THIRD DIVISION

G.R. No. 81262 August 25, 1989

GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS, respondents.

Atencia & Arias Law Offices for petitioners.

Romulo C. Felizmena for private respondent.

CORTES, J.:

Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and
Radio Corporation (GLOBE MACKAY) in a dual capacity as a purchasing agent and
administrative assistant to the engineering operations manager. In 1972, GLOBE MACKAY
discovered fictitious purchases and other fraudulent transactions for which it lost several
thousands of pesos.

According to private respondent it was he who actually discovered the anomalies and reported
them on November 10, 1972 to his immediate superior Eduardo T. Ferraren and to petitioner
Herbert C. Hendry who was then the Executive Vice-President and General Manager of GLOBE
MACKAY.

On November 11, 1972, one day after private respondent Tobias made the report, petitioner
Hendry confronted him by stating that he was the number one suspect, and ordered him to take
a one week forced leave, not to communicate with the office, to leave his table drawers open,
and to leave the office keys.

On November 20, 1972, when private respondent Tobias returned to work after the forced
leave, petitioner Hendry went up to him and called him a "crook" and a "swindler." Tobias was
then ordered to take a lie detector test. He was also instructed to submit specimen of his
handwriting, signature, and initials for examination by the police investigators to determine his
complicity in the anomalies.

On December 6,1972, the Manila police investigators submitted a laboratory crime report (Exh.
"A") clearing private respondent of participation in the anomalies.

Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G.
Fernandez, who on December 10, 1972, submitted a report (Exh. "2") finding Tobias guilty. This
report however expressly stated that further investigation was still to be conducted.

Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending

Tobias from work preparatory to the filing of criminal charges against him.
On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document Examiner,
after investigating other documents pertaining to the alleged anomalous transactions, submitted
a second laboratory crime report (Exh. "B") reiterating his previous finding that the handwritings,
signatures, and initials appearing in the checks and other documents involved in the fraudulent
transactions were not those of Tobias. The lie detector tests conducted on Tobias also yielded
negative results.

Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact that
the report of the private investigator, was, by its own terms, not yet complete, petitioners filed
with the City Fiscal of Manila a complaint for estafa through falsification of commercial
documents, later amended to just estafa. Subsequently five other criminal complaints were filed
against Tobias, four of which were for estafa through Falsification of commercial document
while the fifth was for of Article 290 of' the Revised Penal Code (Discovering Secrets Through
Seizure of Correspondence).lâwphî1.ñèt Two of these complaints were refiled with the Judge
Advocate General's Office, which however, remanded them to the fiscal's office. All of the six
criminal complaints were dismissed by the fiscal. Petitioners appealed four of the fiscal's
resolutions dismissing the criminal complaints with the Secretary of Justice, who, however,
affirmed their dismissal.

In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners that
his employment has been terminated effective December 13, 1972. Whereupon, Tobias filed a
complaint for illegal dismissal. The labor arbiter dismissed the complaint. On appeal, the
National Labor Relations Commission (NLRC) reversed the labor arbiter's decision. However,
the Secretary of Labor, acting on petitioners' appeal from the NLRC ruling, reinstated the labor
arbiter's decision. Tobias appealed the Secretary of Labor's order with the Office of the
President. During the pendency of the appeal with said office, petitioners and private
respondent Tobias entered into a compromise agreement regarding the latter's complaint for
illegal dismissal.

Unemployed, Tobias sought employment with the Republic Telephone Company (RETELCO).
However, petitioner Hendry, without being asked by RETELCO, wrote a letter to the latter
stating that Tobias was dismissed by GLOBE MACKAY due to dishonesty.

Private respondent Tobias filed a civil case for damages anchored on alleged unlawful,
malicious, oppressive, and abusive acts of petitioners. Petitioner Hendry, claiming illness, did
not testify during the hearings. The Regional Trial Court (RTC) of Manila, Branch IX, through
Judge Manuel T. Reyes rendered judgment in favor of private respondent by ordering
petitioners to pay him eighty thousand pesos (P80,000.00) as actual damages, two hundred
thousand pesos (P200,000.00) as moral damages, twenty thousand pesos (P20,000.00) as
exemplary damages, thirty thousand pesos (P30,000.00) as attorney's fees, and costs.
Petitioners appealed the RTC decision to the Court of Appeals. On the other hand, Tobias
appealed as to the amount of damages. However, the Court of Appeals, an a decision dated
August 31, 1987 affirmed the RTC decision in toto. Petitioners' motion for reconsideration
having been denied, the instant petition for review on certiorari was filed.

The main issue in this case is whether or not petitioners are liable for damages to private
respondent.

Petitioners contend that they could not be made liable for damages in the lawful exercise of their
right to dismiss private respondent.
On the other hand, private respondent contends that because of petitioners' abusive manner in
dismissing him as well as for the inhuman treatment he got from them, the Petitioners must
indemnify him for the damage that he had suffered.

One of the more notable innovations of the New Civil Code is the codification of "some basic
principles that are to be observed for the rightful relationship between human beings and for the
stability of the social order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED
CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the
defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit,
incorporated certain fundamental precepts which were "designed to indicate certain norms that
spring from the fountain of good conscience" and which were also meant to serve as "guides for
human conduct [that] should run as golden threads through society, to the end that law may
approach its supreme ideal, which is the sway and dominance of justice" (Id.) Foremost among
these principles is that pronounced in Article 19 which provides:

Art. 19. Every person must, in the exercise of his rights and in the performance of
his duties, act with justice, give everyone his due, and observe honesty and good
faith.

This article, known to contain what is commonly referred to as the principle of abuse of rights,
sets certain standards which must be observed not only in the exercise of one's rights but also
in the performance of one's duties. These standards are the following: to act with justice; to give
everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a
primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in
Article 19 must be observed. A right, though by itself legal because recognized or granted by
law as such, may nevertheless become the source of some illegality. When a right is exercised
in a manner which does not conform with the norms enshrined in Article 19 and results in
damage to another, a legal wrong is thereby committed for which the wrongdoer must be held
responsible. But while Article 19 lays down a rule of conduct for the government of human
relations and for the maintenance of social order, it does not provide a remedy for its violation.
Generally, an action for damages under either Article 20 or Article 21 would be proper.

Article 20, which pertains to damage arising from a violation of law, provides that:

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

However, in the case at bar, petitioners claim that they did not violate any provision of law since
they were merely exercising their legal right to dismiss private respondent. This does not,
however, leave private respondent with no relief because Article 21 of the Civil Code provides
that:

Art. 21. Any person who wilfully causes loss or injury to another in a manner that
is contrary to morals, good customs or public policy shall compensate the latter
for the damage.

This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims
of moral wrongs helpless, even though they have actually suffered material and moral injury"
[Id.] should "vouchsafe adequate legal remedy for that untold number of moral wrongs which it
is impossible for human foresight to provide for specifically in the statutes" [Id. it p. 40; See also
PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247].

In determining whether or not the principle of abuse of rights may be invoked, there is no rigid
test which can be applied. While the Court has not hesitated to apply Article 19 whether the
legal and factual circumstances called for its application [See for e.g., Velayo v. Shell Co. of the
Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra; Grand Union Supermarket, Inc. v. Espino,
Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No. L-46558, July
31,1981,106 SCRA 391; United General Industries, Inc, v. Paler G.R. No. L-30205, March
15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911, August 21, 1987, 153 SCRA 183] the
question of whether or not the principle of abuse of rights has been violated resulting in
damages under Article 20 or Article 21 or other applicable provision of law, depends on the
circumstances of each case. And in the instant case, the Court, after examining the record and
considering certain significant circumstances, finds that all petitioners have indeed abused the
right that they invoke, causing damage to private respondent and for which the latter must now
be indemnified.

The trial court made a finding that notwithstanding the fact that it was private respondent Tobias
who reported the possible existence of anomalous transactions, petitioner Hendry "showed
belligerence and told plaintiff (private respondent herein) that he was the number one suspect
and to take a one week vacation leave, not to communicate with the office, to leave his table
drawers open, and to leave his keys to said defendant (petitioner Hendry)" [RTC Decision, p. 2;
Rollo, p. 232]. This, petitioners do not dispute. But regardless of whether or not it was private
respondent Tobias who reported the anomalies to petitioners, the latter's reaction towards the
former upon uncovering the anomalies was less than civil. An employer who harbors suspicions
that an employee has committed dishonesty might be justified in taking the appropriate action
such as ordering an investigation and directing the employee to go on a leave. Firmness and
the resolve to uncover the truth would also be expected from such employer. But the high-
handed treatment accorded Tobias by petitioners was certainly uncalled for. And this
reprehensible attitude of petitioners was to continue when private respondent returned to work
on November 20, 1972 after his one week forced leave. Upon reporting for work, Tobias was
confronted by Hendry who said. "Tobby, you are the crook and swindler in this company."
Considering that the first report made by the police investigators was submitted only on
December 10, 1972 [See Exh. A] the statement made by petitioner Hendry was baseless. The
imputation of guilt without basis and the pattern of harassment during the investigations of
Tobias transgress the standards of human conduct set forth in Article 19 of the Civil Code. The
Court has already ruled that the right of the employer to dismiss an employee should not be
confused with the manner in which the right is exercised and the effects flowing therefrom. If the
dismissal is done abusively, then the employer is liable for damages to the employee [Quisaba
v. Sta. Ines-Melale Veneer and Plywood Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA
771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L-21871, September 27,1966, 18
SCRA 107] Under the circumstances of the instant case, the petitioners clearly failed to exercise
in a legitimate manner their right to dismiss Tobias, giving the latter the right to recover
damages under Article 19 in relation to Article 21 of the Civil Code.

But petitioners were not content with just dismissing Tobias. Several other tortious acts were
committed by petitioners against Tobias after the latter's termination from work. Towards the
latter part of January, 1973, after the filing of the first of six criminal complaints against Tobias,
the latter talked to Hendry to protest the actions taken against him. In response, Hendry cut
short Tobias' protestations by telling him to just confess or else the company would file a
hundred more cases against him until he landed in jail. Hendry added that, "You Filipinos
cannot be trusted." The threat unmasked petitioner's bad faith in the various actions taken
against Tobias. On the other hand, the scornful remark about Filipinos as well as Hendry's
earlier statements about Tobias being a "crook" and "swindler" are clear violations of 'Tobias'
personal dignity [See Article 26, Civil Code].

The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime
in October 1974, stating that Tobias had been dismissed by GLOBE MACKAY due to
dishonesty. Because of the letter, Tobias failed to gain employment with RETELCO and as a
result of which, Tobias remained unemployed for a longer period of time. For this further
damage suffered by Tobias, petitioners must likewise be held liable for damages consistent with
Article 2176 of the Civil Code. Petitioners, however, contend that they have a "moral, if not
legal, duty to forewarn other employers of the kind of employee the plaintiff (private respondent
herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim that "it is the accepted moral
and societal obligation of every man to advise or warn his fellowmen of any threat or danger to
the latter's life, honor or property. And this includes warning one's brethren of the possible
dangers involved in dealing with, or accepting into confidence, a man whose honesty and
integrity is suspect" [Id.]. These arguments, rather than justify petitioners' act, reveal a seeming
obsession to prevent Tobias from getting a job, even after almost two years from the time
Tobias was dismissed.

Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias.
Petitioners contend that there is no case against them for malicious prosecution and that they
cannot be "penalized for exercising their right and prerogative of seeking justice by filing criminal
complaints against an employee who was their principal suspect in the commission of forgeries
and in the perpetration of anomalous transactions which defrauded them of substantial sums of
money" [Petition, p. 10, Rollo, p. 11].

While sound principles of justice and public policy dictate that persons shall have free resort to
the courts for redress of wrongs and vindication of their rights [Buenaventura v. Sto. Domingo,
103 Phil. 239 (1958)], the right to institute criminal prosecutions can not be exercised
maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA
5871.] Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2 SCRA 337,
the Court held that the right to file criminal complaints should not be used as a weapon to force
an alleged debtor to pay an indebtedness. To do so would be a clear perversion of the function
of the criminal processes and of the courts of justice. And in Hawpia CA, G.R. No. L-20047,
June 30, 1967. 20 SCRA 536 the Court upheld the judgment against the petitioner for actual
and moral damages and attorney's fees after making a finding that petitioner, with persistence,
filed at least six criminal complaints against respondent, all of which were dismissed.

To constitute malicious prosecution, there must be proof that the prosecution was prompted by
a design to vex and humiliate a person and that it was initiated deliberately by the defendant
knowing that the charges were false and groundless [Manila Gas Corporation v. CA, G.R. No. L-
44190, October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit by itself, does not
render a person liable for malicious prosecution [Inhelder Corporation v. CA, G.R. No. 52358,
May 301983122 SCRA 576]. The mere dismissal by the fiscal of the criminal complaint is not a
ground for an award of damages for malicious prosecution if there is no competent evidence to
show that the complainant had acted in bad faith [Sison v. David, G.R. No. L-11268, January
28,1961, 1 SCRA 60].
In the instant case, however, the trial court made a finding that petitioners acted in bad faith in
filing the criminal complaints against Tobias, observing that:

xxx

Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six
(6) criminal cases, five (5) of which were for estafa thru falsification of
commercial document and one for violation of Art. 290 of the Revised Penal
Code "discovering secrets thru seizure of correspondence," and all were
dismissed for insufficiency or lack of evidence." The dismissal of four (4) of the
cases was appealed to the Ministry of Justice, but said Ministry invariably
sustained the dismissal of the cases. As above adverted to, two of these cases
were refiled with the Judge Advocate General's Office of the Armed Forces of the
Philippines to railroad plaintiffs arrest and detention in the military stockade, but
this was frustrated by a presidential decree transferring criminal cases involving
civilians to the civil courts.

xxx

To be sure, when despite the two (2) police reports embodying the findings of Lt.
Dioscoro Tagle, Chief Document Examiner of the Manila Police Department,
clearing plaintiff of participation or involvement in the fraudulent transactions
complained of, despite the negative results of the lie detector tests which
defendants compelled plaintiff to undergo, and although the police investigation
was "still under follow-up and a supplementary report will be submitted after all
the evidence has been gathered," defendants hastily filed six (6) criminal cases
with the city Fiscal's Office of Manila, five (5) for estafa thru falsification of
commercial document and one (1) for violation of Art. 290 of the Revised Penal
Code, so much so that as was to be expected, all six (6) cases were dismissed,
with one of the investigating fiscals, Asst. Fiscal de Guia, commenting in one
case that, "Indeed, the haphazard way this case was investigated is evident.
Evident likewise is the flurry and haste in the filing of this case against
respondent Tobias," there can be no mistaking that defendants would not but be
motivated by malicious and unlawful intent to harass, oppress, and cause
damage to plaintiff.

xxx

[RTC Decision, pp. 5-6; Rollo, pp. 235-236].

In addition to the observations made by the trial court, the Court finds it significant that the
criminal complaints were filed during the pendency of the illegal dismissal case filed by Tobias
against petitioners. This explains the haste in which the complaints were filed, which the trial
court earlier noted. But petitioners, to prove their good faith, point to the fact that only six
complaints were filed against Tobias when they could have allegedly filed one hundred cases,
considering the number of anomalous transactions committed against GLOBE MACKAY.
However, petitioners' good faith is belied by the threat made by Hendry after the filing of the first
complaint that one hundred more cases would be filed against Tobias. In effect, the possible
filing of one hundred more cases was made to hang like the sword of Damocles over the head
of Tobias. In fine, considering the haste in which the criminal complaints were filed, the fact that
they were filed during the pendency of the illegal dismissal case against petitioners, the threat
made by Hendry, the fact that the cases were filed notwithstanding the two police reports
exculpating Tobias from involvement in the anomalies committed against GLOBE MACKAY,
coupled by the eventual dismissal of all the cases, the Court is led into no other conclusion than
that petitioners were motivated by malicious intent in filing the six criminal complaints against
Tobias.

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

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

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

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

Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of
the Civil Code provides that "[i]n quasi-delicts, exemplary damages may be granted if the
defendant acted with gross negligence," the Court, in Zulueta v. Pan American World Airways,
Inc., G.R. No. L- 28589, January 8, 1973, 49 SCRA 1, ruled that if gross negligence warrants
the award of exemplary damages, with more reason is its imposition justified when the act
performed is deliberate, malicious and tainted with bad faith. As in the Zulueta case, the nature
of the wrongful acts shown to have been committed by petitioners against Tobias is sufficient
basis for the award of exemplary damages to the latter.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals in CA-
G.R. CV No. 09055 is AFFIRMED.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr. and Bidin, JJ., concur.

Feliciano, J., took no part.

G.R. No. 88694 January 11, 1993

ALBENSON ENTERPRISES CORP., JESSE YAP, AND BENJAMIN MENDIONA, petitioners,

vs.
THE COURT OF APPEALS AND EUGENIO S. BALTAO, respondents.

