G.R. No.

157314 July 29, 2005 particular, was delivered to petitioner bank at the close of banking hours on April 4, 1988 and, following normal
banking procedure, it
FAR EAST BANK AND TRUST COMPANY, NOW BANK OF THE PHILIPPINE (petitioner bank) had until the last clearing hour of the following day, or on April 5, 1988, to honor the check or
ISLANDS, Petitioners, vs. return it, if not funded. In disregard of this banking procedure and practice, however, petitioner bank hastily closed
THEMISTOCLES PACILAN, JR., Respondent. the respondent’s current account and dishonored his Check No. 2434886.

DECISION The respondent further alleged that prior to the closure of his current account, he had issued several other
postdated checks. The petitioner bank’s act of closing his current account allegedly preempted the deposits that
he intended to make to fund those checks. Further, the petitioner bank’s act exposed him to criminal prosecution
CALLEJO, SR., J.: for violation of Batas Pambansa Blg. 22.

Before the Court is the petition for review on certiorari filed by Far East Bank and Trust Company (now Bank of
According to the respondent, the indecent haste that attended the closure of his account was patently malicious
the Philippines Islands) seeking the reversal of the Decision1 dated August 30, 2002 of the Court of Appeals (CA)
and intended to embarrass him. He claimed that he is a Cashier of Prudential Bank and Trust Company, whose
in CA-G.R. CV No. 36627 which ordered it, together with its branch accountant, Roger Villadelgado, to pay branch office is located just across that of petitioner bank, and a prominent and respected leader both in the civic
respondent Themistocles Pacilan, Jr. 2 the total sum of ₱100,000.00 as moral and exemplary damages. The
and banking communities. The alleged malicious acts of petitioner bank besmirched the respondent’s reputation
assailed decision affirmed with modification that of the Regional Trial Court (RTC) of Negros Occidental, Bacolod
and caused him "social humiliation, wounded feelings, insurmountable worries and sleepless nights" entitling him
City, Branch 54, in Civil Case No. 4908. Likewise sought to be reversed and set aside is the Resolution dated
to an award of damages.
January 17, 2003 of the appellate court, denying petitioner bank’s motion for reconsideration.

In their answer, petitioner bank and Villadelgado maintained that the respondent’s current account was subject to
The case stemmed from the following undisputed facts:
petitioner bank’s Rules and Regulations Governing the Establishment and Operation of Regular Demand
Deposits which provide that "the Bank reserves the right to close an account if the depositor frequently draws
Respondent Pacilan opened a current account with petitioner bank’s Bacolod Branch on May 23, 1980. His checks against insufficient funds and/or uncollected deposits" and that "the Bank reserves the right at any time to
account was denominated as Current Account No. 53208 (0052-00407-4). The respondent had since then issued return checks of the depositor which are drawn against insufficient funds or for any reason."3
several postdated checks to different payees drawn against the said account. Sometime in March 1988, the
respondent issued Check No. 2434886 in the amount of ₱680.00 and the same was presented for payment to
They showed that the respondent had improperly and irregularly handled his current account. For example, in
petitioner bank on April 4, 1988.
1986, the respondent’s account was overdrawn 156 times, in 1987, 117 times and in 1988, 26 times. In all these
instances, the account was overdrawn due to the issuance of checks against insufficient funds. The respondent
Upon its presentment on the said date, Check No. 2434886 was dishonored by petitioner bank. The next day, or had also signed several checks with a different signature from the specimen on file for dubious reasons.
on April 5, 1988, the respondent deposited to his current account the amount of ₱800.00. The said amount was
accepted by petitioner bank; hence, increasing the balance of the respondent’s deposit to ₱1,051.43. When the respondent made the deposit on April 5, 1988, it was obviously to cover for issuances made the previous
day against an insufficiently funded account. When his Check No. 2434886 was presented for payment on April
Subsequently, when the respondent verified with petitioner bank about the dishonor of Check No. 2434866, he 4, 1988, he had already incurred an overdraft; hence, petitioner bank rightfully dishonored the same for
discovered that his current account was closed on the ground that it was "improperly handled." The records of insufficiency of funds.
petitioner bank disclosed that between the period of
March 30, 1988 and April 5, 1988, the respondent issued four checks, to wit: Check No. 2480416 for ₱6,000.00;
After due proceedings, the court a quo rendered judgment in favor of the respondent as it ordered the petitioner
Check No. 2480419 for ₱50.00; Check No. 2434880 for ₱680.00 and; Check No. 2434886 for ₱680.00, or a total
bank and Villadelgado, jointly and severally, to pay the respondent the amounts of ₱100,000.00 as moral damages
amount of ₱7,410.00. At the time, however, the respondent’s current account with petitioner bank only had a
and ₱50,000.00 as exemplary damages and costs of suit. In so ruling, the court a quo also cited petitioner bank’s
deposit of ₱6,981.43. Thus, the total amount of the checks presented for payment on April 4, 1988 exceeded the
rules and regulations which state that "a charge of ₱10.00 shall be levied against the depositor for any check that
balance of the respondent’s deposit in his account. For this reason, petitioner bank, through its branch accountant,
is taken up as a returned item due to ‘insufficiency of funds’ on the date of receipt from the clearing office even if
Villadelgado, closed the respondent’s current account effective the evening of April 4, 1988 as it then had an
said check is honored and/or covered by sufficient deposit the following banking day." The same rules and
overdraft of ₱428.57. As a consequence of the overdraft, Check No. 2434886 was dishonored.
regulations also provide that "a check returned for insufficiency of funds for any reason of similar import may be
subsequently recleared for one more time only, subject to the same charges."
