v. Monton, 116 Phil. 1116 (1962). 34 See Note 20. 35 Potts v. Dies, 132 Fed 734, 735. 36 Rice v. Simmons, Del 2 Har, 309. 310. 37 See Note 27. 38 St. Amant v. Thompson, 390 US 731. 39 Garrison v. Louisiana, 379 US 74. 40 Exhs. "3" and "4." 41 Exh. "5."

42 Exhs. "6, "7," "8," "9," "10," and "11." 43 TSN, 30 Septmeber 1991, p. 14. 44 Id., 9 September 1991, p. 36. 45 Id., 30 September 1991, p. 14. 46 Concurring Opinion of US Supreme Court Justice Rutledge in Pennekamp v. Florida, 328 US 331, 371-372. 47 G.R. No. 76565, 9 November 1988, 167 SCRA 255, 265. 48 Phil. 731 (1918). 49 Pennekamp v. Florida, 328 U.S. 331, 356, 365, 90 L Ed 1295, 66 Ct 1029 (1946). 50 Mr. Justice White, concurring in Miami Herald Publishing Co. v. Tornillo, 418 US 241, 41 L Ed 2d 730, 94 S Ct 2831 (1974). 51 See Que v. Intermidiate Appellate Court, G.R. No. 668565, 13 January 1989, 169 SCRA 137; Arenas v. Court of Appeals, G.R. No. 56624, 27 January 1989, 169 SCRA 558. 52 78 S.W. 2, 413-416 (1934). Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-13114 August 29, 1961

ELENITA LEDESMA SILVA, ET AL., plaintiffs-appellants, vs. ESTHER PERALTA, defendant-appellee. E.B. Garcia Law Offices and Ledesma, Puno Guytingco and Antonio & Associates for plaintiffs-appellants. Quijano, Abellera, Santos Corrales & Nitrorreda for defendant-appellee. RESOLUTION REYES, J.B.L., J.: Appellants spouses Saturnino Silva and Elenita LedesmaSilva pray for reconsideration of this Court's decision of November 25, 1960, claiming that

(1) Appellant Elenita Silva should be awarded moral damages for Esther Peralta's unauthorized use of the designation of "Mrs. Esther Silva"; (2) The award of pecuniary damages against appellant Saturnino Silva is unwarranted by the facts and the law. It is contended that the prohibition imposed upon appellee Esther Peralta from representing herself, directly or indirectly, as the wife of Saturnino Silva should result in an award of moral damages in favor of appellant Elenita Ledesma, whose exclusive right to the appellation is recognized by the decision. This argument misapprehends the bias of the decision. Esther Peralta was forbidden from representing herself as Mrs. Saturnino Silva for the reason that it was proved in this case that she was not legally married to him, and because he is now lawfully married to Elenita Ledesma. But an award of damages in the latter's favor would require a further finding that the assumption of the disputed status by Esther Peralta was made in bad faith or through culpable negligence and no such finding has been made in the decision. The facts are that the Esther in good faith regarded herself as Saturnino's lawful wife, and that the man himself led her into this belief prior to his desertion. That later on, unknown to Esther, Silva should have married his co-appellant in the United States is not sufficient to impose upon Esther any liability for damages or to destroy her original good faith, there being no proof that the existence of a valid marriage between Saturnino and Elenita was adequately driven home to Esther before this case was instituted. That the two appellants Silva were living together as husband and wife was certainly not sufficient proof, considering Saturnino Silva's past history and conduct. How was appellee to know that Saturnino's connection with Elenita Ledesma was any more legitimate than his previous one with appellee herself? Moreover, the trial court found Elenita Silva's claim for damages not adequately proved, and we have not found in the record any justification to depart from that finding. II As to the award of damages against Saturnino Silva, it is to be noted that while the latter's liability was extra-contractual in origin, still, under the Civil Code of 1889, the damages resulting from a tort are measured in the same manner as those due from a contractual debtor in bad faith, since he must answer for such damages, whether he had foreseen them or not, just as he must indemnify not only for dumnum emergens but also forlucrum cessans, as required by Article 1106. Article 1902 of the 1889 Civil Code of Spain formulated no standard for measuring quasidelictual damages, the article merely prescribing that the guilty party "shall be liable for the damages so done". This indefiniteness led modern civil law writers to hold that the standards set in Articles 1106 and 1107, place in the general rules on obligations, "rigen por igual para las contractuales y las extra contractuales, las preestablecidas y las que broten ex-lege de actos ilicitos". (Roces, Notesto Fisher, "Los Daos Civiles y su Reparacion," (1927). Since liability for damages arises in either case from a breach of a pre-existing obligation (to behave without fault or negligence in case of quasi-delicts, and, in case of contracts, to observe the conduct required by the stipulation),it is logical to conclude with Planiol that "La

responsabilidad contractual y la extra contractual tienen el mismo fundamento, por lo que se hallan sujetas en principio a identicas regalas" (6 Planiol-Ripert, Derecho Civil, p. 529,sec. 378). Giorgi is of the same opinion (5 Teoria de Obligaciones, pp. 133, 207-208). So is de Cossio y Corral("El Dolo en el Derecho Civil", pp. 132-133): Pero si ello es asi, resulta claro que la aproximacionentre esta clase de culpa y la contractual, es cada dia mayor,hasta el extremo de que, segun hemos antes indicado solamente se pueden sealar diferencias accessorias, y muchas veces aparentes entre una y otra. En primer termino, porque el conceptode culpa contractual se extiende no solo a las obligacionesnacidas ex contractu, sino, en general, a todas aquellas preexistentes entre las partes a la realidad del acto daoso (obligaciones legales). de otra parte, porque si bien consideramoslas cosas, la responsabilidad llamada extracontractual, deriva siempre del quebrantamiento de un deber general, implicitamentereconocido por la ley, cual es el de que todos deben actuar socialmente con la debida diligencia, evitando causar dano a los demas, y una dercho que todo ciudadano tine, correlativamente,a no ser da__ado en su patrimonio y bienes por la conducta dolosa o negligente de los demas. En tal sentido, habria siempre entre el autor del dao y la victima, una relacion juridica,constituida por este derecho y aquel deber. Este idea de unidad entre ambas instituciones se traduce en que las pretendidadas diferencias en order a la extension de la indemnizacion, en ambos casos, no puedan defenderse a la vista de los preceptos de nuestro Derecho positivo. En efectono contiene el Capitulo II del Titulo XVI del Libro IV de nuestroCodigo civil norma alguna referente a la extension de la indemnizacion que en cada caso haya de prestarse, lo que nosobliga forzosamente a acudir a las normas general contenidasen el Capitulo II, del Titulo I de dicho libro, IV, relativeo a los "efectos de los obligaciones", que ninguna razon peermite limitar.a naturaleza contractual, ya que el articulo 1.101 hable genericamente de obligaciones el 1.102, de "todas las obligaciones";el 1.103, de toda clase de obligaciones", y en ninguno de los articulos subsifuientes se hace referencia a una clase especial de obligaciones, sino a todas en general. Que las disposiciones de este Capitulo son aplicables en loscasos de culpa extracontractual, es doctrina constantemente reconocida, por la jurisprudencia del Tribunal Supremo. Asi,en la sentencia de 14 de diciembre de 1894, concretandose a losarticulos 1.101, 1.103 y 1.104, afirma que son de caracter generaly applicables a toda clase de obligaciones, no ofreciendocontradiccion con las especiales de los articulos 1.902 y 1.903; la sentencia de 15 de enero de 1902, permite interpretar los articulos1.902, t 1.903 por los 1.103 y 1.106, a los efectos de determinar los elementos que han de entrar en la indemnizacion.La misma doctrina se mantiene en la senencia de 2 de diciembrede 1946, y en otras muchas que puedieramos aducir. Whether or not the damages awarded to appellee are a natural and direct consequence of Silva's deceitful maneuvers in making love to appellee, and inducing her to yield to his advances and live with him as his wife (when Silva knew all the time that he could not marry Esther Peralta because of his undissolved marriage to an Australian woman, a prior wedlock that he concealed from appellee), is a question of appreciation. It is clear that Esther Peralta would not have consented to the liaison had there been no concealment of