Puruganan, Chato, Chato & Tan for petitioners.

Lino M. Patajo, Francisco Ma. Chanco, Ananiano Desierto and Segundo Mangohig for private
respondent.

BIDIN, J.:

This petition assails the decision of respondent Court of Appeals in

CA-GR CV No. 14948 entitled "Eugenio S. Baltao, plaintiff-appellee vs. Albenson Enterprises
Corporation, et al, defendants-appellants", which modified the judgment of the Regional Trial
Court of Quezon City, Branch XCVIII in Civil Case No. Q-40920 and ordered petitioner to pay
private respondent, among others, the sum of P500,000.00 as moral damages and attorney's
fees in the amount of P50,000.00.

The facts are not disputed.

In September, October, and November 1980, petitioner Albenson Enterprises Corporation

(Albenson for short) delivered to Guaranteed Industries, Inc. (Guaranteed for short) located at
3267 V. Mapa Street, Sta. Mesa, Manila, the mild steel plates which the latter ordered. As part
payment thereof, Albenson was given Pacific Banking Corporation Check No. 136361 in the
amount of P2,575.00 and drawn against the account of E.L. Woodworks (Rollo, p. 148).
When presented for payment, the check was dishonored for the reason "Account Closed."
Thereafter, petitioner Albenson, through counsel, traced the origin of the dishonored check.
From the records of the Securities and Exchange Commission (SEC), Albenson discovered that
the president of Guaranteed, the recipient of the unpaid mild steel plates, was one "Eugenio S.
Baltao." Upon further inquiry, Albenson was informed by the Ministry of Trade and Industry that
E.L. Woodworks, a single proprietorship business, was registered in the name of one "Eugenio
Baltao". In addition, upon verification with the drawee bank, Pacific Banking Corporation,
Albenson was advised that the signature appearing on the subject check belonged to one
"Eugenio Baltao."

After obtaining the foregoing information, Albenson, through counsel, made an extrajudicial
demand upon private respondent Eugenio S. Baltao, president of Guaranteed, to replace and/or
make good the dishonored check.

Respondent Baltao, through counsel, denied that he issued the check, or that the signature
appearing thereon is his. He further alleged that Guaranteed was a defunct entity and hence,
could not have transacted business with Albenson.

On February 14, 1983, Albenson filed with the Office of the Provincial Fiscal of Rizal a complaint
against Eugenio S. Baltao for violation of Batas Pambansa Bilang 22. Submitted to support said
charges was an affidavit of petitioner Benjamin Mendiona, an employee of Albenson. In said
affidavit, the above-mentioned circumstances were stated.

It appears, however, that private respondent has a namesake, his son Eugenio Baltao III, who
manages a business establishment, E.L. Woodworks, on the ground floor of the Baltao Building,
3267 V. Mapa Street, Sta. Mesa, Manila, the very same business address of Guaranteed.

On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed an information against Eugenio
S. Baltao for Violation of Batas Pambansa Bilang 22. In filing said information, Fiscal Sumaway
claimed that he had given Eugenio S. Baltao opportunity to submit controverting evidence, but
the latter failed to do so and therefore, was deemed to have waived his right.

Respondent Baltao, claiming ignorance of the complaint against him, immediately filed with the
Provincial Fiscal of Rizal a motion for reinvestigation, alleging that it was not true that he had
been given an opportunity to be heard in the preliminary investigation conducted by Fiscal
Sumaway, and that he never had any dealings with Albenson or Benjamin Mendiona,
consequently, the check for which he has been accused of having issued without funds was not
issued by him and the signature in said check was not his.

On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal reversed the finding of Fiscal
Sumaway and exonerated respondent Baltao. He also instructed the Trial Fiscal to move for
dismissal of the information filed against Eugenio S. Baltao. Fiscal Castro found that the
signature in PBC Check No. 136361 is not the signature of Eugenio S. Baltao. He also found
that there is no showing in the records of the preliminary investigation that Eugenio S. Baltao
actually received notice of the said investigation. Fiscal Castro then castigated Fiscal Sumaway
for failing to exercise care and prudence in the performance of his duties, thereby causing
injustice to respondent who was not properly notified of the complaint against him and of the
requirement to submit his counter evidence.
Because of the alleged unjust filing of a criminal case against him for allegedly issuing a check
which bounced in violation of Batas Pambansa Bilang 22 for a measly amount of P2,575.00,
respondent Baltao filed before the Regional Trial Court of Quezon City a complaint for damages
against herein petitioners Albenson Enterprises, Jesse Yap, its owner, and Benjamin Mendiona,
its employee.

In its decision, the lower court observed that "the check is drawn against the account of "E.L.
Woodworks," not of Guaranteed Industries of which plaintiff used to be President. Guaranteed
Industries had been inactive and had ceased to exist as a corporation since 1975. . . . . The
possibility is that it was with Gene Baltao or Eugenio Baltao III, a son of plaintiff who had a
business on the ground floor of Baltao Building located on V. Mapa Street, that the defendants
may have been dealing with . . . ." (Rollo, pp. 41-42).

The dispositive portion of the trial court 's decision reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against

defendants ordering the latter to pay plaintiff jointly and severally:

1. actual or compensatory damages of P133,350.00;

2. moral damages of P1,000,000.00 (1 million pesos);

3. exemplary damages of P200,000.00;

4. attorney's fees of P100,000.00;

5 costs.

Defendants' counterclaim against plaintiff and claim for damages against

Mercantile Insurance Co. on the bond for the issuance of the writ of attachment
at the instance of plaintiff are hereby dismissed for lack of merit. (Rollo, pp. 38-
39).

On appeal, respondent court modified the trial court's decision as follows:

WHEREFORE, the decision appealed from is MODIFIED by reducing the moral

damages awarded therein from P1,000,000.00 to P500,000.00 and the attorney's
fees from P100,000.00 to P50,000.00, said decision being hereby affirmed in all
its other aspects. With costs against appellants. (Rollo, pp. 50-51)

Dissatisfied with the above ruling, petitioners Albenson Enterprises Corp., Jesse Yap, and
Benjamin Mendiona filed the instant Petition, alleging that the appellate court erred in:

1. Concluding that private respondent's cause of action is not one based on

malicious prosecution but one for abuse of rights under Article 21 of the Civil
Code notwithstanding the fact that the basis of a civil action for malicious
prosecution is Article 2219 in relation to Article 21 or Article 2176 of the Civil
Code . . . .
 2. Concluding that "hitting at and in effect maligning (private respondent) with an
unjust criminal case was, without more, a plain case of abuse of rights by
misdirection" and "was therefore, actionable by itself," and which "became
inordinately blatant and grossly aggravated when . . . (private respondent) was
deprived of his basic right to notice and a fair hearing in the so-called preliminary
investigation . . . . "

3. Concluding that petitioner's "actuations in this case were coldly deliberate and
calculated", no evidence having been adduced to support such a sweeping
statement.

4. Holding the petitioner corporation, petitioner Yap and petitioner Mendiona

jointly and severally liable without sufficient basis in law and in fact.

5. Awarding respondents —

5.1. P133,350.00 as actual or compensatory damages, even in

the absence of sufficient evidence to show that such was actually
suffered.

5.2. P500,000.00 as moral damages considering that the evidence

in this connection merely involved private respondent's alleged
celebrated status as a businessman, there being no showing that
the act complained of adversely affected private respondent's
reputation or that it resulted to material loss.

5.3. P200,000.00 as exemplary damages despite the fact that

petitioners were duly advised by counsel of their legal recourse.

5.4. P50,000.00 as attorney's fees, no evidence having been

adduced to justify such an award (Rollo, pp. 4-6).

Petitioners contend that the civil case filed in the lower court was one for malicious prosecution.
Citing the case of Madera vs. Lopez (102 SCRA 700 [1981]), they assert that the absence of
malice on their part absolves them from any liability for malicious prosecution. Private
respondent, on the other hand, anchored his complaint for Damages on Articles 19, 20, and 21
** of the Civil Code.

Article 19, known to contain what is commonly referred to as the principle of abuse of rights,
sets certain standards which may be observed not only in the exercise of one's rights but also in
the performance of one's duties. These standards are the following: to act with justice; to give
everyone his due; and to observe honesty and good faith. The law, therefore, recognizes the
primordial limitation on all rights: that in their exercise, the norms of human conduct set forth in
Article 19 must be observed. A right, though by itself legal because recognized or granted by
law as such, may nevertheless become the source of some illegality. When a right is exercised
in a manner which does not conform with the norms enshrined in Article 19 and results in
damage to another, a legal wrong is thereby committed for which the wrongdoer must be held
responsible. Although the requirements of each provision is different, these three (3) articles are
all related to each other. As the eminent Civilist Senator Arturo Tolentino puts it: "With this
article (Article 21), combined with articles 19 and 20, the scope of our law on civil wrongs has
been very greatly broadened; it has become much more supple and adaptable than the Anglo-
American law on torts. It is now difficult to conceive of any malevolent exercise of a right which
could not be checked by the application of these articles" (Tolentino, 1 Civil Code of the
Philippines 72).

There is however, 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 the principle of
abuse of rights has been violated, resulting in damages under Articles 20 and 21 or other
applicable provision of law, depends on the circumstances of each case. (Globe Mackay Cable
and Radio Corporation vs. Court of Appeals, 176 SCRA 778 [1989]).

The elements of an abuse of right under 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.
Article 20 speaks of the general sanction for all other provisions of law which do not especially
provide for their own sanction (Tolentino, supra, p. 71). Thus, anyone who, whether willfully or
negligently, in the exercise of his legal right or duty, causes damage to another, shall indemnify
his victim for injuries suffered thereby. Article 21 deals with acts contra bonus mores, and has
the following elements: 1) There is an act which is legal; 2) but which is contrary to morals, good
custom, public order, or public policy; 3) and it is done with intent to injure.

Thus, under any of these three (3) provisions of law, an act which causes injury to another may
be made the basis for an award of damages.

There is a common element under Articles 19 and 21, and that is, the act must be intentional.
However, Article 20 does not distinguish: the act may be done either "willfully", or "negligently".
The trial court as well as the respondent appellate court mistakenly lumped these three (3)
articles together, and cited the same as the bases for the award of damages in the civil
complaint filed against petitioners, thus:

With the foregoing legal provisions (Articles 19, 20, and 21) in focus, there is not
much difficulty in ascertaining the means by which appellants' first assigned error
should be resolved, given the admitted fact that when there was an attempt to
collect the amount of P2,575.00, the defendants were explicitly warned that
plaintiff Eugenio S. Baltao is not the Eugenio Baltao defendants had been
dealing with (supra, p. 5). When the defendants nevertheless insisted and
persisted in filing a case — a criminal case no less — against plaintiff, said
defendants ran afoul of the legal provisions (Articles 19, 20, and 21 of the Civil
Code) cited by the lower court and heretofore quoted (supra).

Defendants, not having been paid the amount of P2,575.00, certainly had the
right to complain. But that right is limited by certain constraints. Beyond that limit
is the area of excess, of abuse of rights. (Rollo, pp.
44-45).

Assuming, arguendo, that all the three (3) articles, together and not independently of each one,
could be validly made the bases for an award of damages based on the principle of "abuse of
right", under the circumstances, We see no cogent reason for such an award of damages to be
made in favor of private respondent.
Certainly, petitioners could not be said to have violated the aforestated principle of abuse of
right. What prompted petitioners to file the case for violation of Batas Pambansa Bilang 22
against private respondent was their failure to collect the amount of P2,575.00 due on a
bounced check which they honestly believed was issued to them by private respondent.
Petitioners had conducted inquiries regarding the origin of the check, and yielded the following
results: from the records of the Securities and Exchange Commission, it was discovered that the
President of Guaranteed (the recipient of the unpaid mild steel plates), was one "Eugenio S.
Baltao"; an inquiry with the Ministry of Trade and Industry revealed that E.L. Woodworks,
against whose account the check was drawn, was registered in the name of one "Eugenio
Baltao"; verification with the drawee bank, the Pacific Banking Corporation, revealed that the
signature appearing on the check belonged to one "Eugenio Baltao".

In a letter dated December 16, 1983, counsel for petitioners wrote private respondent
demanding that he make good the amount of the check. Counsel for private respondent wrote
back and denied, among others, that private respondent ever transacted business with
Albenson Enterprises Corporation; that he ever issued the check in question. Private
respondent's counsel even went further: he made a warning to defendants to check the veracity
of their claim. It is pivotal to note at this juncture that in this same letter, if indeed private
respondent wanted to clear himself from the baseless accusation made against his person, he
should have made mention of the fact that there are three (3) persons with the same name, i.e.:
Eugenio Baltao, Sr., Eugenio S. Baltao, Jr. (private respondent), and Eugenio Baltao III (private
respondent's son, who as it turned out later, was the issuer of the check). He, however, failed to
do this. The last two Baltaos were doing business in the same building — Baltao Building —
located at 3267 V. Mapa Street, Sta. Mesa, Manila. The mild steel plates were ordered in the
name of Guaranteed of which respondent Eugenio S. Baltao is the president and delivered to
Guaranteed at Baltao building. Thus, petitioners had every reason to believe that the Eugenio
Baltao who issued the bouncing check is respondent Eugenio S. Baltao when their counsel
wrote respondent to make good the amount of the check and upon refusal, filed the complaint
for violation of BP Blg. 22.

Private respondent, however, did nothing to clarify the case of mistaken identity at first hand.
Instead, private respondent waited in ambush and thereafter pounced on the hapless petitioners
at a time he thought was propitious by filing an action for damages. The Court will not
countenance this devious scheme.

The criminal complaint filed against private respondent after the latter refused to make good the
amount of the bouncing check despite demand was a sincere attempt on the part of petitioners
to find the best possible means by which they could collect the sum of money due them. A
person who has not been paid an obligation owed to him will naturally seek ways to compel the
debtor to pay him. It was normal for petitioners to find means to make the issuer of the check
pay the amount thereof. In the absence of a wrongful act or omission or of fraud or bad faith,
moral damages cannot be awarded and that the adverse result of an action does not per se
make the action wrongful and subject the actor to the payment of damages, for the law could
not have meant to impose a penalty on the right to litigate (Rubio vs. Court of Appeals, 141
SCRA 488 [1986]).

In the case at bar, private respondent does not deny that the mild steel plates were ordered by
and delivered to Guaranteed at Baltao building and as part payment thereof, the bouncing
check was issued by one Eugenio Baltao. Neither had private respondent conveyed to petitioner
that there are two Eugenio Baltaos conducting business in the same building — he and his son
Eugenio Baltao III. Considering that Guaranteed, which received the goods in payment of which
the bouncing check was issued is owned by respondent, petitioner acted in good faith and
probable cause in filing the complaint before the provincial fiscal.

To constitute malicious prosecution, there must be proof that the prosecution was prompted by
a sinister design to vex and humiliate a person, and that it was initiated deliberately by the
defendant knowing that his charges were false and groundless. Concededly, the mere act of
submitting a case to the authorities for prosecution does not make one liable for malicious
prosecution. (Manila Gas Corporation vs. Court of Appeals, 100 SCRA 602 [1980]). Still, private
respondent argues that liability under Articles 19, 20, and 21 of the Civil Code is so
encompassing that it likewise includes liability for damages for malicious prosecution under
Article 2219 (8). True, a civil action for damages for malicious prosecution is allowed under the
New Civil Code, more specifically Articles 19, 20, 26, 29, 32, 33, 35, and 2219 (8) thereof. In
order that such a case can prosper, however, the following three (3) elements must be present,
to wit: (1) The fact of the prosecution and the further fact that the defendant was himself the
prosecutor, and that the action was finally terminated with an acquittal; (2) That in bringing the
action, the prosecutor acted without probable cause; (3) The prosecutor was actuated or
impelled by legal malice (Lao vs. Court of Appeals, 199 SCRA 58, [1991]).

Thus, a party injured by the filing of a court case against him, even if he is later on absolved,
may file a case for damages grounded either on the principle of abuse of rights, or on malicious
prosecution. As earlier stated, a complaint for damages based on malicious prosecution will
prosper only if the three (3) elements aforecited are shown to exist. In the case at bar, the
second and third elements were not shown to exist. It is well-settled that one cannot be held
liable for maliciously instituting a prosecution where one has acted with probable cause.
"Probable cause is the existence of such facts and circumstances as would excite the belief, in
a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person
charged was guilty of the crime for which he was prosecuted. In other words, a suit will lie only
in cases where a legal prosecution has been carried on without probable cause. The reason for
this rule is that it would be a very great discouragement to public justice, if prosecutors, who had
tolerable ground of suspicion, were liable to be sued at law when their indictment miscarried"
(Que vs. Intermediate Appellate Court, 169 SCRA 137 [1989]).

The presence of probable cause signifies, as a legal consequence, the absence of malice. In
the instant case, it is evident that petitioners were not motivated by malicious intent or by
sinister design to unduly harass private respondent, but only by a well-founded anxiety to
protect their rights when they filed the criminal complaint against private respondent.

To constitute malicious prosecution, there must be proof that the prosecution was
prompted by a sinister design to vex and humiliate a person, that it was initiated
deliberately by the defendant knowing that his charges were false and
groundless. Concededly, the mere act of submitting a case to the authorities for
prosecution does not make one liable for malicious prosecution. Proof and
motive that the institution of the action was prompted by a sinister design to vex
and humiliate a person must be clearly and preponderantly established to entitle
the victims to damages (Ibid.).

In the case at bar, there is no proof of a sinister design on the part of petitioners to vex or
humiliate private respondent by instituting the criminal case against him. While petitioners may
have been negligent to some extent in determining the liability of private respondent for the
dishonored check, the same is not so gross or reckless as to amount to bad faith warranting an
award of damages.

The root of the controversy in this case is founded on a case of mistaken identity. It is possible
that with a more assiduous investigation, petitioners would have eventually discovered that
private respondent Eugenio S. Baltao is not the "Eugenio Baltao" responsible for the dishonored
check. However, the record shows that petitioners did exert considerable effort in order to
determine the liability of private respondent. Their investigation pointed to private respondent as
the "Eugenio Baltao" who issued and signed the dishonored check as the president of the
debtor-corporation Guaranteed Enterprises. Their error in proceeding against the wrong
individual was obviously in the nature of an innocent mistake, and cannot be characterized as
having been committed in bad faith. This error could have been discovered if respondent had
submitted his counter-affidavit before investigating fiscal Sumaway and was immediately
rectified by Provincial Fiscal Mauro Castro upon discovery thereof, i.e., during the
reinvestigation resulting in the dismissal of the complaint.

Furthermore, the adverse result of an action does not per se make the act wrongful and subject
the actor to the payment of moral damages. The law could not have meant to impose a penalty
on the right to litigate, such right is so precious that moral damages may not be charged on
those who may even exercise it erroneously. And an adverse decision does not ipso facto justify
the award of attorney's fees to the winning party (Garcia vs. Gonzales, 183 SCRA 72 [1990]).

Thus, an award of damages and attorney's fees is unwarranted where the action was filed in
good faith. If damage results from a person's exercising his legal rights, it is damnum absque
injuria (Ilocos Norte Electric Company vs. Court of Appeals, 179 SCRA 5 [1989]).

Coming now to the claim of private respondent for actual or compensatory damages, the
records show that the same was based solely on his allegations without proof to substantiate
the same. He did not present proof of the cost of the medical treatment which he claimed to
have undergone as a result of the nervous breakdown he suffered, nor did he present proof of
the actual loss to his business caused by the unjust litigation against him. In determining actual
damages, the court cannot rely on speculation, conjectures or guesswork as to the amount.
Without the actual proof of loss, the award of actual damages becomes erroneous (Guilatco vs.
City of Dagupan, 171 SCRA 382 [1989]).

Actual and compensatory damages are those recoverable because of pecuniary loss — in
business, trade, property, profession, job or occupation — and the same must be proved,
otherwise, if the proof is flimsy and unsubstantiated, no damages will be given (Rubio vs. Court
of Appeals, 141 SCRA 488 [1986]). For these reasons, it was gravely erroneous for respondent
court to have affirmed the award of actual damages in favor of private respondent in the
absence of proof thereof.

Where there is no evidence of the other party having acted in wanton, fraudulent or reckless, or
oppressive manner, neither may exemplary damages be awarded (Dee Hua Liong Electrical
Equipment Corporation vs. Reyes, 145 SCRA 488 [1986]).

As to the award of attorney's fees, it is well-settled that the same is the exception rather than the
general rule. Needless to say, the award of attorney's fees must be disallowed where the award
of exemplary damages is eliminated (Article 2208, Civil Code; Agustin vs. Court of Appeals, 186
SCRA 375 [1990]). Moreover, in view of the fact that there was no malicious prosecution against
private respondent, attorney's fees cannot be awarded him on that ground.

In the final analysis, there is no proof or showing that petitioners acted maliciously or in bad faith
in the filing of the case against private respondent. Consequently, in the absence of proof of
fraud and bad faith committed by petitioners, they cannot be held liable for damages (Escritor,
Jr. vs. Intermediate Appellate Court, 155 SCRA 577 [1987]). No damages can be awarded in
the instant case, whether based on the principle of abuse of rights, or for malicious prosecution.
The questioned judgment in the instant case attests to the propensity of trial judges to award
damages without basis. Lower courts are hereby cautioned anew against awarding
unconscionable sums as damages without bases therefor.

WHEREFORE, the petition is GRANTED and the decision of the Court of Appeals in C.A. G.R.
C.V. No. 14948 dated May 13, 1989, is hereby REVERSED and SET ASIDE. Costs against
respondent Baltao.

SO ORDERED.

Gutierrez, Jr., Davide, Jr., Romero and Melo, JJ., concur.

G.R. No. 85464 October 3, 1991

DAVID P. LLORENTE, petitioner,

vs.
THE SANDIGANBAYAN (THIRD DIVISION), and PEOPLE OF THE PHILIPPINES,
respondents.

Padilla Law Office for petitioner.

SAMIENTO, J.:

The petitioner questions the Decision of the Sandiganbayan * holding him civilly liable in spite of
an acquittal. The facts are not disputed:

Atty. Llorente was employed in the PCA, a public corporation (Sec. 1, PD 1468) from
1975 to August 31, 1986, when he resigned. He occupied the positions of Assistant
Corporate Secretary for a year, then Corporate Legal Counsel until November 2, 1981,
and, finally, Deputy Administrator for Administrative Services, Finance Services, Legal
Affairs Departments. ...

As a result of a massive reorganization in 1981, hundreds of PCA employees resigned

effective October 31, 1981. Among them were Mr. Curio, Mrs. Perez, Mr. Azucena, and
Mrs. Javier (TSN, Oct. 22/87, p. 2; Exhs. M-2, N-1, and O-1). They were all required to
apply for PCA clearances in support of their gratuity benefits (Exhs. C, M-2, N-1, and 0-
1). Condition (a) of the clearance provided:

The clearance shall be signed by the PCA officers concemed only when there is
no item appearing under "PENDING ACCOUNTABILITY" or after every item
previously entered thereunder is fully settled. Settlement thereof shall be written
in RED ink. (Exhs. D or D-1 and 1-B)

After the clearance was signed by the PCA officers concerned, it was to be approved,
first, by Atty. Llorente, in the case of a rank-and-file employee, or by Col. Duefias, the
acting administrator, in the case of an officer, and then by Atty. Rodriguez, the corporate
auditor ...

Notwithstanding Condition (a) just quoted, the clearances of Mrs Perez and Mr. Azucena
both dated October 30, 1981, were favorably acted upon by the CPA officers concerned,
including Mrs. Sotto, acting for the accounting division, even if the clearances showed
they had pending accountabilities to the GSIS and the UCPB, and subsequently
approved by Attys. Llorente and Rodriguez (Exhs. M and N). Thereafter, the vouchers
for their gratuity benefits, also indicating their outstanding obligations were approved,
among others, by Atty Llorente, and their gratuity benefits released to them after
deducting those accountabilities. ...

The clearanceof Mrs. Javier of the same date of October 30, 1991 was also signed by all
PCA officers concerned, including Mrs. Sotto even though the former had unsettled
obligations noted thereon, viz 'SIS loan — P5,387.00 and UCPB car loan P19,705.00, or
a total of P25,092.00, and later on approveed by Col. Dueñas, Mrs Javier being an
officer, and Atty. Rodriguez "Exh. (O)". Similariv the, voucher of Mrs Javier for her
gratuity benefits likewise recited her accountabilities of P25,092.00 plus P92.000.00,
which was handwritten. Both accounts were deducted from her gratuity benefits, and the
balance released to her on November 16, 1981. The voucher passed post-audit by Atty.
Rodriguez on December 1, 1981 (Exhs. L,
L-1, L-2, and L-3).

The said P92,000.00 was the disallowed portion of the cash advances received by Mr.
Curio in connection with his duties as "super cargo" in the distribution of seed nuts
throughout the country. He received them through and in the name of Mrs. Javier from
the UCPB. When the amount was disallowed, the UCPB withheld from the PCA certain
receivables; the latter, in turn, deducted the same amount from the gratuity benefits of
Mrs. Javier, she being primarily liable therefor (Exhs, L, L-1, L-2, and L-3), At the time of
the deduction, the additional liquidation papers had already been submitted and were in
process. Just in case she would not be successful in having the entire amount wiped
out, she requested Mr. Curio, who admittedly received it, to execute, as he did, an
affidavit dated November 26, 1981, in which he assumed whatever portion thereof might
not be allowed ...

The clearance of Mr. Curio dated November 4,1981, (Exh. D or D-1) likewise favorably
passed all officers concerned, including Mrs. Sotto, the latter signing despite the notation
handwritten on December 8, 1981, that Mr. Curio had pending accountabilities, namely:
GSIS loan — 2,193.74, 201 accounts receivable — P3,897.75, and UCPB loan —
P3,623.49, or a total of P10,714.78. However, when the clearance was submitted to
Atty. Llorente for approval, he refused to approve it. For this reason, the clearance was
held up in his office and did not reach Atty. Rodriguez, ...

The reason given by Atty. Llorente was that when the clearance was presented to him
on December 8, 1981, he was already aware of the affidavit dated November 26, 1981,
in which Mr. Curio assumed to pay any residual liability for the disallowed cash
advances, which at the time, December 8, 1981, stood at P92,000.00 (Exhs. 2 and 2-A).
Moreover, Mr. Curio had other pending obligations noted on his clearance totalling
Pl0,714.98 (Exh. 1-a). To justify his stand, Atty. Llorente invoked Condition (a) of the
clearance (Exhs. D and I-B), which, he said, was "very stringent" and could not be
interpreted in any other way ...

On December 1, 1982, Mr. Curio brought the matter of his unapproved clearance to Col.
Dueñas (Exh. G), who referred it to the Legal Department, which was under Atty.
Llorente as Deputy Administrator for legal affairs. After follow-up in that department, Mr.
Curio received the answer of Col. Dueñas dated February 11, 1983, saying that the
clearance was being withheld until the former settled his alleged accountability for
P92,000.00 reduced already to P56,000.00 (Exh. I). Mr. Curio elevated the matter to the
Chairman of the PCA Board, who indorsed it to Col. Dueñas, who, in turn, sent it to the
Legal Department. This time the latter, through its Manager, Manuel F. Pastor, Jr., first
cousin of Atty. Llorente, submitted a formal report under date of August 14, 1986, to the
PCA Chairman, justifying the action taken by Atty. Llorente and Col. Dueñas (Exh. 12).
The PCA Chairman did not respond in writing, but advised Mr. Curio to wait for the
resolution of the Tanodbayan with which he (Mr. Curio) had filed this case initially
against Atty. Llorente and, later on, against Col. Duerias also. On August 31, 1986, Atty.
Llorente resigned from the PCA; the clearance, however, could not be issued because,
according to the PCA Corporate Legal Counsel, Arthur J. Liquate, the PCA did not want
to preempt the Tanodbayan. On November 12, 1986, the latter decided to institlite this
case in court ...

Nine days thereafter, or on November 21, 1986, Mr. Curio accomplished another
clearance, which no longer imposed Condition (a) of his earlier clearance (Exh. E). The
new clearance was approved, even if he still had pending accountabilities, totalling
P10,714.78 that had remained unsettled since December 1981. His voucher was also
approved, and his gratuity benefits paid to him in the middle of December 1986, after
deducting those obligations (Exh. F). Nothing was mentioned anymore about the
disallowed cash advances of P92,000.00, which had been reduced to P55,000.00 ...

Between December 1981 and December 1986, Mr. Curio failed to get gainful
employment; as a result, his family literally went hungry, In 1981, he applied for work
with the Philippine Cotton Authority, but was refused, because he could not present his
PCA clearance. The same thing happened when he sought employment with the
Philippine Fish Marketing Administration in January 1982. In both prospective
employers, the item applied for was P2,500.00 a month. At that time, he was only about
45 years old and still competitive in the job market. But in 1986, being already past 50
years, he could no longer be hired permanently, there being a regulation to that effect.
His present employment with the Philippine Ports Authority, which started on March 16,
1987, was casual for that reason. Had his gratuity benefits been paid in 1981, he would
have received a bigger amount, considering that since then interest had accrued and the
foreign exchange rate of the peso to the dollar had gone up ... 1
On December 10, 1986, an Information for violation of Section 3(c) of the Anti-Graft and Corrupt Practices Act was filed against the petitioner:

That on or about December 8, 1981 and/or subsequent thereto, in Quezon City, Philippines, and within the jurisdiction of this Honorable Court, accused
David Pastor Llorente, Deputy Administrator for the Philippine Coconut Authority (PCA), and as such was empowered among others to approve
clearances of employees thereat, taking advantage of his position, through evident bad faith, did then and there, wilfully and unlawfully refuse to issue a
certificate of clearance to Herminigildo M. Curio, an employee thereat, who was forced to resign as a result of the abolition of his item pursuant to the
1981 reorganization of the PCA, resulting in his deprivation to receive his gratuity benefits amounting to P29,854.90, and to secure employment with other
offices to his damage and prejudice, and that of the public service.

CONTRARY TO LAW.

Manila, Philippines, December 10, 1986. 2

As indicated at the outset, the Sandiganbayan acquitted the petitioner in the absence of any evidence that he acted in bad faith. 3
The Sandiganbayan
cited three considerations that precluded bad faith:

First, when Atty. Llorente withheld favorable action on the clearance on and after
December 8, 1981, there was still the possibility, remote though it was when viewed
after the fact, that the accountability, which Mrs. Javier was primarily liable therefor and
which was fully settled by deduction from her gratuity benefits on November 16, 1981
(Exhs. L, L-1, L-2, and
L-3), would be reinstated and charged directly to Mr. Curio, for the latter executed on
November 26, 1981, an affidavit assuming responsibility for the obligation to the extent
of the amount finally disallowed, and the affidavit was on December 8, 1981, already
pending consideration by the PCA management (Exhs. 2 and 2-A).

Second, Atty. Llorente was appointed Deputy Administrator for administrative services,
finance services, and legal affairs departments only on November 2,1981 (TSN, March
9/87, p. 3). Being new in his job, it was but natural that he was zealous in the
performance of his functions — in fact, overzealous in the protection of the PCA
interests, even if that protection was not necessary, as the P92,000.00 accountability
had already been paid (See Exh. 12, 4th paragraph).

Finally, Atty. Llorente was officiously, though incidentally, taking care also of the interest
of Mrs. Javier who, justice and equity demanded, should not be made to shoulder the
P92,000.00 unliquidated cash advances, for the reason that it was Mr. Curio who
admittedly spent them or who, at the very least, should be able to get reimbursement of
what she paid, totally or partially, from his gratuity benefits (See Exh. 5, pp. 2-3 ). 4

The Sandiganbayan, as we also indicated earlier, took the petitioner to task civilly, and
ordered him to pay "compensatory damages" in the sum of P90,000.00. According to the
Sandiganbayan, the petitioner was guilty nonetheless of abuse of right under Article 19
of the Civil Code and as a public officer, he was liable for damages suffered by the
aggrieved party (under Article 27).

The petitioner claims that the Sandiganbayan's Decision is erroneous even if the
Sandiganbayan acquitted him therein, because he was never in bad faith as indeed found
by the Sandiganbayan.

Under the 1985 Rules of Criminal Procedure, amending Rules 110 through 127 of the
Rules of Court, the judgment of the court shall include, in case of acquittal, and unless
there is a clear showing that the act from which the civil liability might arise did not exist,
"a finding on the civil liability of the accused in favor of the offended party." 5 The rule is based on
the provisions of substantive law, 6
that if acquittal proceeds from reasonable doubt, a civil action, lies
nonetheless.

The challenged judgment found that the petitioner, in refusing to issue a certificate of clearance
in favor of the private offended party, Herminigildo Curio, did not act with "evident bad faith,"
one of the elements of Section 3(e) of Republic Act No. 3819. 7 We agree with tile judgment,
insofar as it found lack of evident bad faith by the petitioner, for the reasons cited therein
basicallv, because the petitioner was acting within the bounds of law in refusing to clear Curio
although "[t]he practice was that the clearance was nevertheless approved, and then the
amount of the unsettled obligation was deducted from the gratuity benefits of the employee." 8

We also agree with the Sandiganbaya (although the Sandiganbayan did not say it) that although the petitioner did not act with evident bad faith, he acted with bad faith
nevertheless, for which he should respond for damages.

The records show that the office practice indeed in the Philippine Coconut Authority was to clear the employee (retiree) and deduct his accountabilities from his
gratuity benefits. There seems to be no debate about the existence of this practice (the petitioner admitted it later on) and in fact, he cleared three employees on the
condition that their obligations should be deducted from their benefits. 9
We quote:

Confronted with these evidence (sic), Atty. Llorente conceded, albeit grudgingly, the
existence of the practice by the accounting division of not complying with Condition (a).
He, however, claimed that he learned of the practice only during the trial of the case and
that he must have inadvertently approved the clearances of Mrs. Perez, Mr. Azucena,
and possibly others who were similarly situated (TSN, March 9/88,pp. 4-5). This the
evidence belies. First, he himself testified that when the clearance of Mr. Curio was
presented to him in December 1981, it already bore the signature of Mrs. Sotto of the
accounting division and the notation set opposite her name about the outstanding
accountabilities of Mr. Curio; but he (Atty. Llorente) significantly did not ask her why she
signed the clearance (TSN, Nov. 24/87, pp. 24-25). Second, in that month, Atty. Llorente
approved Mrs. Perez's and Mr. Azucena's vouchers showing that hey has pending
obligations to the GSIS and the UCPB, which were being deducted from their gratuity
benefits. Attached to those vouchers were the clearances as supporting documents
(Exhs. M-2 and N-1; TSN, Dec. 7/87, pp. 13,23). And third, in the same month, Atty.
Llorente was already aware of the cae of Mrs. Javier whose clearance and voucher
were, according to him, preciselywithheld because of her unsettled accountability for the
cash advances of P92,000.00, but here later on given due course; and her gratuity
 benefits released on November 16, 1981, minus that amount (TSN, Nov. 24/87, pp. 31-
32; Exhs. L, L-1, L-2 and L-3).

The cash advances of P92,000.00 were the primary obligation of Mrs. Javier, since they
were secured through her and in her name from the UCPB. That was why they were
charged to and deducted from, her gratuity benefits. Consequently, as early as that date
and in so far as the PCA and the UCPB were concerned, the accountability was already
fully paid. The assumption of residual liability by Mr. Curio for the cash advances on
November 26, 1981, was a matter between him and Mrs. Javier (Exhs. 2 and 2-A). 10

The general rule is that this Court is bound by the findings of fact of the Sandiganbayan. 11

As we said, the acts of the petitioner were legal (that is, pursuant to procedures), as he insists in this petition, yet it does not follow, as we said, that his acts were done
in good faith. For emphasis, he had no valid reason to "go legal" all of a sudden with respect to Mr. Curio, since he had cleared three employees who, as the
Sandiganbayan found, "were all similarly circumstanced in that they all had pending obligations when, their clearances were filed for consideration, warranting similar
official action." 12

The Court is convinced that the petitioner had unjustly discriminated against Mr. Curio.

It is no defense that the petitioner was motivated by no ill-will (a grudge, according to the Sandiganbayan), since the facts speak for themselves. It is no defense either
that he was, after all, complying merely with legal procedures since, as we indicated, he was not as strict with respect to the three retiring other employees. There can
be no other logical conclusion that he was acting unfairly, no more, no less, to Mr. Curio.

It is the essence of Article 19 of the Civil Code, under which the petitioner was made to pay damages, together with Article 27, that the performance of duty be done
with justice and good faith. In the case of Velayo vs. Shell Co. of the Philippines, 13 we held the defendant liable under Article 19 for disposing of its propertv — a
perfectly legal act — in order to escape the reach of a creditor. In two fairly more recent cases, Sevilla vs. Court of Appeals 14 and Valenzuela vs. Court of Appeals,
15
we held that a principal is liable under Article 19 in terminating the agency — again, a legal
act — when terminating the agency would deprive the agent of his legitimate business.

We believe that the petitioner is liable under Article 19.

The Court finds the award of P90,000.00 to be justified bv Article 2202 of the Civil Code, which
holds the defendant liable for all "natural and probable" damages. Hennenegildo Cunct
presented evidence that as a consequence of the petitioner's refusal to clear him, he failed to
land a job at the Philippine Cotton Authority and Philippine First Marketing Authority. He also
testified that a job in either office would have earned him salary of P2,500.00 a month, or
P150,000.00 in five years. Deducting his probable expenses of reasonably about P1,000.00 a
month or P60,000.00 in five years, the petitioner owes him a total actual damages of
P90,000.00

WHEREFORE, premises considered, the Petition is DENIED. No pronouncement as to costs.

IT IS SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin,
Griño-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.

EN BANC

G.R. No. L-15526          December 28, 1963

ENRIQUE J. L. RUIZ and JOSE V. HERRERA, in their behalf and as minority stockholders
of the Allied Technologists, Inc., plaintiffs-appellants,
vs.
THE SECRETARY OF NATIONAL DEFENSE, COL. NICOLAS JIMENEZ, Head of the
Engineer Group, Office of the Secretary of National Defense, THE FINANCE OFFICER of
the Department of National Defense, THE AUDITOR of the Dept. of National Defense,
PABLO D. PANLILIO and ALLIED TECHNOLOGISTS, INC., defendants-appellees.

Montenegro, Madayag, Viola and Hernandez for plaintiffs-appellants.

Office of the Solicitor General for defendant-appellee Secretary of National Defense.
Rosauro Alvarez for defendant-appellee Allied Technologists, Inc.
L. D. Panlilio for defendant-appellee Pablo Panlilio.

PAREDES, J.:

This is an appeal by plaintiffs Enrique J. L. Ruiz and Jose V. Herrera from an Order of the Court
of First Instance of Manila, in Civil Case No. 26601, dated February 25, 1959, dismissing
plaintiffs' complaint.

On September 11, 1950, a contract was executed between the defendant Allied Technologists,
Inc. (corporation, for short), and the Republic of the Philippines, for the construction of the
Veterans Memorial Hospital. Ruiz and Herrera were stockholders and officers of the
corporation. The construction of the hospital was terminated in 1955. On August 20, 1954, and
June 20, 1955, Civil Cases Nos. 23778 and 26601, respectively, were filed by same plaintiffs
herein, making as parties-defendants in both cases, the same defendants herein, the Secretary
of National Defense, Col. Nicolas Jimenez (Engineer), the Finance Officer, and the Auditor of
the Dept. of National Defense, Pablo D. Panlilio and Allied Technologists, Inc. Civil Case No.
23778 was dismissed by the CFI on October 12, 1954; and the dismissal was affirmed by this
Court on July 7, 1955, in G.R. No. L-8638. Civil Case No. 26601 was also dismissed on
September 13, 1955. On appeal, this Court reversed the order of dismissal, under the
impression that the real controversy was confined merely between defendant Panlilio and
plaintiffs Ruiz and Herrera over the 15% of the contract price, which was retained by the
Department of National Defense. The retention of the 15% of the contract price in the sum of
P34,740.00 was made to answer for any claim or lien that might arise, in the course of the
construction. The last case, however, was remanded to the court of origin, for further
proceedings. Panlilio and the corporation filed their amended answers, stating that the amount
retained by the Department of National Defense was already paid to defendant corporation, as
sought for by the plaintiffs in their complaint. In view of this development, the trial court invited
the parties to a conference, in which the plaintiffs indicated their conformity, to the dismissal of
the complaint with respect to the retention of the 15% of the contract price; but insisted upon the
hearing of the second question, which sought the declaration and recognition of plaintiffs Ruiz
and Herrera, as two of the three architects of the hospital. The trial court, nevertheless,
dismissed the complaint, for being already academic and moot. Hence, this appeal by plaintiffs-
appellants, who alleged in their lone assignment of error that "the lower court grievously erred in
ordering the dismissal of the case, with costs against the plaintiffs".

Plaintiffs-appellants contend that the only ground relied upon by the lower court to dismiss the
case without any trial is the allegation contained in pars. 4 and (e) of the answers of the
appellees Panlilio and Allied Technologists, Inc., respectively; that the amount retained by the
Department of National Defense had already been paid; that except for this bare allegation of
the appellees, no evidence was adduced to prove the truth of the same; that even assuming, for
the sake of argument, that the same is true, nevertheless the first part of the first cause of action
still remains, for which they had insisted upon a hearing in order to establish their right to be
recognized as two of the three architects of the hospital; that because the pleadings do not
show any ground which might legally justify the action taken by the lower court, the latter should
not have ordered the dismissal of the entire case but should have ordered only the striking out
of the moot portion of appellants' first cause of action, citing Pacal v. Ramos, 81 Phil. 30, 33; 27
C.J.S. 209-210; Bush v. Murray, 205 N.Y.S. 21, 26, 209 App. Div. 563; Bearden v. Longino. 190
S.E. 12, 183 Ga. 819. Appellants further argue in their brief that they base their cause of action
on article 21, New Civil Code.

The appeal has no merit. The order appealed from, states —

Considering the manifestation of counsel for plaintiffs that the latter would insist on the
hearing of the above-entitled case for the purpose of establishing their right to be
recognized as the architects of the Veterans Hospital together with defendant Pablo D.
Panlilio, and it appearing that plaintiffs' Amended Complaint with Injunction prays,
among others, "That this Honorable Court order defendants Secretary of National
Defense, Col. Nicolas Jimenez, and the Finance Officer and Auditor of the Department
of National Defense to pay the Allied Technologists, Inc., the balance unpaid by virtue of
the contract executed on September 11, 1950 (Annex "C" hereof) for services rendered
under Title I and to be rendered under Title II of said contract; that paragraph 4 of
defendant Pablo Panlilio's Amended Answer to said complaint alleges "That whatever
amounts were retained by the Dept. of National Defense on the contract price, which
retention was authorized by the contract, was paid by the Dept. of National Defense to
the Allied Technologists Inc. as sought by the plaintiffs; that paragraph (e) of the
ANSWER TO THE AMENDED COMPLAINT of defendant Allied Technologists, Inc.,
also alleges "That whatever amounts were retained by the Department of National
Defense, per the stipulations contained in the contract, have already been paid by the
Allied Technologists, Inc. and, therefore, the present action seeking to compel the
aforementioned Department of National Defense to pay to defendant Allied
Technologists, Inc. the amounts retained by the Department of National Defense is
academic, groundless, unfounded and malicious"; that the said allegations of the
separate answers of defendants Pablo Panlilio and Allied Technologists, Inc., are not
and can not be denied by plaintiffs, and that it is this Court's understanding that
defendant has no objection to the dismissal of this case — it is ordered that this case be,
as it is hereby DISMISSED, with costs against plaintiffs.

A cursory reading of pars. 18 and 19 of the amended complaint with injunction and prayers (1)
and (2) thereof, reveals that appellants' first cause of action is composed of two parts, as
follows:
(a) A judicial declaration or recognition that appellants Ruiz and Herrera, together with appellee
Panlilio, were the architects of the Veterans Hospital; and

(b) An injunction restraining the appellee government officials paying their co-appellee Panlilio
the sum retained by the former, as per stipulation contained in the contract for the construction
of the hospital because "they will not only be deprived of the monetary value of the services
legally due them, but that their professional prestige and standing will be seriously
impaired".lawphil.net

As appellants admitted, they no longer consider the Secretary and other officials of the
Department of National Defense, as parties-defendants in the case, said officials can no longer
be compelled to recognize the appellants, Ruiz and Herrera, as co-architects with appellee
Panlilio of the Veterans Hospital. And, as the amount retained by the Department on the
contract price, which retention was authorized by the contract, was, as sought by the appellants,
already paid to the Allied Technologists, Inc., there is nothing more for the trial court to decide,
even without first ruling on the special defenses of appellees Panlilio and the corporation.

Moreover, by discarding the Secretary and other officials of the Department of National
Defense, as parties-defendants, appellants could not expect the trial court to order them to
recognize and declare appellants as co-architects in the construction of the hospital. And this
must be so, because the construction agreement expressly provides that the architect being
contracted by the Government was appellee Pablo Panlilio. The said agreement states that the
same was entered into by the government, party of the first part and "Allied Technologists, Inc. .
. . and Mr. Pablo D. Panlilio, architect, hereinafter called the party of the second part" and "The
Allied Technologists, Inc. for rendering engineering services and Mr. Pablo D. Panlilio, architect,
for rendering architectural services". And the contract was signed for the Government by
"Ramon Magsaysay, Secretary of National Defense (party of the first part," and "Allied
Technologists, Inc., by Enrique J. L. Ruiz, President, Contractor, Pablo D. Panlilio, Architect".

Appellants maintain that their claim for recognition is divisible and separable from their
allegations regarding the non-payment by the government of a portion of the architectural fees;
thereby concluding that what the lower court should have done, should have been merely to
order the striking out of the moot portion of appellants' cause of action, and should have
proceeded with hearing their claim for recognition. But the allegations in pars. 18 and 19 of the
amended complaint, show otherwise. There is an indivisible and single cause of action which is
primarily to prevent payment exclusively to defendant Panlilio of the amount of P34,740.00,
which said appellants contend should be paid to appellee Allied Technologists, Inc.; the matter
recognizing them together with Pablo Panlilio as architects of the hospital, being merely
incidental thereto. The case of Pacal v. Ramos, 81 Phil. 30, cited by appellants is not applicable.
In this case, the grounds for quo warranto are separable from the grounds for election
irregularities which are distinct and separate causes of action, entitling the petitioner to separate
and unrelated reliefs. These two grounds were alleged under separate paragraphs and they
were two independent actions improperly joined in one proceeding. In the case at bar, in one
paragraph (par. 19 of the amended complaint), as first cause of action, the claim for recognition
is inseparably linked with their allegations regarding alleged threatened payment of P34,740.00
to Panlilio alone, because "they will not only be deprived of the monetary value of the services
legally due them, but that their professional prestige and standing will be seriously impaired".
When the very defendant Allied Technologists, Inc. itself asserted in its answer the amended
complaint, that the amount was paid to it, an assertion which was not at all denied, plaintiffs-
appellants' cause of action under said par. 19 dissipated entirely.
There is a veiled insinuation that appellants, thesis would fall under the provisions of the Rules
on declaratory relief, because appellants wanted merely a declaration of their rights in a contract
in which they were interested. The trial court, however, was correct in refusing to make such
declaration, because it was not necessary and proper under the circumstances (sec. 6, Rule
66). Appellants were not parties to the construction agreement. The sole object the appeal is
only to secure for them a recognition, that they were allegedly the co-architects of Panlilio, in the
construction of the hospital, so as to enhance their professional prestige and not to impair their
standing. If this is the goal of appellants, a judicial declaration to the effect would seem
unnecessary. Let us ponder over the thought that a brilliant professional enjoys the respect and
esteem of his fellowmen, even without any court declaration of such fact, and that an
incompetent one may summon all the tribunals in the world, to proclaim his genius in vain.

But appellants invoke Article 21 of the Civil Code, which states —

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 damages.

contending that the word "injury" in the said article, refers not only to any indeterminate right or
property, but also to honor or credit (I Tolentino Civil Code, p. 67). It may be added, however,
that this article also envisions a situation where a person has a legal right, and such right is
violated by another in a manner contrary to morals, good customs or public policy; it
presupposes losses or injuries, material or otherwise, which one may suffer as a result of said
violation. The pleadings do not show that damages were ever asked or alleged, in connection
with this case, predicated upon the article aforecited. And under the facts and circumstances
obtaining in this case, one cannot plausibly sustain the contention that the failure or refusal to
extend the recognition was an act contrary to morals, good customs or public policy.

IN VIEW HEREOF, the order appealed from is affirmed, with costs against plaintiffs-appellants.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Dizon,
Regala and Makalintal, JJ., concur.

FIRST DIVISION

G.R. No. L-48250 December 28, 1979

GRAND UNION SUPERMARKET, INC. and NELIA SANTOS FANDINO, petitioners,

vs.
JOSE J. ESPINO JR., and THE HONORABLE COURT OF APPEALS, respondents.

GUERRERO, J.

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

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

"Upon the evidence, and from the findings of the lower court, it appears that in the morning of
August 22, 1970, plaintiff Jose J. Espino. Jr., a civil engineer and an executive of Procter and
Gamble Philippines, Inc., and his wife and their two daughters went to shop at the defendants'
South Supermarket in Makati. While his wife was shopping at the groceries section, plaintiff
browsed around the other parts of the market. Finding a cylindrical "rat tail" file which he needed
in his hobby and had been wanting to buy, plaintiff picked up that item from one of the shelves.
He held it in his hand thinking that it might be lost, because of its tiny size, if he put it in his
wife's grocery cart. In the course of their shopping, plaintiff and his wife saw the maid of
plaintiff's aunt. While talking to this maid, plaintiff stuck the file into the front breast pocket of his
shirt with a good part of the merchandise exposed.

"At the check-out counter, the plaintiff paid for his wife's purchases which amounted to P77.00,
but he forgot to pay for the file. As he was leaving by the exit of the supermarket on his way to
his car, carrying two bags of groceries and accompanied by his wife and two daughter, plaintiff
was approached by a uniformed guard of the supermarket who said: "Excuse me, Mr., I think
you have something in your pocket which you have not paid for." (p. 5, tsn, Aug. 13, 1971),
pointing to his left front breast pocket. Suddenly reminded of the file, plaintiff apologized thus: "I
am sorry," and he turned back toward the cashier to pay for the file. But the guard stopped him
and led him instead toward the rear of the supermarket. The plaintiff protested but the guard
was firm saying: "No, Mr., please come with me. It is the procedure of the supermarket to bring
people that we apprehend to the back of the supermarket" (p. 8, Ibid). The time was between 9
and 10 o'clock. A crowd of customers on their way into the supermarket saw the plaintiff being
stopped and led by a uniformed guard toward the rear of the supermarket. Plaintiff acquiesced
and signaled to his wife and daughters to wait.

"Into a cubicle which was immediately adjacent to the area where deliveries to the supermarket
were being made, the plaintiff was ushered. The guard directed him to a table and gave the file
to the man seated at the desk. Another man stood beside the plaintiff. The man at the desk
looked at the plaintiff and the latter immediately explained the circumstances that led to the
finding of the file in his possession. The man at the desk pulled out a sheet of paper and began
to ask plaintiff's name, age, residence and other personal data. Plaintiff was asked to make a
brief statement, and on the sheet of paper or "Incident Report" he wrote down the following:
"While talking to my aunt's maid with my wife, I put this item in my shirt pocket. I forgot to check
it out with my wife's items" (Exhibit A). Meanwhile, the plaintiff's wife joined him and asked what
had taken him so long.

"The guard who had accosted plaintiff took him back inside the supermarket in the company of
his wife. Plaintiff and his wife were directed across the main entrance to the shopping area,
down the line of check-out counters, to a desk beside the first checkout counter. To the woman
seated at the desk, who turned out to be defendant Nelia Santos-Fandino, the guard presented
the incident report and the file, Exhibit B. Defendant Fandino read the report and addressing the
guard remarked: "Ano, nakaw na naman ito" (p. 22, Id.). Plaintiff explained and narrated the
incident that led to the finding of the file in his pocket, telling Fandino that he was going to pay
for the file because he needed it. But this defendant replied: "That is all they say, the people
whom we cause not paying for the goods say... They all intended to pay for the things that are
found to them." (p. 23, Id). Plaintiff objected and said that he was a regular customer of the
supermarket.

"Extracting a P5.00 bill from his pocket, plaintiff told Fandino that he was paying for the file
whose cost was P3.85. Fandino reached over and took the P5.00 bill from plaintiff with these
words: "We are fining you P5.00. That is your the fine." Plaintiff was shocked. He and his wife
objected vigorously that he was not a common criminal, and they wanted to get back the P5.00.
But Fandino told them that the money would be given as an incentive to the guards who
apprehend pilferers. People were milling around them and staring at the plaintiff. Plaintiff gave
up the discussion. He drew a P50.00 bill and took back the file. Fandino directed him to the
nearest check-out counter where he had to fall in line. The people who heard the exchange of
words between Fandino and plaintiff continued to stare at him. At the trial, plaintiff expressed his
embarrassment and humiliation thus: " I felt as though I wanted to disappear into a hole on the
ground" (p. 34, Id.). After paying for the file, plaintiff and his wife walked as fast as they could
out of the supermarket. His first impulse was to go back to the supermarket that night to throw
rocks at its glass windows. But reason prevailed over passion and he thought that justice should
take its due course.

"Plaintiff was certain during the trial that when he signed the incident report, Exhibit A, inside the
cubicle at the back of the supermarket only his brief statement of the facts (Exhibit A-2), aside
from his name and personal circumstances, was written thereon. He swore that the following
were not in the incident report at, the time he signed it:

Exhibit A-I which says opposite the stenciled word SUBJECT "Shoplifting"

Exhibit A-3 which says opposite the stenciled words Action Taken: Released by
Mrs. Fandino after paying the item.

Exhibit A-4 which says opposite the stenciled words Remarks Noted: "Grd. Ebreo
requested Grd. Paunil to apprehend subject shoplifter.

Private respondent's complaint filed on October 8, 1970 is founded on Article 21 in relation to

Article 2219 of the New Civil Code and prays for moral damages, exemplary damages, attorney
s fees and 'expenses of litigation, costs of the suit and the return of the P5.00 fine. After trial, the
Court of First Instance of Pasig, Rizal, Branch XIX dismissed the complaint, Interposing the
appeal to the Court of Appeals, the latter reversed and set aside the appealed judgment,
granting and damages as earlier stated.

Not satisfied with the decision of the respondent court, petitioners instituted the present petition
and submits the following grounds and/or assignment of errors, to wit:

Respondent Court of Appeals erred in awarding moral and exemplary damages

to the respondent Espino under Articles 19 and 21 in relation to Article 2219 of
the Civil Code, considering that —
 A. Respondent Espino was guilty of theft;

B. Petitioners legitimately exercised their right of defense of property within the

context of Article 429 of the Civil Code negating the application of Articles 19 and
21 of the same Code;

C. Petitioners acted upon probable cause in stopping and investigating

respondent Espino for shoplifting and as held in various decisions in the United
States on shoplifting, a merchant who acts upon probable cause should not be
held liable in damages by the suspected shoplifter;

D. Petitioners did not exercise their right maliciously, wilfully or in bad faith;
and/or

E. The proximate cause of respondent Espino's alleged injury or suffering was

his own negligence or forgetfulness; petitioners acted in good faith.

II

Assuming arguendo that petitioners are hable for moral and exemplary damages,
the award of P75,000.00 for moral damages and P25,000.00 for exemplary
damages by the respondent Court of Appeals is not legally justified and/or is
grossly excessive in the premises.

III

The award of P5,000.00 for attorney's fees by the respondent Court of Appeals is
unjustified and unwarranted under Article 2199 of the Civil Code.

We agree with the holding of the respondent appellate court that "the evidence sustains the
court's finding that the plaintiff had absolutely no intention to steal the file." The totality of the
facts and circumstances as found by the Court of Appeals unerringly points to the conclusion
that private respondent did not intend to steal the file and that is act of picking up the file from
the open shelf was not criminal nor done with malice or criminal intent for on the contrary, he
took the item with the intention of buying and paying for it.

This Court needs only to stress the following undisputed facts which strongly and convincingly
uphold the conclusion that private respondent was not "shoplifting." Thus, the facts that private
respondent after picking the cylindrical "rat-tail" file costing P3.85 had placed it inside his left
front breast pocket with a good portion of the item exposed to view and that he did not conceal it
in his person or hid it from sight as well as the fact that he paid the purchases of his wife
amounting to P77.00 at the checkout counter of the Supermarket, owed that he was not acting
suspiciously or furtively. And the circumstance that he was with his family consisting of his wife
Mrs. Caridad Jayme Espino, and their two daughters at the time negated any criminal intent on
his part to steal. Moreover, when private respondent was approached by the guard of the
Supermarket as he was leaving by the exit to his car who told him, "Excuse me, Mr., I think you
have something in your pocket which you have not paid for," Espino, immediately apologized
and answered, "I am sorry," which indicated his sincere apology or regrets. He turned back
towards the cashier to pay for the file which proved his honesty sincerity and good faith in
buying the item, and not to shoplift the same. His brief statement on the sheet of paper called
the Incident Report where private respondent wrote the following: "While talking to my aunt's
maid with my wife, I put this item in in my shirt pocket. I forgot to check it out with my wife's
item," was an instant and contemporaneous explanation of the incident.

Considering further the personal circumstances of the private respondent. his education,
position and character showing that he is a graduate Mechanical Engineer from U.P. Class
1950, employed as an executive of Proctor & Gamble Phils., Inc., a corporate manager incharge
of motoring and warehousing therein; honorably discharged from the Philippine Army in 1946; a
Philippine government pensionado of the United States for six months; member of the Philippine
veterans Legion; author of articles published in the Manila Sunday Times and Philippines Free
Press; member of the Knights of Columbus, Council No. 3713; son of the late Jose Maria
Espino, retired Minister, Department of Foreign Affairs at the Philippine Embassy Washington,
We are fully convinced, as the trial and appellate courts were, that private respondent did not
intend to steal the article costing P3.85. Nothing in the records intimates or hints whatsoever
that private respondent has had any police record of any sort much less suspicion of stealing or
shoplifting.

We do not lay down here any hard-and-fast rule as to what act or combination of acts constitute
the crime of shoplifting for it must be stressed that each case must be considered and adjudged
on a case-to-case basis and that in the determination of whether a person suspected of
shoplifting has in truth and in fact committed the same, all the attendant facts and
circumstances should be considered in their entirety and not from any single fact or
circumstance from which to impute the stigma of shoplifting on any person suspected and
apprehended therefor.

We likewise concur with the Court of Appeals that "(u)pon the facts and under the law, plaintiff
has clearly made the cause of action for damages against the defendants. Defendants wilfully
caused loss or injury to plaintiff in a manner that was contrary to morals, good customs or public
policy, making them amenable to damages under Articles 19 and 21 in relation to Article 2219 of
the Civil Code." 2

That private respondent was falsely accused of shoplifting is evident. The Incident Report
(Exhibit A) with the entries thereon under Exhibit A-1 which says opposite the stenciled word
SUBJECT: "Shoplifting," Exhibit A-3 which says opposite the stenciled words Action Taken:
Relesed by Mrs. Fandino after paying the item," Exhibit A-4 which says opposite the stenciled
words Remarks Noted: Grd. Ebreo requested Grd. Paunil to apprehend subject shoplifter,"
established the opinion, judgment or thinking of the management of petitioner's supermarket
upon private respondent's act of picking up the file. ln plain words, private respondent was
regarded and pronounced a shoplifter and had committed "shoplifting."

We also affirm the Court of Appeals' finding that petitioner Nelia Santos Fandino, after reading
the incident report, remarked the following: "Ano, nakaw na naman ito". Such a remark made in
the presence of private respondent and with reference to the incident report with its entries, was
offensive to private respondent's dignity and defamatory to his character and honesty. When
Espino explained that he was going to pay the file but simply forgot to do so, Fandino doubted
the explanation. saying: "That is all what they say, the people whom we caught not paying for
the goods say... they all intended to pay for the things that are found to them." Private
respondent objected and said that he was a regular customer of the Supermarket.
The admission of Fandino that she required private respondent to pay a fine of P5.00 and did in
fact take the P5.00 bill of private respondent tendered by the latter to pay for the file, as a fine
which would be given as an incentive to the guards who apprehend pilferers clearly proved that
Fandino branded private respondent as a thief which was not right nor justified.

The testimony of the guard that management instructed them to bring the suspected customers
to the public area for the people to see those kind of customers in order that they may be
embarassed (p. 26, tsn, Sept. 30, 1971); that management wanted "the customers to be
embarrassed in public so that they will not repeat the stealing again" (p. 2, tsn, Dec. 10, 1971);
that the management asked the guards "to bring these customers to different cashiers in order
that they will know that they are pilferers" (p. 2, Ibid.) may indicate the manner or pattern
whereby a confirmed or self-confessed shoplifter is treated by the Supermarket management
but in the case at bar, there is no showing that such procedure was taken in the case of the
private respondent who denied strongly and vehemently the charge of shoplifting.

Nonetheless, the false accusation charged against the private respondent after detaining and
interrogating him by the uniformed guards and the mode and manner in which he was
subjected, shouting at him, imposing upon him a fine, threatening to call the police and in the
presence and hearing of many people at the Supermarket which brought and caused him
humiliation and embarrassment, sufficiently rendered the petitioners liable for damages under
Articles 19 and 21 in relation to Article 2219 of the Civil Code. We rule that under the facts of the
case at bar, petitioners wilfully caused loss or injury to private respondent in a manner that was
contrary to morals, good customs or public policy. It is against morals, good customs and public
policy to humiliate, embarrass and degrade the dignity of a person. Everyone must respect the
dignity, personality, privacy and peace of mind of his neighbors and other persons (Article 26,
Civil Code). And one must act with justice, give everyone his due and observe honesty and
good faith (Article 19, Civil Code).

Private respondent is entitled to damages but We hold that the award of Seventy-Five
Thousand Pesos (P75,000.00) for moral damages and Twenty-Five Thousand Pesos
(P25,000.00, for exemplary damages is unconscionable and excessive.

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

In Our considered estimation and assessment, moral damages in the amount of Five Thousand
Pesos (P5,000.00) is reasonable and just to award to private respondent.

The grant of Twenty-Five Thousand Pesos (P25,000.00) as exemplary damages is unjustified.

Exemplary or corrective damages are imposed by way of example or correction for the public
good, in addition to the moral, temperate, liquidated or compensatory damages (Art. 2229, New
Civil Code). Exemplary damages cannot be recovered as a matter of right; the court will decide
whether or not they could be adjudicated (Art. 2223, New Civil Code). Considering that
exemplary damages are awarded for wanton acts, that they are penal in character granted not
by way of compensation but as a punishment to the offender and as a warning to others as a
sort of deterrent, We hold that the facts and circumstances of the case at bar do not warrant the
grant of exemplary damages.

Petitioners acted in good faith in trying to protect and recover their property, a right which the
law accords to them. Under Article 429, New Civil Code, the owner or lawful possessor of a
thing has a right to exclude any person from the enjoyment and disposal thereof and for this
purpose, he may use such force as may be reasonably necessary to repel or prevent an actual
or threatened unlawful physical invasion or usurpation of his property. And since a person who
acts in the fulfillment of a duty or in the lawful exercise of a right or office exempts him from civil
or criminal liability, petitioner may not be punished by imposing exemplary damages against
him. We agree that petitioners acted upon probable cause in stopping and investigating private
respondent for taking the file without paying for it, hence, the imposition of exemplary damages
as a warning to others by way of a deterrent is without legal basis. We, therefore, eliminate the
grant of exemplary damages to the private respondent.

In the light of the reduction of the damages, We hereby likewise reduce the original award of
Five Thousand Pesos (P5,000.00) as attorney's fees to Two Thousand Pesos (P2,000.00).

WHEREFORE, IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals is hereby
modified. Petitioners are hereby ordered to pay, jointly and severally, to private respondent
moral damages in the sum of Five Thousand Pesos (P5,000.00) and the amount of Two
Thousand Pesos (P2,000.00) as and for attorney's fees; and further, to return the P5.00 fine to
private respondent. No costs.

SO ORDERED.

Makasiar, Fernandez, De Castro and Melencio-Herrera, JJ., concur,

Teehankee (Chairman), took no part.

#Footnotes

1 Special Second Division, A. Reyes, J., ponente; with M. Serrano and H.

Gutierrez, J., JJ., concurring.

2 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. 21. Any person who wilfully causes loss or injury to another in a manner that
is contrary to morals, good customs or public policy shall compensate the latter
for the damage.

Art. 2219. Moral damages may be recovered in the following and analogous
cases: ... (10)

G.R. No. L-22554 August 29, 1975

DELFIN LIM and JIKIL TAHA, plaintiffs-appellants,

vs.
FRANCISCO PONCE DE LEON AND ORLANDO MADDELA, defendants-appellees.

Ricardo L. Manalilig for plaintiffs-appellants.

Iñigo R. Peña for defendants-appellees.

MARTIN, J.:

Appeal on a question of law from the decision of the Court of First Instance of Palawan in Civil
Case No. 416, entitled "Delfin Lim and Jikil Taha vs. Francisco Ponce de Leon and Orlando
Maddela", dismissing the complaint of the plaintiffs and ordering them to pay each of the
defendants jointly and severally the sum of P500.00 by way of actual damages; P500.00 by way
of attorney's fees; and P1,000.00 by way of exemplary damages.

On April 29, 1961, plaintiff-appellant Jikil Taha sold to a certain Alberto Timbangcaya of
Brooke's Point, Palawan a motor launch named M/L "SAN RAFAEL". A year later or on April 9,
1962 Alberto Timbangcaya filed a complaint with the Office of the Provincial Fiscal of Palawan
alleging that after the sale Jikil Taha forcibly took away the motor launch from him.

On May 14, 1962, after conducting a preliminary investigation, Fiscal Francisco Ponce de Leon
in his capacity as Acting Provincial Fiscal of Palawan, filed with the Court of First Instance of
Palawan the corresponding information for Robbery the Force and Intimidation upon Persons
against Jikil Taha. The case was docketed as Criminal Case No. 2719.

On June 15, 1962, Fiscal Francisco Ponce de Leon, upon being informed that the motor launch
was in Balabac, Palawan, wrote the Provincial Commander of Palawan requesting him to direct
the detachment commander-in Balabac to impound and take custody of the motor launch.1

On June 26, 1962, Fiscal Ponce de Leon reiterated his request to the Provincial Commander to
impound the motor launch, explaining that its subsequent sale to a third party, plaintiff-appellant
Delfin Lim, cannot prevent the court from taking custody of the same. 2 So, on July 6, 1962 upon
order of the Provincial Commander, defendant-appellee Orlando Maddela, Detachment
Commander of Balabac, Palawan, seized the motor launch "SAN RAFAEL" from plaintiff-
appellant Delfin Lim and impounded it.

On July 15, 1962 plaintiff-appellant Delfin Lim pleaded with Orlando Maddela to return the motor
launch but the latter refused. Likewise, on September 20, 1962, Jikil Taha through his counsel
made representations with Fiscal Ponce de Leon to return the seized property to plaintiff-
appellant Delfin Lim but Fiscal Ponce de Leon refused, on the ground that the same was the
subject of a criminal offense.

All efforts to recover the motor launch going to naught, plaintiffs-appellants Delfin Lim and Jikil
Taha, on November 19, 1962, filed with the Court of First Instance of Palawan a complaint for
damages against defendants-appellees Fiscal Francisco Ponce de Leon and Orlando Maddela,
alleging that on July 6, 1962 Orlando Maddela entered the premises of Delfin Lim without a
search warrant and then and there took away the hull of the motor launch without his consent;
that he effected the seizure upon order of Fiscal Ponce de Leon who knew fully well that his
office was not vested with authority to order the seizure of a private property; that said motor
launch was purchased by Delfin Lim from Jikil Taha in consideration of Three Thousand Pesos
(P3,000.00), Two Thousand Pesos (P2,000.00) of which has been given to Jikil Taha as
advance payment; that as a consequence of the unlawful seizure of the motor launch, its sale
did not materialize; and that since July 6, 1962, the said motor launch had been moored at the
Balabac Bay, Palawan and because of exposure to the elements it had become worthless and
beyond repair. For the alleged violation of their constitutional rights, plaintiffs-appellants prayed
that defendants-appellees be ordered to pay jointly and severally each of them the sum of
P5,750.00 representing actual, moral and exemplary damages and attorney's fees.

In their answer, defendants-appellees denied the material allegations of the complaint and as
affirmative defenses alleged that the motor launch in question which was sold by Jikil Taha to
Alberto Timbangcaya on April 29, 1961 was sometime in April 1962, forcibly taken with violence
upon persons and with intent to gain by Jikil Taha from Alfredo Timbangcaya without the latter's
knowledge and consent, thus giving rise to the filing of a criminal charge of robbery against Jikil
Taha; that Fiscal Ponce de Leon, in his capacity as Acting Provincial Fiscal of Palawan ordered
Orlando Maddela to seize and impound the motor launch "SAN RAFAEL", for being the corpus
delicti of the robbery; and that Orlando Maddela merely obeyed the orders of his superior officer
to impound said launch. By way of counterclaim, defendants-appellees alleged that because of
the malicious and groundless filing of the complaint by plaintiffs-appellants, they were
constrained to engage the services of lawyers, each of them paying P500.00 as attorney's fees;
and that they suffered moral damages in the amount of P5,000.00 each and actual damages in
the amount of P500.00 each. They also prayed that each of them awarded exemplary damages
in the amount of P1,000.00.

On September 13, 1965, the trial court rendered its decision, upholding the validity of the
seizure of the motor launch on the ground that "the authority to impound evidences or exhibits
or corpus delicti in a case pending investigation is inherent in the Provincial Fiscal who controls
the prosecution and who introduces those exhibits in the court." Accordingly, the trial court
dismissed the complaint of plaintiffs-appellants and ordered them to pay jointly and severally
each of the defendants-appellees the amount of P500.00 by way of actual damages another
amount of P500.00 for attorney's fees and P1,000.00 as exemplary damages.

Hence, this appeal.

Two vital issues call for resolution by this Court. First, whether or not defendant-appellee Fiscal
Ponce de Leon had the power to order the seizure of the motor launch in question without a
warrant of search and seizure even if the same was admittedly the corpus delicti of the crime.
Second, whether or not defendants-appellees are civilly liable to plaintiffs-appellants for
damages allegedly suffered by them granting that the seizure of the motor launch was unlawful.

The gravamen of plaintiffs-appellants' argument is that the taking of the motor launch on July 6,
1962 by Orlando Maddela upon the order of Fiscal Ponce de Loon was in violation of the
constitutional guarantee against unreasonable searches and seizures since it was done without
a warrant.

The pertinent provision of the Constitution then in force reads:

3) The right of the people to be secure in their persons, houses, papers and
effects against unreasonable searches and seizures shall not be violated, and no
warrants shall issue but upon probable cause, to be determined by the judge
after examination under oath or affirmation of the complainant and the witnesses
he may produce, and particularly describing the place to be searched, and the
persons or things to be seized.3

A cursory reading of the above provision easily brings into focus the unreasonableness of the
seizure of the aforementioned motor launch. A search and seizure to be reasonable, must be
effected by means of a valid search warrant. And for a search warrant to be valid: (1) it must be
issued upon probable cause; (2) the probable cause must be determined by the judge himself
and not by the applicant or any other person; (3) in the determination of probable cause, the
judge must examine, under oath or affirmation, the complainant and such witnesses as the latter
may produce; and (4) the warrant issued must particularly describe the place to be searched
and persons or things to be seized.4 Thus in a long line of decisions, this Court has declared
invalid search warrants which were issued in utter disregard of the constitutional injunction.5

Defendants-appellees admitted that when Orlando Maddela entered the premises of Delfin Lim
and impounded the motor launch he was not armed with a search warrant; that he effected the
seizure of the motor launch in the absence of and without the consent of Delfin Lim. There can
be no question that without the proper search warrant, no public official has the right to enter the
premises of another without his consent for the purpose of search and seizure.6 And since in the
present case defendants-appellees seized the motor launch without a warrant, they have
violated the constitutional right of plaintiffs-appellants against unreasonable search and seizure.

Defendants-appellees however would want to justify the seizure of the motor launch even
without a warrant because of Fiscal Ponce de Leon's alleged inherent power to order the
seizure of a personal property which is the corpus delicti of a crime, he being a quasi judicial
officer who has the control of the prosecution and the presentation of the evidence in the
criminal case. They argue that inasmuch as the motor launch in question was allegedly stolen
by Jikil Taha from Timbangcaya, Fiscal Ponce de Leon could order its seizure even without a
search warrant. We cannot agree. Under the old Constitution7 the power to issue a search
warrant is vested in a judge or magistrate and in no other officer and no search and seizure can
be made without a proper warrant. At the time the act complained of was committed, there was
no law or rule that recognized the authority of Provincial Fiscals to issue a search warrant. In his
vain attempt to justify the seizure of the motor launch in question without a warrant Fiscal Ponce
de Leon invoked the provisions of Republic Act No. 732, which amended Sections 1674 and
1687 of the Revised Administrative Code. But there is nothing in said law which confers upon
the provincial fiscal; the authority to issue warrants, much less to order without warrant the
seizure of a personal property even if it is the corpus delicti of a crime. True, Republic Act No.
732 has broadened the power of provincial fiscals to conduct preliminary investigations, but said
law did not divest the judge or magistrate of its power to determine, before issuing the
corresponding warrant, whether or not probable cause exists therefor.8

Moreover, under Sections 2 and 3 of Rule 122 of the Rules of Court 9 which complement the
constitutional provision earlier cited, two principles are made clear, namely: (1) that in the
seizure of a stolen property search warrant is still necessary; and (2) that in issuing a search
warrant the judge alone determines whether or not there is a probable cause. The fact that a
thing is a corpus delicti of a crime does not justify its seizure without a warrant. As held in U.S.
v. de los Reyes and Esguerra, 10 citing McClurg v. Brenton: 11

The mere fact that a man is an officer, whether of high or low degree, gives him
no more right than is possessed by the ordinary private citizen to break in upon
the privacy of a home and subject its occupant to the indignity of a search for the
evidence of crime, without a legal warrant procured for that purpose. No amount
of incriminating evidence whatever its source, will supply the place of such
warrant. At the closed door of the home be it palace or hovel even bloodhounds
must wait till the law, by authoritative process, bids it open. (Emphasis supplied.)

Defendant-appellee Fiscal Ponce de Leon would also invoke lack of time to procure a search
warrant as an excuse for the seizure of the motor launch without one. He claimed that the motor
launch had to be seized immediately in order to preserve it and to prevent its removal out of the
locality, since Balabac, Palawan, where the motor launch was at the time, could only be
reached after three to four days' travel by boat. 12 The claim cannot be sustained. The records
show that on June 15, 1962 13 Fiscal Ponce de Leon made the first request to the Provincial
Commander for the impounding of the motor launch; and on June 26, 1962 14 another request
was made. The seizure was not effected until July 6, 1962. In short, Fiscal Ponce de Leon had
all the time to procure a search warrant had he wanted to and which he could have taken in less
than a day, but he did not. Besides, there is no basis for the apprehension that the motor launch
might be moved out of Balabac because even prior to its seizure the motor launch was already
without its engine. 15 In sum, the fact that there was no time to secure a search warrant would
not legally justify a search without one. 16

As to whether or not they are entitled to damages, plaintiffs-appellants anchor their claim for
damages on Articles 32 and 2219 of the New Civil Code which provide in part as follows:

ART. 32. Any public officer or employee, or any private individual, who directly or
indirectly obstructs, defeats, violates or in any manner impedes or impairs any of
the following rights and liberties of another person shall be liable to the latter for
damages.

xxx xxx xxx

(9) The rights to be secure in one's person, house, papers, and effects against
unreasonable searches and seizures.

xxx xxx xxx

The indemnity shall include moral damages. Exemplary damages may also be
adjudicated.

ART. 2219. Moral damages may be recovered in the following and analogous
cases:

xxx xxx xxx

(6) Illegal search;

xxx xxx xxx

(1) Acts and action referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.

Pursuant to the foregoing provisions, a person whose constitutional rights have been violated or
impaired is entitled to actual and moral damages from the public officer or employee responsible
therefor. In addition, exemplary damages may also be awarded. In the instant case, plaintiff-
appellant Delfin Lim claimed that he purchased the motor launch from Jikil Taha in
consideration of P3,000.00, having given P2,000.00 as advanced payment; that since or seizure
on July 6, 1962 the motor launch had been moored at Balabac Bay and because of exposure to
the elements it has become worthless at the time of the filing of the present action; that because
of the illegality of the seizure of the motor launch, he suffered moral damages in the sum of
P1,000.00; and that because of the violation of their constitutional rights they were constrained
to engage the services of a lawyer whom they have paid P1,500.00 for attorney's fees. We find
these claims of Delfin Lim amply supported by the evidence and therefore should be awarded
the sum of P3,000.00 as actual damages; P1,000.00 as moral damages and P750.00 for
attorney's fees. However, with respect co plaintiff Jikil Taha, he is not entitled to recover any
damage which he alleged he had suffered from the unlawful seizure of the motor launch
inasmuch as he had already transferred the ownership and possession of the motor launch to
Delfin Lim at the time it was seized and therefore, he has no legal standing to question the
validity of the seizure. Well settled is the rule that the legality of a seizure can be contested only
by the party whose rights have been impaired thereby, and that the objection to an unlawful
search and seizure is purely personal and cannot be availed of by third parties. 17 Consequently,
one who is not the owner, lessee, or lawful occupant of the premise searched cannot raise the
question of validity of the search and seizure. 18 Jikil Taha is not without recourse though. He
can still collect from his co-plaintiff, Delfin Lim the unpaid balance of P1,000.00.

Defendant-appellee Fiscal Ponce de Leon wanted to wash his hands of the incident by claiming
that "he was in good faith, without malice and without the slightest intention of inflicting injury to
plaintiff-appellant, Jikil Taha" 19 when he ordered the seizure of the motor launch. We are not
prepared to sustain his defense of good faith. To be liable under Article 32 of the New Civil
Code it is enough that there was a violation of the constitutional rights of the plaintiffs and it is
not required that defendants should have acted with malice or bad faith. Dr. Jorge Bocobo,
Chairman of the Code Commission, gave the following reasons during the public hearings of the
Joint Senate and House Committees, why good faith on the part of the public officer or
employee is immaterial. Thus:

DEAN BOCOBO. Article 32, regarding individual rights; Attorney Cirilo Paredes
proposes that Article 32 be so amended as to make a public official liable for
violation of another person's constitutional rights only if the public official acted
maliciously or in bad faith. The Code Commission opposes this suggestion for
these reasons:

The very nature of Article 32 is that the wrong may be civil or criminal. It is not
necessary therefore that there should be malice or bad faith. To make such a
requisite would defeat the main purpose of Article 32 which is the effective
protection of individual rights. Public officials in the past have abused their
powers on the pretext of justifiable motives or good faith in the performance of
their duties. Precisely, the object of the Article is to put an end to official abuse by
the plea of good faith. In the United States this remedy is in he nature of a tort.

Mr. Chairman, this article is firmly one of the fundamental articles introduced in
the New Civil Code to implement democracy. There is no real democracy if a
public official is abusing, and we made the article so strong and so
comprehensive that it concludes an abuse of individual rights even if done in
good faith, that official is liable. As a matter of fact, we know that there are very
few public officials who openly and definitely abuse the individual rights of the
citizens. In most cases, the abuse is justified on a plea of desire to enforce the
law to comply with one's duty. And so, if we should limit the scope of this article,
that would practically nullify the object of the article. Precisely, the opening object
of the article is to put an end to abuses which are justified by a plea of good faith,
which is in most cases the plea of officials abusing individual rights. 20

But defendant-appellee Orlando Maddela cannot be held accountable because he impounded

the motor launch upon the order of his superior officer. While a subordinate officer may be held
liable for executing unlawful orders of his superior officer, there are certain circumstances which
would warrant Maddela's exculpation from liability. The records show that after Fiscal Ponce de
Leon made his first request to the Provincial Commander on June 15, 1962 Maddela was
reluctant to impound the motor launch despite repeated orders from his superior officer. 21 It was
only after he was furnished a copy of the reply of Fiscal Ponce de Leon, dated June 26, 1962, to
the letter of the Provincial Commander, justifying the necessity of the seizure of the motor
launch on the ground that the subsequent sale of the launch to Delfin Lim could not prevent the
court from taking custody of the same, 22 that he impounded the motor launch on July 6, 1962.
With said letter coming from the legal officer of the province, Maddela was led to believe that
there was a legal basis and authority to impound the launch. Then came the order of his
superior officer to explain for the delay in the seizure of the motor launch. 23 Faced with a
possible disciplinary action from his Commander, Maddela was left with no alternative but to
seize the vessel. In the light of the above circumstances. We are not disposed to hold Maddela
answerable for damages.

IN VIEW OF THE FOREGOING, the decision appealed from is hereby reversed and another
one entered declaring the seizure illegal and ordering defendant-appellee Fiscal Francisco
Ponce de Leon to pay to plaintiff-appellant Delfin Lim the sum of P3,000.00 as actual damages,
plus P1,000.00 moral damages, and, in addition, P750.00 for attorney's fees. With costs against
defendant-appellee Fiscal Ponce de Leon.

SO ORDERED.

Castro (Chairman), Teehankee, Makasiar and Esguerra, JJ., concur.

Muñoz Palma, J, is on leave.

THIRD DIVISION

[G.R. No. 160422 : July 05, 2010]

MANILA ELECTRIC COMPANY (MERALCO), PETITIONER, VS. SPS. EDITO AND

FELICIDAD CHUA, AND JOSEFINA PAQUEO, RESPONDENTS.

DECISION

BRION, J.:

Manila Electric Company (MERALCO or petitioner) assails in this petition for review on
certiorari[1] the decision of the Court of Appeals (CA or appellate court), dated October 20, 2003,
[2]
in CA-G.R. SP No. 77034, affirming with modification the March 26, 2003 decision of the
Regional Trial Court (RTC) of Quezon City, Branch 82, in Civil Case No. Q-97-30503. [3]

The affirmed RTC decision ordered the petitioner to restore the electric power connection of
spouses Edito and Felicidad Chua (Chuas) at their residence, and awarded P300,000.00 as
moral damages. The CA affirmed the restoration of electric power connection but reduced the
awarded moral damages to P100,000.00.

BACKGROUND FACTS

The facts, as found by the RTC and affirmed by the CA, are summarized below.

MERALCO is a utility company engaged in the business of sale and distribution of electricity
within its franchise area. The Chuas are the beneficial users at their residence of electric service
provided by MERALCO, registered under the name of respondent Josefina Paqueo with
Account Number 05091-4038-14. MERALCO installed an electric meter with number Co. No. 33
SPN 46170 in front of the Chuas' home to record the Chuas' electric consumption. The meter
was in a concrete post outside the Chuas' perimeter fence.[4]

From June 11, 1996 to September 11, 1996, the Chuas consumed between 231 to 269 kilowatt
hours of electricity per month, with their corresponding monthly electric bills ranging from
P747.84 to P887.27. In October 1996, the Chuas were surprised to receive an electricity bill for
the amount of P4,906.87 for the period of September 11 to October 11, 1996 (September 1996
bill). According to this bill, they consumed 1,297 kilowatt hours for this one month period, or
approximately 553% higher than their previous monthly bill.[5] Alarmed by the significant
increase, Florence Chua (the Chuas' daughter) went to the MERALCO office to question the bill.
Florence paid the bill under protest to avoid disconnection.

On October 31, 1996, MERALCO responded to the Chuas' complaint by sending a

representative, Francisco Jose Albano, to their residence to inspect the electric meter. Albano
filed a Meter/Socket Inspection Report stating that he replaced the old meter [6] and installed a
new one[7] because the old meter's terminal seal was missing, the cover seal was broken, and
the meter had a broken sealing wire.[8]

The Chuas were billed based on the new meter and its readings from October 11, 1996 to
January 24, 1997, with an average usage ranging from 227 to 254 kilowatt hours, with
corresponding monthly electric bills ranging from P700.00 to P800.00.[9]

On January 3, 1997, the Chuas received a letter from MERALCO, stating that:

Our Inspection Office has referred to us for appropriate action the following finding(s) of our
service inspectors and meter laboratory technicians after your metering installation at the above
address was inspected on OCTOBER 31, 1996:

1. THE TERMINAL SEAL WAS MISSING.

2. THE SEALING WIRE OF THE ERB AND MERALCO LEAD COVER SEALS
WAS CUT.

3. THE 1000TH, 100TH AND 10TH DIAL POINTERS OF THE REGISTER WERE OUT
OF ALIGNMENT.

Given the above condition(s) and in accordance with the rules implementing Republic
Act 7832, you are billed the amount of P183,983.66 (rate charge of P179,353.26 and
energy tax of P4,630.40). Furthermore, the company is now allowed to collect Surcharges as a
penalty for all Violation of Contract cases apprehended effective January 17, 1995, which would
be collected later.

This is a formal demand upon you to pay the above stated amount at this office within ten days
from your receipt of this letter; if no settlement is made within the given grace period, your
service shall be disconnected and the necessary criminal or civil action initiated against you for
violation of Republic Act 7832.[10]

The Chuas refused to pay as demanded. On January 24, 1997, MERALCO returned to their
residence and removed Meter No. 33RZN80082, thereby disconnecting their electric supply.

On February 5, 1997, MERALCO sent the Chuas another demand letter stating that it had re-
evaluated the Chuas' case based on field findings and the documents they furnished, and
reduced the amount they had to pay from P183,983.66 to P71,737.49. [11]

On March 11, 1997, the Chuas filed a complaint for mandamus and damages, [12] praying that
they be granted a preliminary mandatory injunction to compel MERALCO to restore the
electrical connection to their residence. The Chuas also asked the court to award them moral
and exemplary damages, attorney's fees, and litigation expenses.

After trial, the RTC rendered its decision, whose dispositive portion states:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and
against the defendant ordering the latter as follows:

1) To restore to plaintiffs at their residence at #9 Hukvet St., Area I, Veterans Village, Quezon
City their electric power connection and/or services;
2) To pay the plaintiffs the sum of P300,000.00 as and by way of moral damages;
3) To pay the plaintiffs the sum of P30,000.00 as and by way of attorney's fees;
4) To pay the cost of suit.

SO ORDERED.[13]

MERALCO appealed the trial court's decision to the CA.

The CA affirmed the RTC decision.[14] The appellate court confirmed that the meter had been
tampered, but found that the tampering was mitigated by the Chuas' voluntary act of going to
MERALCO to report the possible defect in their meter. The voluntary act, according to the court,
constituted good faith as MERALCO would not have discovered the defects in the meter if the
Chuas had not reported the matter.

The appellate court also noted that while Section 6 of Republic Act No. 7832 (RA 7832), or the
"Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994," allows
MERALCO to immediately disconnect electric service, it may only do so when the owner of the
house has either been caught in flagrante delicto in any of the acts constituting prima facie
evidence of illegal use, or has been discovered a second time in any of the enumerated
circumstances. In the Chuas' case, they were not caught in flagrante delicto as they in fact
reported the defect in their meter. This was the first instance, too, that MERALCO had
discovered any tampering in the Chuas' meter. Under these circumstances, the appellate court
concluded that MERALCO had no legal right to disconnect the Chuas' electrical service.

While upholding the RTC's factual findings, the CA modified the RTC decision by reducing the
awarded moral damages from P300,000.00 to P100,000.00.

THE PETITION

MERALCO filed the present petition, raising the following arguments:[15]

 I. The CA erred in ruling that MERALCO had no right to disconnect the electric service of
the Chuas.

II. MERALCO is entitled to collect the differential billing of P183,983.66.

III. Even assuming that MERALCO had no right to disconnect the Chuas' electric service,
they are nevertheless not entitled to moral damages in the absence of evidence of
damages they sustained.

MERALCO points out that it did not immediately disconnect electric service to the Chuas. It first
sent several demand letters explaining the meter tampering and demanding payment for the
billed differential in the sum of P183,983.66. It was only after the Chuas refused to pay the
differential billing that MERALCO disconnected their electric service.

Additionally, MERALCO contends that based on Section 9 of RA 7832, no writs of injunction

shall be issued by any court against any private electric utility exercising its right and authority to
disconnect electric service unless there is prima facie evidence that the disconnection was
made with evident bad faith or grave abuse of authority. Since the Chuas failed to prove
MERALCO's evident bad faith in disconnecting their electric service, they are not entitled to an
injunctive writ.

MERALCO further posits that the deliberate manipulation of the dial pointers prevented the full
and correct billing of the electric energy actually delivered to and consumed by the Chuas. The
differential billing represents the monetary equivalent of the electricity used by the Chuas but
not registered by the meter.

Lastly, MERALCO maintains that even if it had no right to disconnect the Chuas' electric service,
the Chuas nevertheless are not entitled to moral damages. The Chuas did not sustain damages
after the disconnection since they sourced their electric supply from another electric meter
within the premises.

THE COURT'S RULING

We deny the petition for lack of merit.

Prima facie evidence of
illegal use of electricity

MERALCO claims that the meter tampering in this case stands undisputed in the evidence on
record. Under RA 7832, the law presumes that the person benefited by the unlawful use of
electricity is the perpetrator of the meter tampering. Thus, no need arose for MERALCO to
prove that the Chuas actually tampered with their meter; pursuant to Section 4 of RA 7832,
Meralco had the right to immediately disconnect the Chuas' electric service.

We find MERALCO's position legally incorrect. Essential to the resolution of this issue is
Section 4 of RA 7832, which reads:

SEC. 4. Prima Facie Evidence. -

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

(iv) The presence of a tampered, broken, or fake seal on the meter, or mutilated, altered, or
tampered meter recording chart or graph or computerized chart, graph, or log.

x x x

(viii) x x x Provided, however, That the discovery of any of the foregoing circumstances, in order
to constitute prima facie evidence, must be personally witnessed and attested to by an
officer of the law or a duly authorized representative of the Energy Regulatory Board
(ERB).

To reiterate, the discovery of a tampered, broken, or fake seal on the meter shall only constitute
prima facie evidence of illegal use of electricity by the person who benefits from the illegal use if
such discovery is personally witnessed and attested to by an officer of the law or a duly
authorized representative of the Energy Regulatory Board (ERB). With such prima facie
evidence, MERALCO is within its rights to immediately disconnect the electric service of the
consumer after due notice.

Section 1, Rule III of the Rules and Regulations Implementing RA 7832 (IRR) defines an officer
of the law as one "who, by direct supervision of law or by election or by appointment by
competent authority, is charged with the maintenance of public order and the protection and
security of life and property, such as barangay captain, barangay chairman, barangay
councilman, barangay leader, officer or member of Barangay Community Brigades, barangay
policeman, PNP policeman, municipal councilor, municipal mayor and provincial fiscal."

The importance of having an authorized government representative present during an

inspection was highlighted during the Senate deliberations on RA 7832 when Senator John H.
Osmeña, the law's author, explained:

Mr. President, if a utility like MERALCO finds certain circumstances or situations which are
listed in Section 2 of this bill to be prima facie evidence, I think they should be prudent
enough to bring in competent authority, either the police or the NBI, to verify or
substantiate their finding. If they were to summarily proceed to disconnect on the basis of
their findings and later on there would be a court case and the customer or the user would deny
the existence of what is listed in Section 2, then they could be in a lot of trouble.[16]

We emphasized the significance of this requirement in Sps. Quisumbing v. MERALCO,[17] when

we said:

The presence of government agents who may authorize immediate disconnections go

into the essence of due process. Indeed, we cannot allow respondent to act virtually as
prosecutor and judge in imposing the penalty of disconnection due to alleged meter tampering.
That would not sit well in a democratic country. After all, Meralco is a monopoly that derives its
power from the government. Clothing it with unilateral authority to disconnect would be
equivalent to giving it a license to tyrannize its hapless customers.[18]

After thoroughly examining the records of this case, we find no proof that MERALCO ever
complied with the required presence of an "officer of the law." In his testimony, Albano never
mentioned that he was accompanied by an authorized government representative during the
inspection. As evident from the Meter/Socket Inspection Report, only Albano inspected the
Chuas' electric meter; no evidence shows that he was accompanied by anyone else. Most
telling of all, MERALCO does not even allege in its submissions with this Court that an ERB
representative or an officer of the law ever accompanied its representative during the inspection
of the Chuas' electric meter.

We note, too, that while MERALCO claimed in its Answer that an ERB representative was
present and witnessed the testing of the Chuas' electric meter at the MERALCO laboratory, [19] it
never once identified this ERB representative. MERALCO did not allege in either the present
petition or in the Memorandum it filed with this Court that an ERB representative witnessed the
laboratory testing of the Chuas' electric meter. The Meter Verification Report, [20] the document
that contains the results of the laboratory testing, was also not signed by either an ERB
representative or by any officer of the law.

For lack of any evidence showing that a government representative personally witnessed and
attested to the discovery of the Chuas' tampered electric meter, no supporting prima facie
evidence can be invoked for the immediate disconnection of the Chuas' electric service
pursuant to Section 4 of RA 7832.

Consumer not the proper witness to

inspection

Rule III, Section 1 of the IRR provides: "In order to constitute prima facie evidence, the
discovery of any of the circumstances enumerated in Section 1 hereof, must be personally
witnessed and attested to by the consumer concerned or a duly authorized ERB
representative or any officer of the law, as the case may be."

We hold the view, however, that the inclusion of the phrase "by the consumer
concerned" in the IRR is invalid because it is in excess of what the law being
implemented provides. As RA 7832 stands, only the presence of an authorized government
agent, either an officer of the law or an authorized representative of the ERB, during the
MERALCO inspection would allow any of the circumstances enumerated in Section 4 of RA
7832 to be considered prima facie evidence of illegal use of electricity by the benefited party.
The law does not include the consumer or the consumer's representative in this enumeration.

In legal contemplation, the ERB's inclusion of the phrase "by the consumer concerned" in Rule
III, Section 1 of the IRR expanded the clear wording of the law and violated the recognized
principle that an administrative agency's rule-making power is confined to filling in the gaps and
the necessary details in carrying into effect the law as enacted; rule-making cannot extend,
amend, or expand statutory requirements or embrace matters not covered by the law being
implemented. Administrative regulations must always be in harmony with the provisions of the
law because any resulting discrepancy between the two will always be resolved in favor of the
basic law.[21] In the present case, the consumer cannot in any way be considered to be in the
same classification as the named government representatives so that his or her presence can
be a substitute for the presence of these representatives.

For this reason, even if Florence Chua, the Chuas' daughter, acknowledged that she witnessed
Albano's examination of the electric meter outside their house so that she signed the
Meter/Socket Inspection Report, her presence did not characterize the discovered broken meter
seal as prima facie evidence of illegal use of electricity justifying immediate disconnection.

Legal requirements for authority

to disconnect electricity

Section 6 of RA 7832 provides another mandatory requirement before MERALCO can

immediately disconnect a consumer's electric service. The provision reads:

SEC. 6. Disconnection of Electric Service. - The private electric utility or rural electric
cooperative concerned shall have the right and authority to disconnect immediately the electric
service after serving the written notice or warning to the effect, without the need of a court or
administrative order, and deny restoration of the same, when the owner of the house or
establishment concerned or someone acting in his behalf shall have been caught en
flagrante delicto doing any of the acts enumerated in section 4 (a) hereof, or when any of
the circumstances so enumerated shall have been discovered for the second time: Provided,
That in the second case, a written notice or warning shall have been issued upon the first
discovery: Provided, further, That the electric service shall not be immediately disconnected or
shall be immediately restored upon the deposit of the amount representing the differential billing
by the person denied the service, with the private electric utility or the rural cooperative
concerned or with the competent court as the case may be: Provided, furthermore, That if the
court finds that illegal use of electricity has not been committed by the same person, the amount
deposited shall be credited against future billings, with legal interest thereon chargeable against
the private utility or rural electric cooperative, and the utility or cooperative shall be made to
immediately pay such person double the value of the payment or deposit with legal interest,
which amount shall likewise be creditable against immediate future billings, without prejudice to
any criminal, civil or administrative action that such person may be entitled to file under existing
laws, rules and regulations: Provided, finally, That if the court finds the same person guilty of
such illegal use of electricity, he shall, upon final judgment, be made to pay the electric utility or
the rural electric cooperative concerned double the value of the estimated electricity illegally
used which is referred to in this section as differential billing.

In other words, MERALCO is authorized to immediately disconnect the electric service of its
consumers without the need of a court or administrative order when: (a) the consumer, or
someone acting in his behalf, is caught in flagrante delicto in any of the acts enumerated in
Section 4 of RA 7832; or (b) when any of the circumstances constituting prima facie evidence of
illegal use of electricity is discovered for the second time.

In flagrante delicto means "[i]n the very act of committing the crime." [22] To be caught in flagrante
delicto, therefore, necessarily implies positive identification by an eyewitness or eyewitnesses to
the act of tampering so that there is "direct evidence" of culpability, or "that which proves the
fact in dispute without the aid of any inference or presumption." [23]

In the present case, however, MERALCO presented no proof that it ever caught the Chuas, or
anyone acting in the Chuas' behalf, in the act of tampering with their electric meter. As correctly
observed by the CA, the Chuas could not have been caught in flagrante delicto committing the
tampering since in the first place, they were the ones who reported the defect in their meter.
Moreover, the presence of a broken cover seal, broken sealing wire, and a missing terminal
seal, is not enough to declare the Chuas in flagrante delicto tampering with the electric meter.
As the basic complaint for mandamus alleged, without any serious refutation from the petitioner,
the electric meter is in a concrete post outside of the Chuas' perimeter fence; hence, in a
location accessible to the public. We note, too, that MERALCO did not present any evidence
that it caught the Chuas committing any of the acts constituting prima facie evidence of illegal
use of electricity for the second time.

In view of MERALCO's failure to comply with both Section 4 and Section 6 of RA 7832,
MERALCO obviously had no authority to immediately disconnect the Chuas' electric service.

Writ of Mandatory Injunction

On the validity of the injunctive writ the lower court issued in the Chuas' favor, MERALCO
submits that the Chuas were not entitled to an injunctive writ since it had a right, under the law,
to automatically disconnect the latter's electric service. Furthermore, Section 9 of RA 7832
prohibits courts from issuing injunctions or restraining orders against electric utilities from
disconnecting service unless the consumer proves that the electric utility acted with evident bad
faith in disconnecting the electric service. This cited provision states:

Section 9. Restriction on the Issuance of Restraining Orders or Writs of Injunction. - No writ of

injunction or restraining order shall be issued by any court against any private electric utility or
rural electric cooperative exercising the right and authority to disconnect electric service as
provided in this Act, unless there is prima facie evidence that the disconnection was made with
evident bad faith or grave abuse of authority.

We have fully discussed above why MERALCO was not in the position under RA 7832 to
immediately disconnect the Chuas' electric service. We add that while electricity is property [24]
whose enjoyment, as a
general rule, the owner may extend or deny to others, [25] electricity is not an ordinary kind of
property that a service provider may grant or withhold to consumers at will. Electricity is a basic
necessity whose generation and distribution is imbued with public interest, and its provider is a
public utility subject to strict regulation by the State in the exercise of police power. [26] In view of
the serious consequences resulting from immediate disconnection of electric service, the law
provides strict requisites that MERALCO must follow before it can be granted authority to
undertake instant disconnection of electric service due to its consumers. In view of MERALCO's
dominance over its market and its customers and the latter's relatively weak bargaining position
as against MERALCO, and in view too of the serious consequences and hardships a customer
stands to suffer upon service disconnection, MERALCO's failure to strictly observe these legal
requirements can be equated to the bad faith or abuse of right [27] that the law speaks of.

Under the circumstances, we cannot but conclude that MERALCO abused its superior and
dominant position as well as the authority granted to it by law as a service provider when it
persisted in disconnecting the Chuas' electric service. Hence, the general prohibition against the
issuance of a restraining order or an injunction under Section 9 of RA 7832 cannot apply.
Rather, what must prevail is the exception: an injunction can issue when a disconnection has
been attended by bad faith or grave abuse of authority.

As to whether the Chuas are entitled to a writ of mandatory injunction, we rule in the affirmative.
An injunctive writ issues only upon a showing that: a) the applicant possesses a clear and
unmistakable right; b) there is a material and substantial invasion of such right; and c) there is
urgent and permanent necessity for an injunctive writ to prevent serious damage. [28]

In the present case, the Chuas have established that they are paying MERALCO customers. In
the absence of the prima facie evidence required by Section 4 and by the requirements of
Section 6 of RA 7832 that the Chuas tampered with their electric meter, and in light as well of
the merits of the Chuas' case as discussed below, the Chuas have an unmistakable right to be
provided with continuous power supply - a right MERALCO obviously invaded when it cut off the
Chuas' electric service. Electricity being what it is and has been in modern day living, an urgent
and permanent need exists to prevent MERALCO from cutting off the Chuas' electric service
under the circumstances that gave rise to the present dispute. Accordingly, we uphold the RTC
and CA decisions ordering MERALCO to immediately restore the Chuas' electric service.

Differential billing

MERALCO further asserts that the Chuas should be made to pay the differential billing for the
electricity that they actually consumed but which was not reflected on their electric bills due to
the tampered electric meter. Since the prima facie presumption afforded by Section 4 of RA
7832 does not apply, it falls upon MERALCO to first prove that the Chuas actually manipulated
the dial pointers on their meter before it can hold them accountable for the differential billing.
The circumstances discussed below, however, cast serious doubt on the allegation and
assumption that the Chuas ever tampered with their electric meter.

First, we stress once again that the Chuas themselves requested MERALCO to inspect their
meter for possible defects after they received their unusually high September 1996 bill; the
Chuas themselves were instrumental in discovering the tampered condition of their electric
meter. Had the Chuas been guilty of tampering as MERALCO assumed, they would not have
drawn attention to themselves by reporting the problem with their meter; as the beneficial users
of the electric service, they would have been MERALCO's main suspects once the tampering
came to light. We thus find it highly illogical for the Chuas to be guilty of actual tampering given
their actions on record on the discovery of the tampered condition of their meter.

Second, we observe that based on the Chuas' billing record, no discernable difference exists
between the Chuas' electric bills before and after MERALCO had replaced their tampered
meter. The Chuas consumed between 231 to 269 kilowatt hours of electricity per month from
June 11, 1996 to September 11, 1996, with their corresponding monthly electric bills ranging
from P747.84 to P887.27. (Their long-term usage record is further reflected in the appropriate
footnoted table below.) The following usage record is undisputed after MERALCO installed a
new meter to replace the tampered one.

Date Kilowatt hours Amount Paid (pesos)

October 1996 1,297 4,906.87
November 227 781.86
December 228 806.19
January 1997 254 898.89
January 24, 1997 96 331.04

Tampering with the electric meter is committed by the consumer to prevent the meter from
registering the correct amount of electric consumed; thus, while using the same regular power
supply, they are billed for less than what they actually consumed. Tampering affects only the
registered usage as reflected in the electric meter, not the amount of electricity actually used,
assuming a more or less uniform monthly usage of electricity. [29] Stated otherwise, when an
electric meter is tampered, the recorded consumption is less than the electricity actually used.
Consequently, when a tampered electric meter is replaced, assuming the same amount of
monthly rate of usage, the new electric meter will register the increased use of electricity
that had previously been concealed by the tampered meter. [30]

If the Chuas had truly tampered with their electric meter, it stands to reason that after
MERALCO replaced the tampered electric meter with a new one, the Chuas' electric bills would
have gone up to reflect the electricity they were actually consuming. That the Chuas' monthly
electric consumption remained virtually unchanged even after the defective electric
meter had been replaced strongly disproves the contentions that the Chuas tampered
with their electric meter and that the Chuas' electric meter registered less than the
electricity they had actually "consumed."  Given the surrounding circumstance, the
sequence of events, and the electric meter readings, i.e., the exposed location of the Chuas'
electric meter, the long-term consumption record shown below, the unusual upward spike of the
meter reading in September 1996, the inspection and the replacement by a new electric meter,
and the continued readings consistent with the readings prior to the September 1996 spike, it
would not be surprising if the tampering of the seals came immediately before September 1996
and were made by parties other than the Chuas for their own reasons. To be sure, the Chuas
would not have tampered with their own meter to increase their meter reading.

Aside from the doubtful veracity of the allegation and assumption that the Chuas tampered with
their meter, we also consider that MERALCO did not provide any factual or legal basis for its
differential billing. Section 6 of RA 7832 supplies the manner by which a public utility can
compute the differential billing.

SEC. 6. Disconnection of Electric Service. - x x x

For purposes of this Act, "differential billing" shall refer to the amount to be charged to the
person concerned for the unbilled electricity illegally consumed by him as determined through
the use of methodologies which utilize, among other, as basis for determining the amount of
monthly electric consumption in kilowatt-hours to be billed either: (a) the highest recorded
monthly consumption within the five-year billing period preceding the time of the
discovery, (b) the estimated monthly consumption as per the report of load inspection
conducted during the time of the discovery, (c) the higher consumption between the average
consumption before or after the highest drastic drop in consumption within the five year billing
period preceding the discovery, (d) the highest recorded monthly consumption within four (4)
months after the time of discovery, or (e) the result of the ERB test during the time of discovery
and, as basis for determining the period to be recovered by the differential billing, either:
(1) the time when the electric service of the person concerned recorded an abrupt or abnormal
drop in consumption, or (2) when there was change in his service connection such as a
change in his service connection such as a change of meter, change of seal or reconnection, or
in the absence thereof, a maximum of sixty (60) billing months, up to the time of discovery:
Provided, however, That such period shall, in no case, be less than one (1) year preceding the
date of discovery of the illegal use of electricity.

According to MERALCO's witness, Enrique Katipunan, the period affected by the Chuas'
tampered electric meter was from August 17, 1992 to October 11, 1996 (affected period).[31] In
line with the fundamental rule that the burden of evidence lies with the person who asserts the
affirmative allegation,[32] MERALCO thus carried the burden to prove that the Chuas' electric
meter had been tampered with as early as August 17, 1992.
Significantly, while Katipunan stated that he "studied the Chuas' billing history to establish the
affected period from August 17, 1992 to October 11, 1996," [33] we find conspicuously absent
from his testimony any statement explaining how he established this four-year period as
the period affected by the tampered electric meter. Katipunan did not mention any abrupt or
abnormal drop in the Chuas' electric consumption, nor did he identify anything suspicious in the
Chuas' billing history that would lead him to conclude that the tampering began on August 17,
1992. All we have to rely on is Katipunan's assurance that the Chuas' electric meter existed in a
tampered state for this whole four-year period. This testimony, however, is uncorroborated by
evidence.

We are not unaware that MERALCO used the Chuas' September 1996 bill to compute the
differential billing - the same bill that the Chuas protested with Meralco for being extraordinarily
high. While Section 6 of RA 7832 does allow MERALCO to use the consumer's highest
recorded monthly consumption as the basis to compute the differential billing, still, Meralco -
after examining the Chuas' records for the past four years [34] - should have noticed that the
September 1996 bill was truly unusual. As seen from their billing history, while the Chuas
consistently consumed no more than 300 kilowatt hours of electricity every month for the past
four years, in their September bill, their usage dramatically spiked to 1,297 kilowatt hours, or a
difference of more than 400%. Even more telling is that after MERALCO replaced the alleged
tampered electric meter, the Chuas continued to consume the same amount of electricity
they had consumed prior to the September 1996 bill.

Given the strange circumstances surrounding the September 1996 bill, MERALCO should have
exercised prudence and employed another method to compute the Chuas' differential billing,
such as using the estimated monthly consumption based on a load inspection report. At the very
least, MERALCO should have exerted efforts to investigate the Chuas' complaint regarding the
sudden increase in their electric bill, especially considering the Chuas' claim that they had not
done anything new or used any additional appliances during the period covered by the
September 1996 bill.[35] We find it significant that nothing in the record suggests that MERALCO
even attempted to study, or even tried to explain, the sudden surge in the Chuas' September
1996 bill.

We highlight another important point to consider - that MERALCO sent the Chuas another letter
dated February 5, 1997, where it reduced the Chuas' differential billing from P183,983.66 to
P71,737.49.[36] While MERALCO admitted the existence of this letter in the proceedings before
the lower courts, it chose to ignore the existence of this February 5, 1997 letter in its
submissions with this Court; instead, in the Petition and Memorandum it filed with this Court,
MERALCO reverted to its demand that the Chuas pay the original differential billing of
P183,983.66. This unexplained and inconsistent MERALCO posture further strengthens our
doubts on to the legitimacy and correctness of the Chuas' differential billing.

MERALCO is duty bound to explain to its customers the basis for arriving at any given billing,
particularly in cases of unregistered consumptions. Otherwise, consumers will stand piteously at
the public utility's mercy.[37] Courts cannot and will not in any way blindly grant a public utility's
claim for differential billing if there is no sufficient evidence to prove entitlement. [38] As
MERALCO has failed to substantiate its claim for the differential billing, we rule that the Chuas
cannot be held to account for the billed amount.

MERALCO guilty of inexcusable negligence

Apart from lacking factual or legal basis, another reason for us not to hold the Chuas
accountable for MERALCO's differential billing is our previous ruling in Ridjo Tape & Chemical
Corp. v. CA,[39] where we said:

It has been held that notice of a defect need not be direct and express; it is enough that the
same had existed for such a length of time that it is reasonable to presume that it had
been detected, and the presence of a conspicuous defect which has existed for a
considerable length of time will create a presumption of constructive notice thereof.
Hence, MERALCO's failure to discover the defect, if any, considering the length of time,
amounts to inexcusable negligence. Furthermore, we need not belabor the point that as a
public utility, MERALCO has the obligation to discharge its functions with utmost care and
diligence.

Accordingly, we are left with no recourse but to conclude that this is a case of negligence on the
part of MERALCO for which it must bear the consequences. Its failure to make the necessary
repairs and replacement of the defective electric meter installed within the premises of
petitioners was obviously the proximate cause of the instant dispute between the parties.

Indeed, if an unusual electric consumption was not reflected in the statements of account of
petitioners, MERALCO, considering its technical knowledge and vast experience in providing
electric service, could have easily verified any possible error in the meter reading. In the
absence of such a mistake, the electric meters themselves should be inspected for possible
defects or breakdowns and forthwith repaired and, if necessary, replaced. x x x

The rationale behind this ruling is that public utilities should be put on notice, as a
deterrent, that if they completely disregard their duty of keeping their electric meters in
serviceable condition, they run the risk of forfeiting, by reason of their negligence,
amounts originally due from their customers. Certainly, we cannot sanction a situation
wherein the defects in the electric meter are allowed to continue indefinitely until suddenly the
public utilities concerned demand payment for the unrecorded electricity utilized when, in the
first place, they should have remedied the situation immediately. If we turn a blind eye on
MERALCO's omission, it may encourage negligence on the part of public utilities, to the
detriment of the consuming public.[40]

While Ridjo involved a defective meter, we have, on occasion, applied this same doctrine to
cases that involved allegations of meter tampering. In both Manila Electric Company v. Macro
Textile Mills, Corp.[41] and Davao Light & Power Co., Inc. v. Opena,[42] we faulted the electric
companies involved for not immediately inspecting the electric meters after they noted a sudden
drop in the consumer's registered electric consumption. Since, in both cases, the public utility
companies allowed several years to lapse before deciding to conduct an inspection of the
electric meters, we ruled that they were both negligent and consequently barred them from
collecting their claims of differential billing against the consumers.

With these rulings in mind, we held in MERALCO v. Wilcon Builders Supply, Inc.[43] that the use
of the words "defect" and "defective" in Ridjo does not restrict the inexcusable negligence
doctrine to cases of "mechanical defects" in installed electric meters. We said:

The Ridjo doctrine simply states that the public utility has the imperative duty to make a
reasonable and proper inspection of its apparatus and equipment to ensure that they do not
malfunction. Its failure to discover the defect, if any, considering the length of time, amounts to
inexcusable negligence; its failure to make the necessary repairs and replace the defective
electric meter installed within the consumer's premises limits the latter's liability. The use of the
words "defect" and "defective" in the above-cited case does not restrict the application of the
doctrine to cases of "mechanical defects" in the installed electric meters. A more plausible
interpretation is to apply the rule on negligence whether the defect is inherent,
intentional or unintentional, which therefore covers tampering, mechanical defects and
mistakes in the computation of the consumers' billing.[44]

The production and distribution of electricity is a highly technical business undertaking. In

conducting its operation, it is only logical for a public utility, such as MERALCO, to employ
mechanical devices and equipment for the orderly pursuit of its business. [45] MERALCO has the
imperative duty to make a reasonable and proper inspection of its apparatus and equipment to
ensure that they do not malfunction, and the due diligence to discover and repair defects
therein. Failure to perform such duties constitutes negligence.[46]

True, consumers who tamper with their electric meter do so surreptitiously to avoid being
detected by the public utility providing the service; hence, at first glance, it may seem
unreasonable for us to chastise MERALCO for not detecting the alleged tampering sooner.
However, what stands out in this case is the sheer length of time that the Chuas' electric meter
allegedly existed in a tampered state without being discovered by MERALCO if indeed the
electric meter had been defective since 1992. If we presume MERALCO's findings to be correct,
MERALCO discovered the broken seals in the Chuas' meter after more than four years (from
August 1992 to October 1996), and only because the Chuas reported a possible defect with
their electric meter to the public utility company.

Aside from the long period of time involved, we also underscore the fact that the alleged
tampering in this case did not require special training or knowledge to be detected. Certainly,
the missing terminal seal, the broken cover seal, and the broken sealing wire of the meter [47] are
visible to the naked eye and would have caught the attention of MERALCO's personnel in the
course of their meter readings.

As in Ridjo, we take judicial notice that during this long period of time, MERALCO's personnel
had the opportunity to inspect and examine the Chuas' electric meter for the purpose of
determining the monthly dues payable. Even if MERALCO did not conduct these regular
monthly inspections, we find it reasonable to expect that within this four-year period, MERALCO
would, at the very least, annually examine the electric meter to verify its condition and to
determine the accuracy of its readings if ordinary examination shows defects as in the case of
the Chuas' meter. That it failed to do so constitutes negligence on its part, and bars it from
collecting its claim for differential billing.

On the issue of moral damages

Article 32 of the Civil Code provides that moral damages are proper when the rights of
individuals, including the right against deprivation of property without due process of law, are
violated. Jurisprudence has established the following requisites for the award of moral
damages: (1) there is an injury - whether physical, mental, or psychological - clearly sustained
by the claimant; (2) there is a culpable act or omission factually established; (3) the wrongful act
or omission of the defendant is the proximate cause of the injury sustained by the claimant; and
(4) the award of damages is predicated on any of the cases stated in Article 2219 of the Civil
Code.[48]
Considering the manner MERALCO disconnected the Chuas' electric service, we find the award
of moral damages proper. Apart from the havoc wreaked on the Chuas' daily lives when
MERALCO abruptly and without legal basis cut off their electricity, the removal of the electric
meter also caused the Chuas extreme social humiliation and embarrassment as they were
subjected to speculations in their neighborhood of being "power thieves." As Mrs. Felicidad
Chua testified, she suffered sleepless nights and felt serious anxiety after the removal of their
electric meter came to the attention of the barangay. In fact, she even had to consult a doctor
for this anxiety.[49] Thus, even if the Chuas did subsequently obtain their electricity from another
source,[50] the damage to the Chuas' reputation and social standing had already been done.

However, moral damages, which are left largely to the sound discretion of the courts, should be
granted in reasonable amounts, considering the attendant facts and circumstances. [51] Moral
damages, though incapable of pecuniary estimation, are designed to compensate the claimant
for actual injury suffered and not to impose a penalty.[52] As prevailing jurisprudence[53] deems
the award of moral damages in the amount of P100,000.00 appropriate in cases where
MERALCO wrongfully disconnected electric service, we uphold the CA ruling, reducing the
moral damages awarded from P300,000.00 to P100,000.00.

WHEREFORE, the petition is hereby DENIED. The assailed decision of the Court of Appeals
dated October 20, 2003 in CA-G.R. SP No. 77034 is AFFIRMED in toto.

SO ORDERED.