On April 18, 1988, the respondent wrote to petitioner bank complaining that the closure of his account was
unjustified. When he did not receive a reply from petitioner bank, the respondent filed with the RTC of Negros
According to the court a quo, following these rules and regulations, the respondent, as depositor, had the right to
Occidental, Bacolod City, Branch 54, a complaint for damages against petitioner bank and Villadelgado. The case
put up sufficient funds for a check that was taken as a returned item for insufficient funds the day following the
was docketed as Civil Case No. 4908. The respondent, as complainant therein, alleged that the closure of his
receipt of said check from the clearing office. In fact, the said check could still be recleared for one more time. In
current account by petitioner bank was unjustified because on the first banking hour of April 5, 1988, he already previous instances, petitioner bank notified the respondent when he incurred an overdraft and he would then
deposited an amount sufficient to fund his checks. The respondent pointed out that Check No. 2434886, in
deposit sufficient funds the following day to cover the overdraft. Petitioner bank thus acted unjustifiably when it
immediately closed the respondent’s account on April 4, 1988 and deprived him of the opportunity to reclear his
check or deposit sufficient funds therefor the following day.
As a result of the closure of his current account, several of the respondent’s checks were subsequently
dishonored and because of this, the respondent was humiliated, embarrassed and lost his credit standing in the
business community. The court a quo further ratiocinated that even granting arguendo that petitioner bank had
the right to close the respondent’s account, the manner which attended the closure
constituted an abuse of the said right. Citing Article 19 of the Civil Code of the Philippines
which states that "[e]very 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" and Article 20 thereof which states that
"[e]very person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter
for the same," the court a quo adjudged petitioner bank of acting in bad faith. It held that, under the foregoing
circumstances, the respondent is entitled to an award of moral and exemplary damages.
The decretal portion of the court a quo’s decision reads:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:
1. Ordering the defendants [petitioner bank and Villadelgado], jointly and severally, to pay plaintiff [the respondent]
the sum of ₱100,000.00 as moral damages;
2. Ordering the defendants, jointly and severally, to pay plaintiff the sum of ₱50,000.00 as exemplary damages
plus costs and expenses of the suit; and
3. Dismissing [the] defendants’ counterclaim for lack of merit.
SO ORDERED.4
On appeal, the CA rendered the Decision dated August 30, 2002, affirming with modification the decision of the
court a quo.
The appellate court substantially affirmed the factual findings of the court a quo as it held that petitioner bank
unjustifiably closed the respondent’s account notwithstanding that its own rules and regulations
allow that a check returned for insufficiency of funds or any reason of similar import, may be subsequently
recleared for one more time, subject to standard charges. Like the court a quo, the appellate court observed that
in several instances in previous years, petitioner bank would inform the respondent when he incurred an overdraft
and allowed him to make a timely deposit to fund the checks that were initially dishonored for insufficiency of funds.
However, on April 4, 1988, petitioner bank immediately closed the respondent’s account without even notifying
him that he had incurred an overdraft. Even when they had already closed his account on April 4, 1988, petitioner
bank still accepted the deposit that the respondent made on April 5, 1988, supposedly to cover his checks.
Echoing the reasoning of the court a quo, the CA declared that even as it may be conceded that petitioner bank
had reserved the right to close an account for repeated overdrafts by the respondent, the exercise of that right
must never be despotic or arbitrary. That petitioner bank chose to close the account outright and return the check,
even after accepting a deposit sufficient to cover the said check, is contrary to its duty to handle the respondent’s
account with utmost fidelity. The exercise of the right is not absolute and good faith, at least, is required. The
manner by which petitioner bank closed the account of the respondent runs afoul of Article 19 of the Civil Code
which enjoins every person, in the exercise of his rights, "to give every one his due, and observe honesty and
good faith."
The CA concluded that petitioner bank’s precipitate and imprudent closure of the respondent’s account had caused
him, a respected officer of several civic and banking associations, serious anxiety and humiliation. It had, likewise,
tainted his credit standing. Consequently, the award of damages is warranted. The CA, however, reduced the
amount of damages awarded by the court a quo as it found the same to be excessive:
We, however, find excessive the amount of damages awarded by the RTC. In our view the reduced amount of
₱75,000.00 as moral damages and ₱25,000.00 as exemplary damages are in order. Awards for damages are not
meant to enrich the plaintiff-appellee [the respondent] at the expense of defendants-appellants [the petitioners],
but to obviate the moral suffering he has undergone. The award is aimed at the restoration, within limits possible,
of the status quo ante, and should be proportionate to the suffering inflicted.5
The dispositive portion of the assailed CA decision reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED, subject to the MODIFICATION that the award
of moral damages is reduced to ₱75,000.00 and the award of exemplary damages reduced to ₱25,000.00.
SO ORDERED.6
Petitioner bank sought the reconsideration of the said decision but in the assailed Resolution dated January 17,
2003, the appellate court denied its motion. Hence, the recourse to this Court.
