Professional Documents
Culture Documents
II. Quasi-Delict, A. Elements
II. Quasi-Delict, A. Elements
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810
810
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811
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813
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587
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588
588
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589
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not published.
590
590
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591
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592
From this it will be seen that the trial court estimated the
rental value of the land for grazing purposes at 50 centavos
per hectare per annum, and roughly adopted the period of
four years as the time for which compensation at that rate
should be made. As the. court had already found that the
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593
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594
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595
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596
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Gye ([1853], 2 El. & Bl., 216). It there appeared that the
plaintiff, as manager of a theatre, had entered into a
contract with Miss Johanna Wagner, an opera singer,
whereby she bound herself for a period to sing in the
plaintiff's theatre and nowhere else. The defendant,
knowing of the existence of this contract, and, as the
declaration alleged, "maliciously intending to injure the
plaintiff," enticed and procured Miss Wagner to leave the
plaintiff's employment. It was held that the plaintiff was
entitled to recover damages. The right which was here
recognized had its origin in a rule, long familiar to the
courts of the common law, to the effect that any person who
entices a servant from his employment is liable in damages
to the master. The master's interest in the service rendered
by his employee is here considered as a distinct subject of
juridical right. It being thus accepted that it is a legal
wrong to break up a relation of personal service, the
question now arose whether it is illegal for one person to
interfere with any contract relation subsisting between
others. Prior to the decision of Lumley vs. Gye [supra] it
had been supposed that the liability here
597
597
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598
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599
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600
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601
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602
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603
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604
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605
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606
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607
607
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155
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156
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Civil Case No. 38810, "Rafael Carrascoso, plaintiff, vs. Air France,
France, defendant-appellant."
157
157
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Appendix A, petitioner's brief, pp. 146-147. See also R.A., pp. 66-67.
Section 1, Rule 36, Rules of Court. See also Section 2, Rule 120, in
10
Id.
158
158
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12
13
People vs. Manigque, 35 O.G., No. 94, pp. 1682, 1683, citing Section
133 of the Code of Civil Procedure and Section 12, Art. VIII,
Constitution, supra.
14
15
*Editor's
159
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17
18
19
Rules of Court.
20
160
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_______________
21
22
148-149,
161
161
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24
25
26
162
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Segment or leg
Carrier
1. Manila to Hongkong
PAL
2. Hongkong to Saigon
3. Saigon to Beirut
March 30
VN(Air Vietnam)
693
March 31
AF (Air France)
245
March 31
28
29
Id., p. 103.
30
Ibid., p. 102.
163
163
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legal ground for awarding moral damages if the court should find that,
under the circumstances, such damages are justly due. The same rule
applies to breaches of contract where the defendant acted 'f raudulently
or in bad faith."
32
33
164
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class
passage
covering,
amongst
others,
the
BangkokTeheran leg; Second, That said contract was
breached when petitioner failed to furnish first class
transportation at Bangkok; and Third, That there was bad
faith when petitioner's employee compelled Carrascoso to
leave his first class accommodation berth "after he was
already seated" and to take a seat in the tourist class, by
reason
of
which
he
suffered
inconvenience,
embarrassments and humiliations, thereby causing him
mental anguish, serious anxiety, wounded feelings and
social humiliation, resulting in moral damages. It is true
that there is no specific mention of the term bad faith in
the complaint. But, the inference of bad faith is there, it
may be 34drawn from the facts and circumstances set forth
therein. The contract was averred to establish the relation
between the parties. But the stress of the action is put on
wrongf ul expulsion.
Quite apart from the foregoing is that (a) right at the
start of the trial, respondent's counsel placed petitioner on
guard on what Carrascoso intended to prove: That while
sitting in the plane in Bangkok, Carrascoso was ousted by
35
petitioner's manager who gave his seat to a white man;
and (b) evidence of bad faith' in the fulfillment of the
contract was presented without objection on the part of the
petitioner. It is, therefore, unnecessary to inquire as to
whether or not there is sufficient averment in the
complaint to justify an award for moral damages.
Deficiency in the complaint, if any, was cured by the
evidence. An amendment
thereof to conform to the evidence
36
is not even required. On the question of bad
_______________
34
Copeland vs, Dunehoo, et al., 138 S.E., 267, 270. See also 25 C.J.S.,
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165
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166
166
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pp. 147-151.
167
167
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'first class' seat that the plaintiff was occupying, duly paid for, and
for which the corresponding 'first class' ticket was issued by the
40
defendant to him."
Words ,& Phrases, Perm. Ed., Vol. 5, p. 13, citing Warfield Natural
41
42
168
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45
47
Id., p. 233.
48
169
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Q.
A.
Q.
A.
Mr. VALTE
'I move to strike out the last part of the testimony of
the witness because the best evidence would be the
notes. Your Honor.