Silva's previous marriage, or that the birth of the child was a direct result of this connection. That Esther had to support the child because Silva abandoned her before it was born is likewise patent upon the record, and we can not see how said appellant can be excused from liability therefor. Silva's seduction and subsequent abandonment of appellee and his illegitimate child were likewise the direct cause for the filling of the support case in Manila, and in order to prosecute the same, appellee had to quit her employment in Davao. While the case could have been filed in Davao, we do not believe that this error in selecting a more favorable venue (due to her unfamiliarity with the technicalities of the law) should be allowed to neutralized the appellant Silva's responsibility as the primary causative factor of the prejudice and damage suffered by appellee. It is argued that the maintenance of the child can not be considered as an element of damage because the child's case for support was dismissed. This contention fails to take into account the action there was for support as an acknowledged natural child, and that under the Civil Code of 1889 (the law in force when the child was born), the right of natural children to be supported by their father depended exclusively on the recognition by the father of his paternity; the rule being that the mere fact of birth gave no legal right to the child, and imposed no legal duty upon the father, except, perhaps, in cases arising under the criminal law.. . . The father was not, prior to the Civil Code, and is not now, bound to recognize his natural son by reason of the mere fact that he is the father. . . . But as to the father the question is, and always has been, Has he performed any acts which indicate his intention to recognize the child as his?" (Buenaventura vs. Urbano, 5 Phil., pp. 2-3). It follows that in said suit, the real issue was whether the child had been duly recognized, the support being a mere consequence of the recognition. Therefore, the failure of the child's action for support did not adjudge that he was not the defendant's child, but that the defendant never recognized him as such. That the decision of the Court of Appeal (CA-G.R. No. 24532-R) rejecting the child's action did not declare him without right to support under all circumstances can be seen from the following statement in the decision: The proofs so far found in the record may possibly warrant the filing of an action for compulsory recognition, under paragraphs 3 and 4 of Art. 283, but there was no action presented to that effect. Plainly, the issues and parties being different, the result of the child's action can not constitute res judicata with regard to the mother's claim for damages against the father on account of the amounts she was compelled to spend for the maintenance of their child. On the contrary, the very fact that the child was not allowed to collect support from the father (appellant therein) merely emphasizes the account of his birth and rearing, which, in turn, was a direct consequence of appellant's tortious conduct. Since Esther Peralta had expressly that she had to support the child (Record of Appeal, p. 27, in fine),and had prayed for such relief "as may be deemed just and equitable in the premises", there is no reason why her expenses for the child's maintenance should not be taken into account.

Appellants submit that the damages allowed for maintenance of the son should be limited to P600.00 a year, because the income tax law allows only that much deduction for each child. We do not believe that income tax deductions constitute a reasonable basis for an award of damages, since they are fixed an entirely different purpose (to arrive at the net taxable income) and merely represent the amount that the state is willing to exempt from taxation. At that, it should be noted that the deductible amount has been lately increased to P1,000.00 per annum. But even at P600.00 per annum, the damage suffered by appellee on this count, from 1945 to 1960, already amount to around P9,000.00 a year, to which must be added the loss of appellee's salary as executive of the Girl Scouts in Davao; so that the P15,000.00 damages awarded by the court below is by no means excessive, as already held in our decision in chief. Appellants also contend that the claim for pecuniary damages has prescribed, because they date back to 1945. Suffice it to note that the defense of prescription was not invoked by appellants against the claim for pecuniary damages, and this defense must be regarded as waived in relation to the same. Appellant's reply to the appellee'sfirst counterclaim in her second amended answer (which was for actual or pecuniary damages) read as follows (Answer to Counterclaim, Rec. App. p. 33): 1. That plaintiff is without knowledge or information sufficient to to form a belief as to the truth of the allegations continued under paragraphs 6, 7, 8, 9, 10, 11 and 12 of the first counterclaim and, therefore, specifically denies the same. The defense of prescription was actually interposed only against the second counterclaim, in this wise: 1. That the cause of action alleged in the second counterclaim has already prescribed more than ten years having already elapsed. (Answer to Counterclaim, Rec. App., p. 34). The second counterclaim referred to was for damages due to "mental torture, anguish and hurt feelings, all to her damage in the amount of P250,000." (Rec. App. p. 28).Upon the other hand, our own award for moral damages was based, not on the deceit practiced by Silva in securing Esther's assent to live maritally with him, but on his subsequent harassment of her in 1945, by filing suit against her in different provinces and otherwise applying pressure to cause her to abandon her child's case. As this cause of action arose less than three years before the present action was filed, the defense of prescription is rendered untenable against it, for the limitation period had not yet expired when the suit was brought. WHEREFORE, the motion for reconsideration is denied. Bengzon, C.J., Padilla, Labrador, Concepcion, Barrera, Paredes and Dizon, JJ., concur. Republic of the Philippines SUPREME COURT Manila

SECOND DIVISION G.R. No. L-51183 December 21, 1983 CARMEN L. MADEJA, petitioner, vs. HON. FELIX T. CARO and EVA ARELLANO-JAPZON, respondents. Ernesto P. Miel for petitioner. Gorgonio T. Alvarez for respondents.

ABAD SANTOS, J.:+.wph!1 In Criminal Case No. 75-88 of the defunct Court of First Instance of Eastern Samar, DR. EVA A. JAPZON is accused of homicide through reckless imprudence for the death of Cleto Madeja after an appendectomy. The complaining witness is the widow of the deceased, Carmen L. Madeja. The information states that: "The offended party Carmen L. Madeja reserving her right to file a separate civil action for damages." (Rollo, p. 36.) The criminal case still pending, Carmen L. Madeja sued Dr. Eva A. Japzon for damages in Civil Case No. 141 of the same court. She alleged that her husband died because of the gross negligence of Dr. Japzon. The respondent judge granted the defendant's motion to dismiss which motion invoked Section 3(a) of Rule 111 of the Rules of Court which reads:t.hqw Sec. 3. Other civil actions arising from offenses. In all cases not included in the preceding section the following rules shall be observed: (a) Criminal and civil actions arising from the same offense may be instituted separately, but after the criminal action has been commenced the civil action can not be instituted until final judgment has been rendered in the criminal action. ... According to the respondent judge, "under the foregoing Sec. 3 (a), Rule 111, New Rules of Court, the instant civil action may be instituted only after final judgment has been rendered in the criminal action." (Rollo, p. 33.) The instant petition which seeks to set aside the order of the respondent judge granting the defendant's motion to dismiss Civil Case No. 141 is highly impressed with merit. Section 2, Rule 111 of the Rules of Court in relation to Article 33 of the Civil Code is the applicable provision. The two enactments are quoted hereinbelow:t.hqw Sec. 2. Independent civil action. In the cases provided for in Articles 31,32, 33, 34 and 2177 of the Civil Code of the Philippines, an independent civil action entirely separate and distinct from the criminal action, may be brought by the injured party during the pendency of the criminal case, provided the right is reserved as required in the preceding section.

Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence." (Rule 111, Rules of Court.) Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence. (Civil Code,) There are at least two things about Art. 33 of the Civil Code which are worth noting, namely: 1. The civil action for damages which it allows to be instituted is ex-delicto. This is manifest from the provision which uses the expressions "criminal action" and "criminal prosecution." This conclusion is supported by the comment of the Code Commission, thus:t.hqw The underlying purpose of the principle under consideration is to allow the citizen to enforce his rights in a private action brought by him, regardless of the action of the State attorney. It is not conducive to civic spirit and to individual self-reliance and initiative to habituate the citizens to depend upon the government for the vindication of their own private rights. It is true that in many of the cases referred to in the provision cited, a criminal prosecution is proper, but it should be remembered that while the State is the complainant in the criminal case, the injured individual is the one most concerned because it is he who has suffered directly. He should be permitted to demand reparation for the wrong which peculiarly affects him. (Report, p. 46.) And Tolentino says:t.hqw The general rule is that when a criminal action is instituted, the civil action for recovery of civil liability arising from the offense charged is impliedly instituted with the criminal action, unless the offended party reserves his right to institute it separately; and after a criminal action has been commenced, no civil action arising from the same offense can be prosecuted. The present articles creates an exception to this rule when the offense is defamation, fraud, or physical injuries, In these cases, a civil action may be filed independently of the criminal action, even if there has been no reservation made by the injured party; the law itself in this article makes such reservation; but the claimant is not given the right to determine whether the civil action should be scheduled or suspended until the criminal action has been terminated. The result of the civil action is thus independent of the result of the civil action." (I Civil Code, p. 144 [1974.]) 2. The term "physical injuries" is used in a generic sense. It is not the crime of physical injuries defined in the Revised Penal Code. It includes not only physical injuries but consummated, frustrated and attempted homicide.t.hqw The Article in question uses the words 'defamation', 'fraud' and 'physical injuries.' Defamation and fraud are used in their ordinary sense because there are no specific provisions in the Revised Penal Code using these terms as means of offenses defined therein, so that these two terms defamation and fraud must have been used not to impart to them any technical meaning in the laws of the Philippines, but in their generic sense.

With this apparent circumstance in mind, it is evident that the terms 'physical injuries' could not have been used in its specific sense as a crime defined in the Revised Penal Code, for it is difficult to believe that the Code Commission would have used terms in the same article-some in their general and another in its technical sense. In other words, the term 'physical injuries' should be understood to mean bodily injury, not the crime of physical injuries, bacause the terms used with the latter are general terms. In any case the Code Commission recommended that the civil action for physical injuries be similar to the civil action for assault and battery in American Law, and this recommendation must hove been accepted by the Legislature when it approved the article intact as recommended. If the intent has been to establish a civil action for the bodily harm received by the complainant similar to the civil action for assault and battery, as the Code Commission states, the civil action should lie whether the offense committed is that of physical injuries, or frustrated homicide, or attempted homicide, or even death," (Carandang vs. Santiago, 97 Phil. 94, 96-97 [1955].) Corpus vs. Paje, L-26737, July 31, 1969, 28 SCRA 1062, which states that reckless imprudence or criminal negligence is not included in Article 33 of the Civil Code is not authoritative. Of eleven justices only nine took part in the decision and four of them merely concurred in the result. In the light of the foregoing, it is apparent that the civil action against Dr. Japzon may proceed independently of the criminal action against her. WHEREFORE, the petition is hereby granted; the order dismissing Civil Case No. 141 is hereby set aside; no special pronouncement as to costs. SO ORDERED.1wph1.t Makasiar (Chairman), Concepcion, Jr., Guerrero, De Castro and Escolin, JJ., concur.

Separate Opinions

AQUINO, J., concurring: I concur. Death due to a negligent act may be a delict or quasi-delict. It may create a civil action based on article 100 of the Penal Code or an action based on culpa aquiliana under article 2176 of the Civil Code. These alternatives are assumed in article 2177 of the Civil Code "but the plaintiff cannot recover twice for the same act or omission of the defendant" (Barredo vs. Garcia, 73 Phil. 607 and Sudario vs. Acro Taxi and Yuson, 86 Phil. 1. See Formento vs. CA, L-26442, August 29,1969,29 SCRA 437). The term "physical injuries" in article 33 of the Civil Code includes death and may give rise to an independent civil action (Dyogi vs. Yatco, 100 Phil. 1095).

The rule in Corpus vs. Paje, L-26737, July 31, 1969, 28 SCRA 1062, that reckless imprudence is not included in article 33 of the Civil Code, is not authoritative doctrine because it was concurred in by only five Justices. Four Justices concurred in the result.

Separate Opinions AQUINO, J., concurring: I concur. Death due to a negligent act may be a delict or quasi-delict. It may create a civil action based on article 100 of the Penal Code or an action based on culpa aquiliana under article 2176 of the Civil Code. These alternatives are assumed in article 2177 of the Civil Code "but the plaintiff cannot recover twice for the same act or omission of the defendant" (Barredo vs. Garcia, 73 Phil. 607 and Sudario vs. Acro Taxi and Yuson, 86 Phil. 1. See Formento vs. CA, L-26442, August 29,1969,29 SCRA 437). The term "physical injuries" in article 33 of the Civil Code includes death and may give rise to an independent civil action (Dyogi vs. Yatco, 100 Phil. 1095). The rule in Corpus vs. Paje, L-26737, July 31, 1969, 28 SCRA 1062, that reckless imprudence is not included in article 33 of the Civil Code, is not authoritative doctrine because it was concurred in by only five Justices. Four Justices concurred in the result. THIRD DIVISION [G.R. No. 124245. February 15, 2000] ANTONIO F. NAVARRETE, petitioner, vs. COURT OF APPEALS, and LEONILA E. GENEROSO, respondents. francis DECISION GONZAGA_REYES, J.: Before us is a petition for review seeking the reversal of the Decision[1] of the respondent Court of Appeals dated March 14, 1996 in CA-G.R. CV No. 33838 insofar as it deleted the award of moral damages and attorneys fees granted to him by the Regional Trial Court of Manila in its Decision[2] dated September 27, 1990 in Civil Case No. 87-41856. Petitioner is a lawyer and is one of the defendants in Civil Case No. 87-41856 for annulment of "Deed of Sale with Right to Repurchase and Damages", filed with the Regional Trial Court of Manila entitled "Leonila E. Generoso, et. al. vs. Frederick S. Pumaren, et. al.". Private respondent filed the civil case on September 2, 1987 originally against Mr. Frederick S. Pumaren, Mr. Avelino Profeta and the Register of Deeds of Metro Manila seeking to annul a deed of sale executed over her property on the ground that her purported signature therein was forged. On December 21, 1987, the complaint was amended to include petitioner and Atty. Rafael C. Dinglasan.