Petitioner bank maintains that, in closing the account of the respondent in the evening of April 4, 1988, it acted in
good faith and in accordance with the rules and regulations governing the operation of a
regular demand deposit which reserves to the bank "the right to close an account if the depositor frequently draws
checks against insufficient funds and/or uncollected deposits." The same rules and regulations also provide that
"the depositor is not entitled, as a matter of right, to overdraw on this deposit and the bank reserves the right at
any time to return checks of the depositor which are drawn against insufficient funds or for any reason."
It cites the numerous instances that the respondent had overdrawn his account and those instances where he
deliberately signed checks using a signature different from the specimen on file. Based on these facts, petitioner
bank was constrained to close the respondent’s account for improper and irregular handling and returned his
Check No. 2434886 which was presented to the bank for payment on April 4, 1988.
Petitioner bank further posits that there is no law or rule which gives the respondent a legal right to make good his
check or to deposit the corresponding amount to cover said check within 24 hours after the same is dishonored or
returned by the bank for having been drawn against insufficient funds. It vigorously denies having violated Article
19 of the Civil Code as it insists that it acted in good faith and in accordance with the pertinent banking rules and
regulations.
The petition is impressed with merit.
A perusal of the respective decisions of the court a quo and the appellate court show that the award of damages
in the respondent’s favor was anchored mainly on Article 19 of the Civil Code which, quoted anew below, reads:
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.
The elements of abuse of rights are the following: (a) the existence of a legal right or duty; (b) which is exercised
in bad faith; and (c) for the sole intent of prejudicing or injuring another.7 Malice or bad faith is at the core of the
said provision.8 The law always presumes good faith and any person who seeks to be awarded damages due to
acts of another has the burden of proving that the latter acted in bad faith or with ill-motive.9 Good faith refers to
the state of the mind which is manifested by the acts of the individual concerned. It consists of the intention to
abstain from taking an unconscionable and unscrupulous advantage of another.10 Bad faith does not simply
connote bad judgment or simple negligence, dishonest purpose or some moral obliquity and conscious doing of a
wrong, a breach of known duty due to some motives or interest or ill-will that partakes of the nature of fraud.11
Malice connotes illwill or spite and speaks not in response to duty. It implies an intention to do ulterior and
unjustifiable harm. Malice is bad faith or bad motive.12
Undoubtedly, petitioner bank has the right to close the account of the respondent based on the following provisions
of its Rules and Regulations Governing the Establishment and Operation of Regular Demand Deposits:
10) The Bank reserves the right to close an account if the depositor frequently draws checks against insufficient
funds and/or uncollected deposits.
12) …
However, it is clearly understood that the depositor is not entitled, as a matter of right, to overdraw on this deposit
and the bank reserves the right at any time to return checks of the depositor which are drawn against insufficient
funds or for any other reason.
The facts, as found by the court a quo and the appellate court, do not establish that, in the exercise of this right,
petitioner bank committed an abuse thereof. Specifically, the second and third elements for abuse of rights are not
attendant in the present case. The evidence presented by petitioner bank negates the existence of bad faith or
malice on its part in closing the respondent’s account on April 4, 1988 because on the said date the same was
already overdrawn. The respondent issued four checks, all due on April 4, 1988, amounting to ₱7,410.00 when
the balance of his current account deposit was only ₱6,981.43. Thus, he incurred an overdraft of ₱428.57 which
resulted in the dishonor of his Check No. 2434886. Further, petitioner bank showed that in 1986, the current
account of the respondent was overdrawn 156 times due to his issuance of checks against insufficient funds.13 In
1987, the said account was overdrawn 117 times for the same
reason.14 Again, in 1988, 26 times.15 There were also several instances when the respondent issued checks
deliberately using a signature different from his specimen signature on file with petitioner bank.16 All these
circumstances taken together justified the petitioner bank’s closure of the respondent’s account on April 4, 1988
for "improper handling."
It is observed that nowhere under its rules and regulations is petitioner bank required to notify the respondent, or
any depositor for that matter, of the closure of the account for frequently drawing checks against insufficient funds.
No malice or bad faith could be imputed on petitioner bank for so acting since the records bear out that the
respondent had indeed been improperly and irregularly handling his account not just a few times but hundreds of
times. Under the circumstances, petitioner bank could not be faulted for exercising its right in accordance with the
express rules and regulations governing the current accounts of its depositors. Upon the opening of his account,
the respondent had agreed to be bound by these terms and conditions.
Neither the fact that petitioner bank accepted the deposit made by the respondent the day following the closure of
his account constitutes bad faith or malice on the part of petitioner bank. The same could be characterized as
simple negligence by its personnel. Said act, by itself, is not constitutive of bad faith.
The respondent had thus failed to discharge his burden of proving bad faith on the part of petitioner bank or that
it was motivated by ill-will or spite in closing his account on April 4, 1988 and in inadvertently accepting his deposit
on April 5, 1988.
