1

[G.R. No. 122191. October 8, 1998.]

SAUDI ARABIAN AIRLINES, petitioner, vs. COURT OF APPEALS, MILAGROS P. MORADA and
HON. RODOLFO A. ORTIZ, in his capacity as Presiding Judge of Branch 89, Regional Trial Court
of Quezon City, respondents.
SYLLABUS
1.REMEDIAL LAW; CIVIL PROCEDURE; VENUE; CONVENIENCE OF THE LITIGANTS IS OF PRAGMATIC
CONSIDERATIONS. Pragmatic considerations, including the convenience of the parties, also weigh
heavily in favor of the RTC Quezon City assuming jurisdiction. Paramount is the private interest of the
litigant. Enforceability of a judgment if one is obtained is quite obvious. Relative advantages and obstacles
to a fair trial are equally important. Plaintiff may not, by choice of an inconvenient forum, 'vex', 'harass', or
'oppress' the defendant, e.g., by inflicting upon him needless expense of disturbance. But unless the
balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.
Weighing the relative claims of the parties, the court a quo found it best to hear the case in the Philippines.
Had it refused to take cognizance of the case, it would be forcing plaintiff to seek remedial action
elsewhere, i.e., in the Kingdom of Saudi Arabia where she no longer maintains substantial connections.
That would have caused a fundamental unfairness to her. Moreover, by hearing the case in the Philippines
no unnecessary difficulties and inconvenience have been shown by either of the parties. The choice of
forum of the plaintiff should be upheld. cdasia
2.ID.; ID.; JURISDICTION; OVER THE PERSONS OF THE LITIGANTS IS OBTAINED IN THE CASE AT BAR.
Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By filing her
Complaint and Amended Complaint with the trial court, private respondent has voluntarily submitted herself
to the jurisdiction of the court. The records show that petitioner SAUDIA has filed several motions praying
for the dismissal of Morada's Amended Complaint. SAUDIA also filed an Answer In Ex Abundante
Cautelam dated February 20, 1995. What is very patent and explicit from the motions filed, is that SAUDIA
prayed for other reliefs under the premises. Undeniably, petitioner SAUDIA has effectively submitted to the
trial court's jurisdiction by praying for the dismissal of the Amended Complaint on grounds other than lack
of jurisdiction.
3.CONFLICT OF LAWS; CHOICE OF LAW; CHARACTERIZATION (DOCTRINE OF QUALIFICATION) DEFINED.
As to the choice of applicable law, we note that choice-of-law problems seek to answer two important
questions: (1) What legal system should control a given situation where some of the significant facts
occurred in two or more states; and (2) to what extent should the chosen legal system regulate the
situation. Before a choice can be made, it is necessary for us to determine under what category a certain
set of facts or rules fall. This process is known as "characterization", or the "doctrine of qualification." It is
the "process of deciding whether or not the facts relate to the kind of question specified in a conflicts rule."
The purpose of "characterization" is to enable the forum to select the proper law.
4.ID.; ID.; ID.; PHILIPPINES IS THE SITUS OF THE TORT. Considering that the complaint in the court a
quo is one involving torts, the "connecting factor" or "point of contract" could be the place or places where
the tortious conduct or lex loci actus occurred. And applying the torts principle in a conflicts case, we find
that the Philippines could be said as a situs of the tort (the places where the alleged tortious conduct took
place). This is because it is in the Philippines where petitioner allegedly deceived private respondent, a
Filipina residing and working here. According to her, she had honestly believed that petitioner would, in the
exercise of its rights and in the performance of its duties, "act with justice, give her due and observe
honesty and good faith." Instead, petitioner failed to protect her, she claimed. That certain acts or parts of
the injury allegedly occurred in another country is of no moment. For in our view what is important here is
the place where the over-all harm or the totality of the alleged injury to the person, reputation, social
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standing and human rights of complainant, had lodged, according to the plaintiff below (herein private
respondent). All told, it is not without basis to identify the Philippines as the situs of the alleged
tort. IcaHTA
5.ID.; ID.; STATE OF THE MOST SIGNIFICANT RELATIONSHIP RULE APPLIES IN THE CASE AT BAR.
Moreover, with the widespread criticism of the traditional rule of lex loci delicti commissi, modern theories
and rules on tort liability have been advanced to offer fresh judicial approaches to arrive at just results. In
keeping abreast with the modern theories on tort liability, we find here an occasion to apply the "State of
the most significant relationship" rule, which in our view should be appropriate to apply now, given the
factual context of this case. In applying said principle to determine the State which has the most significant
relationship, the following contacts are to be taken into account and evaluated according to their relative
importance with respect to the particular issue: (a) the place where the injury occurred; (b) the place
where the conduct causing the injury occurred; (c) the domicile, residence, nationality place of
incorporation and place of business of the parties, and (d) the place where the relationship, if any, between
the parties is centered. As already discussed, there is basis for the claim that over-all injury occurred and
lodged in the Philippines. There is likewise no question that private respondent is a resident Filipina
national, working with petitioner, a resident foreign corporation engaged here in the business of
international air carriage. Thus, the "relationship" between the parties was centered here, although it
should be stressed that this suit is not based on mere labor law violations. From the records, the claim that
the Philippines has the most significant contact with the matter in this dispute, raised by private respondent
as plaintiff below against defendant (herein petitioner), in our view, has been properly established.
Prescinding from this premise that the Philippines is the situs of the tort complained of and the place
"having the most interest in the problem." HCaDIS
D E C I S I O N
QUISUMBING, J p:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside the
Resolution 1 dated September 27, 1995 and the Decision 2 dated April 10, 1996 of the Court of
Appeals 3 in CA-G.R. SP No. 36533, 4 and the Orders 5 dated August 29, 1994 6 and February 2,
1995 7 that were issued by the trial court in Civil Case No. Q-93-18394. 8
The pertinent antecedent facts which gave rise to the instant petition, as stated in the questioned
Decision 9 , are as follows: dctai
"On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for its airlines based in
Jeddah, Saudi Arabia. . . .
On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a disco dance with fellow crew
members Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi nationals. Because it was almost morning
when they returned to their hotels, they agreed to have breakfast together at the room of Thamer. When
they were in te (sic) room, Allah left on some pretext. Shortly after he did, Thamer attempted to rape
plaintiff. Fortunately, a roomboy and several security personnel heard her cries for help and rescued her.
Later, the Indonesian police came and arrested Thamer and Allah Al-Gazzawi, the latter as an accomplice.
When plaintiff returned to Jeddah a few days later, several SAUDIA officials interrogated her about the
Jakarta incident. They then requested her to go back to Jakarta to help arrange the release of Thamer and
Allah. In Jakarta, SAUDIA Legal Officer Sirah Akkad and base manager Baharini negotiated with the police
for the immediate release of the detained crew members but did not succeed because plaintiff refused to
cooperate. She was afraid that she might be tricked into something she did not want because of her
inability to understand the local dialect. She also declined to sign a blank paper and a document written in
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the local dialect. Eventually, SAUDIA allowed plaintiff to return to Jeddah but barred her from the Jakarta
flights. LLphil
Plaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesian authorities
agreed to deport Thamer and Allah after two weeks of detention. Eventually, they were again put in service
by defendant SAUDI (sic). In September 1990, defendant SAUDIA transferred plaintiff to Manila.
On January 14, 1992, just when plaintiff thought that the Jakarta incident was already behind her, her
superiors requested her to see Mr. Ali Miniewy, Chief Legal Officer of SAUDIA, in Jeddah, Saudi Arabia.
When she saw him, he brought her to the police station where the police took her passport and questioned
her about the Jakarta incident. Miniewy simply stood by as the police put pressure on her to make a
statement dropping the case against Thamer and Allah. Not until she agreed to do so did the police return
her passport and allowed her to catch the afternoon flight out of Jeddah.
One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few minutes before the departure
of her flight to Manila, plaintiff was not allowed to board the plane and instead ordered to take a later flight
to Jeddah to see Mr. Miniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid of the
SAUDIA office brought her to a Saudi court where she was asked to sign a document written in Arabic.
They told her that this was necessary to close the case against Thamer and Allah. As it turned out, plaintiff
signed a notice to her to appear before the court on June 27, 1993. Plaintiff then returned to Manila. Cdpr

Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and see Miniewy
on June 27, 1993 for further investigation. Plaintiff did so after receiving assurance from SAUDIA's Manila
manager, Aslam Saleemi, that the investigation was routinary and that it posed no danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27, 1993. Nothing
happened then but on June 28, 1993, a Saudi judge interrogated plaintiff through an interpreter about the
Jakarta incident. After one hour of interrogation, they let her go. At the airport, however, just as her plane
was about to take off, a SAUDIA officer told her that the airline had forbidden her to take flight. At the
Inflight Service Office where she was told to go, the secretary of Mr. Yahya Saddick took away her passport
and told her to remain in Jeddah, at the crew quarters, until further orders. LLpr
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court where the judge, to her
astonishment and shock, rendered a decision, translated to her in English, sentencing her to five months
imprisonment and to 286 lashes. Only then did she realize that the Saudi court had tried her, together with
Thamer and Allah, for what happened in Jakarta. The court found plaintiff guilty of (1) adultery; (2) going
to a disco, dancing and listening to the music in violation of Islamic laws; and (3) socializing with the male
crew, in contravention of Islamic tradition." 10
Facing conviction, private respondent sought the help of her employer, petitioner SAUDIA. Unfortunately,
she was denied any assistance. She then asked the Philippine Embassy in Jeddah to help her while her case
is on appeal. Meanwhile, to pay for her upkeep, she worked on the domestic flight of SAUDIA, while
Thamer and Allah continued to serve in the international flights. 11
Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her and allowed
her to leave Saudi Arabia. Shortly before her return to Manila, 12 she was terminated from the service by
SAUDIA, without her being informed of the cause. LLpr
On November 23, 1993, Morada filed a Complaint 13 for damages against SAUDIA, and Khaled Al-Balawi
("Al-Balawi"), its country manager.
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On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss 14 which raised the following grounds,
to wit: (1) that the Complaint states no cause of action against Saudia; (2) that defendant Al-Balawi is not
a real party in interest; (3) that the claim or demand set forth in the Complaint has been waived,
abandoned or otherwise extinguished; and (4) that the trial court has no jurisdiction to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss) 15 . Saudia filed a
reply 16 thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint 17 wherein Al-Balawi was dropped as party
defendant. On August 11, 1994, Saudia filed its Manifestation and Motion to Dismiss Amended
Complaint 18 .
The trial court issued an Order 19 dated August 29, 1994 denying the Motion to Dismiss Amended
Complaint filed by Saudia.
From the Order of respondent Judge 20 denying the Motion to Dismiss, SAUDIA filed on September 20,
1994, its Motion for Reconsideration 21 of the Order dated August 29, 1994. It alleged that the trial court
has no jurisdiction to hear and try the case on the basis of Article 21 of the Civil Code, since the proper law
applicable is the law of the Kingdom of Saudi Arabia. On October 14, 1994, Morada filed her
Opposition 22 (To Defendant's Motion for Reconsideration). cdrep
In the Reply 23 filed with the trial court on October 24, 1994, SAUDIA alleged that since its Motion for
Reconsideration raised lack of jurisdiction as its cause of action, the Omnibus Motion Rule does not apply,
even if that ground is raised for the first time on appeal. Additionally, SAUDIA alleged that the Philippines
does not have any substantial interest in the prosecution of the instant case, and hence, without jurisdiction
to adjudicate the same.
Respondent Judge subsequently issued another Order 24 dated February 2, 1995, denying SAUDIA's
Motion for Reconsideration. The pertinent portion of the assailed Order reads as follows:
"Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines filed, thru counsel, on
September 20, 1994, and the Opposition thereto of the plaintiff filed, thru counsel, on October 14, 1994, as
well as the Reply therewith of defendant Saudi Arabian Airlines filed, thru counsel, on October 24, 1994,
considering that a perusal of the plaintiff's Amended Complaint, which is one for the recovery of actual,
moral and exemplary damages plus attorney's fees, upon the basis of the applicable Philippine law, Article
21 of the New Civil Code of the Philippines, is, clearly, within the jurisdiction of this Court as regards the
subject matter, and there being nothing new of substance which might cause the reversal or modification
of the order sought to be reconsidered, the motion for reconsideration of the defendant, is DENIED. prLL
SO ORDERED." 25
Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and Prohibition with Prayer for
Issuance of Writ of Preliminary Injunction and/or Temporary Restraining Order 26 with the Court of
Appeals.
Respondent Court of Appeals promulgated a Resolution with Temporary Restraining Order 27 dated
February 23, 1995, prohibiting the respondent Judge from further conducting any proceeding, unless
otherwise directed, in the interim.
In another Resolution 28 promulgated on September 27, 1995, now assailed, the appellate court denied
SAUDIA's Petition for the Issuance of a Writ of Preliminary Injunction dated February 18, 1995, to wit:
"The Petition for the Issuance of a Writ of Preliminary Injunction is hereby DENIED, after considering the
Answer, with Prayer to Deny Writ of Preliminary Injunction (Rollo, p. 135) the Reply and Rejoinder, it
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appearing that herein petitioner is not clearly entitled thereto (Unciano Paramedical College, et. Al., v. Court
of Appeals, et.Al., 100335, April 7, 1993, Second Division). cdphil
SO ORDERED."
On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition 29 for Review with Prayer
for Temporary Restraining Order dated October 13, 1995.
However, during the pendency of the instant Petition, respondent Court of Appeals rendered the
Decision 30 dated April 10, 1996, now also assailed. It ruled that the Philippines is an appropriate forum
considering that the Amended Complaint's basis for recovery of damages is Article 21 of the Civil Code, and
thus, clearly within the jurisdiction of respondent Court. It further held that certiorari is not the proper
remedy in a denial of a Motion to Dismiss, inasmuch as the petitioner should have proceeded to trial, and in
case of an adverse ruling, find recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for Temporary Restraining
Order 31 dated April 30, 1996, given due course by this Court. After both parties submitted their
Memoranda, 32 the instant case is now deemed submitted for decision. LLjur
Petitioner SAUDIA raised the following issues:
"I
The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394 based on Article 21 of the New
Civil Code since the proper law applicable is the law of the Kingdom of Saudi Arabia inasmuch as this case
involves what is known in private international law as a 'conflicts problem'. Otherwise, the Republic of the
Philippines will sit in judgment of the acts done by another sovereign state which is abhorred.
II
Leave of court before filing a supplemental pleading is not a jurisdictional requirement. Besides, the matter
as to absence of leave of court is now moot and academic when this Honorable Court required the
respondents to comment on petitioner's April 30, 1996 Supplemental Petition For Review With Prayer For A
Temporary Restraining Order Within Ten (10) Days From Notice Thereof. Further, the Revised Rules of
Court should be construed with liberality pursuant to Section 2, Rule 1 thereof. prcd
III
Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-G.R. SP NO. 36533 entitled 'Saudi
Arabian Airlines v. Hon. Rodolfo A. Ortiz, et al.' and filed its April 30, 1996 Supplemental Petition For Review
With Prayer For A Temporary Restraining Order on May 7, 1996 at 10:29 a.m. or within the 15-day
reglementary period as provided for under Section 1, Rule 45 of the Revised Rules of Court. Therefore, the
decision in CA-G.R. SP No. 36533 has not yet become final and executory and this Honorable Court can
take cognizance of this case." 33
From the foregoing factual and procedural antecedents, the following issues emerge for our resolution:
I.
WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT THE REGIONAL TRIAL COURT OF
QUEZON CITY HAS JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q-93-18394 ENTITLED "MILAGROS
P. MORADA V. SAUDI ARABIAN AIRLINES". cdrep
II.
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WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT IN THIS CASE PHILIPPINE LAW
SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the outset. It maintains
that private respondent's claim for alleged abuse of rights occurred in the Kingdom of Saudi Arabia. It
alleges that the existence of a foreign element qualifies the instant case for the application of the law of the
Kingdom of Saudi Arabia, by virtue of the lex loci delicti commissi rule. 34
On the other hand, private respondent contends that since her Amended Complaint is based on Articles
19 35 and 21 36 of the Civil Code, then the instant case is properly a matter of domestic law. 37