The Deed of Sale with Right of Repurchase involved in the civil case was prepared and notarized by petitioner. Petitioner claims that the statements made by private respondent in her Amended Complaint and her testimonies in the course of the trial falsely and maliciously slandered him. Hence, petitioner now assails the denial of his right to recover moral damages and attorneys fees from private respondent. The alleged malicious and false statements made by private respondent against petitioner were uttered on December 14 and 21, 1987. On these dates, the lower court conducted the hearings for the issuance of a writ of preliminary injunction in Civil Case No. 87-41856. Petitioner claims that private respondent alluded to him when she said the words "stupid", "bastards", "swindlers", and "plunderers" while testifying on the Deed of Sale with Right of Repurchase. Quoted below are the pertinent portions of private respondents testimonies: "Q. Now, there are signatures here as witnesses appearing on page 2 of the document, can you tell us, Ms. Witness, if you can recognize those signatures? "A. I do not know any of those bastards, none of them."[3] xxx "Q. One of the defendants in this case is a certain Avelino Profeta, have you met him before? "A. I never met this swindler before. I never seen him. Never heard of him."[4] xxxmarie "Q. Before this proceedings commence as it appears that it was so confirmed thru a petition be defendant Frederick S. Pumaren on October 13, 1986, did you receive from the Court or from the defendants that there was such proceedings? "A. No, sir. I did not receive any notice from the court or from these stupid people."[5] xxx "A. I do not know this document. I do not know about the selling. Those people are really swindlers."[6] xxx "A. I still could not understand how this certificate of title could be recopied. There must be somebody who is responsible for it. How was it possible that this was copied by these swindlers."[7] xxx "A. We came here precisely for this because I can not let these things go ahead. My property is being stolen behind my back. I have to come here 10,000 miles away to defend my property so that justice may be given to punish those plunderers."[8] xxx

"DRA. GENEROSO: Before we have the break, can I make a statement to Atty. Villanueva? Are you defending Avelino Profeta, one of the swindlers in this case? How can you, after examining all those papers, protect and defend him after they plundered my property?"[9] (Emphasis supplied) Petitioner is also convinced that the following allegations of private respondent in her Amended Complaint are actionable: (a) Accused "private defendants" of "forging" Leonila Generosos signature in the Deed of Absolute Sale with Right of Repurchase" (par. 51); (b) Claimed that "the same conspiring defendants falsified the signatures of Leonila E. Generoso" (par. 61); (c) Pointed to private defendants wanton and malevolent acts to deceive and defraud plaintiffs" (par. 91); and (d) Charged the defendants of "blatant, malicious and fraudulent acts as aforestated" (par. 10)[10] (Emphasis supplied) novero On September 27,1990, the Regional Trial Court of Manila rendered its Decision in Civil Case No. 87-41856, the dispositive portion of which reads: "WHEREFORE, and in view of the foregoing considerations, judgment is hereby rendered: (a) Declaring plaintiff Leonila E. Generoso as the absolute, exclusie and paraphernal owner of the subject property covered by her already deemed cancelled Transfer Certificate of Title No. 143351, now Transfer Certificate of Title No. 154609, of the Register of Deeds of Manila; (b) Declaring the Deed of Absolute Sale with Right of Repurchase, Exhibit A, and Transfer Certificate of Title Nos. 143551 and 175354 issued to Frederick S. Pumaren as null and void, concelled (sic) without force and effect; (c) Declaring Transfer Certificate of Title No. 154609 issued to plaintiff Leonila E. Generoso as the lawful and valid title to the land in question; (d) Dismissing the complaint with respect to defendant Antonio Navarrete and, on his counterclaim, ordering plaintiffs to pay him the amount of P 100,000.00 as moral damages and P 20,000.00 as attorneys fees. No pronouncement as to costs."[11] Both parties appealed, including petitioner who protested the minimal amount of damages awarded to him. On March 14, 1996, the Court of Appeals upheld the finding that the Deed of Sale with Right of Repurchase and the Transfer of Certificate of Title issued to Pumaren were null and

void, but deleted the award of damages in favor of petitioner. It held: "IN THE LIGHT OF ALL THE FOREGOING, the assailed Decision is hereby AFFIRMED with the modifications that: (a) the award of moral damages and attorneys fees in favor of Navarrete are hereby deleted; (b) Appellant Pumaren and Dinglasan are hereby ordered to pay to Appellant Generoso and Elshawi jointly and severally, the amount of US $ 2,650.00 or its peso equivalent by way of actual damages; to Appellant Generoso, the amount of P 50,00.00 by way of exemplary damages; and to Appellants Generoso and Elshawi, the amount of P 20,000.00 as attorneys fees; and the costs of suit."[12] Petitioner believes that this Court should overturn the decision of the Court of Appeals on the ground that: nigel IN HOLDING THAT A PARTY TO A CASE HAS THE ABSOLUTE PRIVILEGE OF FALSELY AND MALICIOUSLY MALIGNING A LAWYER, EVEN WHILE THE LATTER IS NOT YET A PARTY TO THAT CASE, THE RESPONDENT COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE, NOT HERETOFORE DETERMINED BY THIS HONORABLE COURT, OR HAS DECIDED IT IN A WAY CLEARLY NOT IN ACCORD WITH LAW, WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT OR, AT THE VERY LEAST, WITH FAIRNESS AND EQUITY.[13] In questioning the conclusion of the Court of Appeals that the statements made by private respondent in the pleadings and in her testimony are considered absolutely privileged, petitioner deplores the fact that only American cases were cited by the Court to justify its conclusion. He insists that under Philippine law and jurisprudence, the statements made by private respondent are not absolutely privileged. The petition underscores the fact that petitioner is a lawyer whose reputation has been allegedly besmirched by a "brown American".[14] Petitioner now turns to this Court to vindicate his honor. In her Answer, private respondent cited decisions[15] of the Supreme Court to the effect that no action for libel or for damages may be founded on utterances made in the course of judicial proceedings.[16] This Court finds that the Court of Appeals did not commit any reversible error in revoking the award of moral damages and attorneys fees to petitioner. It is a settled principle in this jurisdiction that statements made in the course of judicial proceedings are absolutely privileged.[17] This absolute privilege remains regardless of the defamatory tenor and the presence of malice if the same are relevant, pertinent or material to the cause in hand or subject of the inquiry.[18] Thus, the person making these statements such as a judge, lawyer or witness does not thereby incur the risk of being found liable thereon in a criminal prosecution or an action for the recovery of damages.[19] ella The doctrine that statements made during the course of judicial proceedings enjoy the shield of absolute privilege was first categorically established[20] in the case of Sison vs. David.[21] In said case, the petition allegedly contained libelous allegations, implying that the complainant was incompetent to manage the affairs of a corporation and that he was