Further, it has not been shown that these acts were done by petitioner bank with the sole intention of prejudicing
and injuring the respondent. It is conceded that the respondent may have suffered damages as a result of the
closure of his current account. However, there is a material distinction between damages and injury. The Court
had the occasion to explain the distinction between damages and injury in this wise:
… Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results from the injury; and
damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage
without injury in those instances in which the loss or harm was not the result of a violation of a legal duty. In such
cases, the consequences must be borne by the injured person alone, the law affords no remedy for damages
resulting from an act which does not amount to a legal injury or wrong. These situations are often called damnum
absque injuria
In other words, in order that a plaintiff may maintain an action for the injuries of which he complains, he must
establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff – a concurrence
of injury to the plaintiff and legal responsibility by the person causing it. The underlying basis for the award of tort
damages is the premise that the individual was injured in contemplation of law. Thus, there must first be a breach
of some duty and the imposition of liability for that breach before damages may be awarded; and the breach of
such duty should be the proximate cause of the injury.17
Whatever damages the respondent may have suffered as a consequence, e.g., dishonor of his other insufficiently
funded checks, would have to be borne by him alone. It was the respondent’s repeated improper and irregular
handling of his account which constrained petitioner bank to close the same in accordance with the rules and
regulations governing its depositors’ current accounts. The respondent’s case is clearly one of damnum absque
injuria.
WHEREFORE, the petition is GRANTED. The Decision dated August 30, 2002 and Resolution dated January 17,
2003 of the Court of Appeals in CA-G.R. CV No. 36627 are REVERSED AND SET ASIDE.
SO ORDERED.

G.R. No. 146322 December 6, 2006
ERNESTO RAMAS UYPITCHING and RAMAS UYPITCHING SONS, INC., petitioners, vs.
ERNESTO QUIAMCO, respondent.
DECISION
CORONA, J.:
Honeste vivere, non alterum laedere et jus suum cuique tribuere. To live virtuously, not to injure others and to give
everyone his due. These supreme norms of justice are the underlying principles of law and order in society. We
reaffirm them in this petition for review on certiorari assailing the July 26, 2000 decision1 and October 18, 2000
resolution of the Court of Appeals (CA) in CA-G.R. CV No. 47571.
In 1982, respondent Ernesto C. Quiamco was approached by Juan Davalan,2 Josefino Gabutero and Raul
Generoso to amicably settle the civil aspect of a criminal case for robbery3 filed by Quiamco against them. They
surrendered to him a red Honda XL-100 motorcycle and a photocopy of its certificate of registration. Respondent
asked for the original certificate of registration but the three accused never came to see him again. Meanwhile,
the motorcycle was parked in an open space inside respondent’s business establishment, AvescoAVNE
Enterprises, where it was visible and accessible to the public.
It turned out that, in October 1981, the motorcycle had been sold on installment basis to Gabutero by petitioner
Ramas Uypitching Sons, Inc., a family-owned corporation managed by petitioner Atty. Ernesto Ramas Uypitching.
To secure its payment, the motorcycle was mortgaged to petitioner corporation.4
When Gabutero could no longer pay the installments, Davalan assumed the obligation and continued the
payments. In September 1982, however, Davalan stopped paying the remaining installments and told petitioner
corporation’s collector, Wilfredo Veraño, that the motorcycle had allegedly been "taken by respondent’s men."
Nine years later, on January 26, 1991, petitioner Uypitching, accompanied by policemen,5
went to Avesco-AVNE
Enterprises to recover the motorcycle. The leader of the police team, P/Lt. Arturo Vendiola, talked to the clerk in
charge and asked for respondent. While P/Lt. Vendiola and the clerk were talking, petitioner Uypitching paced
back and forth inside the establishment uttering "Quiamco is a thief of a motorcycle."
On learning that respondent was not in Avesco-AVNE Enterprises, the policemen left to look for respondent in his
residence while petitioner Uypitching stayed in the establishment to take photographs of the motorcycle. Unable
to find respondent, the policemen went back to AvescoAVNE Enterprises and, on petitioner Uypitching’s instruction
and over the clerk’s objection, took the motorcycle.
On February 18, 1991, petitioner Uypitching filed a criminal complaint for qualified theft and/or violation of the Anti-
Fencing Law6 against respondent in the Office of the City Prosecutor of Dumaguete City.7 Respondent moved for
dismissal because the complaint did not charge an offense as he had neither stolen nor bought the motorcycle.
The Office of the City Prosecutor dismissed the complaint8 and denied petitioner Uypitching’s subsequent motion
for reconsideration.
Respondent filed an action for damages against petitioners in the RTC of Dumaguete City, Negros Oriental, Branch
37.9 He sought to hold the petitioners liable for the following: (1) unlawful taking of the motorcycle; (2) utterance
of a defamatory remark (that respondent was a thief) and (3) precipitate filing of a baseless and malicious
complaint. These acts humiliated and embarrassed the respondent and injured his reputation and integrity.
On July 30, 1994, the trial court rendered a decision10 finding that petitioner Uypitching was motivated with malice
and ill will when he called respondent a thief, took the motorcycle in an abusive manner and filed a baseless
complaint for qualified theft and/or violation of the AntiFencing Law. Petitioners’ acts were found to be contrary to
Articles 1911 and 2012 of the Civil Code. Hence, the trial court held petitioners liable to respondent for P500,000
moral damages, P200,000 exemplary damages and P50,000 attorney’s fees plus costs.
Petitioners appealed the RTC decision but the CA affirmed the trial court’s decision with modification, reducing the
award of moral and exemplary damages to P300,000 and P100,000, respectively.13 Petitioners sought
reconsideration but it was denied. Thus, this petition.