Under the factual antecedents obtaining in this case, there is no dispute that the interplay of events
occurred in two states, the Philippines and Saudi Arabia. prcd
As stated by private respondent in her Amended Complaint 38 dated June 23, 1994:
"2.Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines corporation doing business in the
Philippines. It may be served with summons and other court processes at Travel Wide Associated Sales
(Phils.), Inc., 3rd Floor, Cougar Building, 114 Valero St., Salcedo Village, Makati, Metro Manila.
xxx xxx xxx
6.Plaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesian
authorities agreed to deport Thamer and Allah after two weeks of detention. Eventually, they were again
put in service by defendant SAUDIA. In September 1990, defendant SAUDIA transferred plaintiff to Manila.
7.On January 14, 1992, just when plaintiff thought that the Jakarta incident was already behind her, her
superiors requested her to see MR. Ali Meniewy, Chief Legal Officer of SAUDIA. in Jeddah, Saudi Arabia.
When she saw him, he brought her to the police station where the police took her passport and questioned
her about the Jakarta incident. Miniewy simply stood by as the police put pressure on her to make a
statement dropping the case against Thamer and Allah. Not until she agreed to do so did the police return
her passport and allowed her to catch the afternoon flight out of Jeddah. Cdpr
8.One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few minutes before the
departure of her flight to Manila, plaintiff was not allowed to board the plane and instead ordered to take a
later flight to Jeddah to see Mr. Meniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid
of the SAUDIA office brought her to a Saudi court where she was asked to sigh a document written in
Arabic. They told her that this was necessary to close the case against Thamer and Allah. As it turned out,
plaintiff signed a notice to her to appear before the court on June 27, 1993. Plaintiff then returned to
Manila.
9.Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and see
Miniewy on June 27, 1993 for further investigation. Plaintiff did so after receiving assurance from SAUDIA's
Manila manager, Aslam Saleemi, that the investigation was routinary and that it posed no danger to
her. Cdpr
10.In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27, 1993. Nothing
happened then but on June 28, 1993, a Saudi judge interrogated plaintiff through an interpreter about the
Jakarta incident. After one hour of interrogation, they let her go. At the airport, however, just as her plane
was about to take off, a SAUDIA officer told her that the airline had forbidden her to take that flight. At the
Inflight Service Office where she was told to go, the secretary of Mr. Yahya Saddick took away her passport
and told her to remain in Jeddah, at the crew quarters, until further orders. prLL
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11.On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court where the judge, to her
astonishment and shock, rendered a decision, translated to her in English, sentencing her to five months
imprisonment and to 286 lashes. Only then did she realize that the Saudi court had tried her, together with
Thamer and Allah, for what happened in Jakarta. The court found plaintiff guilty of (1) adultery; (2) going
to a disco, dancing, and listening to the music in violation of Islamic laws; (3) socializing with the male
crew, in contravention of Islamic tradition.
12.Because SAUDIA refused to lend her a hand in the case, plaintiff sought the help of the Philippine
Embassy in Jeddah. The latter helped her pursue an appeal from the decision of the court. To pay for her
upkeep, she worked on the domestic flights of defendant SAUDIA while, ironically, Thamer and Allah freely
served the international flights." 39
Where the factual antecedents satisfactorily establish the existence of a foreign element, we agree with
petitioner that the problem herein could present a "conflicts" case.
A factual situation that cuts across territorial lines and is affected by the diverse laws of two or more states
is said to contain a "foreign element". The presence of a foreign element is inevitable since social and
economic affairs of individuals and associations are rarely confined to the geographic limits of their birth or
conception. 40
The forms in which this foreign element may appear are many. 41 The foreign element may simply consist
in the fact that one of the parties to a contract is an alien or has a foreign domicile, or that a contract
between nationals of one State involves properties situated in another State. In other cases, the foreign
element may assume a complex form. 42
In the instant case, the foreign element consisted in the fact that private respondent Morada is a resident
Philippine national, and that petitioner SAUDIA is a resident foreign corporation. Also, by virtue of the
employment of Morada with the petitioner Saudia as a flight stewardess, events did transpire during her
many occasions of travel across national borders, particularly from Manila, Philippines to Jeddah, Saudi
Arabia, and vice versa, that caused a "conflicts" situation to arise. llcd
We thus find private respondent's assertion that the case is purely domestic, imprecise. A conflicts problem
presents itself here, and the question of jurisdiction 43 confronts the court a quo.
After a careful study of the private respondent's Amended Complaint, 44 and the Comment thereon, we
note that she aptly predicated her cause of action on Articles 19 and 21 of the New Civil Code.
On one hand, Article 19 of the New Civil Code provides;
"Art. 19.Every person must, in the exercise of his rights and in the performance of his duties, act with
justice give everyone his due and observe honesty and good faith."
On the other hand, Article 21 of the New Civil Code provides:
"Art. 21.Any person who willfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for damages." cdtai
Thus, in Philippine National Bank (PNB) vs. Court of Appeals, 45 this Court held that:
"The aforecited provisions on human relations were intended to expand the concept of torts in this
jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible
for human foresight to specifically provide in the statutes."
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Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions. Thus, we
agree with private respondent's assertion that violations of Articles 19 and 21 are actionable, with judicially
enforceable remedies in the municipal forum.
Based on the allegations 46 in the Amended Complaint, read in the light of the Rules of Court on
jurisdiction 47 we find that the Regional Trial Court (RTC) of Quezon City possesses jurisdiction over the
subject matter of the suit. 48 Its authority to try and hear the case is provided for under Section 1
of Republic Act No. 7691, to wit:
"Section 1.Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of
1980", is hereby amended to read as follows: cda
SEC. 19.Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive jurisdiction:
xxx xxx xxx
(8)In all other cases in which demand, exclusive of interest, damages of whatever kind, attorney's fees,
litigation expenses, and cost or the value of the property in controversy exceeds One hundred thousand
pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the above-
mentioned items exceeds Two hundred Thousand pesos (P200,000.00). (Emphasis ours)
xxx xxx xxx
And following Section 2 (b), Rule 4 of the Revised Rules of Court the venue, Quezon City, is appropriate:
"SEC. 2.Venue in Courts of First Instance. [Now Regional Trial Court]
(a). . .
(b)Personal actions. All other actions may be commenced and tried where the defendant or any of the
defendants resides or may be found, or where the plaintiff or any of the plaintiff resides, at the election of
the plaintiff." llcd
Pragmatic considerations, including the convenience of the parties, also weigh heavily in favor of the RTC
Quezon City assuming jurisdiction. Paramount is the private interest of the litigant. Enforceability of a
judgment if one is obtained is quite obvious. Relative advantages and obstacles to a fair trial are equally
important. Plaintiff may not, by choice of an inconvenient forum, 'vex', 'harass', or 'oppress' the defendant,
e.g. by inflicting upon him needless expense or disturbance. But unless the balance is strongly in favor of
the defendant, the plaintiff's choice of forum should rarely be disturbed. 49
Weighing the relative claims of the parties, the court a quo found it best to hear the case in the Philippines.
Had it refused to take cognizance of the case, it would be forcing plaintiff (private respondent now) to seek
remedial action elsewhere, i.e. in the Kingdom of Saudi Arabia where she no longer maintains substantial
connections. That would have caused a fundamental unfairness to her. Cdpr
Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience have been
shown by either of the parties. The choice of forum of the plaintiff (now private respondent) should be
upheld.
Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By filing her
Complaint and Amended Complaint with the trial court, private respondent has voluntary submitted herself
to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several motions 50 praying for the dismissal of Morada's
Amended Complaint. SAUDIA also filed an Answer In Ex Abundante Cautelam dated February 20, 1995.
9

What is very patent and explicit from the motions filed, is that SAUDIA prayed for other reliefs under the
premises. Undeniably, petitioner SAUDIA has effectively submitted to the trial court's jurisdiction by praying
for the dismissal of the Amended Complaint on grounds other than lack of jurisdiction. LLpr

As held by this Court in Republic vs. Ker and Company, Ltd.: 51
"We observe that the motion to dismiss filed on April 14, 1962, aside from disputing the lower court's
jurisdiction over defendant's person, prayed for dismissal of the complaint on the ground that plaintiff's
cause of action has prescribed. By interposing such second ground in its motion to dismiss, Ker and Co.,
Ltd. availed of an affirmative defense on the basis of which it prayed the court to resolve controversy in its
favor. For the court to validly decide the said plea of defendant Ker & Co., Ltd., it necessarily had to acquire
jurisdiction upon the latter's person, who, being the proponent of the affirmative defense, should be
deemed to have abandoned its special appearance and voluntarily submitted itself to the jurisdiction of the
court."
Similarly, the case of De Midgely vs. Ferandos, held that:
"When the appearance is by motion for the purpose of objecting to the jurisdiction of the court over the
person, it must be for the sole and separate purpose of objecting to the jurisdiction of the court. If his
motion is for any other purpose than to object to the jurisdiction of the court over his person, he thereby
submits himself to the jurisdiction of the court. A special appearance by motion made for the purpose of
objecting to the jurisdiction of the court over the person will be held to be a general appearance, if the
party in said motion should, for example, ask for a dismissal of the action upon the further ground that the
court had no jurisdiction over the subject matter." 52
Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of Quezon City. Thus, we
find that the trial court has jurisdiction over the case and that its exercise thereof, justified. LibLex
As to the choice of applicable law, we note that choice-of-law problems seek to answer two important
questions: (1) What legal system should control a given situation where some of the significant facts
occurred in two or more states; and (2) to what extent should the chosen legal system regulate the
situation. 53
Several theories have been propounded in order to identify the legal system that should ultimately control.
Although ideally, all choice-of-law theories should intrinsically advance both notions of justice and
predictability, they do not always do so. The forum is then faced with the problem of deciding which of
these two important values should be stressed. 54
Before a choice can be made, it is necessary for us to determine under what category a certain set of facts
or rules fall. This process is known as "characterization", or the "doctrine of qualification". It is the "process
of deciding whether or not the facts relate to the kind of question specified in a conflicts rule." 55 The
purpose of "characterization" is to enable the forum to select the proper law. 56
Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative
fact. 57 An essential element of conflict rules is the indication of a "test" or "connecting factor" or "point of
contact". Choice-of-law rules invariably consist of a factual relationship (such as property right, contract
claim) and a connecting factor or point of contact, such as the situs of the res, the place of celebration, the
place of performance, or the place of wrongdoing. 58
10

Note that one or more circumstances may be present to serve as the possible test for the determination of
the applicable law. 59 These "test factors" or "points of contact" or "connecting factors" could be any of
the following:
"(1)The nationality of a person, his domicile, his residence, his place of sojourn, or his origin;
(2)the seat of a legal or juridical person, such as a corporation;
(3)the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In particular, the lex
situs is decisive when real rights are involved; prcd
(4)the place where an act has been done, the locus actus, such as the place where a contract has been
made, a marriage celebrated, a will signed or a tort committed. The lex loci actus is particularly important
in contracts and torts:
(5)the place where an act is intended to come into effect, e.g., the place of performance of contractual
duties, or the place where a power of attorney is to be exercised;
(6)the intention of the contracting parties as to the law that should govern their agreement, the lex loci
intentionis;
(7)the place where judicial or administrative proceedings are instituted or done. The lex fori the law of
the forum is particularly important because, as we have seen earlier, matters of 'procedure' not going to
the substance of the claim involved are governed by it; and because the lex fori applies whenever the
content of the otherwise applicable foreign law is excluded from application in a given case for the reason
that it falls under one of the exceptions to the applications of foreign law, and cdll
(8)the flag of a ship, which in many cases is decisive of practically all legal relationships of the ship and of
its master or owner as such. It also covers contractual relationships particularly contracts of
affreightment." 60 (Emphasis ours.)
After a careful study of the pleadings on record, including allegations in the Amended Complaint deemed
admitted for purposes of the motion to dismiss, we are convinced that there is reasonable basis for private
respondent's assertion that although she was already working in Manila, petitioner brought her to Jeddah
on the pretense that she would merely testify in an investigation of the charges she made against the two
SAUDIA crew members for the attack on her person while they were in Jakarta. As it turned out, she was
the one made to face trial for very serious charges, including adultery and violation of Islamic laws and
tradition. cdtai
There is likewise logical basis on record for the claim that the "handing over" or "turning over" of the
person of private respondent to Jeddah officials, petitioner may have acted beyond its duties as employer.
Petitioner's purported act contributed to and amplified or even proximately caused additional humiliation,
misery and suffering of private respondent. Petitioner thereby allegedly facilitated the arrest, detention and
prosecution of private respondent under the guise of petitioner's authority as employer, taking advantage
of the trust, confidence and faith she reposed upon it. As purportedly found by the Prince of Makkah, the
alleged conviction and imprisonment of private respondent was wrongful. But these capped the injury or
harm allegedly inflicted upon her person and reputation, for which petitioner could be liable as claimed, to
provide compensation or redress for the wrongs done, once duly proven.
Considering that the complaint in the court a quo is one involving torts, the "connecting factor" or "point of
contact" could be the place or places where the tortious conduct orlex loci actus occurred. And applying the
torts principle in a conflicts case, we find that the Philippines could be said as a situs of the tort (the place
where the alleged tortious conduct took place). This is because it is in the Philippines where petitioner
11

allegedly deceived private respondent, a Filipina residing and working here. According to her, she had
honestly believed that petitioner would, in the exercise of its rights and in the performance of its duties,
"act with justice, give her her due and observe honesty and good faith." Instead, petitioner failed to protect
her, she claimed. That certain acts or parts of the injury allegedly occurred in another country is of no
moment. For in our view what is important here is the place where the over-all harm or the totality of the
alleged injury to the person, reputation, social standing and human rights of complainant, had lodged,
according to the plaintiff below (herein private respondent). All told, it is not without basis to identify the
Philippines as the situs of the alleged tort. LibLex
Moreover, with the widespread criticism of the traditional rule of lex loci delicti commisi, modem theories
and rules on tort liability 61 have been advanced to offer fresh judicial approaches to arrive at just results.
In keeping abreast with the modern theories on tort liability, we find here an occasion to apply the "State of
the most significant relationship" rule, which in our view should be appropriate to apply now, given the
factual context of this case.
In applying said principle to determine the State which has the most significant relationship, the following
contacts are to be taken into account and evaluated according to their relative importance with respect to
the particular issue: (a) the place where the injury occurred; (b) the place where the conduct causing the
injury occurred; (c) the domicile, residence, nationality, place of incorporation and place of business of the
parties, and (d) the place where the relationship, if any, between the parties is centered. 62
As already discussed, there is basis for the claim that over-all injury occurred and lodged in the Philippines.
There is likewise no question that private respondent is a resident Filipina national, working with petitioner,
a resident foreign corporation engaged here in the business of international air carriage. Thus, the
"relationship" between the parties was centered here, although it should be stressed that this suit is not
based on mere labor law violations. From the record, the claim that the Philippines has the most significant
contact with the matter in this dispute, 63 raised by private respondent as plaintiff below against defendant
(herein petitioner), in our view, has been properly established. cdll
Prescinding from this premise that the Philippines is the situs of the tort complained of and the place
"having the most interest in the problem", we find, by way of recapitulation, that the Philippine law on tort
liability should have paramount application to and control in the resolution of the legal issues arising out of
this case. Further, we hold that the respondent Regional Trial Court has jurisdiction over the parties and the
subject matter of the complaint; the appropriate venue is in Quezon City, which could properly apply
Philippine law. Moreover, we find untenable petitioner's insistence that "[s]ince private respondent
instituted this suit, she has the burden of pleading and proving the applicable Saudi law on the
matter." 64 As aptly said by private respondent, she has "no obligation to plead and prove the law of the
Kingdom of Saudi Arabia since her cause of action is based on Articles 19 and 21" of the Civil Code of the
Philippines. In her Amended Complaint and subsequent pleadings, she never alleged that Saudi Law should
govern this case. 65 And as correctly held by the respondent appellate court, "considering that it was the
petitioner who was invoking the applicability of the law of Saudi Arabia, then the burden was on it
[petitioner] to plead and to establish what the law of Saudi Arabia is". 66

Lastly, no error could be imputed to the respondent appellate court in upholding the trial court's denial of
defendant's (herein petitioner's) motion to dismiss the case; Not only was jurisdiction in order and venue
properly laid, but appeal after trial was obviously available, and expeditious trial itself indicated by the
nature of the case at hand. Indubitably, the Philippines is the state intimately concerned with the ultimate
outcome of the case below, not just for the benefit of all the litigants, but also for the vindication of the
country's system of law and justice in a transnational setting. With these guidelines in mind, the trial court
12

must proceed to try and adjudge the case in the light of relevant Philippine law, with due consideration of
the foreign element or elements involved. Nothing said herein, of course, should be construed as
prejudging the results of the case in any manner whatsoever. cdphil
WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No. Q-93-18394 entitled
"Milagros P. Morada vs. Saudi Arabia Airlines" is hereby REMANDED to Regional Trial Court of Quezon City,
Branch 89 for further proceedings.
SO ORDERED.

[G.R. No. 81262. August 25, 1989.]
GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, petitioners, vs. THE
HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS,respondents.
Atencia & Arias Law Offices for petitioners.
Romulo C. Felizmena for private respondent.
SYLLABUS
1.CIVIL LAW; HUMAN RELATIONS; PRINCIPLE OF ABUSE OF RIGHTS; STANDARDS. Article 19 of the
Civil Code known to contain what is commonly referred to as the principle of abuse of rights, sets certain
standards which must be observed not only in the exercise of one's rights but also in the performance of
one's duties. These standards are the following: to act with justice; to give everyone his due; and to
observe honesty and good faith.
2.ID.; ID.; ID.; REMEDY AVAILABLE. In determining whether or not the principle of abuse of rights may
be invoked, there is no rigid test which can be applied. While the Court has not hesitated to apply Article 19
whether the legal and factual circumstances called for its application the question of whether or not the
principle of abuse of rights has been violated resulting in damages under Article 20 or Article 21 or other
applicable provision of law, depends on the circumstances of each case.
3.LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT; RIGHT OF EMPLOYER TO DISMISS AN
EMPLOYEE SHOULD NOT BE CONFUSED WITH THE MANNER IN WHICH THE RIGHT IS EXERCISED. The
right of the employer to dismiss an employee should not be confused with the manner in which the right is
exercised and the effects flowing therefrom. If the dismissal is done abusively, then the employer is liable
for damages to the employee.
4.REMEDIAL LAW; CRIMINAL PROSECUTION; RIGHT TO FILE CRIMINAL CASES; CAN NOT BE EXERCISED
MALICIOUSLY AND IN BAD FAITH. While sound principles of justice and public policy dictate that
persons shall have free resort to the courts for redress of wrongs and vindication of their rights, the right to
institute criminal prosecutions can not be exercised maliciously and in bad faith.
5.ID.; ID.; ID.; SHOULD NOT BE USED AS A WEAPON TO FORCE A DEBTOR TO PAY HIS OBLIGATION.
The right to file criminal complaints should not be used as a weapon to force an alleged debtor to pay an
indebtedness. To do so would be a clear perversion of the function of the criminal processes and of the
courts of justice.
6.CIVIL LAW; DAMAGES; MALICIOUS PROSECUTION; PROOF NECESSARY. To constitute malicious
prosecution, there must be proof that the prosecution was prompted by a design to vex and humiliate a
person and that it was initiated deliberately by the defendant knowing that the charges were false and
groundless.
13

7.ID.; ID.; ID.; MERE FILING OF A SUIT, NOT CONSTITUTE THEREOF. The filing of a suit, by itself, does
not render a person liable for malicious prosecution.
8.ID.; ID.; ID.; MERE DISMISSAL BY THE FISCAL OF THE COMPLAINT NOT A GROUND FOR THE AWARD.
The mere dismissal by the fiscal of the criminal complaint is not a ground for an award of damages for
malicious prosecution if there is no competent evidence to show that the complainant had acted in bad
faith.
9.ID.; ID.; PRINCIPLE OF DANNUM ABSQUE INJURIA. According to the principle of damnum absque
injuria, damage or loss which does not constitute a violation of a legal right or amount to a legal wrong is
not actionable.
10.ID.; ID.; MORAL DAMAGES; RECOVERABLE IN CASES MENTIONED IN ARTICLE 21 OF THE CIVIL CODE.
[P]er express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in the
cases mentioned in Article 21 of said Code.
11.ID.; ID.; EXEMPLARY DAMAGES; IF GROSS NEGLIGENCE WARRANTS THE AWARD THEREOF WITH
MORE REASON WHEN THE ACT IS DELIBERATE, MALICIOUS AND IN BAD FAITH. That if gross
negligence warrants the award of exemplary damages, with more reason is its imposition justified when the
act performed is deliberate, malicious and tainted with bad faith.
D E C I S I O N
CORTES, J p:
Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and Radio
Corporation (GLOBE MACKAY) in a dual capacity as a purchasing agent and administrative assistant to the
engineering operations manager. In 1972, GLOBE MACKAY discovered fictitious purchases and other
fraudulent transactions for which it lost several thousands of pesos. .
According to private respondent it was he who actually discovered the anomalies and reported them on
November 10, 1972 to his immediate superior Eduardo T. Ferraren and to petitioner Herbert C. Hendry who
was then the Executive Vice-President and General Manager of GLOBE MACKAY.
On November 11, 1972, one day after private respondent Tobias made the report, petitioner Hendry
confronted him by stating that he was the number one suspect, and ordered him to take a one week forced
leave, not to communicate with the office, to leave his table drawers open, and to leave the office keys.
On November 20, 1972, when private respondent Tobias returned to work after the forced leave, petitioner
Hendry went up to him and called him a "crook" and a "swindler." Tobias was then ordered to take a lie
detector test. He was also instructed to submit specimen of his handwriting, signature, and initials for
examination by the police investigators to determine his complicity in the anomalies.
On December 6, 1972, the Manila police investigators submitted a laboratory crime report (Exh. "A")
clearing private respondent of participation in the anomalies.
Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G. Fernandez,
who on December 10, 1972, submitted a report (Exh. "2") finding Tobias guilty. This report however
expressly stated that further investigation was still to be conducted.
Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending Tobias from
work preparatory to the filing of criminal charges against him.
On December 19, 1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document Examiner, after
investigating other documents pertaining to the alleged anomalous transactions, submitted a second
14