converting his wifes paraphernal properties into conjugal properties.[22]This Court ruled in that case that the allegations in the pleadings were absolutely privileged and went further by saying that: "Also, sarcastic, pungent and harsh allegations in a pleading although tending to detract from the dignity that should characterize proceedings in courts of justice, are absolutely privileged, if relevant to the issues".[23] We have adopted the same ruling in several cases[24] wherein statements made during judicial proceedings were sued upon for libel or damages. The lone requirement imposed to maintain the cloak of absolute privilege is the test of relevancy.[25] The doctrine of privileged communication has a practical purpose. As enunciated in the case of Deles vs. Aragona, Jr.[26]: "The privilege is not intended so much for the protection of those engaged in the public service and in the enactment and administration of law, as for the promotion of public welfare, the purpose being that members of the legislature, judges of courts, jurors, lawyers and witnesses may speak their minds freely and exercise their respective functions without incurring the risk of a criminal prosecution or an action for damages."[27] In determining the issue of relevancy of statements made in judicial proceedings, courts have adopted a liberal attitude by resolving all doubts in favor of relevancy.[28] In People vs. Aquino[29], we emphasized that "it is the rule that what is relevant or pertinent should be liberally considered to favor the writer, and the words are not to be scrutinized with microscopic intensity".[30] In this case, the allegations made by private respondent in her Amended Complaint stand the test of relevancy. The words "forging", "malicious and fraudulent" and "falsified" are clearly pertinent to the cause of action of private respondent, which is to annul the Deed of Sale with Right of Repurchase wherein private respondents signature was forged by an impostor, and to recover damages resulting from such forgery. marinella With respect to the words "swindlers", "plunderers" "stupid" and "bastards" uttered by private respondent in the course of her testimony, we are inclined to agree that such language is too ignominious and degrading and is out of place in a courtroom. Understandably, private respondent has no love lost for the people she accused of illegally depriving her of her property, but her indignation does not give her the right to use contumacious language with impunity in a courtroom. The judge[31] and commissioner[32] then presiding at the time private respondent uttered the contemptuous words should have restrained the latter because order and proper decorum should always be maintained in the courtroom.[33]Without question, the use of blatantly defamatory language like "stupid", "bastards", "swindlers", and "plunderers" in describing the adverse parties detract from the honor and dignity that befits a court proceeding and should have been stricken out of the records. The foregoing notwithstanding, the Court finds that the terms used by the private respondent in her pleading and in her testimony cannot be the basis for an award of moral

damages and attorneys fees in favor of petitioner. As stated earlier, the words "forging", "falsified", "malicious" and "fraudulent" in the Amended Complaint are unmistakably relevant to private respondents cause of action which is to annul the Deed of Sale where her signature was forged. The words "stupid", "bastards", "swindlers", and "plunderers" uttered by private respondent did not specifically pertain to petitioner to sufficiently identify him as the object of defamation, such identifiability being an element of a libelous imputation.[34] We believe that neither petitioners good name and reputation nor his high standing in the profession have been damaged by these utterances. An examination of the transcript earlier quoted will show that private respondent did not allude to petitioner in particular when she used the words "stupid" and "bastards". The word "bastards" was in response to this question: "Now, there are signatures here as witnesses appearing on page 2 of the document, can you tell us, Ms. Witness, if you can recognize those signatures?"[35] Clearly, private respondent was alluding to the witnesses to the deed in question, who are not parties in the present action. Petitioner was not a witness to the deed, he prepared and notarized it. Also, the word "swindler" was used with particular reference to defendant Avelino Profeta who also is not a party to the instant case. Used in the plural form in the other parts of her testimony, the words "those swindlers", "those plunderers" and "those stupid people" referred to none of the defendants in particular. alonzo As regards the testimony of private respondent on December 14, 1987, the words complained of were uttered before the complaint was amended to include petitioner. It was on December 21, 1987 when private respondent amended her complaint to include petitioner and Atty. Rafael Dinglasan as defendants. The petitioner was well aware that the malicious imputations were made "while (he) is not yet a party to the case" and could not have been the object thereof. We accordingly affirm the ruling of the respondent court deleting the award of attorneys fees in favor of petitioner. WHEREFORE, this petition is hereby DENIED. SO ORDERED. Melo, (Chairman), Panganiban, and Purisima, JJ., concur. Vitug, J., no part. Close association with counsel in law firm. brando Republic of the Philippines Supreme Court Manila

FIRST DIVISION

SAFEGUARD SECURITY AGENCY, INC., and ADMER PAJARILLO, Petitioners,

G.R. NO. 165732

Present:

PANGANIBAN, C.J.* YNARES-SANTIAGO, (Working Chairperson) - versus AUSTRIA-MARTINEZ, CALLEJO, SR., and CHICO-NAZARIO, JJ.

LAURO TANGCO, VAL TANGCO, VERN LARRY TANGCO, VAN LAURO TANGCO, VON LARRIE TANGCO, VIEN LARI TANGCO and VIVIEN LAURIZ TANGCO, Respondents. Promulgated: December 14, 2006

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari filed by Safeguard Security Agency, Inc. (Safeguard) and Admer Pajarillo(Pajarillo) assailing the Decision[1] dated July 16, 2004 and the Resolution[2] dated October 20, 2004 issued by the Court of Appeals (CA) in CA-G.R. CV No. 77462. On November 3, 1997, at about 2:50 p.m., Evangeline Tangco (Evangeline) went to Ecology Bank, Katipunan Branch,Quezon City, to renew her time deposit per advise of the banks cashier as she would sign a specimen card. Evangeline, a duly licensed firearm holder with corresponding permit to carry the same outside her residence, approached security guard Pajarillo, who was stationed outside the bank, and pulled out her firearm from her bag to deposit the same for safekeeping. Suddenly, Pajarillo shot Evangeline with his service shotgun hitting her in the abdomen instantly causing her death.

Lauro Tangco, Evangelines husband, together with his six minor children (respondents) filed with the Regional Trial Court (RTC) of Quezon City, a criminal case of Homicide against Pajarillo, docketed as Criminal Case No. 0-97-73806 and assigned to Branch 78. Respondents reserved their right to file a separate civil action in the said criminal case. The RTC of Quezon City subsequently convicted Pajarillo of Homicide in its Decision dated January 19, 2000.[3] On appeal to the CA, the RTC decision was affirmed with modification as to the penalty in a Decision[4] dated July 31, 2000. Entry of Judgment was made on August 25, 2001.

Meanwhile, on January 14, 1998, respondents filed with RTC, Branch 273, Marikina City, a complaint[5] for damages againstPajarillo for negligently shooting Evangeline and against Safeguard for failing to observe the diligence of a good father of a family to prevent the damage committed by its security guard. Respondents prayed for actual, moral and exemplary damages and attorneys fees.

In their Answer,[6] petitioners denied the material allegations in the complaint and alleged that Safeguard exercised the diligence of a good father of a family in the selection and supervision of Pajarillo; that Evangelines death was not due to Pajarillos negligence as the latter acted only in self-defense. Petitioners set up a compulsory counterclaim for moral damages and attorneys fees.

Trial thereafter ensued. On January 10, 2003, the RTC rendered its Decision,[7] the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs, the heirs of Evangeline Tangco, and against defendants Admer Pajarilloand Safeguard Security Agency, Inc. ordering said defendants to pay the plaintiffs, jointly and severally, the following:

1. ONE HUNDRED FIFTY SEVEN THOUSAND FOUR HUNDRED THIRTY PESOS (P157,430.00), as actual damages 2. 3. 4. 5. 6. FIFTY THOUSAND PESOS (P50,000.00) as death indemnity; ONE MILLION PESOS (P1,000,000.00), as moral damages; THREE HUNDRED THOUSAND PESOS (P300,000.00), as exemplary damages; THIRTY THOUSAND PESOS (P30,000.00), as attorneys fees; and costs of suit.

For lack of merit, defendants counterclaim is hereby DISMISSED.