In their petition and memorandum, petitioners submit that the sole (allegedly) issue to be resolved here is whether
the filing of a complaint for qualified theft and/or violation of the AntiFencing Law in the Office of the City Prosecutor
warranted the award of moral damages, exemplary damages, attorney’s fees and costs in favor of respondent.
Petitioners’ suggestion is misleading. They were held liable for damages not only for instituting a groundless
complaint against respondent but also for making a slanderous remark and for taking the motorcycle from
respondent’s establishment in an abusive manner.
Correctness of the Findings of the RTC and CA
As they never questioned the findings of the RTC and CA that malice and ill will attended not only the public
imputation of a crime to respondent14 but also the taking of the motorcycle, petitioners were deemed to have
accepted the correctness of such findings. This alone was sufficient to hold petitioners liable for damages to
respondent.
Nevertheless, to address petitioners’ concern, we also find that the trial and appellate courts correctly ruled that
the filing of the complaint was tainted with malice and bad faith. Petitioners themselves in fact described their
action as a "precipitate act."15 Petitioners were bent on portraying respondent as a thief. In this connection, we
quote with approval the following findings of the RTC, as adopted by the CA:
x x x There was malice or ill-will [in filing the complaint before the City Prosecutor’s Office] because Atty.
Ernesto Ramas Uypitching knew or ought to have known as he is a lawyer, that there was no probable
cause at all for filing a criminal complaint for qualified theft and fencing activity against [respondent]. Atty.
Uypitching had no personal knowledge that [respondent] stole the motorcycle in question. He was merely
told by his bill collector ([i.e.] the bill collector of Ramas Uypitching Sons, Inc.)[,] Wilfredo Veraño[,] that
Juan Dabalan will [no longer] pay the remaining installment(s) for the motorcycle because the motorcycle
was taken by the men of [respondent]. It must be noted that the term used by Wilfredo Veraño in informing
Atty. Ernesto Ramas Uypitching of the refusal of Juan Dabalan to pay for the remaining installment was
[‘]taken[’], not [‘]unlawfully taken[’] or ‘stolen.’ Yet, despite the double hearsay, Atty. Ernesto Ramas
Uypitching not only executed the [complaint-affidavit] wherein he named [respondent] as ‘the suspect’ of
the stolen motorcycle but also charged [respondent] of ‘qualified theft and fencing activity’ before the City
[Prosecutor’s] Office of Dumaguete. The absence of probable cause necessarily signifies the presence
 of malice. What is deplorable in all these is that Juan Dabalan, the owner of the motorcycle, did not
accuse [respondent] or the latter’s men of stealing the motorcycle[,] much less bother[ed] to file a case
for qualified theft before the authorities. That Atty.
Uypitching’s act in charging [respondent] with qualified theft and fencing activity is tainted with malice is
also shown by his answer to the question of Cupid Gonzaga16 [during one of their conversations] - "why
should you still file a complaint? You have already recovered the motorcycle…"[:] "Aron motagam ang
kawatan ug motor." ("To teach a lesson to the thief of motorcycle.")17
Moreover, the existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact of the trial court,
when affirmed by the appellate court, are conclusive on this Court. We see no compelling reason to reverse the
findings of the RTC and the CA.
Petitioners Abused Their Right of Recovery as Mortgagee(s)
Petitioners claim that they should not be held liable for petitioner corporation’s exercise of its right as seller-
mortgagee to recover the mortgaged vehicle preliminary to the enforcement of its right to foreclose on the
mortgage in case of default. They are clearly mistaken.
True, a mortgagee may take steps to recover the mortgaged property to enable it to enforce or protect its
foreclosure right thereon. There is, however, a well-defined procedure for the recovery of possession of mortgaged
property: if a mortgagee is unable to obtain possession of a mortgaged property for its sale on foreclosure, he
must bring a civil action either to recover such possession as a preliminary step to the sale, or to obtain judicial
foreclosure.18
Petitioner corporation failed to bring the proper civil action necessary to acquire legal possession of the motorcycle.
Instead, petitioner Uypitching descended on respondent’s establishment with his policemen and ordered the
seizure of the motorcycle without a search warrant or court order. Worse, in the course of the illegal seizure of the
motorcycle, petitioner Uypitching even mouthed a slanderous statement.
No doubt, petitioner corporation, acting through its co-petitioner Uypitching, blatantly disregarded the lawful
procedure for the enforcement of its right, to the prejudice of respondent. Petitioners’ acts violated the law as well
as public morals, and transgressed the proper norms of human relations.
The basic principle of human relations, embodied in Article 19 of the Civil Code, provides:
Art. 19. Every person must in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith.
Article 19, also known as the "principle of abuse of right," prescribes that a person should not use his right unjustly
or contrary to honesty and good faith, otherwise he opens himself to liability.19 It seeks to preclude the use of, or
the tendency to use, a legal right (or duty) as a means to unjust ends.
There is an abuse of right when it is exercised solely to prejudice or injure another.20 The exercise of a right must
be in accordance with the purpose for which it was established and must not be excessive or unduly harsh; there
must be no intention to harm another.21 Otherwise, liability for damages to the injured party will attach.