laboratory crime report (Exh. "B") reiterating his previous finding that the handwritings, signatures, and
initials appealing in the checks and other documents involved in the fraudulent transactions were not those
of Tobias. The lie detector tests conducted on Tobias also yielded negative results.
Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact that the report
of the private investigator, was, by its own terms, not yet complete, petitioners filed with the City Fiscal of
Manila a complaint for estafa through falsification of commercial documents, later amended to just estafa.
Subsequently, five other criminal complaints were filed against Tobias, four of which were for estafa
through falsification of commercial document while the fifth was for violation of Article 290 of the Revised
Penal Code (Discovering Secrets Through Seizure of Correspondence). Two of these complaints were refiled
with the Judge Advocate General's Office, which however, remanded them to the fiscal's office. All of the
six criminal complaints were dismissed by the fiscal. Petitioners appealed four of the fiscal's resolutions
dismissing the criminal complaints with the Secretary of Justice, who, however, affirmed their dismissal.
In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners that his
employment has been terminated effective December 13, 1972. Whereupon, Tobias filed a complaint for
illegal dismissal. The labor arbiter dismissed the complaint. On appeal, the National Labor Relations
Commission (NLRC) reversed the labor arbiter's decision. However, the Secretary of Labor, acting on
petitioners' appeal from the NLRC ruling, reinstated the labor arbiter's decision. Tobias appealed the
Secretary of Labor's order with the Office of the President. During the pendency of the appeal with said
office, petitioners and private respondent Tobias entered into a compromise agreement regarding the
latter's complaint for illegal dismissal.
Unemployed, Tobias sought employment with the Republic Telephone Company (RETELCO). However,
petitioner Hendry, without being asked by RETELCO, wrote a letter to the latter stating that Tobias was
dismissed by GLOBE MACKAY due to dishonesty.
Private respondent Tobias filed a civil case for damages anchored on alleged unlawful, malicious,
oppressive, and abusive acts of petitioners. Petitioner Hendry, claiming illness, did not testify during the
hearings. The Regional Trial Court (RTC) of Manila, Branch IX, through Judge Manuel T. Reyes rendered
judgment in favor of private respondent by ordering petitioners to pay him eighty thousand pesos
(P80,000.00) as actual damages, two hundred thousand pesos (P200,000.00) as moral damages, twenty
thousand pesos (P20,000.00) as exemplary damages, thirty thousand pesos (P30,000.00) as attorney's
fees, and costs. Petitioners appealed the RTC decision to the Court of Appeals. On the other hand, Tobias
appealed as to the amount of damages. However, the Court of Appeals, in a decision dated August 31,
1987,
**
affirmed the RTC decision in toto. Petitioners' motion for reconsideration having been denied, the
instant petition for review on certiorari was filed.
The main issue in this case is whether or not petitioners are liable for damages to private
respondent. LibLex
Petitioners contend that they could not be made liable for damages in the lawful exercise of their right to
dismiss private respondent.
On the other hand, private respondent contends that because of petitioners' abusive manner in dismissing
him as well as for the inhuman treatment he got from them, the petitioners must indemnify him for the
damage that he had suffered.
One of the more notable innovations of the New Civil Code is the codification of "some basic principles that
are to be observed for the rightful relationship between human beings and for the stability of the social
order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p.
39]. The framers of the Code, seeking to remedy the defect of the old Code which merely stated the effects
15

of the law, but failed to draw out its spirit, incorporated certain fundamental precepts which were "designed
to indicate certain norms that spring from the fountain of good conscience" and which were also meant to
serve as "guides for human conduct [that] should run as golden threads through society, to the end that
law may approach its supreme ideal, which is the sway and dominance of justice" (Id.) Foremost among
these principles is that pronounced in Article 19 which provides:

Art. 19.Every person must, in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith.
This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain
standards which must be observed not only in the exercise of one's rights but also in the performance of
one's duties. These standards are the following: to act with justice; to give everyone his due; and to
observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in
their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by
itself legal because recognized or granted by law as such, may nevertheless become the source of some
illegality. When a light is exercised in a manner which does not conform with the norms enshrined in Article
19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be
held responsible. But while Article 19 lays down a rule of conduct for the government of human relations
and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action
for damages under either Article 20 or Article 21 would be proper.
Article 20, which pertains to damage arising from a violation of law, provides that:
Art. 20.Every person who contrary to law, wilfully or negligently causes damage to another, shall indemnify
the latter for the same.
However, in the case at bar, petitioners claim that they did not violate any provision of law since they were
merely exercising their legal right to dismiss private respondent. This does not, however, leave private
respondent with no relief because Article 21 of the Civil Code provides that:
Art. 21.Any person who wilfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for the damage.
This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims of moral
wrongs helpless, even though they have actually suffered material and moral injury" [Id.] should
"vouchsafe adequate legal remedy for that untold number of moral wrongs which it is impossible for human
foresight to provide for specifically in the statutes" [Id., at p. 40; See also PNB v. CA, G.R. No. L-27155,
May 18, 1978, 83 SCRA 237, 247].
In determining whether or not the principle of abuse of rights may be invoked, there is no rigid test which
can be applied. While the Court has not hesitated to apply Article 19 whether the legal and factual
circumstances called for its application [See for e.g., Velayo v. Shell Co. of the Phil., Ltd., 100 Phil. 186
(1956); PNB v. CA, supra; Grand Union Supermarket, Inc. v. Espino, Jr., G.R. No. L-48250, December 28,
1979, 94 SCRA 953; PAL v. CA, G.R. No. L-46558, July 31, 1981, 106 SCRA 391; United General Industries,
Inc. v. Paler, G.R. No. L-30205, March 15, 1982, 112 SCRA 404; Rubio v. CA, G.R. No. 50911, August 21,
1987, 153 SCRA 183] the question of whether or not the principle of abuse of rights has been violated
resulting in damages under Article 20 or Article 21 or other applicable provision of law, depends on the
circumstances of each case. And in the instant case, the Court, after examining the record and considering
certain significant circumstances, finds that petitioners have indeed abused the right that they invoke,
causing damage to private respondent and for which the latter must now be indemnified. LLjur
16

The trial court made a finding that notwithstanding the fact that it was private respondent Tobias who
reported the possible existence of anomalous transactions, petitioner Hendry "showed belligerence and told
plaintiff (private respondent herein) that he was the number one suspect and to take a one week vacation
leave, not to communicate with the office, to leave his table drawers open, and to leave his keys to said
defendant (petitioner Hendry)" [RTC Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But
regardless of whether or not it was private respondent Tobias who reported the anomalies to petitioners,
the latter's reaction towards the former upon uncovering the anomalies was less than civil. An employer
who harbors suspicions that an employee has committed dishonesty might be justified in taking the
appropriate action such as ordering an investigation and directing the employee to go on a leave. Firmness
and the resolve to uncover the truth would also be expected from such employer. But the high-handed
treatment accorded Tobias by petitioners was certainly uncalled for. And this reprehensible attitude of
petitioners was to continue when private respondent returned to work on November 20, 1972 after his one
week forced leave. Upon reporting for work, Tobias was confronted by Hendry who said. "Tobby, you are
the crook and swindler in this company." Considering that the first report made by the police investigators
was submitted only on December 10, 1972 [See Exh. "A"] the statement made by petitioner Hendry was
baseless. The imputation of guilt without basis and the pattern of harassment during the investigations of
Tobias transgress the standards of human conduct set forth in Article 19 of the Civil Code. The Court has
already ruled that the right of the employer to dismiss an employee should not be confused with the
manner in which the right is exercised and the effects flowing therefrom. If the dismissal is done abusively,
then the employer is liable for damages to the employee [Quisaba v. Sta. Ines-Melale Veneer and Plywood
Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA 771; See also Philippine Refining Co., Inc. v. Garcia, G.R.
No. L-21871, September 27,1966,18 SCRA 107]. Under the circumstances of the instant case, the
petitioners clearly failed to exercise in a legitimate manner their right to dismiss Tobias, giving the latter the
right to recover damages under Article 19 in relation to Article 21 of the Civil Code.
But petitioners were not content with just dismissing Tobias. Several other tortious acts were committed by
petitioners against Tobias after the latter's termination from work. Towards the latter part of January, 1973,
after the filing of the first of six criminal complaints against Tobias, the latter talked to Hendry to protest
the actions taken against him. In response, Hendry cut short Tobias' protestations by telling him to just
confess or else the company would file a hundred more cases against him until he landed in jail. Hendry
added that, "You Filipinos cannot be trusted." The threat unmasked petitioner's bad faith in the various
actions taken against Tobias. On the other hand, the scornful remark about Filipinos as well as Hendry's
earlier statements about Tobias being a "crook" and "swindler" are clear violations of Tobias' personal
dignity [See Article 26, Civil Code].
The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime in October
1974, stating that Tobias had been dismissed by GLOBE MACKAY due to dishonesty. Because of the letter,
Tobias failed to gain employment with RETELCO and as a result of which, Tobias remained unemployed for
a longer period of time. For this further damage suffered by Tobias, petitioners must likewise be held liable
for damages consistent with Article 2176 of the Civil Code. Petitioners, however, contend that they have a
"moral, if not legal, duty to forewarn other employers of the kind of employee the plaintiff (private
respondent herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim that "it is the accepted
moral and societal obligation of every man to advise or warn his fellowmen of any threat or danger to the
latter's life, honor or property. And this includes warning one's brethren of the possible dangers involved in
dealing with, or accepting into confidence, a man whose honesty and integrity is suspect" [Id.]. These
arguments, rather than justify petitioners' act, reveal a seeming obsession to prevent Tobias from getting a
job, even after almost two years from the time Tobias was dismissed.
Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias. Petitioners
contend that there is no case against them for malicious prosecution and that they cannot be "penalized for
17

exercising their right and prerogative of seeking justice by filing criminal complaints against an employee
who was their principal suspect in the commission of forgeries and in the perpetration of anomalous
transactions which defrauded them of substantial sums of money" [Petition, p. 10, Rollo, p. 11].
While sound principles of justice and public policy dictate that persons shall have free resort to the courts
for redress of wrongs and vindication of their rights [Buenaventura v. Sto. Domingo, 103 Phil. 239 (1958)],
the right to institute criminal prosecutions can not be exercised maliciously and in bad faith [Ventura v.
Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 587]. Hence, in Yutuk v. Manila Electric Co., G.R. No.
L-13016, May 31, 1961, 2 SCRA 337, the Court held that the right to file criminal complaints should not be
used as a weapon to force an alleged debtor to pay an indebtedness. To do so would be a clear perversion
of the function of the criminal processes and of the courts of justice. And in Hawpia v. CA, G.R. No. L-
20047, June 30, 1967, 20 SCRA 536, the Court upheld the judgment against the petitioner for actual and
moral damages and attorney's fees after making a finding that petitioner, with persistence, filed at least six
criminal complaints against respondent, all of which were dismissed.
To constitute malicious prosecution, there must be proof that the prosecution was prompted by a design to
vex and humiliate a person and that it was initiated deliberately by the defendant knowing that the charges
were false and groundless [Manila Gas Corporation v. CA, G.R. No. L-44190, October 30, 1980, 100 SCRA
602]. Concededly, the filing of a suit, by itself, does not render a person liable for malicious prosecution
[Inhelder Corporation v. CA, G.R. No. 52358, May 30, 1983, 122 SCRA 576]. The mere dismissal by the
fiscal of the criminal complaint is not a ground for an award of damages for malicious prosecution if there is
no competent evidence to show that the complainant had acted in bad faith [Sison v. David, G.R. No. L-
11268, January 28, 1961, 1 SCRA 60].

In the instant case, however, the trial court made a finding that petitioners acted in bad faith in filing the
criminal complaints against Tobias, observing that: cdll
xxx xxx xxx
Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six (6) criminal cases, five
(5) of which were for estafa thru falsification of commercial document and one for violation of Art. 290 of
the Revised Penal Code "discovering secrets thru seizure of correspondence," and all were dismissed for
insufficiency or lack of evidence." The dismissal of four (4) of the cases was appealed to the Ministry of
Justice, but said Ministry invariably sustained the dismissal of the cases. As above adverted to, two of these
cases were refiled with the Judge Advocate General's Office of the Armed Forces of the Philippines to
railroad plaintiffs arrest and detention in the military stockade, but this was frustrated by a presidential
decree transferring criminal cases involving civilians to the civil courts.
xxx xxx xxx
To be sure, when despite the two (2) police reports embodying the findings of Lt. Dioscoro Tagle, Chief
Document Examiner of the Manila Police Department, clearing plaintiff of participation or involvement in the
fraudulent transactions complained of, despite the negative results of the lie detector tests which
defendants compelled plaintiff to undergo, and although the police investigation was "still under follow-up
and a supplementary report will be submitted after all the evidence has been gathered," defendants hastily
filed six (6) criminal cases with the city Fiscal's Office of Manila, five (5) for estafa thru falsification of
commercial document and one (1) for violation of Art. 290 of the Revised Penal Code, so much so that as
was to be expected, all six (6) cases were dismissed, with one of the investigating fiscals, Asst. Fiscal de
Guia, commenting in one case that, "Indeed, the haphazard way this case was investigated is evident.
Evident likewise is the flurry and haste in the filing of this case against respondent Tobias," there can be no
18

mistaking that defendants would not but be motivated by malicious and unlawful intent to harass, oppress,
and cause damage to plaintiff.
xxx xxx xxx
[RTC Decision, pp. 5-6; Rollo, pp. 235-236].
In addition to the observations made by the trial court, the Court finds it significant that the criminal
complaints were filed during the pendency of the illegal dismissal case filed by Tobias against petitioners.
This explains the haste in which the complaints were filed, which the trial court earlier noted. But
petitioners, to prove their good faith, point to the fact that only six complaints were filed against Tobias
when they could have allegedly filed one hundred cases, considering the number of anomalous transactions
committed against GLOBE MACKAY. However, petitioners' good faith is belied by the threat made by
Hendry after the filing of the first complaint that one hundred more cases would be filed against Tobias. In
effect, the possible filing of one hundred more cases was made to hang like the sword of Damocles over
the head of Tobias. In fine, considering the haste in which the criminal complaints were filed, the fact that
they were filed during the pendency of the illegal dismissal case against petitioners, the threat made by
Hendry, the fact that the cases were filed notwithstanding the two police reports exculpating Tobias from
involvement in the anomalies committed against GLOBE MACKAY, coupled by the eventual dismissal of all
the cases, the Court is led into no other conclusion than that petitioners were motivated by malicious intent
in filing the six criminal complaints against Tobias.
Petitioners next contend that the award of damages was excessive. In the complaint filed against
petitioners, Tobias prayed for the following: one hundred thousand pesos (P100,000.00) as actual
damages; fifty thousand pesos (P50,000.00) as exemplary damages; eight hundred thousand pesos
(P800,000.00) as moral damages; fifty thousand pesos (P50,000.00) as attorney's fees; and costs. The trial
court, after making a computation of the damages incurred by Tobias [See RTC Decision, pp. 7-8; Rollo,
pp. 154-155], awarded him the following: eighty thousand pesos (P80,000.00) as actual damages; two
hundred thousand pesos (P200,000.00) as moral damages; twenty thousand pesos (P20,000.00) as
exemplary damages; thirty thousand pesos (P30,000.00) as attorney's fees; and, costs. It must be
underscored that petitioners have been guilty of committing several actionable tortious acts, i.e., the
abusive manner in which they dismissed Tobias from work including the baseless imputation of guilt and
the harassment during the investigations; the defamatory language heaped on Tobias as well as the
scornful remark on Filipinos; the poison letter sent to RETELCO which resulted in Tobias' loss of possible
employment; and, the malicious filing of the criminal complaints. Considering the extent of the damage
wrought on Tobias, the Court finds that, contrary to petitioners' contention, the amount of damages
awarded to Tobias was reasonable under the circumstances.
Yet, petitioners still insist that the award of damages was improper, invoking the principle of damnum
absque injuria. It is argued that "[t]he only probable actual damage that plaintiff (private respondent
herein) could have suffered was a direct result of his having been dismissed from his employment, which
was a valid and legal act of the defendants-appellants (petitioners herein)." [Petition, p. 17; Rollo, p. 18].
According to the principle of damnum absque injuria, damage or loss which does not constitute a violation
of a legal right or amount to a legal wrong is not actionable [Escano v. CA, G. R. No. L-47207, September
25, 1980, 100 SCRA 197; See also Gilchrist v. Cuddy, 29 Phil. 542 (1915); The Board of Liquidators v.
Kalaw, G.R. No. L-18805, August 14, 1967, 20 SCRA 987]. This principle finds no application in this case. It
bears repeating that even granting that petitioners might have had the right to dismiss Tobias from work,
the abusive manner in which that right was exercised amounted to a legal wrong for which petitioners must
now be held liable. Moreover, the damage incurred by Tobias was not only in connection with the abusive
19

manner in which he was dismissed but was also the result of several other quasi-delictual acts committed
by petitioners. LLphil
Petitioners next question the award of moral damages. However, the Court has already ruled in Wassmer v.
Velez, G.R. No. L-20089, December 26, 1964, 12 SCRA 648, 653, that "[p]er express provision of Article
2219 (10) of the New Civil Code, moral damages are recoverable in the cases mentioned in Article 21 of
said Code." Hence, the Court of Appeals committed no error in awarding moral damages to Tobias.
Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of the Civil Code
provides that "[i]n quasi-delicts, exemplary damages may be granted if the defendant acted with gross
negligence," the Court, in Zulueta v. Pan American World Airways, Inc., G.R. No. L-28589, January 8, 1973,
49 SCRA 1, ruled that if gross negligence warrants the award of exemplary damages, with more reason is
its imposition justified when the act performed is deliberate, malicious and tainted with bad faith. As in
the Zulueta case, the nature of the wrongful acts shown to have been committed by petitioners against
Tobias is sufficient basis for the award of exemplary damages to the latter.
WHEREFORE, the Petition is hereby DENIED and the decision of the Court of Appeals in CA-G.R. CV No.
09055 is AFFIRMED.
SO ORDERED.

[G.R. No. 140420. February 15, 2001.]
SERGIO AMONOY, petitioner, vs. Spouses JOSE GUTIERREZ and ANGELA FORNILDA, respondents.
Mamaril Arca & Associates for petitioner.
Romeo B. Igot Law Offices for private respondents.
SYNOPSIS
The house of respondents was situated in a lot foreclosed and bought by petitioner. In April and May 1986,
an Order of Demolition of the house was issued by the trial court but was enjoined by a temporary
restraining order (TRO) granted to respondents on June 2, 1986. In 1988, the TRO was made permanent
by the Court, but the house of respondents had already been destroyed. The Court of Appeals held
petitioner liable to respondents for P250,000.00 for actual damages thereof. Hence, this appeal where
petitioner asserted the principle of damnum absque injuria.
The Supreme Court ruled that the petition has no merit. Petitioner argued that he cannot be held liable for
damages as he merely acted in accordance with the Writ of Demolition. However, the Court noted that
petitioner commenced demolition of the house in May 1986 and did not heed the TRO issued by the Court
in June 1986. Petitioner unlawfully pursued demolition of respondents' house well until the middle of 1987.
Thus, although petitioner may have been legally justified at the outset, the continuation of the demolition
even after the issuance of the TRO amounted to an insidious abuse of his right. Petitioner's liability is
premised on the obligation to repair the damage caused to another by reason of one's act or omission,
whether done intentionally or negligently and whether or not punishable by law.
SYLLABUS
1.CIVIL LAW; DAMAGES; PRINCIPLE OF DAMNUM ABSQUE INJURIA. Well-settled is the maxim that
damage resulting from the legitimate exercise of a person's rights is a loss without injury damnum
absque injuria for which the law gives no remedy. In other words, one who merely exercises one's rights
does no actionable injury and cannot be held liable for damages.
20

2.ID.; ID.; ID.; NOT APPLICABLE IN CASE AT BAR; REASONS. True, petitioner commenced the
demolition of respondents' house on May 30, 1986 under the authority of a Writ of Demolition issued by the
RTC. But the records show that a Temporary Restraining Order (TRO), enjoining the demolition of
respondents' house, was issued by the Supreme Court On , June 2, 1986. The CA also found, based on the
Certificate of Service of the Supreme Court process server, that a copy of the TRO was served on petitioner
himself on June 4. 1986. Petitioner, however, did not heed the TRO of this Court. We agree with the CA
that he unlawfully pursued the demolition of respondents' house well until the middle of 1987. Although the
acts of petitioner may have been legally justified at the outset, their continuation after the issuance of the
TRO amounted to an insidious abuse of his right. Indubitably, his actions were tainted with bad faith. Had
he not insisted on completing the demolition, respondents would not have suffered the loss that
engendered the suit before the RTC. Verily, his acts constituted not only an abuse of a right, but an invalid
exercise of a right that had been suspended when he received the TRO from this Court on June 4, 1986. By
then, he was no longer entitled to proceed with the demolition.
3.ID.; HUMAN RELATIONS; CONCEPT OF ABUSE OF RIGHT; APPLICATION IN CASE AT BAR. In Albenson
Enterprises Corp. v. CA, the Court discussed the concept of abuse of rights as follows: "Article 19, known to
contain what is commonly referred to as the principle of abuse of rights, sets certain standards which may
be observed not only in the exercise of one's rights but also in the performance of one's duties. These
standards are the following: to act with justice; to give everyone his due; and to observe honestly and good
faith. The law, therefore; recognizes the primordial limitation on all rights: that in their exercise, the norms
of human conduct set forth in Article 19 must be observed. A right, though by self legal because recognizes
or grnated by law as such, may nevertheless become the sopurce of some illegally. When a right is
exercised in a manner which does not conform with norms enshrined in Article ', 19 and results in damage
to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible . . . ."
Clearly then, the demolition of respondents' house b) petitioner, despite his receipt of the TRO was not only
an abuse but also an unlawful exercise of such right. In insisting on his alleged right, he wantonly violated
this Court's Order and wittingly caused the destruction of respondents' house.
4.ID.; DAMAGES; PRINCIPLE OF DAMNUM ABSQUE INJUR MUST BE PREMISED ON A VALID EXERCISE OF
RIGHT. Petitioner cannot invoke damnum absque injuria, a principle premised on the valid exercise of a
right. Anything less or beyond such exercise will not give rise to the legal protection that the principle
accords. And when damage or prejudice to another is occasioned thereby, liability cannot be obscured,
much less abated. In the ultimate analysis, petitioner's liability is premised on the obligation to repair or to
make whole the damage caused to another by reason of one's act or omission, whether done intentionally
or negligently and whether or not punishable by law.
D E C I S I O N
PANGANIBAN, J p:
Damnum absque injuria. Under this principle, the legitimate exercise of a person's rights, even if it causes
loss to another, does not automatically result in an actionable injury. The law does not prescribe a remedy
for the loss. This principle does not, however, apply when there is an abuse of a person's right, or when the
exercise of this right is suspended or extinguished pursuant to a court order. Indeed, in the availment of
one's rights, one must act with justice, give others their due, and observe honesty and good faith.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the April 21, 1999
Decision 1 of the Court of Appeals (CA) in CA-GR CV No. 41451, which set aside the judgment 2 of the
Regional Trial Court (RTC) of Tanay, Rizal. The RTC had earlier dismissed the Complaint for damages filed
21

by herein respondents against petitioner. The dispositive portion of the challenged CA Decision reads as
follows:
"WHEREFORE, the appealed Decision is SET ASIDE, and in its stead judgment is rendered ordering the
defendant-appellee Sergio Amonoy to pay the plaintiffs-appellants Bruno and Bernardina Gutierrez as actual
damages the sum of [t]wo [h]undred [f]ifty [t]housand [p]esos (P250,000.00)." 3
Likewise assailed is the October 19, 1999 CA Resolution, 4 which denied the Motion for Reconsideration.
The Facts
The appellate court narrated the factual antecedents of this case as follows:
"This case had its roots in Special Proceedings No. 3103 of Branch I of the CFI of Pasig, Rizal, for the
settlement of the estate of the deceased Julio Cantolos, involving six (6) parcels of land situated in Tanay,
Rizal. Amonoy was the counsel of therein Francisca Catolos, Agnes Catolos, Asuncion Pasamba and Alfonso
Fornilda. On 12 January 1965, the Project of Partition submitted was approved and . . . two (2) of the said
lots were adjudicated to Asuncion Pasamba and Alfonso Fornilda. The attorney's fees charged by Amonoy
was P27,600.00 and on 20 January 1965 Asuncion Pasamba and Alfonso Fornilda executed a deed of real
estate mortgage on the said two (2) lots adjudicated to them, in favor of Amonoy to secure the payment of
his attorney's fees. But it was only on 6 August 1969 after the taxes had been paid, the claims settled and
the properties adjudicated, that the estate was declared closed and terminated.
"Asuncion Pasamba died on 24 February 1969 while Alfonso Fornilda passed away on 2 July 1969. Among
the heirs of the latter was his daughter, plaintiff-appellant Angela Gutierrez.
"Because his attorney's fees thus secured by the two lots were not paid, on 21 January 1970 Amonoy filed
for their foreclosure in Civil Case No. 12726 entitled Sergio Amonoy vs. Heirs of Asuncion Pasamba and
Heirs of Alfonso Fornilda before the CFI of Pasig, Rizal, and this was assigned to Branch VIII. The heirs
opposed, contending that the attorney's fees charged [were] unconscionable and that the agreed sum was
only P11,695.92. But on 28 September 1972 judgment was rendered in favor of Amonoy requiring the heirs
to pay within 90 days the P27,600.00 secured by the mortgage, P11,880.00 as value of the harvests, and
P9,645.00 as another round of attorney's fees. Failing in that, the two (2) lots would be sold at public
auction.
"They failed to pay. On 6 February 1973, the said lots were foreclosed and on 23 March 1973 the auction
sale was held where Amonoy was the highest bidder at P23,760.00. On 2 May 1973 his bid was judicially
confirmed. A deficiency was claimed and to satisfy it another execution sale was conducted, and again the
highest bidder was Amonoy at P12,137.50.
"Included in those sold was the lot on which the Gutierrez spouses had their house.
"More than a year after the Decision in Civil Case No. 12726 was rendered, the said decedent's heirs filed
on 19 December 1973 before the CFI of Pasig, Rizal[,] Civil Case No. 18731 entitled Maria Penano, et al
vs. Sergio Amonoy, et al, a suit for the annulment thereof. The case was dismissed by the CFI on 7
November 1977, and this was affirmed by the Court of Appeals on 22 July 1981.
"Thereafter, the CFI on 25 July 1985 issued a Writ of Possession and pursuant to which a notice to vacate
was made on 26 August 1985. On Amonoy's motion of 24 April 1986, the Orders of 25 April 1986 and 6
May 1986 were issued for the demolition of structures in the said lots, including the house of the Gutierrez
spouses. DHSaCA
"On 27 September 1985 the petition entitled David Fornilda, et al vs Branch 164 RTC IVth Pasig, Deputy
Sheriff Joaquin Antonil and Atty. Sergio Amonoy, G.R. No. L-72306, was filed before the Supreme Court.
22

Among the petitioners was the plaintiff-appellant Angela Gutierrez. On a twin Musiyun (Mahigpit na Musiyon
Para Papanagutin Kaugnay ng Paglalapastangan, and Musiyung Makahingi ng Utos sa Pagpapapigil ng
Pagpapagiba at Pananagutin sa Paglalapastangan) with full titles as fanciful and elongated as
their Petisyung (Petisyung Makapagsuri Taglay and Pagpigil ng Utos), a temporary restraining order was
granted on 2 June 1986 enjoining the demolition of the petitioners' houses.

"Then on 5 October 1988 a Decision was rendered in the said G.R. No. L-72306 disposing that:
"WHEREFORE, Certiorari is granted; the Order of respondent Trial Court, dated 25 July 1985, granting a
Writ of Possession, as well as its Orders, dated 25 April 1986 and 16 May 1986, directing and authorizing
respondent Sheriff to demolish the houses of petitioners Angela and Leocadia Fornilda are hereby set aside,
and the Temporary Restraining Order heretofore issued, is made permanent. The six (6) parcels of land
herein controverted are hereby ordered returned to petitioners unless some of them have been conveyed to
innocent third persons." 5
But by the time the Supreme Court promulgated the above-mentioned Decision, respondents' house had
already been destroyed, supposedly in accordance with a Writ of Demolition ordered by the lower court.
Thus, a Complaint for damages in connection with the destruction of their house was filed by respondents
against petitioner before the RTC on December 15, 1989.
In its January 27, 1993 Decision, the RTC dismissed respondents' suit. On appeal, the CA set aside the
lower court's ruling and ordered petitioner to pay respondents P250,000 as actual damages. Petitioner then
filed a Motion for Reconsideration, which was also denied.
Hence, this recourse. 6
The Issue
In his Memorandum, 7 petitioner submits this lone issue for our consideration:
"Whether or not the Court of Appeals was correct in deciding that the petitioner [was] liable to the
respondents for damages" 8
The Court's Ruling
The Petition has no merit.
Main Issue:
Petitioner's Liability
Well-settled is the maxim that damage resulting from the legitimate exercise of a person's rights is a loss
without injury damnum absque injuria for which the law gives no remedy. 9 In other words, one who
merely exercises one's rights does no actionable injury and cannot be held liable for damages.
Petitioner invokes this legal precept in arguing that he is not liable for the demolition of respondents' house.
He maintains that he was merely acting in accordance with the Writ of Demolition ordered by the RTC.
We reject this submission. Damnum absque injuria finds no application to this case.
True, petitioner commenced the demolition of respondents' house on May 30, 1986 under the authority of a
Writ of Demolition issued by the RTC. But the records show that a Temporary Restraining Order (TRO),
enjoining the demolition of respondents' house, was issued by the Supreme Court on June 2, 1986. The CA
23

also found, based on the Certificate of Service of the Supreme Court process server, that a copy of the TRO
was served on petitioner himself on June 4, 1986.
Petitioner, however, did not heed the TRO of this Court. We agree with the CA that he unlawfully pursued
the demolition of respondents' house well until the middle of 1987. This is clear from Respondent Angela
Gutierrez's testimony. The appellate court quoted the following pertinent portion thereof: 10
"Q.On May 30, 1986, were they able to destroy your house?
A.Not all, a certain portion only
xxx xxx xxx
Q.Was your house completely demolished?
A:No, sir.
Q.How about the following day?
A.It was completely demolished"
xxx xxx xxx
Q.Until when[,] Mrs. Witness?
A.Until 1987.
Q.About what month of 1987?
A.Middle of the year.
Q.Can you tell the Honorable Court who completed the demolition?
A.The men of Fiscal Amonoy." 11
The foregoing disproves the claim of petitioner that the demolition, which allegedly commenced only on
May 30, 1986, was completed the following day. It likewise belies his allegation that the demolition's had
already ceased when he received notice of the TRO.
Although the acts of petitioner may have been legally justified at the outset, their continuation after the
issuance of the TRO amounted to an insidious abuse of his right. Indubitably, his actions were tainted with
bad faith. Had he not insisted on completing the demolition, respondents would not have suffered the loss
that engendered the suit before the RTC. Verily, his acts constituted not only an abuse of a right, but an
invalid exercise of a right that had been suspended when he received the TRO from this Court on June 4,
1986. By then, he was no longer entitled to proceed with the demolition.
A commentator on this topic explains:
"The exercise of a right ends when the right disappears, and it disappears when it is abused, especially to
the prejudice of others. The mask of a right without the spirit of justice which gives it life, is repugnant to
the modern concept of social law. It cannot be said that a person exercises a right when he unnecessarily
prejudices another . . . . Over and above the specific precepts of positive law are the supreme norms of
justice . . .; and he who violates them violates the law. For this reason, it is not permissible to abuse our
rights to prejudice others." 12
Likewise, in Albenson Enterprises Corp. v. CA, 13 the Court discussed the concept of abuse of rights as
follows:
24

"Article 19, known to contain what is commonly referred to as the principle of abuse of rights, sets certain
standards which may be observed not only in the exercise of one's rights but also in the performance of
one's duties. These standards are the following: to act with justice; to give everyone his due; and to
observe honesty and good faith. The law, therefore, recognizes the primordial limitation on all rights: that
in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by
itself legal because recognized or granted by law as such, may nevertheless become the source of some
illegality. When a right is exercised in a manner which does not conform with norms enshrined in Article 19
and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be
held responsible . . . ."
Clearly then, the demolition of respondents' house by petitioner, despite his receipt of the TRO, was not
only an abuse but also an unlawful exercise of such right. In insisting on his alleged right, he wantonly
violated this Court's Order and wittingly caused the destruction of respondents' house.
Obviously, petitioner cannot invoke damnum absque injuria, a principle premised on the valid exercise of a
right. 14 Anything less or beyond such exercise will not give rise to the legal protection that the principle
accords. And when damage or prejudice to another is occasioned thereby, liability cannot be obscured,
much less abated.
In the ultimate analysis, petitioner's liability is premised on the obligation to repair or to make whole the
damage caused to another by reason of one's act or omission, whether done intentionally or negligently
and whether or not punishable by law. 15
WHEREFORE, the Petition is DENIED and the appealed Decision AFFIRMED. Costs against
petitioner. aSEHDA
SO ORDERED.

[G.R. No. 96126. August 10, 1992.]
ESTERIA F. GARCIANO, petitioner, vs. THE HON. COURT OF APPEALS, EMERITO LABAJO,
LUNISITA MARODA, LALIANA DIONES, CANONISA PANINSORO, DIONISIO ROSAL, REMEDIOS
GALUSO, FLORDELUNA PETALCORIN, MELCHIZEDECH LOON, NORBERTA MARODA and JOSEPH
WIERTZ,respondents.
Basilio E. Duaban for petitioner.
Julius Z. Neri for private respondents.
SYLLABUS
1.CIVIL LAW; DAMAGES; LIABILITY THEREFOR ARISES ONLY FROM UNLAWFUL, WILLFUL OR NEGLIGENT
ACTS THAT ARE CONTRARY TO LAW, OR MORALS, GOOD CUSTOMS OR PUBLIC POLICY; NOT PRESENT
IN CASE AT BAR. Liability for damages under Articles 19, 20 and 21 of the Civil Code arises only from
unlawful, willful or negligent acts that are contrary to law, or morals, good customs or public policy. The
Court of Appeals was correct in finding that petitioner's discontinuance from teaching was her own choice.
While the respondents admittedly wanted her service terminated, they actually did nothing to physically
prevent her from reassuming her post, as ordered by the school's Board of Directors. That the school
principal and Fr. Wiertz disagreed with the Board's decision to retain her, and some teachers allegedly
threatened to resign en masse, even if true, did not make them liable to her for damages. They were
simply exercising their right of free speech or their right to dissent from the Board's decision. Their acts
were not contrary to law, morals, good customs or public policy. They did not "illegally dismiss" her for the
25

Board's decision to retain her prevailed. She was ordered to report for work on July 5, 1982, but she did
not comply with that order. Consequently, whatever loss she may have incurred in the form of lost earnings
was self-inflicted.Volenti non fit injuria.
2.ID.; ID.; MORAL DAMAGES; TO RECOVER THEM, INJURED PERSON MUST NOT BE AT FAULT; CASE AT
BAR. With respect to petitioner's claim for moral damages, the right to recover them under Article 21 is
based on equity, and he who comes to court to demand equity, must come with clean hands. Article 21
should be construed as granting the right to recover damages to injured persons who are not themselves at
fault (Mabutas vs. Calapan Electric Co. [CA] 50 OG 5828, cited in Padilla, Civil Code Annotated, Vol. 1, 1975
Ed., p. 87). Moral damages are recoverable only if the case falls under Article 2219 in relation to Article 21
(Flordelis vs. Mar, 114 SCRA 41). In the case at bar, petitioner is not without fault. Firstly, she went on an
indefinite leave of absence and failed to report back in time for the regular opening of classes. Secondly, for
reasons known to herself alone, she refused to sign a written contract of employment. Lastly, she ignored
the Board of Directors' order for her to report for duty on July 5, 1982.
D E C I S I O N
GRIO-AQUINO, J p:
This is a petition for review of the decision of the Court of Appeals dismissing the complaint for damages
filed by the petitioner against the private respondents.
The petitioner was hired to teach during the 1981-82 school year in the Immaculate Concepcion Institute in
the Island of Camotes. On January 13, 1982, or before the school year ended, she applied for an indefinite
leave of absence because her daughter was taking her to Austria where her daughter was employed (Exh.
B). The application was recommended for approval by the school principal, Emerito O. Labajo, and
approved by the President of the school's Board of Directors (Exh. B-1). LibLex
On June 1, 1982, Emerito Labajo addressed a letter to the petitioner through her husband, Sotero Garciano
(for she was still abroad), informing her of the decision of Fr. Joseph Wiertz, the school's founder,
concurred in by the president of the Parent-Teachers Association and the school faculty, to terminate her
services as a member of the teaching staff because of: (1) the absence of any written contract of
employment between her and the school due to her refusal to sign one; and (2) the difficulty of getting a
substitute for her on a temporary basis as no one would accept the position without a written contract
(Exhs. C and 1). Upon her return from Austria in the later part of June, 1982, she received the letter
informing her that her services at the Immaculate Concepcion Institute had been terminated. She made
inquiries from the school about the matter and, on July 7, 1982, the members of the Board of Directors of
the school, with the exception of Fr. Joseph Wiertz, signed a letter notifying her that she was "reinstated to
report and do your usual duties as Classroom Teacher . . . effective July 5, 1982," and that "any letter or
notice of termination received by you before this date has no sanction or authority by the Board of
Directors of this Institution, therefore it is declared null and void . . . " (Exhs. D and 2).
On July 9, 1982, the president, vice president, secretary, and three members of the Board of Directors, out
of a membership of nine (9), resigned their positions from the Board "for the reason that the ICI Faculty,
has reacted acidly to the Board's deliberations for the reinstatement of Mrs. Esteria F. Garciano, thereby
questioning the integrity of the Board's decision" (Exh. E).
On September 3, 1982, petitioner filed a complaint for damages in the Regional Trial Court, Cebu, Branch
XI, against Fr. Wiertz, Emerito Labajo, and some members of the faculty of the school for discrimination
and unjust and illegal dismissal.
26

After trial, the lower court rendered a decision on August 30, 1985, ordering the defendants jointly and
severally to pay her P200,000 as moral damages, P50,000 as exemplary damages, P32,400 as lost earnings
for nine years, and P10,000 as litigation expenses and attorney's fees.
The defendants (now private respondents) appealed to the Court of Appeals (CA-G.R. CV No. 10692),
which on August 30, 1990 reversed the trial court's decision thus:
"WHEREFORE, the decision appealed from is reversed, the complaint is dismissed, and defendants-
appellants are absolved from any liability to plaintiff-appellee. With costs against plaintiff-appellee." (p. 13,
Rollo.)
The plaintiff-appellee (now petitioner) filed a motion for reconsideration which the Court of Appeals denied
on October 26, 1990. Hence, this petition for review wherein the lone error assigned by petitioner reads:
"Respondent Court of Appeals gravely erred in absolving the private respondents from liability by faulting
the petitioner for her failure to report back to her work." (p. 6, Rollo.)
After a careful perusal of the petition and the respondents' comments, the Court resolved to deny the
petition for lack of merit. LLjur
The board of directors of the Immaculate Concepcion Institute, which alone possesses the authority to hire
and fire teachers and other employees of the school, did not dismiss the petitioner. It in fact directed her to
report for work. While the private respondents sent her a letter of termination through her husband, they
admittedly had no authority to do so. As the Court of Appeals aptly observed:
"We agree with defendants-appellants, however, that they should not have been held liable to plaintiff-
appellee for damages. Defendants-appellants had no authority to dismiss plaintiff-appellee and the latter
was aware of this. Hence, the letter of termination sent to her through her husband (Exhs. C and 1) by
defendants-appellants had no legal effect whatsoever. It did not effectively prevent her from reporting for
work. What is more, it was subsequently repudiated by the Board of Directors which directed her to report
for work. (Exhs. D and 2) There was, therefore, no reason why she did not continue with her teaching in
the school. No evidence had been presented to show that defendants-appellants prevented her from
reporting for work. The fact that defendants-appellants had 'acidly' received the action of the Board of
Directors repudiating their decision to terminate plaintiff-appellee is not proof that defendants-appellants
had effectively and physically prevented plaintiff-appellee from resuming her post. It was nothing more
than a reaction to what defendants-appellants perceived as an affront to their collective prestige. It would
appear, therefore, that plaintiff-appellee had voluntarily desisted from her teaching job in the school and
has no right to recover damages from defendants-appellants." (p. 13, Rollo.)
Liability for damages under Articles 19, 20 and 21 of the Civil Code arises only from unlawful, willful or
negligent acts that are contrary to law, or morals, good customs or public policy.
"Art. 19.Every person must, in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith.
"Art. 20.Every person who, contrary to law, wilfully or negligently causes damage to another, shall
indemnify the latter for the same.
"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."
The Court of Appeals was correct in finding that petitioner's discontinuance from teaching was her own
choice. While the respondents admittedly wanted her service terminated, they actually did nothing to
physically prevent her from reassuming her post, as ordered by the school's Board of Directors. That the
27

school principal and Fr. Wiertz disagreed with the Board's decision to retain her, and some teachers
allegedly threatened to resign en masse, even if true, did not make them liable to her for damages. They
were simply exercising their right of free speech or their right to dissent from the Board's decision. Their
acts were not contrary to law, morals, good customs or public policy. They did not "illegally dismiss" her for
the Board's decision to retain her prevailed. She was ordered to report for work on July 5, 1982, but she did
not comply with that order. Consequently, whatever loss she may have incurred in the form of lost earnings
was self-inflicted. Volenti non fit injuria.

With respect to petitioner's claim for moral damages, the right to recover them under Article 21 is based on
equity, and he who comes to court to demand equity, must come with clean hands. Article 21 should be
construed as granting the right to recover damages to injured persons who are not themselves at fault
(Mabutas vs. Calapan Electric Co. [CA] 50 OG 5828, cited in Padilla, Civil Code Annotated, Vol. 1, 1975 Ed.,
p. 87). Moral damages are recoverable only if the case falls under Article 2219 in relation to Article 21
(Flordelis vs. Mar, 114 SCRA 41). In the case at bar, petitioner is not without fault. Firstly, she went on an
indefinite leave of absence and failed to report back in time for the regular opening of classes. Secondly, for
reasons known to herself alone, she refused to sign a written contract of employment. Lastly, she ignored
the Board of Directors' order for her to report for duty on July 5, 1982. LexLib
The trial court's award of exemplary damages to her was not justified for she is not entitled to moral,
temperate or compensatory damages (Art. 2234, Civil Code).
In sum, the Court of Appeals correctly set aside the damages awarded by the trial court to the petitioner
for they did not have any legal or factual basis.
WHEREFORE, the petition is DISMISSED for lack of merit and the decision of the Court of Appeals is
AFFIRMED.
SO ORDERED.

[G.R. No. L-20089. December 26, 1964.]
BEATRIZ P. WASSMER, plaintiff-appellee, vs. FRANCISCO X. VELEZ, defendant-appellant.
Jalandoni & Jamir for defendant-appellant.
Samson S. Alcantara for plaintiff-appellee.
SYLLABUS
1.DAMAGES; BREACH OF PROMISE TO MARRY; WHEN ACTIONABLE WRONG. Ordinarily, a mere breach
of promise to marry is not an actionable wrong. But to formally set a wedding and go through all the
necessary preparations and publicity, only to walk out of it when the matrimony is about to be solemnized,
is quite different. This is palpably and unjustifiably contrary to good customs, for which the erring promisor
must be held answerable in damages in accordance with Article 21 of the New Civil Code.
2.ID.; ID.; MORAL AND EXEMPLARY DAMAGES MAY BE AWARDED IN AN ACTIONABLE BREACH OF
PROMISE SUIT. When a breach of promise to marry is actionable under Article 21 of the Civil Code,
moral damages may be awarded under Article 2219 (10) of the said Code. Exemplary damages may also be
awarded under Article 2232 of said Code where it is proven that the defendant clearly acted in a wanton,
reckless and oppressive manner.
28

3.PLEADINGS AND PRACTICE; AFFIDAVIT OF MERITS IN PETITION FOR BELIEF MUST STATE FACTS
CONSTITUTING DEFENSE. An affidavit of merits supporting a petition for relief from judgment must
state facts constituting a valid defense. Where such an affidavit merely states conclusions or opinions, it is
not valid.
4.ID.; TRIAL BY COMMISSIONER; CLERK OF COURT MAY BE VALIDLY DESIGNATED. The procedure of
designating the clerk of court as commissioner to receive evidence is sanctioned by Rule 34 (now Rule 33)
of the Rules of Court.
5.ID.; ID.; ID.; DEFENDANT'S CONSENT TO DESIGNATION OF COMMISSIONER NOT NECESSARY WHERE
HE IS IN DEFAULT. The defendant's consent to the designation of the clerk of court as commissioner to
receive evidence is not necessary where he was declared in default and thus had no standing in court.
6.AFFIDAVITS OF MERIT; MUST CONTAIN FACTS AND NOT CONCLUSIONS OF FACT. Affidavits of merit
to be valid must contain facts and not mere conclusions of facts.
7.ID.; ID.; WHEN CONCLUSION OF FACT, NOT A FACT, DEEMED CONTAINED IN AFFIDAVIT. An
affidavit of merit stating no facts, but merely an inference that defendant's failure was due to fortuitous
events and/or circumstances beyond his control, is held to contain a conclusion of fact, not a fact.
D E C I S I O N
BENGZON, J.P., J p:
The facts that culminated in this case started with dreams and hopes, followed by appropriate planning and
serious endeavors, but terminated in frustration and, what is worse, complete public humiliation.
Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of love, decided to get married
and set September 4, 1954 as the big day. On September 2, 1954 Velez left this note for his bride-to-be:
Dear Bet
"Will have to postpone wedding. My mother oppose it. Am leaving on the Convair today.
"Please do not ask too many people about the reason why That would only create a scandal.
Paquing"
But the next day, September 3, he sent her the following telegram:
"NOTHING CHANGED REST ASSURED RETURNING VERY SOON APOLOGIZE MAMA PAPA LOVE.
PAKING"
Thereafter Velez did not appear nor was he heard from again.
Sued by Beatriz for damages, Velez filed no answer and was declared in default. Plaintiff adduced evidence
before the clerk of court as commissioner, and on April 29, 1955, judgment was rendered ordering
defendant to pay plaintiff P2,000.00 as actual damages; P25,000.09 as moral and exemplary damages;
P2,500.00 as attorney's fees; and the costs.
On June 21, 1955 defendant filed a "petition for relief from orders, judgment and proceedings and motion
for new trial and reconsideration." Plaintiff moved to strike it out. But the court, on August 2, 1955, ordered
the parties and their attorneys to appear before it on August 23, 1955 "to explore at this stage of the
proceedings the possibility of arriving at an amicable settlement." It added that should any of them fail to
appear "the petition for relief and the opposition thereto will be deemed submitted for resolution."
29

On August 23, 1955 defendant failed to appear before the court. Instead, on the following day his counsel
filed a motion to defer for two weeks the resolution on defendant's petition for relief. The counsel stated
that he would confer with defendant in Cagayan de Oro City the latter's residence on the possibility of
an amicable settlement. The court granted two weeks counted from August 25, 1955.
Plaintiff manifested on June 15, 1956 that the two weeks given by the court had expired on September 8,
1955 but that defendant and his counsel had failed to appear.
Another chance for amicable settlement was given by the court in its order of July 6, 1956 calling the
parties and their attorneys to appear on July 13, 1956. This time, however, defendant's counsel informed
the court that chances of settling the case amicably were nil.
On July 20, 1956 the court issued an order denying defendant's aforesaid petition. Defendant has appealed
to this Court.
In his petition of June 21, 1955 in the court a quo defendant alleged excusable negligence as ground to set
aside the judgment by default. Specifically, it was stated that defendant filed no answer in the belief that
an amicable settlement was being negotiated.
A petition for relief from judgment on grounds of fraud, accident, mistake or excusable negligence, must be
duly supported by an affidavit of merit stating facts constituting a valid defense. (Sec. 3, Rule 38, Rules of
Court.) Defendant's affidavit of merits attached to his petition of June 21, 1955 stated: "That he has a good
and valid defense against plaintiff's cause of action, his failure to marry the plaintiff as scheduled having
been due to fortuitous event and/or circumstances beyond his control". An affidavit of merits like this,
stating mere conclusions or opinions instead of facts is not valid. (Cortes vs. Co Bun Kim, L-3926, Oct. 10,
1951; Vaswani vs. P. Tarrachand Bros., L-15800, December 29, 1960.)
Defendant, however, would contend that the affidavit of merits was in fact unnecessary, or a mere
surplusage, because the judgment sought to be set aside was null and void, it having been based on
evidence adduced before the clerk of court. In Province of Pangasinan vs. Palisoc, L-16519, October 30,
1962, this Court pointed out that the procedure of designating the clerk of court as commissioner to receive
evidence is sanctioned by Rule 34 (now Rule 33) of the Rules of Court. Now as to defendant's consent to
said procedure, the same did not have to be obtained for he was declared in default and thus had no
standing in court (Velez vs. Ramas, 40 Phil., 787; Alano vs. Court of First Instance, L-14557, October 30,
1959).
In support of his "motion for new trial and reconsideration," defendant asserts that the judgment is
contrary to law. The reason given is that "there is no provision of the Civil Code authorizing" an action for
breach of promise to marry. Indeed, our ruling in Hermosisima vs. Court of Appeals (L-14628, Sept. 30,
1960) as reiterated in Estopa vs.Biansay (L-14733, Sept. 30, 1960), is that "mere breach of a promise to
marry" is not an actionable wrong. We pointed out that Congress deliberately eliminated from the draft of
the new Civil Code the provisions that would have it so.
It must not be overlooked, however, that the extent to which acts not contrary to law may be perpetrated
with impunity, is not limitless for Article 21 of said Code provides that "Any person who wilfully causes loss
or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate
the latter for the damage."
The record reveals that on August 23, 1954 plaintiff and defendant applied for a license to contract
marriage, which was subsequently issued. (Exhs. A, A-1). Their wedding was set for September 4, 1954.
Invitations were printed and distributed to relatives, friends and acquaintances (Tsn., 5; Exh. C). The bride-
to- be's trousseau, party dresses and other apparel for the important occasion were purchased (Tsn., 7-8).
Dresses for the maid of honor and the flower girl were prepared. A matrimonial bed, with accessories, was
30

bought. Bridal showers were given and gifts received (Tsn., 6; Exh. E). And then, with but two days before
the wedding, defendant, who was then 28 years old, simply left a note for plaintiff stating: "Will have to
postpone wedding My mother opposes it . . ." He enplaned to his home city in Mindanao, and the next
day, the day before the wedding, he wired plaintiff: "Nothing changed rest assured returning soon". But he
never returned and was never heard from again.
Surely this is not a case of mere breach of promise to marry. As stated, mere breach of promise to marry is
not an actionable wrong. But to formally set a wedding and go through all the above-described preparation
and publicity, only to walk out of it when the matrimony is about to be solemnized, is quite different. This is
palpably and unjustifiably contrary to good customs, for which defendant must be held answerable in
damages in accordance with Article 21 aforesaid.
Defendant urges in his aforestated petition that the damages awarded were excessive. No question is
raised as to the award of actual damages. What defendant would really assert hereunder is that the award
of moral and exemplary damages, in the amount of P25,000.00, should be totally eliminated.
Per express provision of Article 2219(10) of the new Civil Code, moral damages are recoverable in the cases
mentioned in Article 21 of said Code. As to exemplary damages, defendant contends that the same could
not be adjudged against him because under Article 2232 of the new Civil Code the condition precedent is
that "the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner". The
argument is devoid of merit as under the above-narrated circumstances of this case defendant clearly acted
in a "wanton . . . reckless [and] oppressive manner." This Court's opinion, however, is that considering the
particular circumstances of this case, P15,000.00 as moral and exemplary damages is deemed to be a
reasonable award.

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

[G.R. No. 101749. July 10, 1992.]
CONRADO BUNAG, JR., petitioner, vs. HON. COURT OF APPEALS, First Division, and ZENAIDA B.
CIRILO, respondents.
Conrado G. Bunag for petitioner.
Ocampo, Dizon & Domingo Law Office for respondents.
SYLLABUS
1.REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE COURT OF APPEALS ARE AS A RULE
CONCLUSIVE UPON THIS COURT. The issue raised primarily and ineluctably involves questions of fact.
We are, therefore, once again constrained to stress the well-entrenched statutory and jurisprudential
mandate that findings of fact of the Court of Appeals are, as a rule, conclusive upon this Court. Only
questions of law, distinctly set forth, may be raised in a petition for review on certiorari under Rule 45 of
the Rules of Court, subject to clearly settled exceptions in case law.
2.ID.; ID.; ID.; SUPREME COURT'S FUNCTION IS LIMITED TO REVIEWING ERRORS. Our jurisdiction in
cases brought to us from the Court of Appeals is limited to reviewing and revising the errors of law imputed
to the latter, its findings of fact being conclusive. This Court has emphatically declared that it is not its
function to analyze or weigh such evidence all over again, its jurisdiction being limited to reviewing errors
31

of law that might have been committed by the lower court. Barring, therefore, a showing that the findings
complained of are totally devoid of support in the record, or that they are so glaringly erroneous as to
constitute serious abuse of discretion, such findings must stand, for this Court is not expected required to
examine or contrast the oral and documentary evidence submitted by the parties. 7 Neither does the
instant case reveal any feature falling within any of the exceptions which under our decisional rules may
warrant a review of the factual findings of the Court of Appeals.
3.CIVIL LAW; DAMAGES; BREACH OF PROMISE TO MARRY; GENERALLY NOT ACTIONABLE; EXCEPTION.
It is true that in this jurisdiction, we adhere to the time-honored rule that an action for breach of
promise to marry has no standing in the civil law, apart from the right to recover money or property
advanced by the plaintiff upon the faith of such promise. Generally, therefore, a breach of promise to
marry per se is not actionable, except where the plaintiff has actually incurred expenses for the wedding
and the necessary incidents thereof.
4.ID.; ID.; ID.; MORAL DAMAGES; RATIONALE. However, the award of moral damages is allowed in
cases specified in or analogous to those provided in Article 2219 of the Civil Code. Correlatively, under
Article 21 of said Code, in relation to paragraph 10 of said Article 2219, any person who wilfully causes loss
or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate
the latter for moral damages. Article 21 was adopted to remedy the countless gaps in the statutes which
leave so many victims of moral wrongs helpless even though they have actually suffered material and moral
injury, and is intended to vouchsafe adequate legal remedy for that untold number of moral wrongs which
is impossible for human foresight to specifically provide for in the statutes.
5.ID.; ID.; ID.; ID.; AWARDED WHERE PETITIONER FORCIBLY ABDUCTED RESPONDENT AND HAD
CARNAL KNOWLEDGE WITH HER. Under the circumstances obtaining in the case at bar, the acts or
petitioner in forcibly abducting private respondent and having carnal knowledge with her against her will,
and thereafter promising to marry her in order to escape criminal liability, only to thereafter renege on such
promise after cohabiting with her for twenty-one days, irremissibly constitutes acts contrary to morals and
good customs. These are grossly insensate and reprehensible transgressions which indisputably warrant
and abundantly justify the award of moral and exemplary damages, pursuant to Article 21, in relation to
paragraphs 3 and 10, Article 2219, and Articles 2229 and 2234 of the Civil Code.
6.REMEDIAL LAW; CRIMINAL PROCEDURE; EXTINCTION OF PENAL ACTION DOES NOT CARRY WITH IT
EXTINCTION OF CIVIL LIABILITY; EXCEPTION. Generally, the basis of civil liability from crime is the
fundamental postulate of our law that every person criminally liable for a felony is also civilly liable. In other
words, criminal liability will give rise to civil liability ex delicto only if the same felonious act or omission
results in damage or injury to another and is the direct and proximate cause thereof. Hence, extinction of
the penal action does not carry with it the extinction of civil liability unless the extinction proceeds from a
declaration in a final judgment that the fact from which the civil might arise did not exist.
7.ID.; ID.; ID.; CASE AT BAR. In the instant case, the dismissal of the complaint for forcible abduction
with rape was by mere resolution of the fiscal at the preliminary investigation stage. There is no declaration
in a final judgment that the fact from which the civil case might arise did not exist. Consequently, the
dismissal did not in any way affect the right of herein private respondent to institute a civil action arising
from the offense because such preliminary dismissal of the penal action did not carry with it the extinction
of the civil action.
8.ID.; ID.; ID.; RATIONALE. The reason most often given for this holding is that the two proceedings
involved are not between the same parties. Furthermore, it has long been emphasized, with continuing
validity up to now, that there are different rules as to the competency of witnesses and the quantum of
evidence in criminal civil proceedings. In a criminal action, the State must prove its case by evidence which
32

shows the guilt of the accused beyond reasonable doubt, while in a civil action it is sufficient for the plaintiff
to sustain his cause by preponderance of evidence only. Thus, in Rillon, et al. vs. Rillon, we stressed that it
is not now necessary that a criminal prosecution for rape be first instituted and prosecuted to final
judgment before a civil action based on said offense in favor of the offended woman can likewise be
instituted and prosecuted to final judgment.
D E C I S I O N
REGALADO, J p:
Petitioner appeals for the reversal of the decision 1 of respondent Court of Appeals promulgated on May
17, 1991 in CA-G.R. CV No. 07054, entitled "Zenaida B. Cirilo vs. Conrado Bunag, Sr. and Conrado Bunag,
Jr.," which affirmed in toto the decision of the Regional Trial Court, Branch XI at Bacoor, Cavite, and,
implicitly, respondent court's resolution of September 3, 1992 2 denying petitioner's motion for
reconsideration.
Respondent court having assiduously discussed the salient antecedents of this case, vis-a-vis the factual
findings of the court below, the evidence of record and the contentions of the parties, it is appropriate that
its findings, which we approve and adopt, be extensively reproduced hereunder:
"Based on the evidence on record, the following facts are considered indisputable: On the afternoon of
September 8, 1973, defendant-appellant Bunag, Jr. brought plaintiff-appellant to a motel or hotel where
they had sexual intercourse. Later that evening, said defendant-appellant brought plaintiff-appellant to the
house of his grandmother Juana de Leon in Pamplona, Las Pias, Metro Manila, where they lived together
as husband and wife for 21 days, or until September 29, 1973. On September 10, 1973, defendant-
appellant Bunag, Jr. and plaintiff-appellant filed their respective applications for a marriage license with the
Office of the Local Civil Registrar of Bacoor, Cavite. On October 1, 1973, after leaving plaintiff-appellant,
defendant-appellant Bunag, Jr. filed an affidavit withdrawing his application for a marriage license.
"Plaintiff-appellant contends that on the afternoon of September 8, 1973, defendant-appellant Bunag, Jr.,
together with an unidentified male companion, abducted her in the vicinity of the San Juan de Dios Hospital
in Pasay City and brought her to a motel where she was raped. The court a quo, which adopted the
evidence, summarized the same which we paraphrased as follows: cdrep
`Plaintiff was 26 years old on November 5, 1974 when she testified, single and had finished a college
course in Commerce (t.s.n., p. 4, Nov. 5, 1974). It appears that on September 8, 1973, at about 4:00
o'clock in the afternoon, while she was walking along Figueras Street, Pasay City on her way to the San
Juan de Dios Canteen to take her snack, defendant, Conrado Bunag, Jr., came riding in a car driven by a
male companion. Plaintiff and defendant Bunag, Jr. were sweethearts, but two weeks before September 8,
1973, they had a quarrel, and Bunag, Jr. wanted to talk matters over with plaintiff, so that he invited her to
take their merienda at the Aristocrat Restaurant in Manila instead of at San Juan de Dios Canteen, to which
plaintiff obliged, as she believed in his sincerity (t.s.n., pp. 8-10, Nov. 5, 1974).'
`Plaintiff rode in the car and took the front seat beside the driver while Bunag, Jr. seated himself by her
right side. The car traveled north on its way to the Aristocrat Restaurant but upon reaching San Juan Street
in Pasay City, it turned abruptly to the right, to which plaintiff protested, but which the duo ignored and
instead threatened her not to make any noise as they were ready to die and would bump the car against
the post if she persisted. Frightened and silenced, the car traveled its course thru F.B. Harrison Boulevard
until they reached a motel. Plaintiff was then pulled and dragged from the car against her will, and amidst
her cries and pleas. In spite of her struggle she was no match to the joint strength of the two male
combatants because of her natural weakness being a woman and her small stature. Eventually, she was
brought inside the hotel where the defendant Bunag, Jr. deflowered her against her will and consent. She
33

could not fight back and repel the attack because after Bunag, Jr. had forced her to lie down and embraced
her, his companion held her two feet, removed her panty, after which he left. Bunag, Jr. threatened her
that he would ask his companion to come back and hold her feet if she did not surrender her womanhood
to him, thus he succeeded in feasting on her virginity. Plaintiff described the pains she felt and how blood
came out of her private parts after her vagina was penetrated by the penis of the defendant Bunag, Jr.
(t.s.n., pp. 17-24, Nov. 5, 1974).

`After that outrage on her virginity, plaintiff asked Bunag, Jr. once more to allow her to go home but the
latter would not consent and stated that he would only let her go after they were married as he intended to
marry her, so much so that she promised not to make any scandal and to marry him. Thereafter, they took
a taxi together after the car that they used had already gone, and proceeded to the house of Juana de
Leon, Bunag, Jr.'s grandmother in Pamplona, Las Pias, Metro Manila where they arrived at 9:30 o'clock in
the evening (t.s.n., p. 26, Nov. 5, 1974). At about ten (10) o'clock that same evening, defendant
Conrado Bunag, Sr., father of Bunag, Jr. arrived and assured plaintiff that the following day which was a
Monday, she and Bunag, Jr. would go to Bacoor, to apply for a marriage license, which they did. They filed
their applications for marriage license (Exhibits `A' and `C') and after that plaintiff and defendant Bunag,
Jr. returned to the house of Juana de Leon and lived there as husband and wife from September 8, 1973 to
September 29, 1973. LLphil
`On September 29, 1973 complaint Bunag, Jr. left and never returned, humiliating plaintiff and compelled
her to go back to her parents on October 3, 1973. Plaintiff was ashamed when she went home and could
not sleep and eat because of the deception done against her by defendant-appellants (t.s.n., p. 35, Nov. 5,
1974).
`The testimony of plaintiff was corroborated in toto by her uncle, Vivencio Bansagan who declared that on
September 8, 1973 when plaintiff failed to arrive home at 9:00 o'clock in the evening, his sister who is the
mother of plaintiff asked him to look for her but his efforts proved futile, and he told his sister that plaintiff
might have married (baka nag-asawa, t.s.n., pp. 5-6, March 18, 1976). However, in the afternoon of the
next day (Sunday), his sister told him that Francisco Cabrera, accompanied by barrio captain Jacinto
Manalili of Ligas, Bacoor, Cavite, informed her that plaintiff and Bunag, Jr. were in Cabrera's house, so that
her sister requested him to go and see the plaintiff, which he did, and at the house of Mrs. Juana de Leon
in Pamplona, Las Pias, Metro Manila he met defendant Conrado Bunag, Sr., who told him, `Pare, the
children are here already. Let us settle the matter and have them married.'
`He conferred with plaintiff who told that as she had already lost her honor, she would bear her sufferings
as Boy Bunag, Jr. and his father promised they would be married.'
"Defendants-appellants, on the other hand, deny that defendant-appellant Conrado Bunag, Jr. abducted
and raped plaintiff-appellant on September 8, 1973. On the contrary, plaintiff-appellant and defendant-
appellant Bunag, Jr. eloped on that date because of the opposition of the latter's father to their
relationship.
"Defendants-appellants claim that defendant-appellant Bunag, Jr. and plaintiff-appellant had earlier made
plans to elope and get married, and this fact was known to their friends, among them, Architect Chito
Rodriguez. The couple made good their plans to elope on the afternoon of September 8, 1973, when
defendant-appellantBunag, Jr., accompanied by his friend Guillermo Ramos, Jr., met plaintiff-appellant and
her officemate named Lydia in the vicinity of the San Juan de Dios Hospital. The foursome then proceeded
to (the) aforesaid hospital's canteen where they had some snacks. Later, Guillermo Ramos, Jr. took Lydia to
Quirino Avenue where she could get a ride home, thereby leaving the defendant-appellant Bunag, Jr. and
plaintiff-appellant alone. According to defendant-appellant Bunag, Jr., after Guillermo Ramos, Jr. and Lydia
34

left, he and plaintiff-appellant took a taxi to the Golden Gate and Flamingo Hotels where they tried to get a
room, but these were full. They finally got a room at the Holiday Hotel, where defendant-appellant
registered using his real name and residence certificate number. Three hours later, the couple checked out
of the hotel and proceeded to the house of Juana de Leon at Pamplona, Las Pias, where they stayed until
September 19, 1973. Defendant-appellant claims that bitter disagreements with plaintiff-appellant over
money and the threats made to his life prompted him to break off their plan to get married. llcd
"During this period, defendant-appellant Bunag, Sr. denied having gone to the house of Juan de Leon and
telling plaintiff-appellant that she would be wed to defendant-appellant Bunag, Jr. In fact, he phoned Atty.
Conrado Adreneda, member of the board of directors of Mandala Corporation, defendant-appellant Bunag,
Jr.'s employer, three times between the evening of September 8, 1973 and September 9, 1973 inquiring as
to the whereabouts of his son. He came to know about his son's whereabouts when he was told of the
couple's elopement late in the afternoon of September 9, 1973 by his mother Candida Gawaran. He likewise
denied having met relatives and emissaries of plaintiff-appellant and agreeing to her marriage to his son. 3
A complaint for damages for alleged breach of promise to marry was filed by herein private respondent
Zenaida B. Cirilo against petitioner Conrado Bunag, Jr. and his father, Conrado Bunag, Sr., as Civil Case No.
N-2028 of the Regional Trial Court, Branch XIX at Bacoor, Cavite. On August 20, 1983, on a finding, inter
alia, that petitioner had forcibly abducted and raped private respondent, the trial court rendered a
decision 4 ordering petitioner Bunag, Jr. to pay private respondent P80,000.00 as moral damages,
P20,000.00 as exemplary damages, P20,000.00 by way of temperate damages, and P10,000.00 for and as
attorney's fees, as well as the costs of suit. Defendant ConradoBunag, Sr. was absolved from any and all
liability.
Private respondent appealed that portion of the lower court's decision disculpating Conrado Bunag, Sr. from
civil liability in this case. On the other hand, the Bunags, as defendants-appellants, assigned in their appeal
several errors allegedly committed by the trial court, which were summarized by respondent court as
follows: (1) in finding that defendant-appellant Conrado Bunag, Jr. forcibly abducted and raped plaintiff-
appellant; (2) in finding that defendants-appellants promised plaintiff-appellant that she would be wed to
defendant-appellant Conrado Bunag, Jr.; and (3) in awarding plaintiff-appellant damages for the breach of
defendants-appellants' promise of marriage. 5
As stated at the outset, on May 17, 1991 respondent Court of Appeals rendered judgment dismissing both
appeals and affirming in toto the decision of the trial court. His motion for reconsideration having been
denied, petitioner Bunag, Jr. is before us on a petition for review, contending that (1) respondent court
failed to consider vital exhibits, testimonies and incidents for petitioner's defense, resulting in the
misapprehensions of facts and violative of the law on preparation of judgments; and (2) it erred in the
application of the proper law and jurisprudence by holding that there was forcible abduction with rape, not
just a simple elopement and an agreement to marry, and in the award of excessive damages. 6
Petitioner Bunag, Jr. first contends that both the trial and appellate courts failed to take into consideration
the alleged fact that he and private respondent had agreed to marry, and that there was no case of forcible
abduction with rape, but one of simple elopement and agreement to marry. It is averred that the
agreement to marry has been sufficiently proven by the testimonies of the witnesses for both parties and
the exhibits presented in court.
This submission, therefore, clearly hinges on the credibility of the witnesses and evidence presented by the
parties and the weight accorded thereto in the factual findings of the trial court and the Court of Appeals.
In effect, what petitioner would want this Court to do is to evaluate and analyze anew the evidence, both
testimonial and documentary, presented before and calibrated by the trial court, and as further
meticulously reviewed and discussed by respondent court.
35

The issue raised primarily and ineluctably involves questions of fact. We are, therefore, once again
constrained to stress the well-entrenched statutory and jurisprudential mandate that findings of fact of the
Court of Appeals are, as a rule, conclusive upon this Court. Only questions of law, distinctly set forth, may
be raised in a petition for review on certiorari under Rule 45 of the Rules of Court, subject to clearly settled
exceptions in case law.
Our jurisdiction in cases brought to us from the Court of Appeals is limited to reviewing and revising the
errors of law imputed to the latter, its findings of fact being conclusive. This Court has emphatically
declared that it is not its function to analyze or weigh such evidence all over again, its jurisdiction being
limited to reviewing errors of law that might have been committed by the lower court. Barring, therefore, a
showing that the findings complained of are totally devoid of support in the record, or that they are so
glaringly erroneous as to constitute serious abuse of discretion, such findings must stand, for this Court is
not expected required to examine or contrast the oral and documentary evidence submitted by the
parties. 7 Neither does the instant case reveal any feature falling within any of the exceptions which under
our decisional rules may warrant a review of the factual findings of the Court of Appeals. On the foregoing
considerations and our review of the records, we sustain the holding of respondent court in favor of private
respondent.
Petitioner likewise asserts that since the action involves a breach of promise to marry, the trial court erred
in awarding damages. prcd
It is true that in this jurisdiction, we adhere to the time-honored rule that an action for breach of promise to
marry has no standing in the civil law, apart from the right to recover money or property advanced by the
plaintiff upon the faith of such promise. 8 Generally, therefore, a breach of promise to marry per se is not
actionable, except where the plaintiff has actually incurred expenses for the wedding and the necessary
incidents thereof.

However, the award of moral damages is allowed in cases specified in or analogous to those provided in
Article 2219 of the Civil Code. Correlatively, under Article 21 of said Code, in relation to paragraph 10 of
said Article 2219, any person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for moral damages. 9 Article 21 was
adopted to remedy the countless gaps in the statutes which leave so many victims of moral wrongs
helpless even though they have actually suffered material and moral injury, and is intended to vouchsafe
adequate legal remedy for that untold number of moral wrongs which is impossible for human foresight to
specifically provide for in the statutes. 10
Under the circumstances obtaining in the case at bar, the acts of petitioner in forcibly abducting private
respondent and having carnal knowledge with her against her will, and thereafter promising to marry her in
order to escape criminal liability, only to thereafter renege on such promise after cohabiting with her for
twenty-one days, irremissibly constitutes acts contrary to morals and good customs. These are grossly
insensate and reprehensible transgressions which indisputably warrant and abundantly justify the award of
moral and exemplary damages, pursuant to Article 21, in relation to paragraphs 3 and 10, Article 2219,
and Articles 2229 and 2234 of the Civil Code.
Petitioner would, however, belabor the fact that said damages were awarded by the trial court on the basis
of a finding that he is guilty of forcible abduction with rape, despite the prior dismissal of the complaint
therefor filed by private respondent with the Pasay City Fiscal's Office.
Generally, the basis of civil liability from crime is the fundamental postulate of our law that every person
criminally liable for a felony is also civilly liable. In other words, criminal liability will give rise to civil
36

liability ex delicto only if the same felonious act or omission results in damage or injury to another and is
the direct and proximate cause thereof. 11 Hence, extinction of the penal action does not carry with it the
extinction of civil liability unless the extinction proceeds from a declaration in a final judgment that the fact
from which the civil might arise did not exist. 12
In the instant case, the dismissal of the complaint for forcible abduction with rape was by mere resolution
of the fiscal at the preliminary investigation stage. There is no declaration in a final judgment that the fact
from which the civil case might arise did not exist. Consequently, the dismissal did not in any way affect the
right of herein private respondent to institute a civil action arising from the offense because such
preliminary dismissal of the penal action did not carry with it the extinction of the civil action.
The reason most often given for this holding is that the two proceedings involved are not between the
same parties. Furthermore, it has long been emphasized, with continuing validity up to now, that there are
different rules as to the competency of witnesses and the quantum of evidence in criminal and civil
proceedings. In a criminal action, the State must prove its case by evidence which shows the guilt of the
accused beyond reasonable doubt, while in a civil action it is sufficient for the plaintiff to sustain his cause
by preponderance of evidence only. 13 Thus, in Rillon, et al. vs. Rillon, 14 we stressed that it is not now
necessary that a criminal prosecution for rape be first instituted and prosecuted to final judgment before a
civil action based on said offense in favor of the offended woman can likewise be instituted and prosecuted
to final judgment.
WHEREFORE, the petition is hereby DENIED for lack of merit, and the assailed judgment and resolution are
hereby AFFIRMED.
SO ORDERED.

[G.R. No. L-47739. June 22, 1983.]
SINGAPORE AIRLINES LIMITED, petitioner, vs. HON. ERNANI CRUZ PAO, as Presiding Judge of
Branch XVIII, Court of First Instance of Rizal, CARLOS E. CRUZ, and B. E.
VILLANUEVA, respondents.
Bengzon, Zarraga, Narciso, Cudala, Pecson, Azucena & Bengzon Law Offices for petitioner.
Celso P. Mariano Law Office for private respondent Carlos Cruz.
Romeo Comia for private respondent B. E. Villanueva.
SYLLABUS
1.REMEDIAL LAW; ACTION; BREACH OF CONTRACTUAL OBLIGATION; CASE FOR RECOVERY OF DAMAGES
COGNIZABLE BY COURTS OF JUSTICE. Upon the facts and issues involved, jurisdiction over the present
controversy must be held to belong to the civil Courts. While seemingly petitioner's claim for damages
arises from employer-employee relations, and the latest amendment to Article 217 of the Labor Code
under P.D. No. 1691 and B.P. Blg. 130 provides that all other claims arising from employer-employee
relationship are cognizable by Labor Arbiters, in essence, petitioner's claim for damages is grounded on the
"wanton failure and refusal" without just cause of private respondent Cruz to report for duty despite
repeated notices served upon him of the disapproval of his application for leave of absence without pay.
This, coupled with the further averment that Cruz "maliciously and with bad faith" violated the terms and
conditions of the conversion training course agreement to the damage of petitioner removes the present
controversy from the coverage of the Labor Code and brings it within the purview of Civil Law. Clearly, the
complaint was anchored not on the abandonment per se by private respondent Cruz of his job as the
37

latter was not required in the Complaint to report back to work but on the manner and consequent
effects of such abandonment of work translated in terms of the damages which petitioner had o suffer.
2.ID.; ID.; QUESTION OF LIABILITY EITHER AS A SURETY OR, AS A GUARANTOR, BEYOND THE FIELD OF
SPECIALIZATION OF LABOR ARBITERS. There is a secondary issue involved that is outside the pale of
competence of Labor Arbiters. Is the liability of Villanueva one of suretyship or one of guaranty?
Unquestionably, this question is beyond the field of specialization of Labor Arbiters.
D E C I S I O N
MELENCIO-HERRERA, J p:
On the basic issue of lack of jurisdiction, petitioner company has elevated to us for review the two Orders
of respondent Judge dated October 28, 1977 and January 24, 1978 dismissing petitioner's complaint for
damages in the first Order, and denying its Motion for Reconsideration in the second.
On August 21, 1974, private respondent Carlos E. Cruz was offered employment by petitioner as Engineer
Officer with the opportunity to undergo a B-707 "conversion training course," which he accepted on August
30, 1974. An express stipulation in the letter-offer read:
"3.BONDING.As you will be provided with conversion training you are required to enter into a bond with
SIA for a period of 6 years. For this purpose, please inform me of the names and addresses of your sureties
as soon as possible."
Twenty six days thereafter, or on October 26, 1974, Cruz entered into an "Agreement for a Course of
Conversion Training at the Expense of Singapore Airlines Limited" wherein it was stipulated among others:
"4.The Engineer Officer shall agree to remain in the service of the Company for a period of five years from
the date of commencement of such aforesaid conversion training if so required by the Company.
5.In the event of the Engineer Officer:
1.Leaving the service of the company during the period of five years referred to in Clause 4 above, or
2.Being dismissed or having his services terminated by the company for misconduct,
the Engineer Officer and the Sureties hereby bind themselves jointly and severally to pay to the Company
as liquidated damages such sums of money as are set out hereunder:
(a)during the first year of the period of five
year referred to in Clause 4 above$67,460/
(b)during the second year of the period of
five years referred to in Clause 4 above$53,968/
(c)during the third year of the period of five
years referred to in Clause 4 above$40,476/
(d)during the fourth year of the period of five
years referred to in Clause 4 above$26,984/
(e)during the fifth year of the period of five
years referred to in Clause 4 above$13,492/
38

"6.The provisions of Clause 5 above shall not apply in a case where an Engineer Officer has his training
terminated by the Company for reasons other than misconduct or where, subsequent to the completion of
training, he
1.loses his license to operate as a Flight Engineer due to medical reasons which can in no way be
attributable to any act or omission on his part;
2is unable to continue in employment with the Company because his employment pass or work permit, as
the case may be, has been withdrawn or has not been renewed due to no act or omission on his part;
3.has his services terminated by the Company as a result of being replaced by a national Flight Engineer;
4.has to leave the service of the Company on valid compassionate grounds stated to and accepted by the
Company in writing." 1
Cruz signed the Agreement with his co-respondent, B. E. Villanueva, as surety.
Claiming that Cruz had applied for "leave without pay" and had gone on leave without approval of the
application during the second year of the period of five years, petitioner filed suit for damages against Cruz
and his surety, Villanueva, for violation of the terms and conditions of the aforesaid Agreement. Petitioner
sought the payment of the following sums: liquidated damages of $53,968.00 or its equivalent of
P161,904.00 (1st cause of action); $883.91 or about P2,651.73 as overpayment in salary (2nd clause of
action); $61.00 or about P183.00 for cost of uniforms and accessories supplied by the company plus
$230.00, or roughly P690.00, for the cost of a flight manual (3rd cause of action); and $1,533.71, or
approximately P4,601.13 corresponding to the vacation leave he had availed of but to which he was no
longer entitled (4th cause of action); exemplary damages; attorney's fees; and costs. LLjur
In his Answer, Cruz denied any breach of contract contending that at no time had he been required by
petitioner to agree to a straight service of five years under Clause 4 of the Agreement (supra) and that he
left the service on "valid compassionate grounds stated to and accepted by the company", so that no
damages may be awarded against him. And because of petitioner-plaintiff's alleged ungrounded causes of
action, Cruz counter claimed for attorney's fees of P7,000.00.
The surety, Villanueva, in his own Answer, contended that his undertaking was merely that of one of two
guarantors not that of surety and claimed the benefit of excussion, if at all found liable. He then filed a
cross claim against Cruz for damages and for whatever amount he may be held liable to petitioner-plaintiff;
and a counterclaim for actual, exemplary, moral and other damages plus attorney's fees and litigation
expenses against petitioner-plaintiff.
The issue of jurisdiction having been raised at the pre-trial conference, the parties were directed to submit
their respective memoranda on that question, which they complied with in due time. On October 28, 1977,
respondent Judge issued the assailed Order dismissing the complaint, counterclaim and cross claim for lack
of jurisdiction stating:
"2.The present case therefore involves a money claim arising from an employer-employee relation or at the
very least a case arising from employer-employee relations, which under Art. 216 of the Labor Code is
vested exclusively with the Labor Arbiters of the National Labor Relations Commission." 2
Reconsideration thereof having been denied in the Order of January 24, 1978, petitioner availed of the
present recourse. We gave due course.
We are here confronted with the issue of whether or not this case is properly cognizable by Courts of
justice or by the Labor Arbiters of the National Labor Relations Commission.
39

Upon the facts and issues involved, jurisdiction over the present controversy must be held to belong to the
civil Courts. While seemingly petitioner's claim for damages does from employer-employee relations, and
the latest amendment to Article 217 of the Labor Code under PD No. 1691 and BP Blg. 130 provides that all
other claims arising from employer-employee relationship are cognizable by Labor Arbiters, 3 in essence,
petitioner's claim for damages is grounded on the "wanton failure and refusal" without just cause of private
respondent Cruz to report for duty despite repeated notices served upon him of the disapproval of his
application for leave of absence without pay. This, coupled with the further averment that Cruz "maliciously
and with bad faith" violated the terms and conditions of the conversion training course agreement to the
damage of petitioner removes the present controversy from the coverage of the Labor Code and brings it
within the purview of Civil Law.
Clearly, the complaint was anchored not on the abandonment per se by private respondent Cruz of his job
as the latter was not required in the Complaint to report back to work but on
the manner and consequent effects of such abandonment of work translated in terms of the damages
which petitioner had to suffer.
Squarely in point is the ruling enunciated in the case of Quisaba vs. Sta. Ines Melale Veneer & Plywood,
Inc., 4 the pertinent portion of which reads:
"Although the acts complained of seemingly appear to constitute 'matter involving employee-employer'
relations as Quisaba's dismissal was the severance of a pre-existing employee-employer relations, his
complaint is grounded not on his dismissal per se, as in fact he does not ask for reinstatement or back
wages, but on the manner of his dismissal and the consequent effects of such dismissal.
"Civil law consists of that 'mass of precepts that determine or regulate the relations . . . that exist between
members of a society for the protection of private interest (1 Sanchez Roman 3).

"The 'right' of the respondents to dismiss Quisaba should not be confused with the manner in which the
right was exercised and the effects flowing therefrom. If the dismissal was done anti-socially or
oppressively, as the complaint alleges, then the respondents violated article 1701 of the Civil Code which
prohibits acts of oppression by either capital or labor against the other, and article 21, which makes a
person liable for damages if he wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy, the sanction for which, by way of moral damages, is provided in
article 2219, No. 10 (Cf, Philippine Refining Co. vs. Garcia, L-21962, Sept. 27, 1966, 18 SCRA 107)."
Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor
Code. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other
items demanded are not labor benefits demanded by workers generally taken cognizance of in labor
disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the
natural consequences flowing from breach of an obligation, intrinsically a civil dispute. prLL
Additionally, there is a secondary issue involved that is outside the pale of competence of Labor Arbiters. Is
the liability of Villanueva one of suretyship or one of guaranty? Unquestionably, this question is beyond the
field of specialization of Labor Arbiters.
WHEREFORE, the assailed Orders of respondent Judge are hereby set aside. The records are hereby
ordered remanded to the proper Branch of the Regional Trial Court of Quezon City, to which this case
belongs, for further proceedings.
No costs.
40

SO ORDERED.

[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.
[G.R. Nos. 60958-59. February 17, 2000.]
THE ASSOCIATED ANGLO-AMERICAN TOBACCO CORPORATION, petitioner, vs. COURT OF
APPEALS, ANDRES LAO, JOSE LAO, and TOMAS LAO,respondents.
Gruba Tanlimco Lamson & Apuhin for Associated Anglo American Tobacco Corporation.
Alfredo O. Felizardo for petitioner Esteban Co.
Sycip, Salazar, Hernandez & Gatmaitan for Andres Lao, Jose Lao and Tomas Lao.
SYNOPSIS
On April 6, 1965, the Associated Anglo-American Tobacco Corporation (Corporation) 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. For his services, Lao would receive commission
depending on the kind of cigarettes sold, fixed monthly salary and operational allowances. As a guarantee
to Lao's compliance with his contractual obligations, his brothers Jose and his father Tomas executed a
deed of mortgage in favor of the corporation in the amount of P200,000.00. The agreement went on
smoothly. But in February 1968, Lao failed to accomplish his monthly sales report. Due to this failure, the
corporation reminded Lao of his enormous accounts and the difficulty of obtaining a tally thereon despite
Lao's avowal of regular remittances of his collection. In 1969, the corporation summoned Lao, for an
accounting, collections and that Lao's liability was established. On May 21, 1970, Andres, Jose and Tomas
Lao brought a complaint (Civil Case No. 4452) for accounting and damages against the corporation. The
lower court ordered the formation of a Committee on Audit to determine the true and correct accountability
of Andres Lao to the corporation. After the accounting, the trial court promulgated a supplemental decision
wherein it dismissed Lao's claim of overpayment and ordered Lao to pay the corporation the sum of
P167,745.20. The corporation appealed the decision, just as Lao appealed the supplemental decision to the
Court of Appeals. On October 26, 1981, the appellate court rendered a decision ordering the corporation to
pay Lao the total amount of P190,000.00 for damages. Likewise, the appellate court reversed and set aside
the supplemental decision of the trial court and ordered the corporation to reimburse Lao's overpayment of
P556,444.20. The corporation filed motions for reconsideration but the same were denied.
Meanwhile, during the pendency of Civil Case 4952, the corporation filed a complaint for estafa (Criminal
Case No. 26500) against Lao for his alleged failure to remit the amount of P224,585.82 which he allegedly
misappropriated and converted for his personal use. The said case was dismissed later but during the
pendency of said Criminal Case, Lao lodged a complaint for malicious prosecution (Civil Case No. 5528)
against the corporation praying for the award of damages. On March 18, 1977, the lower court rendered a
decision in the action for malicious prosecution finding the corporation liable for damages. On April 18,
1977, Lao filed a motion for execution pending appeal in Civil Case No. 5528. This was opposed by the
corporation, but the trial court granted said motion. Because of these decisions, both parties filed an appeal
41

before the Court of Appeals primarily questioning the decision rendered by the lower courts. On September
14, 1977, the Court of Appeals in CA G.R. No. 06761 rendered a decision annulling the granting of
execution pending appeal. The Court of Appeals likewise affirmed in CA G.R. No. 62532-R the trial court's
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. Because of these decisions, both parties filed
several petitions in the Supreme Court questioning the decisions rendered by the Court of Appeals.
In G.R. No. 47013, the Court ruled that 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 as it was necessary
and inevitable for it to look into the diverse factual allegations of the parties. Anent the issue of posting of
the bond, the Court ruled that mere posting of a bond to answer for damages does not suffice as a good
reason for granting execution pending appeal.
In G.R. No. 60647, the Court ruled that petitioner Co's authority 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. The failure of the
corporation 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 petitioner Lao does accorded with law and
jurisprudence.
In G.R. Nos. 606958-59, the Court ruled that the complaint for damages based on malicious prosecution
and Articles 20 and 21 of the Civil Code should have been dismissed for lack of cause of action. As regards
the decision in CA G.R. No. 62532-R, the Court ruled that it is within the power of the trial court to refer the
accounting to court-appointed commissioners because true and correct accounting is necessary for the
information of the court before it can render judgment. Since both parties offered no objection to the
commissioners' report, they are deemed to have accepted and admitted the finding therein contained.
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 receipt invoices cannot be included in Lao's
accountability.
SYLLABUS
1.REMEDIAL LAW; CIVIL PROCEDURE; COURT SHOULD NOT BE SO STRICT ABOUT PROCEDURAL LAPSES
THAT DO NOT REALLY IMPAIR THE PROPER ADMINISTRATION OF JUSTICE. 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: ". . . (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." 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 Co's 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.
2.ID.; ID.; SPECIAL CIVIL ACTION; IN A PETITION FOR CERTIORARI AND MANDAMUS, THE COURT OF
APPEALS, WHEN INEVITABLE, MAY EXAMINE THE FACTUAL MERITS OF THE CASE. Petitioner Co argues
that the Court of Appeals cannot disturb the factual findings of the trial court and substitute its own in a
42

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. 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 petitioner's 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 Corporation's 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.
3.ID.; ID.; JUDGMENT; EXECUTION PENDING APPEAL; MERE POSTING OF A BOND TO ANSWER FOR
DAMAGES DOES NOT SUFFICE AS A GOOD REASON FOR THE GRANT THEREOF. Petitioner Lao's 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. In Roxas v. Court of Appeals, the Court held: "It is not intended
obviously that execution pending appeal shall issue as a matter of course. 'Good reasons, special,
important, pressing reasons 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."

4.ID.; ID.; ACTIONS; 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. 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. The Corporation's 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.
5.CIVIL LAW; DAMAGES; MALICIOUS PROSECUTION; DEFINED; ELEMENTS. 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. 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.
43

6.REMEDIAL LAW; CIVIL PROCEDURE; CAUSE OF ACTION; 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. 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. As this Court said in Surigao Mine Exploration Co., Inc. v. Harris, "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." Thus, the circumstance that
the estafa case concluded in respondent Lao's 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.
7.ID.; ID.; TRIAL BY COMMISSIONER; WHEN ALLOWED. 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. 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. 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.
8.COMMERCIAL LAW; TRANSPORTATION LAW; BILL OF LADING; A BILL OF LADING CANNOT SUBSTITUTE
FOR A DELIVERY RECEIPT. Delivery is generally evidenced by a written acknowledgment 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 acknowledgment 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. 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.
9.ID.; ID.; CONSIGNMENT INVOICE; NOT EVIDENCE OF ACTUAL DELIVERY OF THE GOODS. 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. It is not proof that the thing or goods
were actually delivered to the vendee or the consignee. IcHAaS
10.CIVIL LAW; ACTUAL DAMAGES; PROPERLY AWARDED BUT REDUCED TO P30,000.00. 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. In this case, however, the trial court correctly found that an award for
44

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
corporation's 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
establish Lao's 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. 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.
D E C I S I O N
PURISIMA, J p:
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. LLphil
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 Lao's
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.
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 Lao's 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 Lao's
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.
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 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
45

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 Lao's total obligations duly supported by receipts amounted to P248,990.82.
Since Lao appeared to encounter difficulties in complying with his obligations under the contract of agency,
the Corporation sent Ngo Kheng to supervise Lao's sales operations in Leyte and Samar. Ngo Kheng
discovered that, contrary to Lao's allegation that he still had huge collectibles from his customers, nothing
was due the Corporation from Lao's 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. dctai
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:
"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:
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 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, attorney's fees in the amount of P40,000.00.
6.Ordering the plaintiff 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:
"Total remittances made by Mr. Andres Lao in favor
of Associated from April 10, 1965 to November
46

1969 which are substantially supported by official
receiptP13,686,148.80
Shipments by Associated to Mr. Andres Lao duly
supported by bills of lading, factory consignment
invoices and delivery receipts9,110,777.00
Shipments by Associated to Mr. Andres 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)4,018,927.60
Shipments covered by bills of lading and factory
consignment invoices but with no supporting
delivery receipts597,239.40
Shipments with covering factory consignment
invoices but not covered by bills of lading and
delivery receipts126,950.00"
On February 28, 1977, the trial court 7 promulgated a supplemental decision wherein it dismissed Lao's
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, Lao's 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 Lao's 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."
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: cdasia
"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.
47

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 Lao's 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
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 complaint12 with the Pasay City Fiscal's
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.
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.
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.
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.
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:
"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 Anglo-American Tobacco Corporation and
Esteban Co to jointly and severally pay the plaintiff:

a.P30,000 as actual damages;
b.P150,000.00 as moral damages;
c.P100,000.00 as exemplary damages;
d.P50,000.00 as attorney's fees and costs.
48

SO ORDERED."
The Corporation and Esteban Co both appealed the aforesaid decision to the Court of Appeals under CA-
G.R. No. 61925-R.
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
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 forcertiorari, 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.
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 court's 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, attorney's fees and costs.
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.
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.
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
court's 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
court's holding that the posting of a good and solvent bond is a good or special reason for execution
pending appeal.
49

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:
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 Corporation's properties were mortgaged in the total amount of Seven Million (P7,000,000.00) Pesos.
The Corporation and Co opposed both motions.
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 filing 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
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
In their comment on the petition, respondent Corporation and Co assail petitioner Lao's insinuation of
irregularity in the filing of their pleadings. They aver that in view of petitioner Lao's 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
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 simultaneous receipt of pleadings that should ordinarily be received one after
another is simply insufficient to warrant any conclusion on irregularity of procedure.
50

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. cdtai
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.
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:
". . . 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

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:
". . . (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
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 Co's 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 mandamuswhere 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 petitioner's motion for execution pending
appeal was premised on his contention that the award of damages in his favor would be meaningless on
51

account of respondent Corporation's 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.
Petitioner Lao's 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:
"It is not intended obviously that execution pending appeal shall issue as a matter of course. 'Good
reasons, special, important, pressing reasons 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
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 court's decision, the Court of Appeals deduced from the facts
established that the Corporation knew all along that Lao's 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 Lao's social and business standing. 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, his power to bind the Corporation as
its agent must be sought from statute, charter, by-laws, a delegation of authority to a corporate officer, or
52

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 petitioner's 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.
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 Corporation's 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.
G.R. Nos. 606958-59
In this petition for review on certiorari of the Decisions of the Court of Appeals in CA-G.R. No. 61925-R,
regarding Lao's claim for damages on account of malicious prosecution, and in CA-G.R. No. 62532-R that
arose from Lao's 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. . . . .
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. . . . .
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
damages and was already awarded in Civil Case No. 5528. Moral damages must be specifically prayed for. .
. . .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.
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

53

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:
". . . . The veracity of this allegation is not for us to determine, for if We rule and allow the civil case for
damages to proceed on that ground, there is the possibility that the court a quo in deciding said case might
declare the respondents victims of harassment and thereby indirectly interfere with the proceedings before
the POLCOM. The respondents' case for damages before the lower court is, therefore, premature as it was
filed during the pendency of the administrative case against the respondents before the POLCOM. The
possibility cannot be overlooked that the POLCOM may hand down a decision adverse to the respondents,
in which case the damage suit will become unfounded and baseless for wanting in cause of action. Of
persuasive force is the ruling in William H. Brown vs. Bank of the Philippine Islands and Santiago Freixas,
101 Phil. 309, 312, where this Court said: LibLex
". . . . 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
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.
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 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 Lao's 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.
Neither does the Court find merit in respondent Lao's 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
54

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 Lao's 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 Lao's acquittal would not infuse a cause of action on the
malicious prosecution case already commenced and pending resolution.
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
As regards the Decision in CA-G.R. No. 62532-R which was spawned by respondent Lao's 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 Lao's 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 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
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.
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
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
55

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 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 Lao's monthly sales report.

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. cdphil
Delivery is generally evidenced by a written acknowledgment 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 acknowledgment 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.
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:
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 Corporation to plaintiff Andres Lao. (t.s.n., November 25, 1976, pp.
45-47 as cited in Respondent Lao's 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 Lao's accountability.
56

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 Lao's account because such
shipments were reported in the latter's 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 Lao's 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.
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
corporation's 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
establish Lao's 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.
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 quasi-contracts, 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 attorney's
fees should be deleted.
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
57

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 Lao's 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.

[G.R. No. 107019. March 20, 1997.]
FRANKLIN M. DRILON, AURELIO C. TRAMPE, GREGORIO A. ARIZALA, CESAR M. SOLIS and
FERDINAND R ABESAMIS, petitioners, vs. COURT OF APPEALS, HON. GEORGE C. MACLI-ING, in
his capacity as Presiding Judge of Branch 100 of the Regional Trial Court of Quezon City, and
HOMOBONO ADAZA,respondents.
Armando M. Marcelo private respondent.
SYLLABUS
1.REMEDIAL LAW; CIVIL PROCEDURE, APPEAL, WHEN A PARTY ADOPTS A CERTAIN THEORY IN THE
COURT BELOW, HE WILL NOT BE PERMITTED TO CHANGE HIS THEORY ON APPEAL. An examination of
the records would show that this latest posture as to the nature of his cause of action is only being raised
for the first time on appeal. Nowhere in his complaint filed with the trial court did respondent Adaza allege
that his action is one based on tort or on Section 3(e) of Republic Act No. 3019. Such a change of theory
cannot be allowed. When a party adopts a certain theory in the court below, he will not be permitted to
change his theory on appeal, for to permit him to do so would not only be unfair to the other party but it
would also be offensive to the basic rules of fair play, justice and due process.
2.ID.; ID.; SPECIAL CIVIL ACTIONS; IF THE LOWER COURT DENYING THE MOTION TO DISMISS ACTS
WITHOUT OR IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION, CERTIORARI
UNDER RULE 65 MAY BE AVAILED OF; CASE AT BAR. The ordinary procedure, as a general rule, is that
petitioners should have filed an answer, go to trial, and if the decision is adverse, reiterate the issue on
appeal. This general rule, however, is subject to certain exceptions, among which are, if the court denying
the motion to dismiss acts without or in excess of jurisdiction or with grave abuse of discretion, in which
case certiorari under Rule 65 may be availed of. The reason is that it would be unfair to require the
defendants (petitioners in this case) to undergo the ordeal and expense of trial under such circumstances,
because the remedy of appeal then would then not be plain and adequate. Judge Macli-ing committed
grave abuse of discretion in denying petitioners' motion to dismiss the Adaza complaint, and thus public
respondent Court of Appeals should have issued the writ of certiorari prayed for by the petitioners and
annulled the February 8, 1991 and May 14, 1991 Orders of respondent Judge. It was grievous error on the
part of the court a quo not to have done so. This has to be corrected. Respondent Adaza's baseless action
cannot be sustained for this would unjustly compel the petitioners to needlessly go through a protracted
trial and thereby unduly burden the court with one more futile and inconsequential case.
3.CIVIL LAW; DAMAGES; MALICIOUS PROSECUTION; CONSTRUED UNDER AMERICAN AND PHILIPPINE
JURISDICTION. 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
58

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)."
4.ID.; ID.; ID.; ELEMENTS THEREOF. In order for a malicious prosecution suit to prosper, the plaintiff
must prove three (3) elements: (1) the fact of the prosecution and the further fact that the defendant was
himself the prosecutor and that the action finally terminated with an acquittal; (2) that in bringing the
action, the prosecutor acted without probable cause; and (3) that the prosecutor was actuated or impelled
by legal malice, that is by improper or sinister motive. All these requisites must concur.
5.ID.; ID.; ID.; DISCHARGED ON A WRIT OF HABEAS CORPUS AND GRANTED BAIL, NOT THE
TERMINATION OF THE ACTION COMTEMPLATED TO WARRANT THE INSTITUTION OF A MALICIOUS
PROSECUTION. There is nothing in the records which shows, and the complaint does not allege, that
Criminal Case No. Q-90-11855, filed by the petitioners against respondent Adaza for Rebellion with Murder
and Frustrated Murder, has been finally terminated and therein accused Adaza acquitted of the charge. Not
even Adaza himself, thru counsel, makes any positive asseveration on this aspect that would establish his
acquittal. Insofar as Criminal Case No. Q-90-11855 is concerned, what appears clear from the records only
is that respondent has been discharged on a writ of habeas corpus and granted ball. This is not, however,
considered the termination of the action contemplated under Philippine jurisdiction to warrant the
institution of a malicious prosecution suit against those responsible for the filing of the information against
him.
6.ID.; ID.; ID.; ONE CANNOT BE HELD LIABLE FOR MALICIOUSLY INSTITUTING A PROSECUTION WHERE
ONE HAS ACTED WITH PROBABLE CAUSE; CASE AT BAR. It is well-settled that one cannot be held liable
for maliciously instituting a prosecution where one has acted with probable cause. Elsewise stated, a suit
for malicious prosecution will lie only in cases where a legal prosecution has been carried on without
probable cause. The reason for this rule is that it would be a very great discouragement to public justice, if
prosecutors, who had tolerable ground of suspicion, were liable to be sued at law when their indictment
miscarried. In the case under consideration, the decision of the Special Team of Prosecutors to file the
information for rebellion with murder and frustrated murder against respondent Adaza, among others,
cannot be dismissed as the mere product of whim or caprice on the part of the prosecutors who conducted
the preliminary investigation. Said decision was fully justified in an eighteen (18)-page Resolution dated
April 17, 1990. Here, since the petitioners were of the honest conviction that there was probable cause to
hold respondent Adaza for trial for the crime of rebellion with murder and frustrated murder, and since
Adaza himself, through counsel, did not allege in his complaint lack of probable cause, we find that the
petitioners cannot be held liable for malicious prosecution.
7.ID.; ID.; ID.; PRESENCE OF PROBABLE CAUSE, SIGNIFIES THE ABSENCE OF MALICE. As to the
requirement that the prosecutor must be impelled by malice in bringing the unfounded action, suffice it to
state that the presence of probable cause signifies, as a legal consequence, the absence of malice. At the
risk of being repetitious, it is evident in this case that petitioners were not motivated by malicious intent or
by a sinister design to unduly harass private respondent, but only by a well-founded belief that respondent
Adaza can be held for trial for the crime alleged in the information.
D E C I S I O N
59

HERMOSISIMA, JR., J p:
Petitioners seek the reversal of the Resolutions of respondent Court of Appeals in CA-G.R SP No. 25080
dated January 31, 1992 and September 2, 1992 affirming the Orders, dated February 8, 1991 and May 14,
1991, of respondent Judge George C. Macli-ing which denied herein petitioner's Motion to Dismiss the
complaint filed in Civil Case No. Q-90-6073 by respondent Homobono Adaza.
The facts are not in dispute.
In a letter-complaint to then Secretary of Justice Franklin Drilon 1 dated March 20, 1990, General Renato
de Villa, 2 who was then the Chief of Staff of the Armed Forces of the Philippines, requested the
Department of Justice to order the investigation of several individuals named therein, including herein
private respondent Homobono Adaza, for their alleged participation in the failed December 1989 coup
d'etat. The letter-complaint was based on the affidavit of Brigadier General Alejandro Galido, Captain
Oscarlito Mapalo, Colonel Juan Mamorno, Colonel Hernani Figueroa and Major Eduardo Sebastian.
Gen. de Villa's letter-complaint with its annexes was referred for preliminary inquiry to the Special
Composite Team of Prosecutors created pursuant to Department of Justice Order No. 5 dated January 10,
1990. Petitioner then Assistant Chief State Prosecutor Aurelio Trampe, 3 the Team Leader, finding sufficient
basis to continue the inquiry, issued a subpoena to the individuals named in the letter-complaint, Adaza
included, and assigned the case for preliminary investigation to a panel of investigators composed of
prosecutors George Arizala, as Chairman, and Ferdinand Abesamis and Cesar Solis as members. The case
was docketed as I.S. No. DOJ-SC-90-013.
On April 17, 1990, the panel released its findings, thru a Resolution, which reads:
"PREMISES CONSIDERED, we find and so hold that there is probable cause to hold herein respondents for
trial for the crime of REBELLION WITH MURDER AND FRUSTRATED MURDER Hence we respectfully
recommend the filing of the corresponding information against them in court." 4
The above Resolution became the basis for the filing of an Information, 5 dated April 18, 1990, charging
private respondent with the crime of rebellion with murder and frustrated murder before the Regional Trial
Court of Quezon City, with no recommendation as to bail. 6
Feeling aggrieved by the institution of these proceedings against him, private respondent Adaza filed a
complaint for damages, 7 dated July 11, 1990, before Branch 100 of the Regional Trial Court of Quezon
City. The complaint was docketed as Civil Case No. Q-90-6073 entitled, "Homobono Adaza, plaintiff versus
Franklin Drilon, et al., respondents." In his complaint, Adaza charged petitioners with engaging in a
deliberate, willful and malicious experimentation by filing against him a charge of rebellion complexed with
murder and frustrated murder when petitioners, according to Adaza, were fully aware of the non-existence
of such crime in the statute books.

On October 15, 1990, petitioners filed a Motion to Dismiss Adaza's complaint on the ground that said
complaint states no actionable wrong constituting a valid cause of action against petitioners.
On February 8, 1991, public respondent judge issued an Order 8 denying petitioners' Motion to Dismiss. In
the same Order, petitioners were required to file their answer to the complaint within fifteen (15) days from
receipt of the Order.
Petitioners moved for a reconsideration of the Order of denial, but the same was likewise denied by
respondent Judge in another Order dated May 14, 1991. 9 The subsequent Order reiterated that petitioners
file their responsive pleading within the prescribed reglementary period.
60

Instead of filing their answer as ordered, petitioners filed on June 5, 1991 a petition for certiorari under
Rule 65 before the Court of Appeals, docketed as CA- G.R No. 25080, alleging grave abuse of discretion on
the part of the respondent Judge in ruling that sufficient cause of action exists to warrant a full-blown
hearing of the case filed by Adaza and thus denying petitioners' Motion to Dismiss.
In its Resolution promulgated on January 31, 1992, the appellate court dismissed the petition for lack of
merit and ordered respondent Judge to proceed with the trial of Civil Case No. Q-90-6073. 10 A Motion for
Reconsideration having been subsequently filed on February 28, 1992, the court a quo denied the same in
a Resolution dated September 2, 1992. 11
Hence, this petition, dated October 9, 1992, pleading this Court to exercise its power of review under Rule
45 of the Revised Rules of Court.
On January 13, 1993, however, this Court, thru the Second Division, dismissed the petition for failure to
comply with Revised Circular No. 1-88, particularly the requirement on the payment of the prescribed
docketing fees. 12
On March 8, 1993, 13 we reinstated the petition and required the respondents to comment on the
aforesaid petition. In the same Resolution, a temporary restraining order was issued by this Court enjoining
respondent Judge from further proceeding with Civil Case No. Q-90-6073 until further orders from this
Court.
The petition has merit.
In his Comment, 14 dated March 23, 1993, respondent Adaza maintains that his claim before the trial court
was merely a suit for damages based on tort by reason of petitioners' various malfeasance, misfeasance
and nonfeasance in office, as well as for violation by the petitioners of Section 3 (e) of Republic Act No.
3019, otherwise known as the Anti-Graft and Corrupt Practices Act. It was not a suit for malicious
prosecution.
Private respondent is taking us for a ride. A cursory perusal of the complaint filed by Adaza before
respondent Judge George Macli-ing reveals that it is one for malicious prosecution against the petitioners
for the latter's filing of the charge against him of rebellion with murder and frustrated murder. An
examination of the records would show that this latest posture as to the nature of his cause of action is
only being raised for the first time on appeal. Nowhere in his complaint filed with the trial court did
respondent Adaza allege that his action is one based on tort or on Section 3 (e) of Republic Act No. 3019.
Such a change of theory cannot be allowed. When a party adopts a certain theory in the court below, he
will not be permitted to change his theory on appeal, for to permit him to do so would not only be unfair to
the other party but it would also be offensive to the basic rules of fair play, justice and due process. 15 Any
member of the Bar, even if not too schooled in the art of litigation, would easily discern that Adaza's
complaint is no doubt a suit for damages for malicious prosecution against the herein petitioners.
Unfortunately, however, his complaint filed with the trial court suffers from a fatal infirmity that of failure
to state a cause of action and should have been dismissed right from the start. We shall show
why. aisadc
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)." 16
61

In Philippine jurisdiction, it has been defined as:
"An action for damages brought by one against whom a criminal prosecution, civil suit, or other legal
proceeding has been instituted maliciously and without probable cause, after the termination of such
prosecution, suit, or other proceeding in favor of the defendant therein. The gist of the action is the putting
of legal process in force, regularly, for the mere purpose of vexation or injury (Cabasaan v. Anota, 14169-R,
November 19, 1956)." 17
The statutory basis for a civil action for damages for malicious prosecution are found in the provisions of
the New Civil Code on Human Relations and on damages particularly Articles 19, 20, 21, 26, 29, 32, 33, 35,
2217 and 2219 (8). 18 To constitute malicious prosecution, however, there must be proof that the
prosecution was prompted by a sinister design to vex and humiliate a person, and that it was initiated
deliberately by the defendant knowing that his charges were false and groundless. Concededly, the mere
act of submitting a case to the authorities for prosecution does not make one liable for malicious
prosecution. 19 Thus, in order for a malicious prosecution suit to prosper, the plaintiff must prove three (3)
elements: (1) the fact of the prosecution and the further fact that the defendant was himself the prosecutor
and that the action finally terminated with an acquittal; (2) that in bringing the action, the prosecutor acted
without probable cause; and (3) that the prosecutor was actuated or impelled by legal malice, that is by
improper or sinister motive. 20 All these requisites must concur.
Judging from the face of the complaint itself filed by Adaza against the herein petitioners, none of the
foregoing requisites have been alleged therein, thus rendering the complaint dismissible on the ground of
failure to state a cause of action under Section 1 (g), Rule 16 of the Revised Rules of Court.
There is nothing in the records which shows, and the complaint does not allege, that Criminal Case No. Q-
90-11855, filed by the petitioners against respondent Adaza for Rebellion with Murder and Frustrated
Murder, has been finally terminated and therein accused Adaza acquitted of the charge. Not even Adaza
himself, thru counsel, makes any positive asseveration on this aspect that would establish his acquittal.
Insofar as Criminal Case No. Q-90-11855 is concerned, what appears clear from the records only is that
respondent has been discharged on a writ of habeas corpus and granted bail. 21 This is not however,
considered the termination of the action contemplated under Philippine jurisdiction to warrant the
institution of a malicious prosecution suit against those responsible for the filing of the information against
him.
The complaint likewise does not make any allegation that the prosecution acted without probable cause in
filing the criminal information dated April 18, 1990 for rebellion with murder and frustrated murder.
Elementarily defined, probable cause is the existence of such facts and circumstances as would excite the
belief, in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person
charged was guilty of the crime for which he was prosecuted. It is well-settled that one cannot be held
liable for maliciously instituting a prosecution where one has acted with probable cause. Elsewise stated, a
suit for malicious prosecution will lie only in cases where a legal prosecution has been carried on without
probable cause. The reason for this rule is that it would be a very great discouragement to public justice, if
prosecutors, who had tolerable ground of suspicion, were liable to be sued at law when their indictment
miscarried. 22
In the case under consideration, the decision of the Special Team of Prosecutors to file the information for
rebellion with murder and frustrated murder against respondent Adaza, among others, cannot be dismissed
as the mere product of whim or caprice on the part of the prosecutors who conducted the preliminary
investigation. Said decision was fully justified in an eighteen (18)-page Resolution dated April 17,
1990. 23 While it is true that the petitioners were fully aware of the prevailing jurisprudence enunciated
inPeople v. Hernandez, 24 which proscribes the complexing of murder and other common crimes with
62

rebellion, petitioners were of the honest conviction that the Hernandez Case can be differentiated from the
present case. The petitioners thus argued:
"Of course we are aware of the ruling in People vs. Hernandez, 99 Phil. 515, which held that common
crimes like murder, arson, etc. are absorbed by rebellion. However, the Hernandez case is different from
the present case before us. In the Hernandez case, the common crimes of murder, arson, etc. were found
by the fiscal to have been committed as a necessary means to commit rebellion, or in furtherance thereof.
Thus, the fiscal filed an information for rebellion alleging those common crimes as a necessary means of
committing the offense charged under the second part of Article 48, RPC.
We, however, find no occasion to apply the Hernandez ruling since as intimated above, the crimes of
murder and frustrated murder in this case were absolutely unnecessary to commit rebellion although they
were the natural consequences of the unlawful bombing. Hence, the applicable provision is the first part of
Article 48 of the RPC." 25

While the Supreme Court in the case of Enrile v. Salazar, 26 addressing the issue of whether or not the
Hernandez doctrine is still good law, in a 10-3 vote, did not sustain the position espoused by the herein
petitioners on the matter, three justices 27 felt the need to re-study the Hernandez ruling in light of
present-day developments, among whom was then Chief Justice Marcelo Fernan who wrote a dissenting
opinion in this wise:
"I am constrained to write this separate opinion on what seems to be a rigid adherence to the 1956 ruling
of the Court. The numerous challenges to the doctrine enunciated in the case of People vs. Hernandez, 99
Phil. 515 (1956), should at once demonstrate the need to redefine the applicability of said doctrine so as to
make it conformable with accepted and well-settled principles of criminal law and jurisprudence.
To my mind, the Hernandez doctrine should not be interpreted as an all-embracing authority for the rule
that all common crimes committed on the occasion, or in furtherance of, or in connection with, rebellion are
absorbed by the latter. To that extent, I cannot go along with the view of the majority in the instant case
that 'Hernandez remains binding doctrine operating to prohibit the complexing of rebellion with any other
offense committed on the occasion thereof, either as a means necessary to its commission or as an
unintended effect of an activity that constitutes rebellion' (p. 9, Decision).
The Hernandez doctrine has served the purpose for which it was applied by the Court in 1956 during the
communist-inspired rebellion of the Huks. The changes in our society in the span of 34 years since then
have far-reaching effects on the all-embracing applicability of the doctrine considering the emergence of
alternative modes of seizing the powers of the duly-constituted Government not contemplated in Articles
134 and 135 of the Revised Penal Code and their consequent effects on the lives of our people. The
doctrine was good law then, but I believe that there is a certain aspect of the Hernandez doctrine that
needs clarification." 28
Apparently, not even the Supreme Court then was of one mind in debunking the theory being advanced by
the petitioners in this case, some of whom were also the petitioners in the Enrile case. Nevertheless, we
held in Enrile that the Information filed therein properly charged an offense that of simple
rebellion 29 and thereupon ordered the remand of the case to the trial court for the prosecution of the
named accused 30 in the Information therein. Following this lead, the Information against Adaza in
Criminal Case No. Q-90-11855 was not quashed, but was instead treated likewise as charging the crime of
simple rebellion.
A doubtful or difficult question of law may become the basis of good faith and, in this regard, the law
always accords to public officials the presumption of good faith and regularity in the performance of official
63

duties. 31 Any person who seeks to establish otherwise has the burden of proving bad faith or ill-motive.
Here, since the petitioners were of the honest conviction that there was probable cause to hold respondent
Adaza for trial for the crime of rebellion with murder and frustrated murder, and since Adaza himself,
through counsel, did not allege in his complaint lack of probable cause, we find that the petitioners cannot
be held liable for malicious prosecution. Needless to say, probable cause was not wanting in the institution
of Criminal Case No. Q-90-11855 against Adaza.
As to the requirement that the prosecutor must be impelled by malice in bringing the unfounded action,
suffice it to state that the presence of probable cause signifies, as a legal consequence, the absence of
malice. 32 At the risk of being repetitious, it is evident in this case that petitioners were not motivated by
malicious intent or by a sinister design to unduly harass private respondent, but only by a well-founded
belief that respondent Adaza can be held for trial for the crime alleged in the information.
All told, the complaint, dated July 11, 1990, filed by Adaza before Branch 100 of the Regional Trial Court
against the petitioners does not allege facts sufficient to constitute a cause of action for malicious
prosecution. Lack of cause of action, as a ground for a motion to dismiss under Section 1 (g), Rule 16 of
the Revised Rules of Court, must appear on the face of the complaint itself, meaning that it must be
determined from the allegations of the complaint and from none other. 33 The infirmity of the complaint in
this regard is only too obvious to have escaped respondent judge's attention. Paragraph 14 of the
complaint which states:
"xxx xxx xxx
14.The malicious prosecution, nay persecution, of plaintiff for a non-existent crime had severely injured and
besmirched plaintiff's name and reputation and forever stigmatized his stature as a public figure, thereby
causing him extreme physical suffering, serious anxiety, mental anguish, moral shock and social
humiliation." 34
is a mere conclusion of law and is not an averment or allegation of ultimate facts. It does not, therefore,
aid in any wise the complaint in setting forth a valid cause of action against the petitioners.
It is worthy to note that this case was elevated to the public respondent Court of Appeals and now to this
Court because of respondent Judge Macli-ing's denial of petitioners' motion to dismiss the Adaza complaint.
The ordinary procedure, as a general rule, is that petitioners should have filed an answer, go to trial, and if
the decision is adverse, reiterate the issue on appeal. 35 This general rule, however, is subject to certain
exceptions, among which are, if the court denying the motion to dismiss acts without or in excess of
jurisdiction or with grave abuse of discretion, in which case certiorari under Rule 65 may be availed of. The
reason is that it would be unfair to require the defendants (petitioners in this case) to undergo the ordeal
and expense of trial under such circumstances, because the remedy of appeal then would then not be plain
and adequate. 36Judge Macli-ing committed grave abuse of discretion in denying petitioners' motion to
dismiss the Adaza complaint, and thus public respondent Court of Appeals should have issued the writ
of certiorari prayed for by the petitioners and annulled the February 8, 1991 and May 14, 1991 Orders of
respondent Judge. It was grievous error on the part of the court a quo not to have done so. This has to be
corrected. Respondent Adaza's baseless action cannot be sustained for this would unjustly compel the
petitioners to needlessly go through a protracted trial and thereby unduly burden the court with one more
futile and inconsequential case.
WHEREFORE, the petition is GRANTED. The Resolutions of respondent Court of Appeals dated January 31,
1992 and September 2, 1992 affirming the February 8, 1991 and May 14, 1991 Orders of respondent Judge
George C. Macli- ing are all hereby NULLIFIED AND SET ASIDE. Respondent Judge is DIRECTED to take no
further action on Civil Case No. Q-90-6073 except to DISMISS the same. SO ORDERED.