SO ORDERED. [8]

The RTC found respondents to be entitled to damages. It rejected Pajarillos claim that he merely acted in self-defense. It gave no credence to Pajarillos bare claim that Evangeline was seen roaming around the area prior to the shooting incident sincePajarillo had not made such report to the head office and the police authorities. The RTC further ruled that being the guard on duty, the situation demanded that he should have exercised proper prudence and necessary care by asking Evangeline for him to ascertain the matter instead of shooting her instantly; that Pajarillo had already been convicted of Homicide in Criminal Case No. 0-97-73806; and that he also failed to proffer proof negating liability in the instant case.

The RTC also found Safeguard as employer of Pajarillo to be jointly and severally liable with Pajarillo. It ruled that while it may be conceded that Safeguard had perhaps exercised care in the selection of its employees, particularly of Pajarillo, there was no sufficient evidence to show that Safeguard exercised the diligence of a good father of a family in the supervision of its employee; that Safeguards evidence simply showed that it required its guards to attend trainings and seminars which is not the supervision contemplated under the law; that supervision includes not only the issuance of regulations and instructions designed for the protection of persons and property, for the guidance of their servants and

employees, but also the duty to see to it that such regulations and instructions are faithfully complied with.

Petitioners appealed the RTC decision to the CA. On July 16, 2004, the CA issued its assailed Decision, the dispositiveportion of which reads:

IN VIEW OF ALL THE FOREGOING, the appealed decision is hereby AFFIRMED, with the modification that Safeguard Security Agency, Inc.s civil liability in this case is only subsidiary under Art. 103 of the Revised Penal Code. No pronouncement as to costs.[9]

In finding that Safeguard is only subsidiarily liable, the CA held that the applicable provisions are not Article 2180 in relation to Article 2176 of the Civil Code, on quasi-delicts, but the provisions on civil liability arising from felonies under the Revised Penal Code; that since Pajarillo had been found guilty of Homicide in a final and executory judgment and is said to be serving sentence inMuntinlupa, he must be adjudged civilly liable under the provisions of Article 100 of the Revised Penal Code since the civil liability recoverable in the criminal action is one solely dependent upon conviction, because said liability arises from the offense charged and no other; that this is also the civil liability that is deemed extinguished with the extinction of the penal liability with a pronouncement that the fact from which the civil action might proceed does not exist; that unlike in civil liability arising from quasi-delict, the defense of diligence of a good father of a family in the employment and supervision of employees is inapplicable and irrelevant in civil liabilities based on crimes or ex-delicto; that Article 103 of the Revised Penal Code provides that the liability of an employer for the civil liability of their employees is only subsidiary, not joint or solidary.

Petitioners filed their Motion for Reconsideration which the CA denied in a Resolution dated October 20, 2004.

Hence, the instant Petition for Review on Certiorari with the following assignment of errors, to wit:

The Honorable Court of Appeals gravely erred in finding petitioner Pajarillo liable to respondents for the payment of damages and other money claims.

The Honorable Court of Appeals gravely erred when it applied Article 103 of the Revised Penal Code in holding petitioner Safeguardsolidarily [sic] liable with petitioner Pajarillo for the payment of damages and other money claims.

The Honorable Court of Appeals gravely erred in failing to find that petitioner Safeguard Security Agency, Inc. exercised due diligence in the selection and supervision of its employees, hence, should be excused from any liability.[10]

The issues for resolution are whether (1) Pajarillo is guilty of negligence in shooting Evangeline; and (2) Safeguard should be held solidarily liable for the damages awarded to respondents. Safeguard insists that the claim for damages by respondents is based on culpa aquiliana under Article 2176[11] of the Civil Code, in which case, its liability is jointly and severally with Pajarillo. However, since it has established that it had exercised due diligence in the selection and supervision of Pajarillo, it should be exonerated from civil liability.

We will first resolve whether the CA correctly held that respondents, in filing a separate civil action against petitioners are limited to the recovery of damages arising from a crime or delict, in which case the liability of Safeguard as employer under Articles 102 and 103 of the Revised Penal Code[12] is subsidiary and the defense of due diligence in the selection and supervision of employee is not available to it.

The CA erred in ruling that the liability of Safeguard is only subsidiary.

The law at the time the complaint for damages was filed is Rule 111 of the 1985 Rules on Criminal Procedure, as amended, to wit:

SECTION 1. Institution of criminal and civil actions. - When a criminal action is instituted, the civil action for the recovery of civil

liability is impliedly instituted with the criminal action, unless the offended party waives the civil action, reserves his right to institute it separately, or institutes the civil action prior to the criminal action. Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under Articles 32, 33, 34, and 2176 of the Civil Code of the Philippines arising from the same act or omission of the accused.

Respondents reserved the right to file a separate civil action and in fact filed the same on January 14, 1998.

The CA found that the source of damages in the instant case must be the crime of homicide, for which he had already been found guilty of and serving sentence thereof, thus must be governed by the Revised Penal Code.

We do not agree.

An act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender, i.e., (1) civil liability ex delicto, under Article 100 of the Revised Penal Code; and (2) independent civil liabilities, such as those (a) not arising from an act or omission complained of as a felony, e.g., culpa contractual or obligations arising from law under Article 31 of the Civil Code, intentional torts under Articles 32 and 34, and culpa aquiliana under Article 2176 of the Civil Code; or (b) where the injured party is granted a right to file an action independent and distinct from the criminal action under Article 33 of the Civil Code. Either of these liabilities may be enforced against the offender subject to the caveat under Article 2177 of the Civil Code that the offended party cannot recover damages twice for the same act or omission or under both causes.[13]

It is important to determine the nature of respondents cause of action. The nature of a cause of action is determined by the facts alleged in the complaint as constituting the cause of action.[14] The purpose of an action or suit and the law to govern it is to be determined not by the claim of the party filing the action, made in his argument or brief, but rather by the complaint itself, its allegations and prayer for relief.[15]

The pertinent portions of the complaint read:

7. That Defendant Admer A. Pajarillo was the guard assigned and posted in the Ecology Bank Katipunan Branch, Quezon City, who was employed and under employment of Safeguard Security Agency, Inc. hence there is employer-employee relationship between co-defendants.

The Safeguard Security Agency, Inc. failed to observe the diligence of a good father of a family to prevent damage to herein plaintiffs.

8. That defendant Admer Pajarillo upon seeing Evangeline Tangco, who brought her firearm out of her bag, suddenly without exercising necessary caution/care, and in idiotic manner, with the use of his shotgun, fired and burst bullets upon Evangeline M. Tangco, killing her instantly. xx x

xxxx

16. That defendants, being employer and the employee are jointly and severally liable for the death of Evangeline M. Tangco.[16]

Thus, a reading of respondents complaint shows that the latter are invoking their right to recover damages against Safeguard for their vicarious responsibility for the injury caused by Pajarillos act of shooting and killing Evangeline under Article 2176, Civil Code which provides:

ARTICLE 2176. 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.

The scope of Article 2176 is not limited to acts or omissions resulting from negligence. In Dulay v. Court of Appeals,[17] we held: x x x Well-entrenched is the doctrine that Article 2176 covers not only acts committed with negligence, but also acts which are voluntary and intentional. As far back as the definitive case of Elcano v. Hill (77 SCRA 98 [1977]), this Court already held that: "x x x Article 2176, where it refers to "fault or negligence," covers not only acts "not punishable by law" but also acts criminal in character, whether intentional and voluntary or

negligent. Consequently, a separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, if he is actually charged also criminally, to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary. In other words, the extinction of civil liability referred to in Par. (e) of Section 3, Rule 111, refers exclusively to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil liability for the same act considered as quasi-delict only and not as a crime is not extinguished even by a declaration in the criminal case that the criminal act charged has not happened or has not been committed by the accused. Briefly stated, We here hold, in reiteration of Garcia, that culpa aquiliana includes voluntary and negligent acts which may be punishable by law." (Emphasis supplied)

The civil action filed by respondents was not derived from the criminal liability of Pajarillo in the criminal case but one based on culpa aquiliana or quasi-delict which is separate and distinct from the civil liability arising from crime.[18] The source of the obligation sought to be enforced in the civil case is a quasi-delict not an act or omission punishable by law.

In Bermudez v. Melencio-Herrera,[19] where the issue involved was whether the civil action filed by plaintiff-appellants is founded on crime or on quasi-delict, we held:

x x x The trial court treated the case as an action based on a crime in view of the reservation made by the offended party in the criminal case (Criminal Case No. 92944), also pending before the court, to file a separate civil action. Said the trial court:

It would appear that plaintiffs instituted this action on the assumption that defendant Pontino's negligence in the accident of May 10, 1969constituted a quasi-delict. The Court cannot accept the validity of that assumption. In Criminal Case No. 92944 of this Court, plaintiffs had already appeared as complainants. While that case was pending, the offended parties reserved the right to institute a separate civil action. If, in a criminal case, the right to file a separate civil action for damages is reserved, such civil action is to be based on crime and not on tort. That was the ruling in Joaquin vs. Aniceto, L-18719, Oct. 31, 1964.

We do not agree. The doctrine in the case cited by the trial court is inapplicable to the instant case x x x. xxxx

In cases of negligence, the injured party or his heirs has the choice between an action to enforce the civil liability arising from crime under Article 100 of the Revised Penal Code and an action for quasi-delict under Article 2176-2194 of the Civil Code. If a party chooses the latter, he may hold the employer solidarily liable for the negligent act of his employee, subject to the employer's defense of exercise of the diligence of a good father of the family. In the case at bar, the action filed by appellant was an action for damages based on quasidelict. The fact that appellants reserved their right in the criminal case to file an independent civil action did not preclude them from choosing to file a civil action forquasidelict.[20] (Emphasis supplied)

Although the judgment in the criminal case finding Pajarillo guilty of Homicide is already final and executory, such judgment has no relevance or importance to this case.[21] It would have been entirely different if respondents cause of action was for damages arising from a delict, in which case the CA is correct in finding Safeguard to be only subsidiary liable pursuant to Article 103 of the Revised Penal Code.[22]

As clearly shown by the allegations in the complaint, respondents cause of action is based on quasi-delict. Under Article 2180 of the Civil Code, when the injury is caused by the negligence of the employee, there instantly arises a presumption of law that there was negligence on the part of the master or the employer either in the selection of the servant or employee, or in the supervision over him after selection or both. The liability of the employer under Article 2180 is direct and immediate. Therefore, it is incumbent upon petitioners to prove that they exercised the diligence of a good father of a family in the selection and supervision of their employee.

We must first resolve the issue of whether Pajarillo was negligent in shooting Evangeline.

The issue of negligence is factual in nature. Whether a person is negligent or not is a question of fact, which, as a general rule, we cannot pass upon in a petition for review on certiorari, as our jurisdiction is limited to reviewing errors of law.[23] Generally, factual findings of the trial court, affirmed by the CA, are final and conclusive and may not be reviewed on appeal. The established exceptions are: (1) when the inference made is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of discretion; (3) when the findings are grounded entirely on speculations, surmises or conjectures; (4) when the judgment of the CA is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the CA, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) when the findings of fact are conclusions without citation of specific evidence on which they are based; (8) when the CA manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion; and (9) when

the findings of fact of the CA are premised on the absence of evidence and are contradicted by the evidence on record. [24]

A thorough review of the records of the case fails to show any cogent reason for us to deviate from the factual finding of the trial court and affirmed by the CA that petitioner Pajarillo was guilty of negligence in shooting Evangeline.

Respondents evidence established that Evangelines purpose in going to the bank was to renew her time deposit.[25] On the other hand, Pajarillo claims that Evangeline drew a gun from her bag and aimed the same at him, thus, acting instinctively, he shot her in selfdefense.

Pajarillo testified that when Evangeline aimed the gun at him at a distance of about one meter or one arms length[26] he stepped backward, loaded the chamber of his gun and shot her.[27] It is however unimaginable that petitioner Pajarillo could still make such movements if indeed the gun was already pointed at him. Any movement could have prompted Evangeline to pull the trigger to shoot him.

Petitioner Pajarillo would like to justify his action in shooting Evangeline on his mere apprehension that Evangeline will stage a bank robbery. However, such claim is befuddled by his own testimony. Pajarillo testified that prior to the incident, he saw Evangeline roaming under the fly over which was about 10 meters away from the bank[28] and saw her talking to a man thereat;[29] that she left the man under the fly-over, crossed the street and approached the bank. However, except for the bare testimony ofPajarillo, the records do not show that indeed Evangeline was seen roaming near the vicinity of the bank and acting suspiciously prior to the shooting incident. In fact, there is no evidence that Pajarillo called the attention of his head guard or the banks branch manager regarding his concerns or that he reported the same to the police authorities whose outpost is just about 15 meters from the bank. Moreover, if Evangeline was already roaming the vicinity of the bank, she could have already apprised herself that Pajarillo, who was posted outside the bank, was armed with a shotgun; that there were two guards inside the bank[30] manning the entrance door. Thus, it is quite incredible that if she really had a companion, she would leave him under the flyover which is 10 meters far from the bank and stage a bank robbery all by herself without a back-up. In fact, she would have known, after surveying the area, that aiming her gun at Pajarillo would not ensure entrance to the bank as there were guards manning the entrance door.

Evidence, to be believed, must not only proceed from the mouth of a credible witness, but it must be credible in itself such as the common experience and observation of mankind can approve as probable under the circumstances. We have no test of the truth of human testimony, except its conformity to our knowledge, observation and experience. Whatever is repugnant to these belongs to the miraculous and is outside judicial cognizance.[31]

That Evangeline just wanted to deposit her gun before entering the bank and was actually in the act of pulling her gun from her bag when petitioner Pajarillo recklessly shot her, finds support from the contentions raised in petitioners petition for review where they argued that when Evangeline approached the bank, she was seen pulling a gun from inside her bag and petitioner Pajarillo who was suddenly beset by fear and perceived the act as a dangerous threat, shot and killed the deceased out of pure instinct;[32] that the act of drawing a gun is a threatening act, regardless of whether or not the gun was intended to be used against petitioner Pajarillo;[33]that the fear that was created in the mind of petitioner Pajarillo as he saw Evangeline Tangco drawing a gun from her purse was suddenly very real and the former merely reacted out of pure self-preservation.[34]

Considering that unlawful aggression on the part of Evangeline is absent, Pajarillos claim of self-defense cannot be acceptedspecially when such claim was uncorroborated by any separate competent evidence other than his testimony which was even doubtful. Pajarillos apprehension that Evangeline will shoot him to stage a bank robbery has no basis at all. It is therefore clear that the alleged threat of bank robbery was just a figment of Pajarillos imagination which caused such unfounded unlawful aggression on his part.