In this case, the manner by which the motorcycle was taken at petitioners’ instance was not only attended by bad
faith but also contrary to the procedure laid down by law. Considered in conjunction with the defamatory statement,
petitioners’ exercise of the right to recover the mortgaged vehicle was utterly prejudicial and injurious to
respondent. On the other hand, the precipitate act of filing an unfounded complaint could not in any way be
considered to be in accordance with the purpose for which the right to prosecute a crime was established. Thus,
the totality of petitioners’ actions showed a calculated design to embarrass, humiliate and publicly ridicule
respondent. Petitioners acted in an excessively harsh fashion to the prejudice of respondent. Contrary to law,
petitioners willfully caused damage to respondent. Hence, they should indemnify him.22
WHEREFORE, the petition is hereby DENIED. The July 26, 2000 decision and October 18, 2000 resolution of the
Court of Appeals in CA-G.R. CV No. 47571 are AFFIRMED.
Triple costs against petitioners, considering that petitioner Ernesto Ramas Uypitching is a lawyer and an officer of
the court, for his improper behavior.
SO ORDERED.
Puno, J., Chairperson, Sandoval-Gutierrez, Azcuna and Garcia, JJ., concur.
G.R. No. 160273 January 18, 2008
CEBU COUNTRY CLUB, INC., SABINO R. DAPAT, RUBEN D. ALMENDRAS, JULIUS Z.
NERI, DOUGLAS L. LUYM, CESAR T. LIBI, RAMONTITO* E. GARCIA and JOSE B. SALA,
petitioners, vs.
RICARDO F. ELIZAGAQUE, respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure,
as amended, assailing the Decision1 dated January 31, 2003 and Resolution dated October 2, 2003 of the Court
of Appeals in CA-G.R. CV No. 71506.
The facts are:
Cebu Country Club, Inc. (CCCI), petitioner, is a domestic corporation operating as a non-profit and non-stock
private membership club, having its principal place of business in Banilad, Cebu City. Petitioners herein are
members of its Board of Directors.
Sometime in 1987, San Miguel Corporation, a special company proprietary member of CCCI, designated
respondent Ricardo F. Elizagaque, its Senior Vice President and Operations Manager for the Visayas and
Mindanao, as a special non-proprietary member. The designation was thereafter approved by the CCCI’s Board
of Directors.
In 1996, respondent filed with CCCI an application for proprietary membership. The application was indorsed by
CCCI’s two (2) proprietary members, namely: Edmundo T. Misa and Silvano Ludo.
As the price of a proprietary share was around the P5 million range, Benito Unchuan, then president of CCCI,
offered to sell respondent a share for only P3.5 million. Respondent, however, purchased the share of a certain
Dr. Butalid for only P3 million. Consequently, on September 6, 1996, CCCI issued Proprietary Ownership
Certificate No. 1446 to respondent.
During the meetings dated April 4, 1997 and May 30, 1997 of the CCCI Board of Directors, action on respondent’s
application for proprietary membership was deferred. In another Board meeting held on July 30, 1997,
respondent’s application was voted upon. Subsequently, or on August 1, 1997, respondent received a letter from
Julius Z. Neri, CCCI’s corporate secretary, informing him that the Board disapproved his application for proprietary
membership.
On August 6, 1997, Edmundo T. Misa, on behalf of respondent, wrote CCCI a letter of reconsideration. As CCCI
did not answer, respondent, on October 7, 1997, wrote another letter of reconsideration. Still, CCCI kept silent. On
November 5, 1997, respondent again sent CCCI a letter inquiring whether any member of the Board objected to
his application. Again, CCCI did not reply.
Consequently, on December 23, 1998, respondent filed with the Regional Trial Court (RTC), Branch 71, Pasig City
a complaint for damages against petitioners, docketed as Civil Case No. 67190.
After trial, the RTC rendered its Decision dated February 14, 2001 in favor of respondent, thus: WHEREFORE,
judgment is hereby rendered in favor of plaintiff:
1. Ordering defendants to pay, jointly and severally, plaintiff the amount of P2,340,000.00 as actual or
compensatory damages.
2. Ordering defendants to pay, jointly and severally, plaintiff the amount of P5,000,000.00 as moral
damages.
3. Ordering defendants to pay, jointly and severally, plaintiff the amount of P1,000,000.00 as exemplary
damages.
4. Ordering defendants to pay, jointly and severally, plaintiff the amount of P1,000,000.00 as and by way
of attorney’s fees and P80,000.00 as litigation expenses.
5. Costs of suit.
Counterclaims are hereby DISMISSED for lack of merit.
SO ORDERED.2
On appeal by petitioners, the Court of Appeals, in its Decision dated January 31, 2003, affirmed the trial court’s
Decision with modification, thus:
WHEREFORE, premises considered, the assailed Decision dated February 14, 2001 of the Regional Trial
Court, Branch 71, Pasig City in Civil Case No. 67190 is hereby AFFIRMED with MODIFICATION as
follows:
1. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the amount of
P2,000,000.00 as moral damages;
2. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the amount of
P1,000,000.00 as exemplary damages;
3. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the mount of
P500,000.00 as attorney’s fees and P50,000.00 as litigation expenses; and
4. Costs of the suit.
The counterclaims are DISMISSED for lack of merit.
SO ORDERED.3
On March 3, 2003, petitioners filed a motion for reconsideration and motion for leave to set the motion for oral
arguments. In its Resolution4 dated October 2, 2003, the appellate court denied the motions for lack of merit.
Hence, the present petition.
The issue for our resolution is whether in disapproving respondent’s application for proprietary membership with
CCCI, petitioners are liable to respondent for damages, and if so, whether their liability is joint and several.