COURT
'I will allow that as part of his testimony."
49
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170
so. The subject of inquiry is not the entry, but the ouster
incident. Testimony on the entry does not come within the
proscription49aof the best evidence rule. Such testimony is
admissible.
Besides, from a reading of the transcript just quoted,
when the dialogue happened, the impact of the startling
occurrence was still fresh and continued to be felt. The
excitement had not as yet died down, Statements then, in
this environment, are admissible as part of the res gestae.50
For, they grow "out of the nervous excitement
and mental
51
and physical condition of the declarant". The utterance of
the purser regarding his entry in the notebook was
spontaneous, and related to the circumstances of the
ouster
52
incident. Its trustworthiness has been guaranteed. It thus
escapes the operation of the hearsay rule. It forms part of
the res gestae.
At all events, the entry was made outside the
Philippines. And, by an employee of petitioner. It would
have been an easy matter for petitioner to have
contradicted Carrascoso's testimony. If it were really true
that no such entry was made, the deposition of the purser
could have cleared up the matter.
We, therefore, hold that the transcribed testimony of
Carrascoso is admissible in evidence.
8. Exemplary damages are well awarded. The Civil Code
gives the court ample power to grant exemplary damages
. in contracts and quasi-contracts. The only condition is
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50
51
52
Ibid.
53
54
171
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543
543
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544
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545
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546
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547
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548
548
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549
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550
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551
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552
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553
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554
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555
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Ed., 55; Martens vs. Reilly, 109 Wis., 464, 84 N. W., 840; Rice vs.
Manley, 66 N. Y., 82; 23 Am. Rep., 30; Bitterman vs. L. & N. R. R.
Co., 207 U S., 205; 28 Sup. Ct, 91; 52 L. Ed., 171; Beekman vs.
Marsters, 195 Mass., 205; 80 N. E., 817; 11 L. R. A. [N. S.], 201; 122
Am. St. Rep., 232; South Wales Miners' Fed. vs. Glamorgan Coal
Co., Appeal Cases, 1905, p. 239.)"
556
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557
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558
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559
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560
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561
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562
562
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563
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987
_______________
1
November 24, 1950 by the President's Executive Order 372, which created the
Board of Liquidators. Hence, the substitution of party plaintiff.
2
988
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988
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989
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990
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Explanatory Note of House Bill 295, 1st Session, 2nd Congress, later
991
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992
992
2,386.45
4,613.55
Spencer Kellog
None
1,000
Franklin Baker
1,000
500
Louis Dreyfus
800
2,200
1,150
850
1,755
245
T O T A L S
7,091.45
9,408.55
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993
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994
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Garcia Valdez vs. Tuason, 40 Phil. 943, 951-952; Lucero vs. Guzman,
Government vs. Wise & Co., Ltd. (C.A.), 37 O.G. No. 26, pp. 545, 546.
995
995
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10
1 C.J.S., p. 141.
11
996
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12
time. For,
the court cannot extend the time alloted by
13
statute.
We, however, express the view that the executive order
abolishing NACOCO and creating the Board of Liquidators
should be examined in context. The proviso in Section 1 of
Executive Order 372, whereby the corporate existence of
NACOCO was continued for a period of three years from
the effectivity of the order for "the purpose of prosecuting
and defending suits by or against it and of enabling the
Board of Liquidators gradually to settle and close its
affairs, to dispose of and convey its property in the manner
hereinafter provided", is to be read not as an isolated
provision but in conjunction with the whole. So reading, it
will be readily observed that no time limit has been tacked
to the existence of the Board of Liquidators and its function
of closing the affairs of the-various governmentowned
corporations, including NACOCO.
By Section 2 of the executive order, while the boards of
directors of the various corporations were abolished, their
powers and functions and duties under existing laws were
to be assumed and exercised by the Board of Liquidators,
The President thought it best to do away with the boards of
directors of the defunct corporations; at the same time,
however, the President had chosen to see to it that the
Board of Liquidators step into the vacuum. And nowhere in
the executive order was there any mention of the lifespan
of the Board of Liquidators. A glance at the other
provisions of the executive order buttresses our conclusion.
Thus, liquidation by the Board of Liquidators may, under
section 1, proceed in accordance with law, the provisions of
the executive order, "and/or in such manner as the
President of the Philippines may direct" By Section 4, when
any property, fund, or project is transferred to any
governmental instrumentality "for administration or
continuance of any project," the necessary funds therefor
shall be taken from the corresponding special fund created
in Section 5. Section 5, in turn, talks of special funds
established from
_______________
12
16 Fletcher, p. 902.
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13
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Service & Wright Lumber Co. vs. Sumpter Valley Ry. Co., 152 P.
262, 265.
997
997
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998
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15
Italics ours.
16
17
999
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Id., p. 154.
19
20
1000
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1001
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Sparks vs. Despatch Transfer Co., 15 S.W. 417, 413; Pacific Concrete
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Bonding & Ins. Co. vs. Transamerican Freight Lines, 281 N.W. 584, 588589; Sealy Oil Mill & Mfg. Co. vs. Bishop Mfg. Co., 235 S.W. 850, 852.
1002
1002
though the goods are not yet in the hands of the seller.
Known in business parlance as forward sales, it is
concededly the practice of the trade. A certain amount of
speculation is inherent in the undertaking. NACOCO was
much more conservative than the exporters with big
capital. This short-selling was inevitable at the time in the
light of other factors such as availability of vessels, the
quantity required before being accepted for loading, the
labor needed to prepare and sack the copra for market. To
NACOCO, forward sales were a necessity. Copra could not
stay long in its hands; it would lose weight, its value
decrease. Above all, NACOCO's limited funds necessitated
a quick turnover. Copra contracts then had to be executed
on short noticeat times within twenty-four hours. To be
appreciated then is the difficulty of calling a formal
meeting of the board.
Such were the environmental circumstances when
Kalaw went into copra trading.
Long before the disputed contracts came into being,
Kalaw contractedby himself alone as general manager
for forward sales of copra. For the fiscal year ending June
30, 1947, Kalaw signed some 60 such contracts for the sale
of copra to divers parties. During that period, from those
copra sales, NACOCO reaped a gross profit of
P3,631,181.48. So pleased was NACOCO's board of
directors that, on December 5, 1946, in Kalaw's absence, it
voted to grant him a special bonus "in recognition of the
signal achievement rendered by him in putting the
Corporation's business on a self-sufficient basis within a
few months after assuming office, despite numerous
handicaps and difficulties."
These previous contracts, it should be stressed, were
signed by Kalaw without prior authority from the board.
Said contracts were known all along to the board members.
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1003
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1004
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_______________
23
Italics supplied.
24
Italics supplied.
1005
1005
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Italics supplied.
26
27
Van Denburgh vs. Tungsten Reef Mines Co., 67 P. (2d) 360, 361,
citing First National Fin. Corp. vs. Five-O Drilling Co., 289 P. 844, 845.
28
29
Murphy vs. W. H. & F. W. Cane, 82 Atl. 854, 856. See Martin vs.
Webb, 110 U.S. 7, 14-15, 28 L. ed. 49, 52. See also Victory Investment
Corporation vs. Muskogee Electric T. Co., 150 F, 2d, 889, 893,
1006
1006
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30, 1948, though it is our (and the lower court's) belief that
ratification here is nothing more than a mere formality.
Authorities, great in number, are one in the idea that
"ratification by a corporation of an unauthorized act or
contract by its officers or others relates back to the time of
the act or contract ratified, and is equivalent to original
authority;" and that " [t]he corporation and the other party
to the transaction are in precisely the.same position30as if
the act or contract had been authorized at the time." The
language of one case is expressive: "The adoption or
ratification of a contract by a corporation is nothing more
or less than the making of an original contract. The theory
of corporate ratification is predicated on the right of a
corporation to contract, and any ratif ication
or adoption is
31
equivalent to a grant of prior authority."
Indeed, our law pronounces that " [r] atification cleanses
the contract 32from all its' defects from the moment it was
constituted." By corporate confirmation, the contracts
executed by Kalaw are
thus purged of whatever vice or
33
defect they may have.
In sum, a case is here presented whereunder, even in the
face of an express by-law requirement of prior approval, the
law on corporations is not to be held so rigid and inflexible
as to fail to recognize equitable considerations. And, the
conclusion inevitably is that the embattled contracts
remain valid.
5. It would be difficult, even with hostile eyes; to read
the record in terms of "bad faith and/or breach of trust" in
the board's ratification of the contracts without prior
approval of the board. For, in reality, all that we have on
the government's side of the scale is that the board knew
that the contracts so confirmed would cause heavy losses.
_______________
30
31
Kridelbaugh vs. Aldrehn Theatres Co., 191 N.W. 803, 804, citing
Article 1313, old Civil Code; now Article 1396, new Civil Code.
33
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1007
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34
Spiegel vs. Beacon Participations, 8 N.E. (2d) 895, 907, citing cases.
35
36
1008
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38
3 Fletcher, pp. 450-452, citing cases. Cf. Angeles vs. Santos, 64 Phil.
697, 707.
39
1009
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contracts.
As the trial court correctly observed, this is a case of
damnum absque injuria. Conjunction of damage and wrong
is here absent. There cannot be43 an actionable wrong if
either one or the other is wanting.
_______________
40
Case 4322, Court of First Instance of Manila, entitled "Louis Dreyfus &
Co. (Overseas) Limited, plaintiff vs. National Coconut Corporation,
defendant."
41
42
The time for delivery of copra under the July 30, 1947 contract was
extended. Fifth Amended Complaint, R.A., p, 15. See also Exhibit 26Heirs.
43
Churchill and Tait vs. Rafferty, 32 Phil. 580, 605; Ladrera vs.
1010
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46
P752,440.00.
Kalaw's acts were not the result of haphazard decisions
either. Kalaw invariably consulted with NACOCO's Chief
Buyer, Sisenando Barretto, or the Assistant General
Manager. The dailies and quotations from abroad were
guideposts to him.
Of course, Kalaw could not have been an insurer of prof
its. He could not be expected to predict the coming of
unpredictable typhoons. And even as typhoons supervened,
Kalaw was not remissed in his duty. He exerted efforts to
stave off losses. He asked the Philippine National Bank to
implement its commitment to extend a P400,000.00 loan.
The bank did not release the loan, not even the sum of
P200,000.00, which, in October, 1947, was approved by the
bank's board of directors. In frustration, on December 12,
1947, Kalaw turned to the President, complained about the
bank's short-sighted policy. In the
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44
46
1011
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Kalaw as General
Manager of the National Coconut
47
Corporation." And, on January 7, 1948, at a time when
the contracts had already been openly disputed, the board,
at its regular meeting, appointed Maximo M. Kalaw as
acting general manager of the corporation.
Well may we profit from the following passage from
Montelibano vs. Bacolod-Murcia Milling Co., Inc., L-15092,
May 18, 1962:
"'They (the directors) hold such office charged with the duty to act
for the corporation according to their best judgment, and in so doing
they cannot be controlled in the reasonable exercise and
performance of such duty. Whether the business of a corporation
should be operated at a loss during a business depression, or closed
down at a smaller loss, is a purely business and economic problem
to be determined by the directors of the corporation, and not by the
court. It is a well-known rule of law that questions of policy of
management are left solely to the honest decision of officers and
directors of a corporation, and the court is without authority to
substitute its judgment for the judgment of the board of directors:
the board is the business manager of the corporation, and so long as
it acts in good faith its orders are not reviewable by the courts.'
48
(Fletcher on Corporations, Vol. 2, p. 390.)"
Exhibit 25-Heirs.
48
Italics supplied.
49
1012
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*
SECOND DIVISION.
169
169
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Lantin, M., J., ponente, with Reyes, M.T. and Martinez, A.M., JJ.,
concurring.
2
Grio-Aquino, C., J., ponente, with Reyes, M.T. and Lantin, J.M.,
JJ., concurring.
170
170
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171
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dated May 7, 1982; Original Record, 27.
6
Record, 56.
172
172
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Record, 36.
8
Rollo, 18-19.
173
173
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Rollo, 25.
11
Grio-Aquino, C., J., ponente, with Reyes, M.T. and Lantin, J.M.,
JJ., concurring.
174
174
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175
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II
The Court of Appeals erred in adjudging petitioners liable to pay
temperate damages, exemplary damages, attorneys fees and
13
expenses of litigation.
Rollo, 22.
14
15
Article 527, New Civil Code. Rule 131, sec. 5(a), Revised Rules of
Court; U.S. vs. Rafinan, 1 Phil. 294; see also Guillen vs. Court of
Appeals, G.R. No. 83175, December 4, 1989, 799.
16
G.R. 82564, October 13, 1989, 178 SCRA 509; emphasis in the
176
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17
Rollo, 23.
18
Id., 60.
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177
177
It can be seen from all the foregoing that even the highest
officers (Chairman Ongpin, Vice-Chairman Tordesillas, and
Governor Zayco) of the BOI themselves were not in
agreement as to what proper course to take on the subject
of the various importations of Oriented Polypropylene
(OPP) and Polypropylene (PP) withheld by the Bureau of
Customs. The conflicting recommendations of the BOI on
this score prompted the petitioners to seek final
clarification from the former with regard to its policy on
these importations. This resulted in the inevitable delay in
the release of the Clojus shipment, one of the several of
such importations. The confusion over the disposition of
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20
scraps,
contrary to the evidence submitted by the
National Institute of Science and Technology that the same
was pure oriented OPP, nonetheless, it is the duty of the
Court to see to it that public officers are not hampered in
the performance of their duties or in making decisions for
fear of personal liability for damages due to honest
mistake. Whatever damage they may have caused as a
result of such an erroneous interpretation, if any at all, is
in the nature of a damnum absque injuria. Mistakes
concededly committed by public officers are not actionable
absent any clear showing that they were motivated
by
21
malice or gross negligence amounting to bad faith. After
all, even under the law of public officers, the acts of the
petitioners
are protected by the presumption of good
22
faith.
In the same vein, the presumption, disputable though it
may
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20
21
Dale Sanders, et al. v. Hon. Regino T. Veridiano II, etc., et al., G.R.
Supra.
179
179
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