Petitioners argue that Evangeline was guilty of contributory negligence. Although she was a licensed firearm holder, she had no business bringing the gun in such establishment where people would react instinctively upon seeing the gun; that had Evangeline been prudent, she could have warned Pajarillo before drawing the gun and did not conduct herself with suspicion by roaming outside the vicinity of the bank; that she should not have held the gun with the nozzle pointed at Pajarillo who mistook the act as hold up or robbery.

We are not persuaded.

As we have earlier held, Pajarillo failed to substantiate his claim that Evangeline was seen roaming outside the vicinity of the bank and acting suspiciously prior to the shooting incident. Evangelines death was merely due to Pajarillos negligence in shooting her on his imagined threat that Evangeline will rob the bank.

Safeguard contends that it cannot be jointly held liable since it had adequately shown that it had exercised the diligence required in the selection and supervision of its employees. It claims that it had required the guards to undergo the necessary training and to submit the requisite qualifications and credentials which even the RTC found to have been complied with; that the RTC erroneously found that it did not exercise the diligence required in the supervision of its employee. Safeguard further claims that it conducts monitoring of the activities of its personnel, wherein supervisors are assigned to routinely check the activities of the security guards which include among others, whether or not they are in their proper post and with proper equipment, as well as regular evaluations of the employees performances; that the fact that Pajarillo loaded his firearm contrary to Safeguards operating procedure is not sufficient basis to say that Safeguard had failed its duty of proper supervision; that it was likewise error to say that Safeguard was negligent in seeing to it that the procedures and policies were not properly implemented by reason of one unfortunate event.

We are not convinced.

Article 2180 of the Civil Code provides:

Art. 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions, but also for those of persons for whom one is responsible.

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Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.

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The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.

As the employer of Pajarillo, Safeguard is primarily and solidarily liable for the quasi-delict committed by the former. Safeguard is presumed to be negligent in the selection and

supervision of his employee by operation of law. This presumption may be overcome only by satisfactorily showing that the employer exercised the care and the diligence of a good father of a family in the selection and the supervision of its employee.

In the selection of prospective employees, employers are required to examine them as to their qualifications, experience, and service records.[35] On the other hand, due diligence in the supervision of employees includes the formulation of suitable rules and regulations for the guidance of employees and the issuance of proper instructions intended for the protection of the public and persons with whom the employer has relations through his or its employees and the imposition of necessary disciplinary measures upon employees in case of breach or as may be warranted to ensure the performance of acts indispensable to the business of and beneficial to their employer. To this, we add that actual implementation and monitoring of consistent compliance with said rules should be the constant concern of the employer, acting through dependable supervisors who should regularly report on their supervisory functions.[36] To establish these factors in a trial involving the issue of vicarious liability, employers must submit concrete proof, including documentary evidence.

We agree with the RTCs finding that Safeguard had exercised the diligence in the selection of Pajarillo since the record shows that Pajarillo underwent a psychological and neuropsychiatric evaluation conducted by the St. Martin de Porres Center where no psychoses ideations were noted, submitted a certification on the Pre-licensing training course for security guards, as well as police and NBI clearances.

The RTC did not err in ruling that Safeguard fell short of the diligence required in the supervision of its employee, particularlyPajarillo. In this case, while Safeguard presented Capt. James Camero, its Director for Operations, who testified on the issuance of company rules and regulations, such as the Guidelines of Guards Who Will Be Assigned To Banks,[37] Weapons Training,[38]Safeguard Training Center Marksmanship Training Lesson Plan,[39] Disciplinary/Corrective Sanctions,[40] it had also been established during Cameros crossexamination that Pajarillo was not aware of such rules and regulations.[41] NotwithstandingCameros clarification on his re-direct examination that these company rules and regulations are lesson plans as a basis of guidelines of the instructors during classroom instructions and not necessary to give students copy of the same,[42] the records do not show that Pajarillo had attended such classroom instructions.

The records also failed to show that there was adequate training and continuous evaluation of the security guards performance. Pajarillo had only attended an in-service training on March 1, 1997 conducted by Toyota Sta. Rosa, his first assignment as security guard of Safeguard, which was in collaboration with Safeguard. It was established that the concept

of such training was purely on security of equipments to be guarded and protection of the life of the employees.[43]

It had not been established that after Pajarillos training in Toyota, Safeguard had ever conducted further training of Pajarillowhen he was later assigned to guard a bank which has a different nature of business with that of Toyota. In fact, Pajarillo testified that being on duty in a bank is different from being on duty in a factory since a bank is a very sensitive area.[44]

Moreover, considering his reactions to Evangelines act of just depositing her firearm for safekeeping, i.e., of immediately shooting her, confirms that there was no training or seminar given on how to handle bank clients and on human psychology.

Furthermore, while Safeguard would like to show that there were inspectors who go around the bank two times a day to see the daily performance of the security guards assigned therein, there was no record ever presented of such daily inspections. In fact, if there was really such inspection made, the alleged suspicious act of Evangeline could have been taken noticed and reported.

Turning now to the award of damages, we find that the award of actual damages in the amount P157,430.00 which were the expenses incurred by respondents in connection with the burial of Evangeline were supported by receipts. The award of P50,000.00as civil indemnity for the death of Evangeline is likewise in order.

As to the award of moral damages, Article 2206 of the Civil Code provides that the spouse, legitimate children and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. Moral damages are awarded to enable the injured party to obtain means, diversions or amusements that will serve to alleviate the moral suffering he/she has undergone, by reason of the defendants culpable action. Its award is aimed at restoration, as much as possible, of the spiritual status quo ante; thus it must be proportionate to the suffering inflicted.[45] The intensity of the pain experienced by the relatives of the victim is proportionate to the intensity of affection for him and bears no relation whatsoever with the wealth or means of the offender.[46]

In this case, respondents testified as to their moral suffering caused by Evangelines death was so sudden causing respondentLauro to lose a wife and a mother to six children who were all minors at the time of her death. In People v. Teehankee, Jr.,[47] we awarded one

million pesos as moral damages to the heirs of a seventeen-year-old girl who was murdered. In Metro Manila Transit Corporation v. Court of Appeals,[48] we likewise awarded the amount of one million pesos as moral damages to the parents of a third year high school student and who was also their youngest child who died in a vehicular accident since the girls death left a void in their lives. Hence, we hold that the respondents are also entitled to the amount of one million pesos as Evangelines death left a void in the lives of her husband and minor children as they were deprived of her love and care by her untimely demise.

We likewise uphold the award of exemplary damages in the amount of P300,000.00. Under Article 2229 of the Civil Code, exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages.[49] It is awarded as a deterrent to socially deleterious actions. In quasi-delict, exemplary damages may be granted if the defendant acted with gross negligence.[50]

Pursuant to Article 2208 of the Civil Code, attorney's fees may be recovered when, as in the instant case, exemplary damages are awarded. Hence, we affirm the award of attorney's fees in the amount of P30,000.00. WHEREFORE, the petition for review is DENIED. The Decision dated July 16, 2004 of the Court of Appeals isAFFIRMED with MODIFICATION that the civil liability of petitioner Safeguard Security Agency, Inc. is SOLIDARY andPRIMARY under Article 2180 of the Civil Code.

SO ORDERED.

vi vii viii ix x xi xii xiii xiv