Petitioners contend, inter alia, that the Court of Appeals erred in awarding exorbitant damages to respondent
despite the lack of evidence that they acted in bad faith in disapproving the latter’s application; and in disregarding
their defense of damnum absque injuria.
For his part, respondent maintains that the petition lacks merit, hence, should be denied.
CCCI’s Articles of Incorporation provide in part:
SEVENTH: That this is a non-stock corporation and membership therein as well as the right of
participation in its assets shall be limited to qualified persons who are duly accredited owners of
Proprietary Ownership Certificates issued by the corporation in accordance with its By-Laws.
Corollary, Section 3, Article 1 of CCCI’s Amended By-Laws provides:
 SECTION 3. HOW MEMBERS ARE ELECTED – The procedure for the admission of new members of
the Club shall be as follows:
(a) Any proprietary member, seconded by another voting proprietary member, shall submit to the
Secretary a written proposal for the admission of a candidate to the "Eligible-for-Membership List";
(b) Such proposal shall be posted by the Secretary for a period of thirty (30) days on the Club bulletin
board during which time any member may interpose objections to the admission of the applicant by
communicating the same to the Board of Directors;
(c) After the expiration of the aforesaid thirty (30) days, if no objections have been filed or if there
are, the Board considers the objections unmeritorious, the candidate shall be qualified for inclusion in the
"Eligible-for-Membership List";
(d) Once included in the "Eligible-for-Membership List" and after the candidate shall have acquired
in his name a valid POC duly recorded in the books of the corporation as his own, he shall become a
Proprietary Member, upon a non-refundable admission fee of P1,000.00, provided that admission fees
will only be collected once from any
person.
On March 1, 1978, Section 3(c) was amended to read as follows:
(c) After the expiration of the aforesaid thirty (30) days, the Board may, by unanimous vote of all
directors present at a regular or special meeting, approve the inclusion of the candidate in the
"Eligible-for-Membership List".
As shown by the records, the Board adopted a secret balloting known as the "black ball system" of voting wherein
each member will drop a ball in the ballot box. A white ball represents conformity to the admission of an applicant,
while a black ball means disapproval. Pursuant to Section 3(c), as amended, cited above, a unanimous vote of
the directors is required. When respondent’s application for proprietary membership was voted upon during the
Board meeting on July 30, 1997, the ballot box contained one (1) black ball. Thus, for lack of unanimity, his
application was disapproved.
Obviously, the CCCI Board of Directors, under its Articles of Incorporation, has the right to approve or disapprove
an application for proprietary membership. But such right should not be exercised arbitrarily. Articles 19 and 21 of
the Civil Code on the Chapter on Human Relations provide restrictions, thus:
Article 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.
Article 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for the
damage.
In GF Equity, Inc. v. Valenzona,5 we expounded Article 19 and correlated it with Article 21, thus:
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. (Emphasis in the original)
In rejecting respondent’s application for proprietary membership, we find that petitioners violated the rules
governing human relations, the basic principles to be observed for the rightful relationship between human beings
and for the stability of social order. The trial court and the Court of Appeals aptly held that petitioners committed
fraud and evident bad faith in disapproving respondent’s applications. This is contrary to morals, good custom or
public policy. Hence, petitioners are liable for damages pursuant to Article 19 in relation to Article 21 of the same
Code.
It bears stressing that the amendment to Section 3(c) of CCCI’s Amended By-Laws requiring the unanimous vote
of the directors present at a special or regular meeting was not printed on the application form respondent filled
and submitted to CCCI. What was printed thereon was the original provision of Section 3(c) which was silent on
the required number of votes needed for admission of an applicant as a proprietary member.
Petitioners explained that the amendment was not printed on the application form due to economic reasons. We
find this excuse flimsy and unconvincing. Such amendment, aside from being extremely significant, was introduced
way back in 1978 or almost twenty (20) years before respondent filed his application. We cannot fathom why such
a prestigious and exclusive golf country club, like the CCCI, whose members are all affluent, did not have enough
money to cause the printing of an updated application form.
It is thus clear that respondent was left groping in the dark wondering why his application was disapproved. He
was not even informed that a unanimous vote of the Board members was required. When he sent a letter for
reconsideration and an inquiry whether there was an objection to his application, petitioners apparently ignored
him. Certainly, respondent did not deserve this kind of treatment. Having been designated by San Miguel
Corporation as a special non-proprietary member of CCCI, he should have been treated by petitioners with
courtesy and civility. At the very least, they should have informed him why his application was disapproved.
The exercise of a right, though legal by itself, must nonetheless be in accordance with the proper norm. When the
right is exercised arbitrarily, unjustly or excessively and results in damage to another, a legal wrong is committed
for which the wrongdoer must be held responsible.6 It bears reiterating that the trial court and the Court of Appeals
held that petitioners’ disapproval of respondent’s application is characterized by bad faith.
As to petitioners’ reliance on the principle of damnum absque injuria or damage without injury, suffice it to state
that the same is misplaced. In Amonoy v. Gutierrez,7 we held that this principle does not apply when there is an
abuse of a person’s right, as in this case.
As to the appellate court’s award to respondent of moral damages, we find the same in order. Under Article 2219
of the New Civil Code, moral damages may be recovered, among others, in acts and actions referred to in Article
21. We believe respondent’s testimony that he suffered mental anguish, social humiliation and wounded feelings
as a result of the arbitrary denial of his application. However, the amount of P2,000,000.00 is excessive. While
there is no hardand-fast rule in determining what would be a fair and reasonable amount of moral damages, the
same should not be palpably and scandalously excessive. Moral damages are not intended to impose a penalty
to the wrongdoer, neither to enrich the claimant at the expense of the defendant.8 Taking into consideration the
attending circumstances here, we hold that an award to respondent of P50,000.00, instead of P2,000,000.00, as
moral damages is reasonable.
Anent the award of exemplary damages, Article 2229 allows it by way of example or correction for the public good.
Nonetheless, since exemplary damages are imposed not to enrich one party or impoverish another but to serve
as a deterrent against or as a negative incentive to curb socially deleterious actions,9 we reduce the amount from
P1,000,000.00 to P25,000.00 only.
On the matter of attorney’s fees and litigation expenses, Article 2208 of the same Code provides, among others,
that attorney’s fees and expenses of litigation may be recovered in cases when exemplary damages are awarded
and where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered,
as in this case. In any event, however, such award must be reasonable, just and equitable. Thus, we reduce the
amount of attorney’s fees (P500,000.00) and litigation expenses (P50,000.00) to P50,000.00 and P25,000.00,
respectively.
Lastly, petitioners’ argument that they could not be held jointly and severally liable for damages because only one
(1) voted for the disapproval of respondent’s application lacks merit.
Section 31 of the Corporation Code provides:
SEC. 31. Liability of directors, trustees or officers. — Directors or trustees who willfully and knowingly
vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad
faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with
their duty as such directors, or trustees shall be liable jointly and severally for all damages resulting
therefrom suffered by the corporation, its stockholders or members and other persons. (Emphasis ours)
WHEREFORE, we DENY the petition. The challenged Decision and Resolution of the Court of Appeals in CA-
G.R. CV No. 71506 are AFFIRMED with modification in the sense that (a) the award of moral damages is reduced
from P2,000,000.00 to P50,000.00; (b) the award of exemplary damages is reduced from P1,000,000.00 to
P25,000.00; and (c) the award of attorney’s fees and litigation expenses is reduced from P500,000.00 and
P50,000.00 to P50,000.00 and P25,000.00, respectively.
Costs against petitioners.
SO ORDERED.
Puno, C.J., Chairperson, Corona, Azcuna, Leonardo-de Castro, JJ., concur.
G.R. No. 165443 April 16, 2009
CALATAGAN GOLF CLUB, INC. Petitioner,
vs.
SIXTO CLEMENTE, JR., Respondent.
DECISION
TINGA, J.:
Seeking the reversal of the Decision1 dated 1 June 2004 of the Court of Appeals in CA-G.R. SP No. 62331 and
the reinstatement of the Decision dated 15 November 2000 of the Securities and Exchange Commission (SEC) in
SEC Case No. 04-98-5954, petitioner Calatagan Golf Club, Inc. (Calatagan) filed this Rule 45 petition against
respondent Sixto Clemente, Jr. (Clemente).
The key facts are undisputed.
Clemente applied to purchase one share of stock of Calatagan, indicating in his application for membership his
mailing address at "Phimco Industries, Inc. – P.O. Box 240, MCC," complete residential address, office and
residence telephone numbers, as well as the company (Phimco) with which he was connected, Calatagan issued
to him Certificate of Stock No. A-01295 on 2 May 1990 after paying ₱120,000.00 for the share.2
Calatagan charges monthly dues on its members to meet expenses for general operations, as well as costs for
upkeep and improvement of the grounds and facilities. The provision on monthly dues is incorporated in
Calatagan’s Articles of Incorporation and By-Laws. It is also reproduced at the back of each certificate of stock.3
As reproduced in the dorsal side of Certificate of Stock No. A-01295, the provision reads:
5. The owners of shares of stock shall be subject to the payment of monthly dues in an amount as may be
prescribed in the by-laws or by the Board of Directors which shall in no case be less that [sic] ₱50.00 to meet the
expenses for the general operations of the club, and the maintenance and improvement of its premises and
facilities, in addition to such fees as may be charged for the actual use of the facilities x x x
When Clemente became a member the monthly charge stood at ₱400.00. He paid ₱3,000.00 for his monthly dues
on 21 March 1991 and another ₱5,400.00 on 9 December 1991. Then he ceased paying the dues. At that point,
his balance amounted to ₱400.00.4
Ten (10) months later, Calatagan made the initial step to collect Clemente’s back accounts by sending a demand
letter dated 21 September 1992. It was followed by a second letter dated 22 October 1992. Both letters were sent
to Clemente’s mailing address as indicated in his membership application but were sent back to sender with the
postal note that the address had been closed.5
Calatagan declared Clemente delinquent for having failed to pay his monthly dues for more than sixty (60) days,
specifically ₱5,600.00 as of 31 October 1992. Calatagan also included Clemente’s name in the list of delinquent
members posted on the club’s bulletin board. On 1 December 1992, Calatagan’s board of directors adopted a
resolution authorizing the foreclosure of shares of delinquent members, including Clemente’s; and the public
auction of these shares.
On 7 December 1992, Calatagan sent a third and final letter to Clemente, this time signed by its Corporate
Secretary, