G.R. No.

L-26403 October 20, 1970

DEL VALLE-TIONGSON, ET AL., vs. FERNANDEZ

REYES, J.B.L., Acting C.J.:

Appeal from a decision of the Court of First Instance of
Quezon Province in its Civil Case No. 5799, rendered in 22
April 1966, resolving a conflict between the parties about
rights to use the water of the Taguan River and the Noynoyin
Creek in Tiaong and Candelaria of the Province of Quezon.
For the proper understanding of the controversy, it is
important to recall the general topography of the region. As
shown in the defendants-appellants' sketch plan, Exhibit
"10," which was admitted and adopted by plaintiffs-appellees
(t.s.n., page 879), the main source of the water for the areas
in dispute is the Taguna River that enters the region from
the north and flows south. This Taguan River divides into
two main branches, one that flows southeast (called by the
court below "Taguan Segundo" and Puntor" by
appellants)and another branch called the Noynoyin, that
arches first southwest and later southeast, forming an are
with the concavity to the east, and rejoins the other branch
further south at the juncture with Aguirra creek or canal,
that continues southward. Another river which is pertinent
to this case is the Cabay River which is to the East of the
Aguirra Creek and bounds the irrigated riceland of plaintiffs-
appellees Del Valle on the west and south.
In 1918, defendants were granted water appropriation rights
on the Taguan river by the Department of Commerce and
Communications, after due investigation (Exhibit "B"). But in
1940, plaintiffs constructed at the mouth of the Aguirra, and
across it, a concrete dam (designated as Del Valle dam) that
impeded and reduced the water flow into the Aguirra. Later
on, in 1952, plaintiffs-appellees increased the height of this
dam, shutting off completely the water supply of the Aguirra
creek (an old irrigation canal) so that "only a flood or heavy
rain can cause the water to overflow ... the crest of the
concrete dam.1
Plantiffs are the owners of a parcel of irrigated riceland with
an area of twenty (20) hectares, more or less, situated in
barrio Kinatihan, Candelaria, Quezon, which property was
inherited from their deceased grandfather, Manuel del Valle.
Plaintiffs, in their complaint dated 6 October 1955, alleged
having irrigated the above riceland by means of water
coming from Noynoying Creek in barrio Cabay, Tiaong,
Quezon, since Spanish times up to the present, and they
claim having acquired by prescription, to the exclusion of all
others, the use of all the volume of the Noynoy in creek's
water passing over the dam of one Nicolas Maralit which is
in the upper part of that creek.
Defendant and intervenors (otherwise known as the Cabay
irrigators) are the owners of irrigated ricelands that about
the Aguirra Creek below the dam in controversy. It is their
position that Noynoyin Creek is part of the Taguan River
and, therefore, as prior appropriators of the Taguan River
waters by virtue of the 1918 administrative concession,
Exhibit "B," plaintiffs cannot deprive them from the use of
the same. On 27 September 1955, defendant Melecio
Fernandez dug a ditch on his property connecting the
Noynoyin and Aguirra Creeks to draw water therefrom. This
ditch was closed in the first week of January, 1956 when the
parties reached a temporary agreement in the case, by the
terms of which the plaintiffs on one hand, and the defendant
and the intervenors on the other, were to use the waters
from the Noynoyin Creek on a fifty-fifty basis.
Plaintiffs contend that Noynoyin Creek is a water way
separate and independent of the Taguan River, having its
own source of water, so that while they wholly agree that
defendant and the intervenors are listed in Exhibit "B" as
prior appropriators of the Taguan River waters, any such
right should not encroach on the Noynoyin Creekwaters
which are not part of the Taguan River. It is alleged by
plaintiffs that the Cabay irrigators availed of the use of a
flume (alulod) over plaintiffs' dam at the Aguirra Creek to
catch all the volume of water from the Taguan River bed to
make it fall into and flow through the said creek to irrigate
their own lands. This practice originated allegedly from time
immemorial up to the last time that the Cabay irrigators
made use of Taguan River waters. It is plaintiffs' further
contention that the Cabay irrigators availed exclusively of
the said river waters for irrigation purposes and that with
the digging of the ditch by defendant Fernandez (already
closed pursuant to a temporary agreement between the
parties) the whose volume of natural water of the Noynoyin
Creek was diverted to the Aguirra Creek, thus depriving
plaintiffs of their own exclusive right to use the Noynoyin
Creek waters.
Alleging that if defendant will not be immediately enjoined to
desist from diverting any using the Noynoyin Creek waters
they would be unable to plow and prepare their above
riceland for the planting season and would suffer damages of
no less than P8,000.00 for palay crop that would not be
harvested for the year, the plaintiffs del Valle asked for
P1,000.00 attorney's fees and other damages suffered;
prayed for the immediate issuance of a writ of mandatory
preliminary injunction against the defendant to maintain
the status quo and restroe to plaintiffs the exclusive use of
the water of Noynoyin Creek and a writ of perpetual
injunction to issue against defendant after the trial of the
case. Lastly, plaintiffs prayed that they an their predecessor-
in-interest be declared as having acquired a prescriptive
right for the exclusive use of Noynoyin Creek waters below
the dam of Nicolas Maralit.
Defendant Hernandez and intervenors contend that, prior to
the construction of the del Valle dam across the Aguirra
Creek, there was plenty of water flowing into the creek from
two sources, namely: the Noynoyin Creek and the bed of
Taguan River. With the construction of the dam, there is no
more water (not just scarcity) flowing into the Aguirra Creek.
It is, however admitted by defendant that plaintiffs and their
predecessor-in-interest used to irrigate their riceland with
water flowing along the Aguirra Creek by diverting the said
water from time to time through an old canal which was
connected with, and in perpendicular position to, the Aguirra
Creek, about 100 meters below the present concrete dam.
This practice was allegedly due to an arrangement between
plaintiffs and defendant, his predecessor-in-interest and
other Cabay irrigators, which was considered satisfactory
and equitable. Hence, defendant contends that all the said
parties shared a common interest, not adverse to each other,
in the use of water flowing along the Aguirra Creek coming
from Noynoyin Creek and Taguan River. The use of a flume
is denied by both the defendant and intervenors.
Because of the concrete dam constructed by plaintiffs
(appellees), defendant and intervenors asked that plaintiffs
pay to them jointly and severally a total of P165,000.00 in
moral damages and P66,000 in exemplary damages,
excluding such further damages which defendant and
intervenors may prove at the trial.
The lower court decided the case against the defendant and
intervenors, declaring that defendant Hernandez and no
right to dig his canal connecting the Noynoyin to the Aguirra
and enjoined him from making any construction on his land
the effect of which would reduce the water accumulating at
the "del Valle" dam across the Aguirra Creek. Plaintiffs were
allowed to remove the water gate which impedes the flow of
water from the controversial dam to plaintiffs' ricefields and
"to restroe the del Valledam to its condition at the beginning
of the suit." The lower court dismissed plaintiffs' claim for
damages as well as the counterclaim of defendant and
intervenors, but sentenced defendant to pay to plaintiffs
attorney's fees in the sum of P500.00.
The defendant and intervenors appealed from the decision,
raising both questions of fact and law. The value in
controversy exceeds P200,000.00, exclusive of interest and
costs, appellants' total claim for damages caused by the
alleged public nuisance (the controversial dam) alone being
P339,936.00. Since this appeal was perfected prior to the
effectivity of R.A. No. 5440 on 9 September 1968, this Court
still retains exclusive appellate jusrisdiction over the same.
Appellants claim that the lower court erred in holding that
(a) the Taguan River enters the region from the north flowing
generally to the south thus excluding the Noynoyin Creek;
(b) the Noynoyin Creek is an independent and separate
natural waterway from the Taguan River; (c) the natural
waterways Noynoyin Creek and Taguna Segundo end at the
controversial dam; (d) the Aguirra Creek is an old irrigation
canal that has been dug running southwards; (e) there was
preponderant evidence that plaintiffs acquired a prescriptive
right to use the Noynoyin Creek waters; (f) the cement dam
across the Aguirra Creek may be restored and continued in
use by plaintiff; (g) the remedy of defendant and intervenors
is not against plaintiffs but to institute proceedings under
sections 4 and 2 of Irrigation Act No. 2125; and (h)
defendant is liable to pay to plaintiffs attorney's fees in the
amount of P500.00 plus costs of suit.
The most important issue in this appeal is whether plaintiffs
indeed have acquired a prescriptive right over all the volume
of the Noynoyin Creek waters that pass through the Maralit
dam, to the exclusion of all others, as was in effect held by
the lower court when it found that "in 1925 and for more
than 20 years prior to 1912, plaintiffs had built the Valle and
Cabay dams from the irrigation of plaintiffs' ricefields." But
the Valle dam, the lower court obviously meant the
controversial dam across the Aguirra Creek 2 and by the
Cabay dam, the lower court expressly referred to the dam
further east across the Cabay River.3 The trial court's
conclusion is based "(i) on the complaint in 1925
involving those dams4 filed against plaintiffs by Maria Ramos
Sales and Juan G. Ramos who then appeared to have lands
abutting on the Aguirra; (ii) in the official reports of
Government Engineers Fernando E. V. Sison (Exhibit "J-1")
and J.V. Bagtas (Exhibit "J"); (iii) on the affidavit of Manuel
del Valle (Exhibit "I"); and (v) on the easement of buttress
(see Solis v. Pujeda, 42 Phil. 697) which has existed for so
many years on defendant's land without objection from his
predecessors-in-interest."
It can readily be seen in the foregoing that the lower court
concluded that the del Valle dam across the Aguirra Creek
was also a dam in dispute in 1925 when Maria Ramos Sales
and Juan G. Ramos filed a complaint against Manuel del
Valle. A close examination, however, of Exhibit "J-1," dated
14 September 1925, which is the report of engineer Sison
regarding said dispute investigated by him on 11 September
1925, shows that the stream referred to therein, and from
which diversion of water was to be made, was(and still is)
locally and officially called the Cabay River. Several sources
of water of the 1925 irrigation system are mentioned in the
report, and they are (a) the ricefields at sitio Noynoyin, 5 (b)
Talon Spring, and (c) ricefields at the north side of the lot
belonging to Mr. del Valle.6 Paragraph 10 of the said report
emphasized that the following should be clearly
understood:7 (a) that water flowing through the river above
Dam B (which is the Cabay dam),and through the irrigation
canal Z (which flows to the east from the Cabay dam, curving
to the south to connect with the Cabay River ) 8 are all
coming from ricefields, and (b)that Talon Spring, under Dam
B, constitutes mainly the source of the Cabay River proper. 9
While in the Sison 1925 Report, Exhibit "J-1," Cabay River is
repeatedly mentioned, and its main source of water used by
del Valle is emphatically stated to be the Talon Spring, no
mention is made of the Noynoyin Creek (which was already
known to be such during the Spanish times)as a source. If
the del Valle dam across the Aguirra Creek was already an
accessory to the whole del Valle irrigation system in 1925
and it was already used to divert waters of Noynoyin Creek
to irrigate plaintiffs' ricelands in Sampaloc(as subsequently
reported by irrigation engineer Escobar in 1955, Exhibit "A"),
engineer Sison could have readily mentioned it in his report,
or at least indicated the same in "Plan B," attached thereto.
In one concluding paragraph of his 1925 report, engineer
Sison said that "during the dry season, if the water available
is not enough to both the complainants and the respondent,
privilege should be granted to Mr. del Valle, the respondent,
since he acquired the right of priority of appropriations,
having used the water uninterruptedly for more than 50
years." Since the report was confied only the Cabay River,
the Cabay dam and the sources of water already specified, of
which Noynoyin Creek was never stated to be one, it is
erroneous for the trial court to conclude that the del Valle
dam in the present controversy was likewise existing, just
like the Cabay dam "in 1925 and for more than 20 years
prior to 1912."
The main basis for engineer Sison's conclusion that Mr. del
Valle had been using the water uninterruptedly for more
than 50 years, and, consequently, also that of engineer
Bagtas when he approved engineer Sison's report (Exhibit
"J," "J-1"), was the attached statement of Mr. del Valle, dated
9 September 1925. 10 An analysis of this statement will show
that it speaks of "a dam in question which is an old existing
dam more than fifty (50) years old." Mr. del Valle stated as
having repaired it and "extended both ends so as to close the
Cabay River." 11 There is only one dam mentioned in the
statement and the same clearly referred to the Cabay dam,
east of the Taguan. Again, there is no mention of Noynoyin
Creek in Exhibit "L," hence, there is no basis at all to
conclude that the Noynoyin Creekwaters were also being
referred to. Therefore, plaintiffs have not acquired a
prescriptive right over the said waters on the basis of said
Exhibit "L."
The report of engineer Escobar (Exhibit "X") dated 18 April
1955 was presented by plaintiffs to prove that an earthen
dam across the Aguirra Creek was already an accessory to
the del Valle irrigation system in 1925. The existence of such
a dam was merely conjectured, and the same author of that
report, engineer Dionisio N. Escobar(who was plaintiffs' own
witness in court) testified on cross-examination that the dam
across the Aguirra, now in controversy, was not a part of the
del Valle irrigation system in 1925; that said dam was
constructed only in 1940 and that there is no record to show
that said dam existed in 1925 12 (t.s.n., pages 493-494, 26
March 1958).têñ.£îhqw⣠The same witness categorically
denied that the source of the del Valle irrigation system in
1925 was the Noynoyin Creek or the Taguan River, because
he said that "according to the record it comes from Cabay
River" (t.s.n., page 500, Id.).Witness Escobar thus reversed
previous statements made by him on these material points
in his earlier report, Exhibit "A," relied upon by plaintiffs del
Valle. He further clarified that "the source of the present
system 13 is from Noynoyin Creek and the Taguan Creek as
per sketch." The sketch referred to is Exhibit "K" prepared in
April, 1955 by one Jose P. Peralta and accompanied still
another report, dated 11 April 1955, of government engineer
Vicente G. Alcaneses. 14 This Exhibit "K" is a modification of
the old plan prepared by engineer Sison in 1925 15 and
already embodies those subsequent improvements actually
seen during the course of engineer Alcaneses ocular
inspection in 1955. A close look at Exhibit "K" will reveal
that the old canal "X" indicated in the 1925 "Plan B" still
appears. In the 1925 report, engineer Sison 16 had stated
that "the water flowing thru X (see attached plan B) comes
from the ricefields at sitio Noynoyin; and the water flowing
thru Y is that of course from X in addition to that flowing
front Talon Spring ..." This canal "X" is clearly different from
the "man-made-canal" shown on Exhibit "K" (marked
"Exhibit 2" therein) connecting the Aguirra Creek and Cabay
dams. Both, as already stated, appear on Exhibit "K," canal
"X" being lower. Hence, while it is clear that the canal,
Exhibit "2," diverts the waters of the Noynoyin Creek
eastward towards the Cabay dam from the del Valle dam
across the mouth of the Aguirra Creek, its existence in 1925
is by no means established; for the plan attached to the
1925 Sison report (Exhibit "4") does not show it. That
connecting canal cannot be the canal "X" in Exhibit "4,"
since the arrows indicate that the flow of water in the latter
comes from the south and not from the west.
Finally, engineer Escobar testified that he could not
definitely say whether this "man-made-canal" (Exhibit
"2," supra) connecting the Aguirra Creek dam and the Cabay
dam existed when "Plan B" was prepared in 1925. He said
that if that existed at the time, it would have been placed on
the said plan.
Escobar's testimony is further strengthened by the report of
engineer Vicente Alcaneses dated 11 April 1955 17 that "the
decision handed down by the then District engineer, J. V.
Bagtas, 18 concerning the water rights of del Valle over the
Cabay River cannot be applied to the present dispute."
Alcaneses found it clear, as a result of his ocular inspection,
that the dam in controversy in the present del Valle-
Hernandez case could not have been the dam under
litigation in the Ramos-Sales vs. Del Valle case of 1925,
inasmuch as the dam in controversy in the present appeal
was found by him to have been construed only in 1940, with
improvements and repairs done in April, 1952.
It is indeed remarkable that among the concessionaires of
appropriators of water from the Taguan River listed in the
Government concession of 1918 (Exhibit "B"), the name of
del Valle does not appear, while those of appellants are
specified. The attempted explanation of appellees, and their
witnesses, that appellants drew water exclusively from the
Taguan and Taguan Segundo (or Puntor) by means of a
wooden flume (alulod) over the Noynoyin cannot be true, for
the Government concession, Exhibit "B," makes no mention
thereof, despite its manifest importance for excluding the
waters of the Noynoyin Creek from those of the Taguan River
granted to appellants. Neither is any such structure
mentioned in the Sison-Bagtas report of 1925, or in the
Alcaneses report of 1955. Such an unusual device could not
have escaped the attention of the engineers that inspected
the site in 1918, 1925 and 1955.
Clearer still against the del Valles' claim of exclusive use of
the waters of the Noynoyin Creek in the undenied fact that
Nicolas Maralit, one of the water concessionaires of the
Government in 1918 (No. 2 in Exhibit "B") had his own
diversion dam in the Noynoyin Creek above the mouth of the
Aguirra (shown in the Plan, Exhibit "10," with the label "Sala
Maralit"). And there is no evidence that the del Valles ever
protested against the construction of this dam.
At any rate, the abusiveness of the erection (and subsequent
elevation) of the del Valle dam across the mouth of the
Aguirra, to the detriment of appellants who derive from the
latter the water for their own ricefields, is the remark of
plaintiffs-appellees' own witness, engineer Escobar, in his
report, Exhibit "A," paragraph 4:.
But with the construction of the Aguirra dam, Mr. Del
Valle is not only appropriating water from the Noynoyin
River but also from the Taguan River, allowing only water
which overflows for the use of the irrigation (irrigators)
below the dam in controversy.
The other basis for the lower court's conclusion that
plaintiffs-appellees acquired a prescpritive right over the
Noynoyin Creek waters is the easement of buttress (Solis vs.
Pujeda, 42 Phil. 697) which allegedly existed on the land of
defendant-appellant Hernandez for many years without
object in on his part. The easement of buttress is specifically
provided for under Article 143 of the Law of Waters, which
states that —.
If the dam is for the use of public waters the Government
shall make an investigation of record, and upon granting
the concession, shall after hearing the owner of the land,
decree also the compulsory easement of buttress. If the
waters are of private ownership, the easement shall be
imposed by the governor of the province subject to the
procedure established for the easement of conduit.
In the above-cited case of Solis vs. Pujeda, it was held that,
by Article 143 of the Law of Waters, an easement of buttress
can be imposed by administrative authority with respect to
land lying adjacent to public or private waters; but in such
case it is required that an investigation of record shall be
made before the easement of buttress is
decreed. 19 The Court further said that —.
For the purpose of this decision it may be taken for
granted that the Bureau of Lands is the proper
repository of the administrative authority conferred in
said article with respect to the decreeing of the easement
in case of public waters, and the Director of Lands may
be assumed to be the proper official to conduct the
investigation and make the appropriate order.
Nevertheless, the making of the investigation of record is
an essential prerequisite to the exercise of the power. This
implies that the interested parties shall have an
opportunity to be heard and that record be made of the
proof adduced with reference to the proposed servitude
and the damage to result therefrom. These formalities
are essential; otherwise, the decreeing of the servitude
would be obnoxious to the constitutional provision which
forbids the taking of property without due process of law.
 The administrative investigation contemplated in article
143 of the Law of Waters must proceed along the lines of
a judicial inquiry, at least to the extent of giving the
parties an opportunity to be heard and making record of
the proof pertinent to their respective contentions.
(Emphasis supplied)
Defendant Melecio Hernandez in his depositions 20 stated
that the concrete dam was constructed in 1940 stealthily
and without his knowledge and that when he discovered the
same about one-half year later after its construction, he
requested the overseer of Mr. del Valle to have the dam
opened, but the request went unheeded. Instead, the dam
was increased in height in April, 1952, thereby closing the
source of water of the Aguirra Creek. The defendant stated
that he was angered when he learned of the dam being
abutted to his riceland but he was unable to do anything
after its discovery because of the disorder during the
Japanese times. However, a petition by the Cabay irrigators
was later on filed with the local municipal authorities, 21 a
copy of which was subsequently presented to the PCAC,
Malacañan, with an accompanying letter of Atty. Francisco
Hernandez, 22 but no effective redress was obtained.
Instead, an indorsement of the previous findings of engineers
J.V. Bagtas and E. V. Sison, 23 already discussed, was
made.
Plaintiffs tried to prove notice to the appellees of the
construction of the concrete dam through witness Anastacio
de Rosales, but this witness' credibility becomes doubtful
when he testified that he contacted Sebastian Rodriguez,
overseer of Dionisio Cabuniag (among other Cabay
irrigators),in May, 1940 and talked to him (t.s.n., page 49,
10 December 1956), but Sebastian Rodriguez turned out to
be dead as early as 4 February 1956, as shown in his death
certificate, Exhibit "I."
The applicable laws on prescription require 20 years adverse
uninterrupted possession.
Art. 39. The right to enjoy in perpetuity the waters of
springs and creeks is acquired by the owners of lower
 estates, and in the same way by those adjoining estates
when they have appropriated said waters without
interruption for a space of twenty years." (Spanish Law
of Waters of 3 August 1866.)
Art. 194. Any person who has enjoyed the use of public
waters for a term of twenty years without objection on
the in its enjoyment, even though he may not be able to
show that he secured proper permission. (Id.)
Art. 409. The use of public waters is acquired:
(1) By administrative concession.
(2) By prescription of twenty years.
(Civil Code of 1889, now Art. 504, N.C.C.)
For prescription to set in, the possession must be adverse,
continuous, public and to the exclusion of all other
persons. 24
This Court finds no clear, preponderant evidence that
plaintiffs have been using the water of Noynoyin Creek
uninterruptedly for twenty years or more, much less to the
exclusion of all others. Hence, they cannot be declared to
have acquired a prescriptive right over the said waters. Such
preponderance must be clear, to nullify the 1918
Government grant of water rights in favor of appellants
herein.
Plaintiffs' theory that the Aguirra Creek dam was an
accessory to the whole del Valle irrigation system in 1925
must be rejected as without basis. The only clear proof is
that appellees del Valle started to appropriate Noynoyin
Creek waters exclusively for themselves only in 1940 when a
concrete dam was constructed at the mouth of the Aguirra
Creek. Since only about 15 years have elapsed from the time
the waters were first appropriated by the appellees in 1940
up to the filing of the complaint in October, 1955, it is this
Court's opinion that the parties shared jointly in the use of
Noynoyin Creek waters before 1940 and, therefore, the use
by appellees del Valle was not exclusive nor adverse to
others. Under the facts, defendant Hernandez must be
absolved from the liability to pay attorney's fees to plaintiffs.
Appellants' claim for damage to their crops must be denied
for the reason that they are already sharing in the use of the
waters pursuant to an arrangement agreed upon during the
trial of the case in January, 1956, and their evidence of crop
losses during the previous years is far from satisfactory. It is
not only the shares of the tenants that must be deducted
from the value of the crops allegedly lost, but also the land
taxes and production costs should ered by them, and there
is no proof of their import. Moreover, the law places on the
shoulders of the party suffering loss or injury the duty of
exercising the diligence of a good father of a family to
minimize his damages (Civil Code of the Philippines, Article
2203; Castelvi vs. Cia. General de Tabacos, 49 Phil. 998);
and it is clear from the record that appellees herein only
sought remedy in December, 1954. Nevertheless, considering
that plaintiffs-appellees del Valle, not content with reducing
the water available for the appellant's field by the
construction of the dam in controversy, deliberately blocked
totally their water supply by increasing the elevation of the
dam in 1952, without appellants' consent and without
government authorization, this Court finds that said
appellants are entitled to recover moral damages, pursuant
to the first part of Article 2220 of the Civil Code of the
Philippines, providing that —.
Art. 2220. Wilful injury to property may be legal ground
for awarding moral damages if the court should find that
under the circumstances such damages are justly due.
These damages are assessed at P2,000.00 for each of the
appellants, defendant as well as intervenors.
In addition, justice and equity demand that plaintiffs-
appellees be further sentenced to pay appellants P5,000.00
by way of attorney's fees, since appellants, who are small
and holders, were forced to enter into a litigation that they
could ill afford in order to protect their interests (Article
2208, paragraphs 2 and 11, Civil Code).
WHEREFORE, the decision appealed from is reversed, and a
new one entered dismissing the complaint and sentencing
plaintiffs-appellees del Valle to demolish at their expense the
dam they erected at the confluence of the Noynoyin and
Aguirra creeks in the municipalities of Tiaong and
Candelaria, Quezon Province, within ninety (90) days from
the finality of this decision; to pay jointly and severally to
defendant-appellant Melecio Hernandez P2,000.00 byway of
moral damages, and a like sum to each and every intervenor-
appellant. In addition, said appellee shall pay P5,000.00
attorneys' fees, and the costs.

G.R. No. Nos. L-66870-72 June 29, 1985

MAGBANUA, ET AL. vs. IAC
ABAD SANTOS, J.:
A joint decision was rendered in CAR Case Nos. 827, 828
and 829 of the defunct Court of Agrarian Relations stationed
in San Carlos City (Negros Occidental) because the six
plaintiffs who are the petitioners at bar all alleged that they
are share tenants of the defendants; that the defendants
diverted the free flow of water from their farm lots which
caused portions of their landholdings to dry up to their great
damage and prejudice: and that they were told by the
defendants' overseer to vacate their respective areas for they
could not plant palay any longer due to lack of water. They
prayed that they be declared as leasehold tenants and that
the defendants be ordered to pay attorney's fees and different
kinds of damages.
The trial court rendered judgment in favor of the plaintiffs as
follows:
WHEREFORE, coherent with the foregoing, this Court, in
judgment, hereby:
1) Declares all the plaintiffs in the above-entitled cases to be
maintained as agricultural lessees in peaceful cultivation in
their respective landholdings;
2) Prohibits defendants from closing and/or disrupting the
free flow of water supplying plaintiffs' landholdings;
3) Declares the Writ of Preliminary Injunction issued on
February 23, 1982 to be permanent;
4) Orders plaintiffs to seek the assistance of the Ministry of
Agrarian Reforms in the fixing of their lease rentals;
5) Orders the defendants to pay all the six plaintiffs in the
above-entitled cases individually moral and exemplary
damages in the sum of TEN THOUSAND (P10,000.00)
PESOS, each;
6) Orders the defendants to pay the attorney's fees in the
amount of P5,000.00; and
7) Dismiss all other claims and counterclaims of the parties
for lack of merit (Rollo, pp. 28-29.)
The defendants appealed to the Intermediate Appellate Court
which in turn rendered the following judgment:
WHEREFORE, with the modification above indicated,
deleting the award of moral and exemplary damages and
attorney's fees, the decision appealed from is hereby
AFFIRMED in all other respects, with costs against
appellants. (Rollo, pp. 37-38.)
In this petition, the prayer is for the reinstatement of the
moral and exemplary damages and the attorney's fees which
had been awarded by the trial court on the ground that the
Intermediate Appellate Court committed a grave abuse of
discretion in eliminating them.
In awarding damages and attorney's fees, the trial court
said:
This Court has likewise noted the manifestation submitted
by plaintiffs on June 3, 1982 wherein they have attached
photographs of their dried-up landholdings and wilted palay
crops. The allegations in this pleading and the accompanying
pictures were never rebutted by the defendants.
In view of this circumstances, this Court holds the opinion
that between the period of the inspection by the PC Team on
February 24, 1982 and June 13, 1982 when plaintiffs'
manifestation was filed, there has been complete closure of
water supplying plaintiffs' landholdings which resulted to the
drying up of the same that greatly hampered the healthy
growth of the palay crop. This Court does not believe that the
disruption of the water supply which led to the very poor
harvest is due to the fault/negligence of the plaintiffs.
Under the law, the landowner has an obligation to keep the
tenant in the peaceful and continuous cultivation of his
landholding. A disturbance of possession, such as the act
complained of, is violative of the law.
The Honorable Court of Appeals, thru Associate Justice
Porfirio V. Sison, in June 23, 1982, promulgated a decision
in the case of Buenaventura Garcia, plaintiff-appellant, vs.
Eduardo Jalandoni, Salud Garcia and Chester Garcia,
defendant-appellees, which ruling is relevant to the above-
entitled cases when the said Honorable Court state:
The law forbids the use of tenants like balls on a pool table,
whacked and volleyed and pocketed at the whim and caprice
of the player, or their positions placed on the auction block
like slaves to be sold to the highest bidder. Such a
calamitous situation erode wholehearted dedication to the
soil; it is destructive of the system itself, as such an attitude
takes away the freedom the emancipated tenants won under
the aegis of the New Republic.
The plaintiff-appellant is entitled to moral damages in the
sum of P5,000.00 and exemplary damages in the further
sum of P5,000.00 to be paid by defendant Eduardo
Jalandoni. Let this be a warning to those who flout the lofty
purpose of the agrarian reform program.
Plaintiffs have all their legal rights to protect their interests
under the law in filing these cases, for what the defendants
have done to them, and as such they are entitled attorney's
fees. (Rollo, pp. 27-28.)
Upon the other hand, in deleting the questioned award the
Intermediate Appellate Court said:
However, We are not inclined to sustain the award of moral
and exemplary damages, as well as attorney's fees. There is
no evidence showing that, in dealing with plaintiffs,
defendants acted fraudulently or in bad faith. There is no
showing either that attorney's fees are recoverable under Art:
2208, Civil Code. (Rollo, P. 37.)
Under the facts of the case, the plaintiffs (now petitioners)
are entitled to a measure of moral damages. Article 2219 of
the Civil Code permits the award of moral damages for acts
mentioned in Article 21 of the same code and the latter
stipulates 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."
It appears that the petitioners were denied irrigation water
for their farm lots in order to make them vacate their
landholdings. The defendants violated the plaintiffs' rights
and caused prejudice to the latter by the unjustified
diversion of the water.
The petitioners are also entitled to exemplary damages
because the defendants acted in an oppressive manner. (See
Art. 2232. Civil Code.)
It follows from the foregoing that the petitioners are also
entitled to attorney's fees but the size of the fees as well as
the damages is subject to the sound discretion of the court.
WHEREFORE, the petition is granted; the decision under
review is modified and each of the plaintiffs is entitled to the
following to be paid by the defendants jointly and severally:
Moral damages - P1,000.00 chanrobles virtual law library
Exemplarly damages - 500.00
Attorney's fees - 1,000.00
P2,500.00
The costs shall be assessed against the private respondents.
SO ORDERED.

G.R. NO. 147597, August 6, 2008]

MATA vs. AGRAVANTE
NACHURA, J.:
Before us is a Petition for Review on Certiorari assailing the
decision of the Court of Appeals (CA) which dismissed
petitioner's complaint for damages filed against the
respondents.
The antecedent facts are as follows:
Respondents Eddie E. Santillan, Patricio A. Armodia,
Alejandro A. Almaden and Hermenegildo G. Saldo were
former security guards of the Bessang Pass Security Agency,
owned by herein petitioner Clarissa Mata.
On October 27, 1993, the respondents, assisted by their
counsel, Atty. Alexander Agravante, filed a complaint with
the National Labor Relations Commission (NLRC) in Cebu
City for non-payment of salaries/wages and other
benefits.2 Subsequently, they filed an affidavit-complaint
with the Philippine National Police (PNP) in Cramp Crame,
Quezon City requesting an investigation of the Bessang Pass
Security Agency and cancellation of its license to operate as
security agency for violation of labor laws. Copies of this
affidavit-complaint were likewise sent to the following offices:
(1) Office of the President, (2) Office of the Secretary of Public
Works and Highways, (3) Office of the PNP Director General,
(4) PNP Chief Superintendent Warlito Capitan, (5) Office of
the DILG Secretary, (6) Ombudsman Conrado Vasquez and
(7) Office of the Vice-President.
On January 6, 1994, petitioner instituted an action for
damages against the respondents averring that respondents
filed unfounded, baseless complaints before the NLRC for
alleged violation of the labor laws and with the PNP for
cancellation of its license to operate. She further alleged that
by furnishing the government offices copies of these
complaints, especially the Department of Public Works and
Highways which was its biggest client, the agency's
reputation was besmirched, resulting in the loss of
contracts/projects and income in the amount of at
least P5,000,000.00. Petitioner then declared that
respondents' deliberate and concerted campaign of hate and
vilification against the Bessang Pass Security Agency violated
the provisions of Articles 19, 20, and 21 of the Civil Code,
and thus, prayed that the respondents be held jointly and
severally liable to pay her the sum of P1,000,000.00 as
moral damages, attorney's fees in the amount
of P200,000.00 and other reliefs.
On August 4, 1999, the trial court rendered judgment, the
dispositive portion of which reads, as follows:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of plaintiff and against defendants ordering
the latter to pay plaintiff the sum of ONE MILLION
(P1,000,000.00) PESOS as moral damages.
On the basis of the evidence adduced by the petitioner ex
parte, the trial court found preponderant evidence enough to
justify petitioner's cause of action. It gave credence to the
petitioner's contentions that the respondents had no other
motive in sending the letter to the seven (7) government
offices except to unduly prejudice her good name and
reputation. The trial court, however, did not award the sum
of P5,000,000.00 as petitioner's estimated loss of income for
being speculative.
On appeal, the CA reversed and set aside the trial court's
decision. It dismissed the complaint for lack of merit.
Hence, this petition anchored on the following grounds:
WITH ALL DUE RESPECT, THE HONORABLE COURT OF
APPEALS COMMITTED A SERIOUS REVERSIBLE ERROR,
AMOUNTING TO GRAVE ABUSE OF DISCRETION WHEN IT
REVERSED AND SET ASIDE THE DECISION OF THE
REGIONAL TRIAL COURT, BRANCH 89 IN QUEZON CITY
AND FURTHER CONCLUDED THAT RESPONDENTS' ACT
OF FURNISHING COPIES OF THEIR LETTER-COMPLAINT
NOT ONLY TO SEVEN (7) NATIONAL AGENCIES BUT ALSO
TO PETITIONER'S BIGGEST CLIENT, WAS NOT TAINTED
WITH BAD FAITH AND WITH THE SOLE MOTIVE TO
MALIGN THE GOOD NAME AND REPUTATION OF
PETITIONER.
WITH ALL DUE RESPECT, THE HONORABLE COURT OF
APPEALS COMMITTED SERIOUS ERROR IN THE
APPRECIATION OF FACTS AND APPLICATION OF LAWS,
WHICH IF NOT RECTIFIED, WOULD CAUSE IRREPARABLE
INJURY AND DAMAGE TO HEREIN PETITIONER.
WITH ALL DUE RESPECT, THE HONORABLE COURT OF
APPEALS COMMITTED A SERIOUS REVERSIBLE ERROR,
AMOUNTING TO GRAVE ABUSE OF DISCRETION, WHEN IT
REVERSED AND SET ASIDE THE DECISION OF THE
REGIONAL TRIAL COURT, BRANCH 89 IN QUEZON CITY,
NOTWITHSTANDING RESPONDENTS HAVING BEEN
DECLARED IN DEFAULT.
Petitioner contends that the respondents were so driven by
unrestrained hatred and revenge that they not only
succeeded in disseminating the letter-complaint to the 7
government offices but to the DPWH, her biggest client, with
the intention to destroy her reputation and, more
importantly, her business. She posits that this would mean a
loss of employment for numerous employees throughout the
country who solely depend on the security agency for their
existence, and that respondents obviously failed to see this
fact. She claims that the respondents have abused their
rights, to her prejudice, and that of the security agency
which has tried very hard to protect its name and hard-
earned reputation. Petitioner then concludes that the
respondents have violated Articles 19 and 21 of the Civil
Code and should be held liable for damages.
We are not impressed. We are more in accord with the
findings and conclusions of the respondent court that
petitioner is not entitled to any award of damages. We agree
with the respondent court's explanation, viz.:
In filing the letter-complaint (Exhibit "D") with the Philippine
National Police and furnishing copies thereof to seven (7)
other executive offices of the national government, the
defendants-appellants may not be said to be motivated
simply by the desire to "unduly prejudice the good name and
reputation" of plaintiff-appellee. Such act was consistent
with and a rational consequence of seeking justice through
legal means for the alleged abuses defendants-appellants
suffered in the course of their employment with plaintiff-
appellee, which started with the case for illegal dismissal and
non-payment of backwages and benefits earlier filed with the
NLRC Regional Arbitration Branch in Cebu City. In
exhausting the legal avenues to air their legitimate
grievances, the paramount and overriding concern of the
defendants-appellants - who had already suffered from
retaliatory acts of their employer when they manifested their
desire to take formal action on the violations of labor laws
committed by employer - is to secure government
intervention or action to correct or punish their employer,
plaintiff-appellee, in accordance with the provisions of
existing laws or rules and regulations which may be
applicable to their situation. And in this process, the
intervention of the Philippine National Police was sought in
view of its mandated role of administrative supervision over
security agencies like plaintiff-appellee.
Section 8 of Republic Act No. 5487, otherwise known as the
"Private Security Agency Law," empowered the Chief of the
former Philippine Constabulary (PC) at any time "to suspend
or cancel the licenses of private watchman or security guard
agency found violating any of the provisions of this Act or of
the rules and regulations promulgated by the Chief of
Constabulary pursuant thereto." With the enactment of
Republic Act No. 6975 ("Department of the Interior and Local
Government Act of 1990"), the PC-INP was abolished and in
its place, a new police force was established, the Philippine
National Police (PNP). Among the administrative support
units of the PNP under the new law is the Civil Security Unit
which shall provide administrative services and general
supervision over the organization, business operation and
activities of all organized private detectives, watchmen,
security guard agencies and company guard houses. It was
thus but logical for defendants-appellants, as advised by
their counsel, to also communicate their grievances against
their employer security guard agency with the PNP. The act
of furnishing copies to seven (7) other executive offices,
including that of the Office of the President, was merely to
inform said offices of the fact of filing of such complaint, as
is usually done by individual complainants seeking official
government action to address their problems or grievances.
Their pending case with the NLRC would not preclude them
from seeking assistance from the PNP as said agency is the
national body that exercises general supervision over all
security guard agencies in the country, the defendants-
appellants were of the honest belief that the violation of labor
laws committed by their employer will elicit proper action
from said body, providing them with a relief (cancellation of
license) distinct from those reliefs sought by them from the
NLRC (payment of backwages and benefits). Certainly,
defendants-appellants had good reason to believe that
bringing the matter to PNP is justified as no private security
agency found to be violating labor laws should remain in
good standing with or [be] tolerated by the PNP. Despite the
pendency of the NLRC case, such request for investigation of
plaintiff-appellee could not in any way be tainted with malice
and bad faith where the same was made by the very
individuals who suffered from the illegal labor practices of
plaintiff-appellee. Moreover, no liability could arise from
defendants-appellants' act of filing of the labor case with the
NLRC which plaintiff-appellee claimed to have resulted in the
agency's not being able to secure contracts because of such
pending labor case, defendants-appellants merely exercised
a right granted to them by our labor laws.6
It has been held that Article 19,7 known to contain what is
commonly referred to as the principle of abuse of rights, is
not a panacea for all human hurts and social grievances.
The object of this article is to set 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: act with justice, give everyone his due, and
observe honesty and good faith. Its antithesis is any act
evincing bad faith or intent to injure.8 Article 21 refers to
acts contra bonos mores and has the following elements: (1)
an act which is legal; (2) but which is contrary to morals,
good custom, public order or public policy; and (3) is done
with intent to injure. The common element under Articles 19
and 21 is that the act complained of must be
intentional,9 and attended with malice or bad faith. There is
no hard and fast rule which can be applied to determine
whether or not the principle of abuse of rights may be
invoked. The question of whether or not this principle has
been violated, resulting in damages under Articles 20 and
21,10 or other applicable provision of law, depends on the
circumstances of each case.11 In the case before us, as
correctly pointed out by the CA, the circumstances do not
warrant an award of damages. Thus, the award
of P1,000,000.00 as moral damages is quite preposterous.
We agree with the appellate court that in the action of the
respondents, there was no malicious intent to injure
petitioner's good name and reputation. The respondents
merely wanted to call the attention of responsible
government agencies in order to secure appropriate action
upon an erring private security agency and obtain redress
for their grievances. So, we reiterate the basic postulate that
in the absence of proof that there was malice or bad faith on
the part of the respondents, no damages can be awarded.
WHEREFORE, the petition is DENIED. The Decision of the
Court of Appeals is AFFIRMED.
SO ORDERED.

GR. No. L-48928, February 25, 1982

PARDO DE TAVERA vs. PHILIPPINE TUBERCULOSIS
SOCIETY, INC.

GUERRERO, J.:
On March 23, 1976, plaintiff-appellant Mita Pardo de Tavera
filed with the Court of First Instance of Rizal a complaint
against the Philippine Tuberculosis Society, Inc. (hereinafter
referred to as the Society), Miguel Canizares, Ralph Nubla,
Bernardo Pardo, Enrique Garcia, Midpantao Adil, Alberto
Romulo, and the present Board of Directors of the Philippine
Tuberculosis Society, Inc.
On April 12, 1976, plaintiff-appellant filed an amended
complaint impleading Francisco Ortigas, Jr. as party
defendant.
In substance, the complaint alleged that plaintiff is a doctor
of Medicine by profession and a recognized specialist in the
treatment of tuberculosis, having been in the continuous
practice of her profession since 1945; that she is a member
of the Board of Directors of the defendant Society, in
representation of the Philippine Charity Sweepstakes Office;
that she was duly appointed on April 27, 1973 as Executive
Secretary of the Society; that on May 29, 1974, the past
Board of Directors removed her summarily from her position,
the lawful cause of which she was not informed, through the
simple expedient of declaring her position vacant; that
immediately thereafter, defendant Alberto Romulo was
appointed to the position by an affirmative vote of seven
directors, with two abstentions and one objection; and that
defendants Pardo, Nubla, Garcia and Adil, not being
members of defendant Society when they were elevated to
the position of members of the Board of Directors, are not
qualified to be elected as such and hence, all their acts in
said meeting of May 29, 1974 are null and void.
The defendants filed their answer on May 12, 1976,
specifically denying that plaintiff was illegally removed from
her position as Executive Secretary and averring that under
the Code of By-Laws of the Society, said position is held at
the pleasure of the Board of Directors and when the pleasure
is exercised, it only means that the incumbent has to vacate
the same because her term has expired; that defendants
Pardo, Nubla, Adil and Garcia were, at the time of their
election, members of the defendant Society and qualified to
be elected as members of the Board, that assuming that said
defendants were not members of defendant Society at the
time of their election, the question of qualification of the
members of the Board of Directors should have been raised
at the time of their election: that assuming that the
qualification of members of the Board of Directors can be
questioned after their assumption of their offices as
directors, such contest cannot be done in a collateral action;
that an action to question the qualifications of the Directors
must be brought within one year from their election; and
that a Director elected without necessary qualification
becomes at least a de facto director, whose acts are as valid
and binding as a de jure director. Further, defendant
disputed the timeliness of the filing of the action stating that
an action to question one's ouster from a corporate office
must be filed within one year from said ouster.
On the same date, defendant Adil filed a Motion to Dismiss
on the ground that the complaint states no cause of action,
or if it does, the same has prescribed. Inasmuch as plaintiff
seeks reinstatement, he argued that the complaint is an
action for quo warranto and hence, the same should be
commenced within one year from May 29, 1974 when the
plaintiff was ousted from her position.
Plaintiff filed an Opposition to Motion to Dismiss on May 28,
1976, stating that the complaint is a suit for damages filed
under the authority of Section 6, Article 11 of the present
Constitution in relation to Articles 12 and 32(6) of the New
Civil Code, and her constitutional right to equal protection of
the law, as guaranteed by Section 1, Article IV of the present
Constitution.
On June 2, 1976, defendant Adil filed a Reply to Plaintiff's
Opposition to Motion to Dismiss arguing that since there is
an averment of plaintiff's right to office, and that defendant
Romulo is unlawfully in possession thereof, their it is indeed,
a case for quo warranto; and that assuming that it is merely
a suit for damages, then, the same is premature, pursuant
to Section 16, Rule 66 of the Rules of Court.
On September 3, 1976, the coturt a quo rendered a decision
holding that the present suit being one for quo warranto it
should be filed within one year from plaintiff's outer from
office; that nevertheless, plaintiff was not illegally rendered
or used from her position as Executive Secretary in The
Society since plaintiff as holding an appointment all the
pleasure of the appointing power and hence her appointment
in essence was temporary in nature, terminable at a
moment's notice without need to show that the termination
was for cause; and Chat plaintiff's ouster from office may not
be challenged on the ground that the acts of defendants
Pardo, Adil, Nubla and Garcia are null and void, they being
not qualified to be elected members of the Board of Directors
because the qualifications of the members of the Board of
Directors which removed plaintiff from office may not be the
subject of a collateral attack in the present suit for quo
warranto affecting title to the office of Executive Secretary.
On October 13, 1976, plaintiff filed a Motion for
Reconsideration to which defendants filed an Opposition. On
November 25, 1976, the court a quo denied the motion for
Reconsideration.
Dissatisfied with the decision and the order denying the
motion for reconsideration, plaintiff filed a Notice of Appeal
and an Urgent Motion for Extension of Time to File Record
on Appeal, which was granted in an order dated December
15, 1976. However, on December 20, 1976, the court a quo
issued an amended order where it qualified the action as
principally one for quo warranto and hence, dispensed with
the filing of a record on appeal as the original records of the
case are required to be elevated to the Court of Appeals.
On August 8, 1978, the Court of Appeals issued a resolution
certifying this case to this Court considering that the appeal
raises no factual issues and involves only issues of law, as
may be gleaned from the following assignments of errors:
I. The lower court erred in holding that the present case is
one for quo warranto and not an action for damages.
II. In deciding the case, the lower court erred in not
upholding the Society's By-Laws, the applicable laws, and
the pertinent provisions of the Constitution.
III. The lower court erred in holding that the plaintiff-
appellant is not in the civil service, and therefore, not
entitled to the guaranty against removal from office except
for cause and after due process of law.
The nature of an action filed in court is determined by the
facts alleged in the complaint as constituting the cause of
action, and not those averred as a defense in the defendant's
answer. The theory adopted by the plaintiff in his complaint
is one thing; that by the defendant in his answer another.
The purpose of an action or suit and the law to govern it,
including the period of prescription, is to be determined not
by the claim of the party filing the action, made in his
argument or brief, but rather by the complaint itself, its
allegations and prayer for relief. Rone et al. vs. Claro, et al.,
L-4472, May 8, 1952, 91 Phil. 250). In Baguioro vs. Barrios,
et al., 77 Phil. 120, the Supreme Court held that if the relief
demanded is not the proper one which may be granted under
the law, it does not characterize or determine the nature of
plaintiff's action, and the relief to which plaintiff is entitled
based on the facts alleged by him in his complaint, although
it is not the relief demanded, is what determines the nature
of the action.
While it is true that the complaint questions petitioner's
removal from the position of Executive Secretary and seeks
her reinstatement thereto, the nature of the suit is not
necessarily one of quo warranto. The nature of the instant
suit is one involving a violation of the rights of the plaintiff
under the By-Laws of the Society, the Civil Code and the
Constitution, which allegedly renders the individuals
responsible therefore, accountable for damages, as may be
gleaned from the following allegations in the complaint as
constituting the plaintiff's causes of action, to wit:
20. That, as a consequence of the unfair and malicious
removal of plaintiff from her office, which the plaintiff
maintains to be contrary to morals, good customs,
public policy, the pertinent provisions of said By-Laws of
the Society, the laws, and the guarranties of the
Constitution, by defendants Canizares, Ortigas Jr.,
Pardo, Adil, Nubla and Garcia, the plaintiff suffered not
only material damages, but serious damage to her
priceless properties, consisting of her honor and
reputation, which were maliciously and unlawfully
besmirched, thereby entitling her to compensation for
material and moral damages, from said defendants,
jointly and severally, under Article 21, in relation to
Article 32(6) of the New Civil Code;
xxx xxx xxx
24. That as a consequence of the inordinate use and
abuse of power by defendants, Caares Ortigas Jr., Pardo,
Adil, Nubla and Garcia, in arbitrarily, illegally, and
unjustly removing the plaintiff from office, without due
process of law, and in denying to her the enjoyment of
the guaranty of the Constitution to equal protection of
the law, the plaintiff suffered material and moral
damages as a result of the debasement of her dignity,
both as an individual and as a professional (physician) of
good standing, therefore, defendant Caares Ortigas Jr.,
Pardo, Adil, Nubla and Garcia should be ordered to pay
her moral damages, jointly and severally;
xxx xxx xxx
26. That the acts of the defendants Canizares, Ortigas
Jr., Pardo, Adil, Nubla and Garcia, in illegally removing
the plaintiff from her position as Executive Secretary of
defendant Society, which plaintiff was then holding
under a valid appointment and thereafter, immediately
appointing defendant Alberto Romulo to the position, is
most unfair, unjust and malicious, because it is contrary
to good morals, good customs, public policy, the
pertinent provisions of the Code of By-Laws of the
defendant Society, the laws and the aforementioned
guarranties of the Constitution; that the plaintiff
complaint that the said defendants are legally obligated
to compensate her, in concept of exemplary damages, in
 order to restrain persons in authority from committing
similar file I and un constitutional acts which debase
human dignity and inflict injuries to their fellowmen;
xxx xxx xxx
31. That, as a consequence of the said unjustified
refusal of the defendant, present Board of Directors of
the defendant Society, to resolve the complaint of the
plaintiff and extend to her the reliefs to which she is
entitled under the law and the Constitution, it is
respectfully submitted that said defendant Board is
under legal obligation to correct the illegal and
unconstitutional act of defendants Caares Ortigas Jr.,
Pardo, Nubla, Adil and Garcia, by restoring the plaintiff
to her position as Executive Secretary of the defendant
Society, payment of salaries and other benefits,
corresponding to the period of her illegal and
unconstitutional removal from office.
Further, it must be noted that the action is not only against
Alberto Romulo, the person appointed in her stead, but also
against the Society and the past and present members of the
Board. In fact, Romulo is sued as present occupant of the
office and not to hold him accountable for damages because
he did not participate in the alleged illegal and
unconstitutional removal of plaintiff- appellant. The action is
primarily against the Society and the past members of the
Board who are responsible for her removal. The present
Board of Directors has been implead as party defendant for
the purpose merely of enabling it to act, "to reinstate the
plaintiff to her position as Executive Secretary of the
defendant Society" being one of the reliefs prayed for in the
prayer of the complaint.
Hence, We hold that where the respondents, except for one,
namely, Alberto Romulo, are not actually holding the office
in question, the suit could not be one for quo warranto.
Corollarily, the one-year period fixed in Section 16, Rule 66
of the Revised Rules of Court within which a petition for quo
warranto should be filed, counted from the date of ouster,
does not apply to the case at bar. The action must be
brought within four (4) years, in accordance with Valencia
vs. Cebu Portland Cement Co., et al., L-13715, December 23,
1959, 106 Phil. 732, case involving a plaintiff separated from
his employment for alleged unjustifiable causes, where this
Court held that the action n is one for "injury to the rights of
the plaintiff, and must be brought within 4 years murder
Article 1146 of the New Civil Code .
Nonetheless, although the action is not barred by the statute
of limitations, We rule that it will not prosper. Contrary to
her claim, petitioner was not illegally removed or from her
position as Executive Secretary in violation of Code of By-
laws of the Society. the New Civil Code and the pertinent
provisions of the Constitution.
Petitioner claims and the respondents do not dispute that
the Executive Secretary is an officer of the Society pursuant
to provision in the Code of By-laws Laws:
Section 7.01. Officers of the Society. — The executed
officers f the Society shag be the President a Vice-
President, a Treasurer who shall be elected by the Board
of Directors, Executive Secretary, and an Auditor, who
shall be appointed by the Board of Directors, all of whom
shall exercise the functions. powers and prerogatives
generally vested upon skich officers, the functions
hereinafter set out for their respective offices and such
other duties is from time to time, may be prescribed by
the Board of Directors. On e person may hold more than
one office except when the functions thereof are
incompatible with each other.
It is petitioner's contention that she is subject, to removal
pursuant to Section 7.04 of the Code of By-laws which
respondents correctly dispute citing Section 7.02 of the same
Cede. The aforementioned provisions state as follows:
Section 7.02. Tenure of Office. — All executive officers of
the Society except the Executive Secretary and the
Auditor shall be elected the Board of Directors, for a
term of one rear ind shall hold office until their
 successors are elected and have qualified. The Executive
secretary, the Auditor and all other office ers and
employees of the Society shall hold office at the pleasure
of the Board of Directors, unless their term of
employment shall have been fixed in their contract of
employment.
xxx xxx xxx
Section 7.04. Removal of Officers and Employees. — All
officers and employees shall be subject to suspension or
removal for a sufficient cause at any time by affirmative
vote of a majority of an the members of the Board of
Directors, except that employees appointed by the
President alone or by the other officers alone at the
pleasure of the officer appointing him.
It appears from the records, specifically the minutes of the
special meeting of the Society on August 3, 1972, that
petitioner was designated as Acting Executive Secretary with
an honorarium of P200.00 monthly in view of the application
of Dr. Jose Y. Buktaw for leave effective September 1, 1972
for 300 working days. This designation was formalized in
Special Order No. 110, s. 1972 wherein it was indicated that:
"This designation shall take effect on September 1, 1972 and
shall remain until further advice."
In the organizational meeting of the Society on April 25,
1973, the minutes of the meeting reveal that the Chairman
mentioned the need of appointing a permanent Executive
Secretary and stated that the former Executive Secretary, Dr.
Jose Y. Buktaw, tendered his application for optional
retirement, and while on terminal leave, Dr. Mita Pardo de
Tavera was appointed Acting Executive Secretary. In view
thereof, Don Francisco Ortigas, Jr. moved, duly seconded,
that Dr. Mita Pardo de Tavera be appointed Executive
Secretary of the Philippine Tuberculosis Society, Inc. The
motion was unanimously approved.
On April 27, 1973, petitioner was informed in writing of the
said appointment, to wit:
 Dr. Mita Pardo de Tavera
Philippine Tuberculosis Society, Inc.
Manila
Madam:
I am pleased to inform you that at the meeting of the
Board of Directors held on April 25, 1973, you were
appointed Executive Secretary, Philippine Tuberculosis
Society, Inc. with such compensation, petition and
allowances as are provided for in the Budget of the
Society, effective immediately, vice Dr. Jose Y. Buktaw,
retired.
Congratulations.
Very truly yours,
For the Board of
Directors:
(Sgd) Miguel Canizares,
M.D. MIGUEL
CARIZARES, M.D.
President
Although the minutes of the organizational meeting show
that the Chairman mentioned the need of appointing a
"permanent" Executive Secretary, such statement alone
cannot characterize the appointment of petitioner without a
contract of employment definitely fixing her term because of
the specific provision of Section 7.02 of the Code of By-Laws
that: "The Executive Secretary, the Auditor, and all other
officers and employees of the Society shall hold office at the
pleasure of the Board of Directors, unless their term of
employment shall have been fixed in their contract of
employment." Besides the word permanent" could have been
used to distinguish the appointment from acting capacity".
The absence of a fixed term in the letter addressed to
petitioner informing her of her appointment as Executive
Secretary is very significant. This could have no other
implication than that petitioner held an appointment at the
pleasure of the appointing power.
An appointment held at the pleasure of the appointing power
is in essence temporary in nature. It is co-extensive with the
desire of the Board of Directors. Hence, when the Board opts
to replace the incumbent, technically there is no removal but
only an expiration of term and in an expiration of term, there
is no need of prior notice, due hearing or sufficient grounds
before the incumbent can be separated from office. The
protection afforded by Section 7.04 of the Code of By-Laws
on Removal of Officers and Employees, therefore, cannot be
claimed by petitioner.
Thus, in the case of Moji vs. Mariño 13 SCRA 293, where the
appointment contains the following proviso: that it may be
terminated at anytime without any proceedings, at the
pleasure of the President of the Philippines, this Court held:
"It may, therefore, be said that, though not technically a
temporary appointment, as this term is used in Section 24(b)
of the Civil Service Act of 1959, petitioner's appointment in
essence is temporary because of its character that it is
terminable at the pleasure of the appointing power. Being
temporary in nature, the appointment can be terminated at a
moment's notice without need to show cause as required in
appointments that belong to the classified service."
In Paragas vs. Bernal 17 SCRA 150, this Court distinguished
between removal and expiration of term .
In the case at bar there has been, however, no removal
from office. Pursuant to the charter of Dagupan City, the
Chief of Police thereof holds office at the pleasure of the
President. Consequently, the term of office of the Chief of
Police expires at any time that the President may so
declare. This is not removal, inasmuch as the latter
entails the ouster of an incumbent before the expiration
of his term. In the present case, petitioner's term merely
expired upon receipt by him of the communication of
respondent Assistant Executive Secretary of the
President, dated September 14, 1962.
Petitioner cannot likewise seek relief from the general
provisions of the New Civil Code on Human Relations nor
from the fundamental principles of the New Constitution on
preservation of human dignity. While these provisions
present some basic principles that are to be observed for the
rightful relationship between human beings and the stability
of social order, these are merely guides for human conduct
in the absence of specific legal provisions and definite
contractual stipulations. In the case at bar, the Code of By-
Laws of the Society contains a specific provision governing
the term of office of petitioner. The same necessarily limits
her rights under the New Civil Code and the New
Constitution upon acceptance of the appointment.
Moreover, the act of the Board in declaring her position as
vacant is not only in accordance with the Code of By-Laws of
the Society but also meets the exacting standards of honesty
and good faith. The meeting of May 29, 1974, at which
petitioner ,petitioner's position was declared vacant, was
caged specifically to take up the unfinished business of the
Reorganizational Meeting of the Board of April 30, 1974.
Hence, and act cannot be said to impart a dishonest purpose
or some moral obliquity and conscious doing to wrong but
rather emanates from the desire of the Board to reorganize
itself.
Finally, We find it unnecessary to resolve the third
assignment of error. The proscription against removal
without just cause and due process of law under the Civil
Service Law does not have a bearing on the case at bar for
the reason, as We have explained, that there was no removal
in her case but merely an expiration of term pursuant to
Section 7.02 of the Code of By-Laws. Hence, whether or not
the petitioner falls within the protective mantle of the Civil
Service Law is immaterial and definitely unnecessary to
resolve this case.
WHEREFORE, premises considered, the decision of the lower
court holding that petitioner was not illegally removed or
ousted from her position as Executive Secretary of the
Philippine Tuberculosis Society, Inc., is hereby AFFIRMED.
G.R. No. 127932 December 7, 2001
ANDRADE vs. CA and WINGSING
DE LEON, JR., J.:
Before us is a petition for review on certiorari seeking
nullification of the Decision1 and Resolution2 dated
September 28, 1995 and January 23, 1997, respectively, of
the Court of Appeals3 reversing the Decision4 dated August
31, 1990 of the Regional Trial Court, Branch 106, Quezon
City which adjudged private respondent Dominador S.
Wingsing liable to petitioner Virginia M. Andrade for actual
and compensatory damages, attorney's fees and the costs of
suit.
The pertinent facts are as follows:
On July 6, 1971, petitioner was appointed as permanent
teacher in the Division of City Schools, Manila. She was
initially assigned as English teacher at the Araullo High
School, Manila.
On June 14, 1985, two (2) days before the opening of classes
for the school year 1985-1986, petitioner inquired from the
English Department Head, Virginia E. Fermin, about her
teaching load, and in response thereto, she was referred to
private respondent Dominador Wingsing, Principal of the
Araullo High School. However, a subsequent visit by
petitioner to private respondent Wingsing on June 19, 1985
yielded negative results as the latter merely referred back the
petitioner to English Department Head Fermin.
Irked by the manner by which she was being referred back
and forth from one person to another, the petitioner wrote on
July 17, 1985 to Arturo F. Coronel, Assistant Schools
Division Superintendent of the Division of City Schools,
Manila, requesting that she be given a teaching
assignment.5 In an endorsement dated July 30, 1985,
addressed to Superintendent Coronel, private respondent
Wingsing cited three (3) reasons why petitioner Andrade was
not given any teaching load: (1) drastic drop of enrollment;
(2) she was declared an excess teacher; and (3) she ranked
lowest in her performance rating.6 Hence, on August 22,
1985, Superintendent Coronel informed the petitioner,
through private respondent Wingsing, that the petitioner
would be designated to a non-teaching position in the
meantime that arrangements were being made for her
eventual reassignment to other schools where her services
may be needed.7
On October 4, 1985, petitioner made a request to Benedicto
M. Hormilla Chief a Personnel Services of the Division of City
Schools of Manila, that she be transferred from Araullo High
School to Ramon Magsaysay High School in Manila, 8 and
said request was favorably acted upon by Superintendent
Coronel.9 Petitioner then reported for work on October 9,
1985 at the Ramon Magsaysay High School,10 but in a letter
of the same date, petitioner relayed that she is withdrawing
her request for transfer and indicated her intention of
remaining at the Araullo High School.11 Thereafter, petitioner
discovered that her name has been deleted from the regular
monthly payroll and transferred to a special voucher
list.1âwphi1.nêt
Feeling aggrieved, petitioner filed an action for damages with
mandatory injunction12 against private respondent
Dominador S. Wingsing, English Department Head Virginia
E. Fermin and Assistant Schools Division Superintendent
Arturo F. Coronel before the Regional Trial Court
(RTC),13 Quezon City. Petitioner claimed that Wingsing,
Fermin and Coronel conspired in depriving her of her
teaching load and humiliated her further by excluding her
name from the regular monthly payroll.
In his answer, private respondent Wingsing disclaimed any
intention to maliciously deprive the petitioner of her teaching
load. He explained that the decrease n the enrollment for the
school year 1985-1986 necessitated that a number of
teachers be declared in a list as excess teachers, and as
petitioner had the lowest performance rating, she was
included in the said list. Nonetheless, respondent Wingsing
asserted that due consideration was extended to petitioner
upon instruction from Superintendent Coronel to provide her
with a non-teaching job in the meantime that her next
assignment was being determined. However, petitioner
declined his offer to handle Developmental Reading lessons
and to function as an Assistant Librarian. As for the deletion
of petitioner's name from the regular monthly payroll,
respondent Wingsing declared that he and his co-defendants
were merely exercising and doing their duties in accordance
with the existing school policies, rules and regulations.
On August 31, 1990, the trial court rendered its Decision
absolving Virginia Fermin and Arturo Coronel, but held
herein respondent Wingsing liable to petitioner for:
1. Actual and compensatory damages in the amount of
Ninety Three Thousand Five Hundred Seventy-five and
99/100 pesos (P93,575.99);
2. Attorney's fees in the sum of Ten Thousand Pesos
(P10,000.00); and
3. Costs of suit.
Aggrieved by the said decision, private respondent Wingsing
appealed to the Court of Appeals,14 maintaining the necessity
of declaring excess teachers, including the petitioner, during
the subject school year and invoking regularity in the
performance of his functions as principal of the Araullo High
School. Finding merit in his argument, the appellate court
on September 28, 1995 reversed the decision of the trial
court and dismissed the complaint of petitioner.
The appellate court in its Resolution dated January 23, 1997
denied petitioner's motion for reconsideration. The petitioner
now challenges the correctness of the Court of Appeal's
decision via the instant petition.
Petitioner contends that public respondent Court of Appeals
erred in applying the Orcino Doctrine15 and that Sec. 31 of
P.D. No. 807, otherwise known as the Civil Service
Commission,16 Sec. 6 of R.A. No. 4670, otherwise known as
The Magna Carta for Public School Teachers17 and R.A. No.
2260, as amended18 should be the applicable laws.
Petitioner asserts that private respondent Wingsing failed to
comply with the said laws considering that no performance
evaluation plan which can be the basis for personal action
was ever presented in evidence to justify the latter's actions.
What was shown were performance rating sheets and the
Certification on the Audit of Teachers, allegedly prepared by
petitioner's co-teachers and personnel from the Office of the
Research and Evaluation Services, which petitioner Andrade
did not conform to nor sign. And assuming that the above-
cited documents were valid and credible, petitioner
nonetheless argues that she had not been informed
periodically by private respondent Wingsing of her
performance ratings, nor was she warned that she needed to
improve her performance.
Petitioner also doubts the veracity of private respondent
Wingsing's claim that there was a reduction of classes for the
school year 1985-1986 as reason for her being declared as
an excess teacher since Araullo High School even hired three
(3) more new teachers that school year. To underscore her
claim that she had been singled out, petitioner asserts that,
contrary to the declaration of respondent Wingsing, there
was no other person declared as an excess teacher in Araullo
High School for that school year.
Petitioner likewise argues that the procedure for transferring
teachers to other work stations as laid down in Republic Act
No. 4670 was not observed when private respondent tried to
effect her transfer from Araullo High School to Ramon
Magsaysay High School. Although petitioner admits that she
initiated the request for transfer, she claims that she was
misled by respondent Wingsing regarding the availability of a
teaching position in the Ramon Magsaysay High School.
Even then, upon learning that there was no vacancy in the
Ramon Magsaysay High School. As the order to transfer has
not been revoked, she thereafter questioned its validity
before the Regional Director and the Secretary of the
Department of Education, Culture and Sports. Petitioner
argues that her failure to report for work on the first day of
classes at the Ramon Magsaysay High School did not justify
her exclusion from the teachers' regular monthly payroll.
She points out that as clarified by Chief Accountant Priscilla
Fabian, Accounting Section of the Division of City Schools, a
minimum of three (30 days is usually given to teachers or
personnel who fail to report for duty on the first day of
classes before such employee can be deleted from the regular
monthly payroll. She claims that this 3-day period was not
extended to her before name was deleted from the regular
monthly payroll.
The petition is not meritorious.
It must be noted that the present petition originated from an
action for damages for alleged withholding of petitioner's
teaching load and deletion of her name from the regular
monthly payroll caused by private respondent Dominador S.
Wingsing, Virginia E. Fermin and Arturo F. Coronel. From
the initial pleading and the testimony of petitioner Andrade,
it appeared that her claim for damages was based on Article
19 of the New Civil Code which provides that:
"Every person must, in the exercise of his rights and in
the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith."
While Article 19 of the New Civil Code may have been
intended as a declaration of principle, the "cardinal law on
human conduct" expressed in said article has given rise to
certain rules, e.g., that where a person exercises his rights
but does so arbitrarily or unjustly or performs his duties in a
manner that is not in keeping with honesty and good faith,
he opens himself to civil liability. The elements of abuse of
one's rights under the said Article 19 are the following: (1)
there is a legal right or duty; (2) which is exercised in bad
faith; (3) for the sole intent of prejudicing or injuring
another.19 In this regard, it appeared that the complaint of
petitioner Andrade failed to meet the second and third
requirements.
A careful review of the records reveals that the declaration of
petitioner as an excess teacher was not motivated by any
personal desire on the part of respondent Wingsing to cause
her undue misery or injury, but merely the result of the valid
exercise of authority. The decrease in the enrollment for the
school year 1985-1986 in the Araullo High School resulted in
a number of teachers being declared as excess teachers in
the following subjects: Social Studies, 1; Math, 2, and
English, 1.20 In exercising his judgment, the evidence reveals
that respondent Wingsing was not at all dictated by whim or
fancy, nor of spite against the petitioner but was rather
guided by the following factors: qualification to teach,
seniority, teaching performance and attitude towards the
school community. For two (2) consecutive years petitioner
received an unsatisfactory rating, the lowest, from two (2)
English Department Heads, namely: Herminia Valdez and
Virginia Fermin.21 Petitioner knew about her poor rating, but
she refused to acknowledge it. She did not question nor
contest the same. Homeroom teacher Zaida Perez22 and
Remedios P. Rutaquio,23 a retired Supervisor of English,
Division of City Schools, Manila, both testified that petitioner
frequently absented herself from classes. Assistant Principal
Romeo F. Amparado likewise testified that petitioner was
often the subject of complaints from school personnel and
students, one of which involved the slapping of a student
without provocation, for which petitioner was suspended for
one month without pay.24 Petitioner Andrade was therefore
declared as an excess teacher, as rightfully recommended by
private respondent, the latter being the school principal. It
was a judgment made in good faith by respondent.
Contrary to the claim of petitioner, there were no new
teachers hired that school year in Araullo High School;
rather, existing substitute teachers were merely given
permanent designation or assigned new subjects,
significantly, prior to the teachers' audit or to the declaration
of excess teachers on July 27, 1985; Linda Fincalero was
appointed English teacher on may 31, 1985, while Estelita A.
Durucan, a history teacher was made to teach English at
about the same date.25 Moreover, the said three (3) teachers
were appointed to teach the English subject after petitioner
Andrade refused to teach the said subject when it was
offered to her. Private respondent Wingsing testified in that
regard, to wit:
 ATTY ESTRADA:
Q Mr. Witness, showing to you a document marked
as Exhibit M. In this particular document, one teacher
Estella Durupan, a history major and minor in English
was given a teaching load in English?
A Correct.
Q My Question is – if there is a scarcity of teaching
loads in the Division of schools, why was it that a
History teacher was assigned to English?
A Because that position was already offered to Mrs.
Andrade and she informed me that her knowledge and
intelligence does not fit that position, so it was given to
an English minor.
xxx xxx xxx
Q Mr. Wingsing, why was Mrs. Durupan, a Social
Study (sic) teacher assigned as Development teacher to
teach English subject?
A Because Mrs. Durupan is a minor in English
subject and when we offered the teaching of the
developmental reading to Mrs. Andrade, she did not like
to accept it, so we have to assign it to a teacher who is a
minor in English subject.
xxx xxx xxx
ATTY. NALAPO:
Q Mr. Wingsing, why was Linda Fingalero assigned
on May 31 instead of Mrs. Andrade?
A Linda Fingalero was formerly assigned as a
substitute teacher to the class of Mrs. Andrade comes off
and on and she was not handling the two or three
classes from 2:30 to 3:30 so our request from the
superintendent for additional teacher in 1984, Mrs.
Fingalero was a substitute teacher. So at the termination
 of the school year 1984-1985, her assignment at Araullo
was terminated. xxx26
Entrenched is the rule that bad faith does not simply
connote bad judgment or negligence; it imputes a dishonest
purpose or some moral obliquity and conscious doing of a
wrong; a breach of sworn duty through some motive or
intent or ill will; it partakes of the nature of fraud. 27 In the
case at bar, we find that there was no "dishonest purpose,"
or "some moral obliquity," or "conscious doing of a wrong," or
"breach of a known duty," or "some motive or interest or ill
will" that can be attributed to the private respondent. It
appeared that efforts to accommodate petitioner were made
as she was offered to handle two (2) non-teaching jobs, that
is, to handle Developmental Reading lessons and be an
assistant Librarian, pending her re-assignment or transfer to
another work station, but she refused. The same would not
have been proposed if the intention of private respondent
were to cause undue hardship on the petitioner. Good faith
is always presumed unless convincing evidence to the
contrary is adduced. It is incumbent upon the party alleging
bad faith to sufficiently prove such allegation. Absent enough
proof thereof, the presumption of good faith prevails. In the
case at bar, the burden of proving alleged bad faith therefore
was with petitioner but she failed to discharge such onus
probandi. Without a clear and persuasive evidence of bad
faith, the presumption of good faith in favor of private
respondent stands.28
With regards to the deletion of petitioner's name from the
regular monthly payroll of teachers, we find the same to be
merely the result of a school policy being implemented by the
school personnel. Private respondent Wingsing had nothing
to do with the preparation of the payroll, as it was the school
payroll clerk who prepared the same. As explained by payroll
clerk Aida Soliman, petitioner's name was not deleted from
the regular monthly payroll but merely transferred to the last
page of the roll since she failed to submit her Form 48 or
Daily Time Record (DTR) sheet on time. The move was made
so that the other teachers would not be unduly prejudiced by
the delayed release of petitioner's salary, which as a policy
was the consequence for late submission of DTRs.29 There
was no showing that private respondent had a hand in this
situation as Aida Soliman likewise revealed that the decision
to transfer petitioner's name on the last page of the payroll
was made on the instruction of the Accounting Services
upon discovery that she did not report to work on the first
day of class. Indeed, after being declared as an excess
teacher and having declined her transfer to Ramon
Magsaysay High School, petitioner's status could only be
described as "floating." She should have expected that there
would be changes in her situation, and that she should not
have immediately blamed it on others, more particularly on
private respondent. Although there might have been a delay
in the receipt of petitioner's salary, we find that it was not as
grave as she painted it out to be considering that she was
nonetheless paid her salary until October 15, 1986. The only
reason why she failed to receive her salary and benefits from
October 16, 1986 to June 1988 was because she did not
report for work during the said period due to her unjustified
refusal to accept her assignment.1âwphi1.nêt
WHEREFORE, the challenged Decision of the Court of
Appeals in CA G.R. CV No. 30213 is AFFIRMED in toto.
SO ORDERED.

G.R. No. 79237 October 18, 1988

UNIVERSITY OF SAN CARLOS and SATORRE vs.
CA and LEE
GANCAYCO, J.:
The principal issue raised in this petition is whether or not
mandamus is the proper remedy to compel a university to
confer a degree with honors. The secondary question is
whether or not the refusal of that university to confer honors
would constitute bad faith so as to make it liable for
damages.
Private respondent Jennifer C. Lee filed an action for
mandamus with damages against Petitioners University of
San Carlos and Victoria A. Satorre, docketed as Civil Case
No. R22022 in the Regional Trial Court, Branch XVIII, Cebu,
asking that petitioners be compelled to confer upon her the
degree of Bachelor of Science in Commerce, major in
Accounting, cum laude, retroactive to March 28, 1982, to
execute and deliver to her all necessary credentials
evidencing her graduation with honors, and to pay her moral
damages in the amount of P300,000.00, exemplary damages
in the amount of P50,000.00, and attorney's fees in the
amount of P20,000.00.
After trial, the lower court rendered its Decision dated
January 29, 1986, 1 the dispositive portion of which reads as
follows:
WHEREFORE, judgment is hereby rendered in favor of
plaintiff, and accordingly, defendants University of San
Carlos and Dean Victoria A. Satorre are ordered to
confer upon plaintiff, Jennifer C. Lee, the degree of
Bachelor of Science in Commerce, major in accounting,
with cum laude honors (sic), retroactive to March 28,
1982, and to execute and deliver to plaintiff all the
necessary school credentials evidencing her graduation
with such honors; and said defendants are ordered to
pay plaintiff jointly and severally the sum of P75,000 as
moral damages, the sum of P20,000 as exemplary
damages, with interest thereon at 12% per annum
beginning July 22, 1982, until said amounts are fully
paid: and the sum of P15,000 as attorney's fees. The
counterclaim is ordered dismissed. Costs against
defendants. 2
Petitioners appealed to the respondent Court of Appeals
where the case was docketed as CA-G.R. No. SP-09368. In a
decision dated May 28, 1987, the appellate court affirmed in
toto the decision of the trial court. 3
The motion for reconsideration filed by petitioners was
denied in a Resolution of the appellate court dated July 7,
1987.4
Hence, this petition where petitioners allege as grounds
thereof-
(a) A university may not be compelled by mandamus to
grant graduation honors to any student who, according
to the university's standards, rules and regulations, does
not qualify for such honors; and
(b) The decision penalizing petitioners to pay excessive
moral and exemplary damages and attorney's fees is not
justified by the facts and circumstances of this case and
disregards the many decisions of this Honorable Court
setting reasonable standards and limits in the award of
such damages. (P. 2, petition; p. 12, rollo)
Private respondent enrolled in the College of Architecture,
University of San Carlos (USC), during the first semester of
school year 1978-79. At the end of the second semester of
that school year, she obtained a grade of "I.C." (Incomplete)
in Architecture 121, and grades of "5's" (failures) in
Architecture 122 and Architecture 123.
The following school year, 1979-1980, she shifted to the
College of Commerce of the USC. Some of the units she had
completed when she was still an architecture student were
then carried over and credited in her new course. As a
commerce student, she obtained good grades. However, she
was aware of her earlier failing grades in the College of
Architecture and that the same would be taken into
consideration in the evaluation of her overall academic
performance to determine if she could graduate with honors.
So, on December 10, 1981, she wrote 5 the Council of Deans
of the USC, requesting that her grades of 5s in Architecture
121 and Architecture 122 be disregarded in the computation
of her grade average. She wrote a similar letter to the
Ministry of Education, Culture and Sports MECS in Region
VII on January 5, 1982 6 and this letter was referred to the
President of the USC for comment and return to the MECS.
In the 3rd Indorsement dated February 4, 1982, the
President of the USC informed the MECS that the university
policy was that any failing grade obtained by a student in
any course would disqualify the student for honors; that to
deviate from that policy would mean injustice to students
similarly situated before who were not allowed to graduate
with honors; that the bad grades given to her were justified
and could not be deleted or removed because her subjects
were not "dropped" as required; that she had two failures
and one incomplete grade which became a failure upon her
inaction to attend to the incomplete grade within one year;
and that while her three failures did not affect her
graduation from the College of Commerce, they nonetheless
caused her disqualification from graduating with honors.
She was furnished a copy of said indorsement but she did
not ask for a reconsideration.
On March 17, 1982, when the USC President was out of
town, private respondent wrote to the USC Registrar'
requesting that her failing grades be changed. The USC
Registrar 7 referred her letter to the MECS and the request
for change of grades was approved in a 4th indorsement of
March 22, 1982. 8 Thus, her grade of IC in Architecture 121
was changed to "1.9" by Professor Victor Leves Jr. and the
grades of "5" in Architecture 122 and Architecture 123 were
changed to "W" (Withdrawn).
On March 24, 1982, Mr. Marcelo Bacalso of MECS' Higher
Education Division discovered that the change of the grade
of private respondent from "IC" to "1.9" did not have the
supporting class record required, so he wrote to MECS
Supervisor Mr. Ortiz requesting the submission of the class
record. 9
On March 28, 1982, the USC held its graduation exercises,
and the private respondent graduated with the degree of
Bachelor of Science in Commerce, major in Accounting,
without honors.
On March 31, 1982, the private respondent, assisted by
counsel, demanded from Dean Victoria A. Satorre that she
be allowed to graduate, cum laude. 10 Dean Satorre explained
that the matter was held in abeyance pending compliance
with certain requirements of the MECS through the memo of
Mr. Bacalso. 11
On May 24, 1982, Arch. Leves Jr., the teacher required to
produce the class records, reported he could not produce the
same. 12 Thus, on May 27, 1982, Dean Satorre wrote to the
MECS Regional Director Aurelio Tiro asking for the
revocation of the change of grades of private
respondent. 13 The request was denied as there was no
positive proof of fraud. 14
It is an accepted principle that schools of teaming are given
ample discretion to formulate rules and guidelines in the
granting of honors for purposes of graduation. This is part of
academic freedom. Within the parameters of these rules, it is
within the competence of universities and colleges to
determine who are entitled to the grant of honors among the
graduating students. Its discretion on this academic matter
may not be disturbed much less controlled by the courts
unless there is grave abuse of discretion in its exercise.
In this case, the petitioner's bulletin of information provides
all students and all other interested parties advise on the
University policies and rules on enrollment and academic
achievements. Therein it is provided, among others, that a
student may not officially withdraw from subjects in the
curriculum if he does not have the written permission of his
parents or guardian. 15 For an incomplete grade, there must
be an application for completion or removal within the period
announced by the school calendar and when not removed
within one (1) year, it automatically becomes final. 16 A "DR"
(Dropped) subject which is in the same category, as a "5"
disqualifies a student from receiving honors. 17 A candidate
for honors should have earned no less than 18 units per
semester but a working student should earn no less that 12
units. A failure in any subject disqualifies a student from
honors. 18 Good moral character and exemplary conduct are
as important criteria for honors as academic
achievements. 19
Private respondent should know and is presumed to know
those University policies and is bound to comply therewith.
It is precisely because she knew of these rules that she
exerted all efforts to have her final grades of "5's" in
Architecture 122 and Architecture 123 be disregarded in the
computation of honors. When her request was denied by the
university, she did not ask for a reconsideration thereof.
Instead, in the middle part of March 1982 when the USC
President was out of town, she wrote another letter to the
USC registrar asking her failing grades be changed as above
related. The matter was referred to the MECS and the
request was approved on March 22,1982.
However, when it was discovered thereafter that the change
of private respondent's grades from "IC" TO "1.9" was not
supported by the corresponding class records and its
production was required the same could not be produced.
There is thus no justification for said change of grade.
Moreover, the request for the change of the grade of
incomplete was not made by private respondent within one
(1) year so that it became final according to the rules.
By the same token, the change of the grades of private
respondent from "5" to "W" (Withdrawn) in Architecture 122
and Architecture 123 was without the written permission of
her parents or guardian. Indeed, it is unusual that a student
who got a "5" in a subject, as in this case, should still be
allowed to withdraw from such subject. Withdrawal from
subjects is not ordinarily allowed after mid-term
examination 20 much less after a failing grade in the subject
has been received.
The change of grades of private respondent is thus open to
question. Obviously, private respondent employed undue
and improper pressure on the MECS authorities to approve
the change of her grades to remove all obstacle to her
graduation with honors. Petitioners' claim that the change of
grades of the private respondent was attended with fraud is
not entirely misplaced. Petitioners cannot be faulted for
refusing to vest the honors demanded of them by the private
respondent. One failure would have been sufficient to
disqualify her but she had one incomplete and two failures.
Her only change was to reverse her failing grades. This she
accomplished thru the back door.
Nevertheless, even if she succeeded in removing her failing
grades, it was still within the sound discretion of the
petitioners to determine whether private respondent was
entitled to graduate with honors. The Court finds that
petitioners did not commit a grave abuse of discretion in
denying the honors sought by private respondent under the
circumstances. Indeed, the aforesaid change of grades did
not automatically entitle her to the award of honors.
Private respondent not having demonstrated that she has a
clear legal right to the honors sought, her claim for damages
must necessarily fail.
WHEREFORE, the petition is GRANTED and the subject
decision of the respondent court of May 28, 1987 and its
resolution of July 7, 1987, are hereby REVERSED and SET
ASIDE and another judgment is hereby rendered
DISMISSING the complaint without pronouncement as to
costs.
SO ORDERED.

G.R. No. 96126 August 10, 1992

GARCIANO vs. CA
GRIÑO-AQUINO, J.:
This is a petition for review of the decision of the Court of
Appeals dismissing the complaint for damages filed by the
petitioner against the private respondents.
The petitioner was hired to teach during the 1981-82 school
year in the Immaculate Concepcion Institute in the Island of
Camotes. On January 13, 1982, or before the school year
ended, she applied for an indefinite leave of absence because
her daughter was taking her to Austria where her daughter
was employed (Exh. B). The application was recommended
for approval by the school principal, Emerito O. Labajo, and
approved by the President of the school's Board of Directors
(Exh. B-1).
On June 1, 1982, Emerito Labajo addressed a letter to the
petitioner through her husband, Sotero Garciano (for she
was still abroad), informing her of the decision of Fr. Joseph
Wiertz, the school's founder, concurred in by the president of
the Parent-Teachers Association and the school faculty, to
terminate her services as a member of the teaching staff
because of: (1) the absence of any written contract of
employment between her and the school due to her refusal
to sign one; and (2) the difficulty of getting a substitute for
her on a temporary basis as no one would accept the
position without a written contract (Exhs. C and 1). Upon
her return from Austria in the later part of June, 1982, she
received the letter informing her that her services at the
Immaculate Concepcion Institute had been terminated. She
made inquiries from the school about the matter and, on
July 7, 1982, the members of the Board of Directors of the
school, with the exception of Fr. Joseph Wiertz, signed a
letter notifying her that she was "reinstated to report and do
your usual duties as Classroom Teacher . . . effective July 5,
1982," and that "any letter or notice of termination received
by you before this date has no sanction or authority by the
Board of Directors of this Institution, therefore it is declared
null and void . . ." (Exhs. D and 2).
On July 9, 1982, the president, vice president, secretary,
and three members of the Board of Directors, out of a
membership of nine (9), resigned their positions from the
Board "for the reason that the ICI Faculty, has reacted acidly
to the Board's deliberations for the reinstatement of Mrs.
Esteria F. Garciano, thereby questioning the integrity of the
Board's decision" (Exh. E).
On September 3, 1982, petitioner filed a complaint for
damages in the Regional Trial Court, Cebu, Branch XI,
against Fr. Wiertz, Emerito Labajo, and some members of the
faculty of the school for discrimination and unjust and illegal
dismissal.
After trial, the lower court rendered a decision on August 30,
1985, ordering the defendants jointly and severally to pay
her P200,000 as moral damages, P50,000 exemplary
damages, P32,400 as lost earnings for nine years, and
P10,000 as litigation expenses and attorney's fees.
The defendants (now private respondents) appealed to the
Court of Appeals (CA-G.R. CV No. 10692), which on August
30, 1990 reversed the trial court's decision thus:
WHEREFORE, the decision appealed from is reversed,
the complaint is dismissed, and defendants-appellants
are absolved from any liability to plaintiff-appellee. With
costs against plaintiff-appellee. (p. 13, Rollo.)
The plaintiff-appellee (now petitioner) filed a motion for
reconsideration which the Court of Appeals denied on
October 26, 1990. Hence, this petition for review wherein the
lone error assigned by petitioner reads:
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.
The board of directors of the Immaculate Concepcion
Institute, which alone possesses the authority to hire and
fire teachers and other employees of the school, did not
dismiss the petitioner. It in fact directed her to report for
work. While the private respondents sent her a letter of
termination through her husband, they admittedly had no
authority to do so. As the Court of Appeals aptly observed:
We agree with defendants-appellants, however, that they
should not have been held liable to plaintiff-appellee for
damages. Defendants-appellants had no authority to
dismiss plaintiff-appellee and the latter was aware of
this. Hence, the letter of termination sent to her through
her husband (Exhs. C and 1) by defendants-appellants
 had no legal effect whatsoever. It did not effectively
prevent her from reporting for work. What is more, it was
subsequently repudiated by the Board of Directors which
directed her to report for work. (Exhs. D and 2) There
was, therefore, no reason why she did not continue with
her teaching in the school. No evidence had been
presented to show that defendants-appellants prevented
her from reporting for work. The fact that defendants-
appellants had "acidly" received the action of the Board
of Directors repudiating their decision to terminate
plaintiff-appellee is not proof that defendants-appellants
had effectively and physically prevented plaintiff-appellee
from resuming her post. It was nothing more than a
reaction to what defendants-appellants perceived as an
affront to their collective prestige. It would appear,
therefore, that plaintiff-appellee voluntarily desisted from
her teaching job in the school and has no right to
recover damages from defendants-appellants. (p.
13, Rollo.)
Liability for damages under Articles 19, 20 and 21 of the
Civil Code arises only from unlawful, willful or negligent acts
that are contrary to law, or morals, good customs or public
policy.
Art. 19. Every person must, in the exercise of his rights
and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good
faith.
Art. 20. Every person who, contrary to law, willfully or
negligently causes damage to another, shall indemnify
the latter for the same.
Art. 21. Any person who willfully causes loss or injury to
another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for
the damage.
The Court of Appeals was correct in finding that petitioner's
discontinuance from teaching was her own choice. While the
respondents admittedly wanted her service terminated, they
actually did nothing to physically prevent her from
reassuming her post, as ordered by the school's Board of
Directors. That the school principal and Fr. Wiertz disagreed
with the Board's decision to retain her, and some teachers
allegedly threatened to resign en masse, even if true, did not
make them liable to her for damages. They were simply
exercising their right of free speech or their right to dissent
from the Board's decision. Their acts were not contrary to
law, morals, good customs or public policy. They did not
"illegally dismiss" her for the Board's decision to retain her
prevailed. She was ordered to report for work on July 5,
1982, but she did not comply with that order. Consequently,
whatever loss she may have incurred in the form of lost
earnings was self-inflicted. Volenti non fit injuria.
With respect to petitioner's claim for moral damages, the
right to recover them under Article 21 is based on equity,
and he who comes to court to demand equity, must come
with clean hands. Article 21 should be construed as granting
the right to recover damages to injured persons who are not
themselves at fault (Mabutas vs. Calapan Electric Co. [CA]
50 OG 5828, cited in Padilla, Civil Code Annotated, Vol. 1,
1975 Ed., p. 87). Moral damages are recoverable only if the
case falls under Article 2219 in relation to Article 21
(Flordelis vs. Mar, 114 SCRA 41). In the case at bar,
petitioners is not without fault. Firstly, she went on an
indefinite leave of absence and failed to report back in time
for the regular opening of classes. Secondly, for reasons
known to herself alone, she refused to sign a written contract
of employment. Lastly, she ignored the Board of Directors'
order for her to report for duty on July 5, 1982.
The trial court's award of exemplary damages to her was not
justified for she is not entitled to moral, temperate or
compensatory damages. (Art. 2234, Civil Code).
In sum, the Court of Appeals correctly set aside the damages
awarded by the trial court to the petitioner for they did not
have any legal or factual basis.
WHEREFORE, the petition is DISMISSED for lack of merit
and the decision of the Court of Appeals is AFFIRMED.
G.R. No. 126486 February 9, 1998
BARONS MARKETING CORP. vs. CA and PHELPS DODGE
PHILS., INC.
KAPUNAN, J.:
The instant petition raises two issues: (1) whether or not
private respondent is guilty of abuse of right; and (2) whether
or not private respondent is entitled to interest and
attorney's fees.
The facts are undisputed:
On August 31, 1973, plaintiff [Phelps Dodge, Philippines,
Inc. private respondent herein] appointed defendant
[petitioner Barons Marketing, Corporation] as one of its
dealers of electrical wires and cables effective September 1,
1973 (Exh. A). As such dealer, defendant was given by
plaintiff 60 days credit for its purchases of plaintiff's
electrical products. This credit term was to be reckoned from
the date of delivery by plaintiff of its products to defendant
(Exh. 1).
During the period covering December 1986 to August 17,
1987, defendant purchased, on credit, from plaintiff various
electrical wires and cables in the total amount of
P4,102,438.30 (Exh. B to K). These wires and cables were in
turn sold, pursuant to previous arrangements, by defendant
to MERALCO, the former being the accredited supplier of the
electrical requirements of the latter. Under the sales invoices
issued by plaintiff to defendant for the subject purchases, it
is stipulated that interest at 12% on the amount due for
attorney's fees and collection (Exh. BB). 1 On September 7,
1987, defendant paid plaintiff the amount of P300,000.00
out of its total purchases as above-stated (Exh. S), thereby
leaving an unpaid account on the aforesaid deliveries of
P3,802,478.20. On several occasions, plaintiff wrote
defendant demanding payment of its outstanding obligations
due plaintiff (Exhs. L, M, N, and P). In response, defendant
wrote plaintiff on October 5, 1987 requesting the latter if it
could pay its outstanding account in monthly installments of
P500,000.00 plus 1% interest per month commencing on
October 15, 1987 until full payment (Exh. O and O-4).
Plaintiff, however, rejected defendant's offer and accordingly
reiterated its demand for the full payment of defendant's
account (Exh. P). 2
On 29 October 1987, private respondent Phelps Dodge
Phils., Inc. filed a complaint before the Pasig Regional Trial
Court against petitioner Barons Marketing Corporation for
the recovery of P3,802,478.20 representing the value of the
wires and cables the former had delivered to the latter,
including interest. Phelps Dodge likewise prayed that it be
awarded attorney's fees at the rate of 25% of the amount
demanded, exemplary damages amounting to at least
P100,000.00, the expenses of litigation and the costs of suit.
Petitioner, in its answer, admitted purchasing the wires and
cables from private respondent but disputed the amount
claimed by the latter. Petitioner likewise interposed a
counterclaim against private respondent, alleging that it
suffered injury to its reputation due to Phelps Dodge's acts.
Such acts were purportedly calculated to humiliate
petitioner and constituted an abuse of rights.
After hearing, the trial court on 17 June 1991 rendered its
decision, the dispositive portion of which reads:
WHEREFORE, from all the foregoing considerations, the
Court finds Phelps Dodge Phils., Inc. to have preponderantly
proven its case and hereby orders Barons Marketing, Inc. to
pay Phelps Dodge the following:
1. P3,108,000.00 constituting the unpaid balance of
defendant's purchases from plaintiff and interest thereon at
12% per annum computed from the respective expiration of
the 60 day credit term, vis-a-vis the various sales invoices
and/or delivery receipts;
2. 25% of the preceding obligation for and as attorney's fees;
3. P10,000.00 as exemplary damages;
4. Costs of suit. 3
Both parties appealed to respondent court. Private
respondent claimed that the trial court should have awarded
it the sum of P3,802,478.20, the amount which appeared in
the body of the complaint and proven during the trial rather
than P3,1081000.00 The latter amount appears in
petitioner's prayer supposedly as a result of a typographical
error.
On the other hand, petitioner reiterated its claims for
damages as a result of "creditor's abuse." It also alleged that
private respondent failed to prove its cause of action against
it.
On 25 June 1996, the Court of Appeals rendered a decision
modifying the decision of the trial court, thus:
WHEREFORE, from all the foregoing considerations, the
Court finds Phelps Dodge Phils., Inc. to have preponderantly
proven its case and hereby orders Barons Marketing, Inc. to
pay Phelps Dodge the following:
1. P3,802,478.20 constituting the unpaid balance of
defendant's purchases from plaintiff and interest thereon at
12% per annum computed from the respective expiration of
the 60 day credit term, vis-a-vis the various sales invoices
and/or delivery receipts; and
2. 5% of the preceding obligation for and as attorney's fees.
No costs. 4
Petitioner Barons Marketing is now before this Court alleging
that respondent court erred when it held (1) private
respondent Phelps Dodge not guilty of "creditor's abuse," and
(2) petitioner liable to private respondent for interest and
attorney's fees.
I
Petitioner does not deny private respondent's rights to
institute an action for collection and to claim full payment.
Indeed, petitioner's right to file an action for collection is
beyond cavil. 5 Likewise, private respondent's right to reject
petitioner's offer to pay in installments is guaranteed by
Article 1248 of the Civil Code which states:
Art. 1248. Unless there is an express stipulation to that
effect, the creditor cannot be compelled partially to receive the
prestations in which the obligation consists. Neither may the
debtor be required to make partial payments.
However, when the debt is in part liquidated and in part
unliquidated, the creditor may demand and the debtor may
effect the payment of the former without waiting for the
liquidation of the latter.
Under this provision, the prestation, i.e., the object of the
obligation, must be performed in one act, not in parts.
Tolentino concedes that the right has its limitations:
Partial Prestations. - Since the creditor cannot be compelled
to accept partial performance, unless otherwise stipulated,
the creditor who refuses to accept partial prestations does
not incur in delay or mora accipiendi, except when there is
abuse of right or if good faith requires acceptance. 6
Indeed, the law, as set forth in Article 19 of the Civil Code,
prescribes a "primordial limitation on all rights" by setting
certain standards that must be observed in the exercise
thereof. 7 Thus:
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.
Petitioner now invokes Article 19 and Article 21 8 of the Civil
Code, claiming that private respondent abused its rights
when it rejected petitioner's offer of settlement and
subsequently filed the action for collection considering:
. . . that the relationship between the parties started in 1973
spanning more than 13 years before the complaint was filed,
that the petitioner had been a good and reliable dealer
enjoying a good credit standing during the period before it
became delinquent in 1987, that the relationship between
the parties had been a fruitful one especially for the private
respondent, that the petitioner exerted its outmost efforts to
settle its obligations and avoid a suit, that the petitioner did
not evade in the payment of its obligation to the private
respondent, and that the petitioner was just asking a small
concession that it be allowed to liquidate its obligation to
eight (8) monthly installments of P500,000.00 plus 1%
interest per month on the balance which proposal was
supported by post-dated checks. 9
Expounding on its theory, petitioner states:
In the ordinary course of events, a suit for collection of a
sum of money filed in court is done for the primary purpose
of collecting a debt or obligation. If there is an offer by the
debtor to pay its debt or obligation supported by post-dated
checks and with provision for interests, the normal response
of a creditor would be to accept the offer of compromise and
not file the suit for collection. It is of common knowledge that
proceedings in our courts would normally take years before
an action is finally settled. It is always wiser and more
prudent to accept an offer of payment in installment rather
than file an action in court to compel the debtor to settle his
obligation in full in a single payment.
xxx xxx xxx
. . . Why then did private respondent elect to file a suit for
collection rather than accept petitioner's offer of settlement,
supported by post-dated checks, by paying monthly
installments of P500,000.00 plus 1% per month commencing
on October 15, 1987 until full payment? The answer is
obvious. The action of private respondent in filling a suit for
collection was an abuse of right and exercised for the sole
purpose of prejudicing and injuring the petitioner. 10
Petitioner prays that the Court order private respondent to
pay petitioner moral and exemplary damages, attorney's fees,
as well as the costs of suit. It likewise asks that it be allowed
to liquidate its obligation to private respondent, without
interests, in eight equal monthly installments.
Petitioner's theory is untenable.
Both parties agree that to constitute an abuse of rights
under Article 19 the defendant must act with bad faith or
intent to prejudice the plaintiff. They cite the following
comments of Tolentino as their authority:
Test of Abuse of Right. - Modern jurisprudence does not
permit acts which, although not unlawful, are anti-
social. There is undoubtedly an abuse of right when it is
exercised for the only purpose of prejudicing or injuring
another. When the objective of the actor is illegitimate, the
illicit act cannot be concealed under the guise of exercising a
right. The principle does not permit acts which, without
utility or legitimate purpose cause damage to another,
because they violate the concept of social solidarity which
considers law as rational and just. Hence, every abnormal
exercise of a right, contrary to its socio-economic purpose, is
an abuse that will give rise to liability. The exercise of a right
must be in accordance with the purpose for which it was
established, and must not be excessive or unduly harsh; there
must be no intention to injure another. Ultimately, however,
and in practice, courts, in the sound exercise of their
discretion, will have to determine all the facts and
circumstances when the exercise of a right is unjust, or
when there has been an abuse of right. 11
The question, therefore, is whether private respondent
intended to prejudice or injure petitioner when it rejected
petitioner's offer and filed the action for collection.
We hold in the negative. It is an elementary rule in this
jurisdiction that good faith is presumed and that the burden
of proving bad faith rests upon the party alleging the
same. 12 In the case at bar, petitioner has failed to prove bad
faith on the part of private respondent. Petitioner's allegation
that private respondent was motivated by a desire to
terminate its agency relationship with petitioner so that
private respondent itself may deal directly with Meralco is
simply not supported by the evidence. At most, such
supposition is merely speculative.
Moreover, we find that private respondent was driven by very
legitimate reasons for rejecting petitioner's offer and
instituting the action for collection before the trial court. As
pointed out by private respondent, the corporation had its
own "cash position to protect in order for it to pay its own
obligations." This is not such "a lame and poor
rationalization" as petitioner purports it to be. For if private
respondent were to be required to accept petitioner's offer,
there would be no reason for the latter to reject similar offers
from its other debtors. Clearly, this would be inimical to the
interests of any enterprise, especially a profit-oriented one
like private respondent. It is plain to see that what we have
here is a mere exercise of rights, not an abuse thereof Under
these circumstances, we do not deem private respondent to
have acted in a manner contrary to morals, good customs or
public policy as to violate the provisions of Article 21 of the
Civil Code.
Consequently, petitioner's prayer for moral and exemplary
damages must thus be rejected. Petitioner's claim for moral
damages is anchored on Article 2219 (10) of the Civil Code
which states:
Art. 2219. Moral damages may be recovered in the following
and analogous cases:
xxx xxx xxx
(10) Acts and actions referred to in articles 21, 26, 27, 28,
29, 30, 32, 34, and 35.
xxx xxx xxx
Having ruled that private respondent's acts did not
transgress the provisions of Article 21, petitioner cannot be
entitled to moral damages or, for that matter, exemplary
damages. While the amount of exemplary damages need not
be proved, petitioner must show that he is entitled to moral,
temperate or compensatory damages before the court may
consider the question of whether or not exemplary damages
should be awarded. 13 As we have observed above; petitioner
has failed to discharge this burden.
It may not be amiss to state that petitioner's contract with
private respondent has the force of law between
them. 14 Petitioner is thus bound to fulfill what has been
expressly stipulated therein. 15 In the absence of any abuse
of right, private respondent cannot be allowed to perform its
obligation under such contract in parts. Otherwise, private
respondent's right under Article 1248 will be negated, the
sanctity of its contract with petitioner defiled. The principle
of autonomy of contracts 16 must be respected.
II
Under said contract, petitioner is liable to private respondent
for the unpaid balance of its purchases from private
respondent plus 12% interest. Private respondent's sales
invoices expressly provide that:
. . . Interest at 12% per annum will be charged on all overdue
account plus 25% on said amount for attorney's fees and
collection. . . . 17
It may also be noted that the above stipulation, insofar as it
provides for the payment of "25% on said amount for
attorney's fees and collection (sic)," constitutes what is
known as a penal clause. 18 Petitioner is thus obliged to pay
such penalty in addition to the 12% annual interest, there
being an express stipulation to that effect.
Petitioner nevertheless urges this Court to reduce the
attorney's fees for being "grossly excessive," "considering the
nature of the case which is a mere action for collection of a
sum of money." It may be pointed out however that the
above penalty is supposed to answer not only for attorney's
fees but for collection fees as well. Moreover:
. . . the attorneys' fees here provided is not, strictly speaking,
the attorneys' fees recoverable as between attorney and
client spoken of and regulated by the Rules of Court. Rather,
the attorneys' fees here are in the nature of liquidated
damages and the stipulation therefor is aptly called a penal
clause. It has been said that so long as such stipulation does
not contravene law, morals, or public order, it is strictly
binding upon defendant. The attorneys' fees so provided are
awarded in favor of the litigant, not his counsel. It is the
litigant, not counsel, who is the judgment creditor entitled to
enforce the judgment by execution. 19
Nonetheless, courts are empowered to reduce such penalty if
the same is "iniquitous or unconscionable." Article 1229 of
the Civil Code states thus:
Art. 1229. The judge shall equitably reduce the penalty when
the principal obligation has been partly or been irregularly
complied with by the debtor. Even if there has no
performance, the penalty may also be reduced by the courts if
it is iniquitous or unconscionable. (Emphasis supplied.)
The sentiments of the law are echoed in Article 2227 of the
same Code:
Art. 2227. Liquidated damages, whether intended as an
indemnity or a penalty, shall be equitably reduced if they are
iniquitous or unconscionable.
It is true that we have upheld the reasonableness of
penalties in the form of attorney's fees consisting of twenty-
five percent (25%) of the principal debt plus interest. 20 In the
case at bar, however, the interest alone runs to some four
and a half million pesos (P4.5M), even exceeding the
principal debt amounting to almost four million pesos
(P4.0M). Twenty five percent (25%) of the principal and
interest amounts to roughly two million pesos (P2M). In real
terms, therefore, the attorney's fees and collection fees are
manifestly exorbitant. Accordingly, we reduce the same to
ten percent (10%) of the principal.
Private respondent, however, argues that petitioner failed to
question the award of attorney's fees on appeal before
respondent court and raised the issue only in its motion for
reconsideration. Consequently, petitioner should be deemed
to have waived its right to question such award.
Private respondent's attempts to dissuade us from reducing
the penalty are futile. The Court is clothed with ample
authority to review matters, even if they are not assigned as
errors in their appeal, if it finds that their consideration is
necessary in arriving at a just decision of the case. 21
WHEREFORE, the decision of the Court of Appeals is hereby
MODIFIED in that the attorney's and collection fees are
reduced to ten percent (10%) of the principal but is
AFFIRMED in all other respects.
SO ORDERED.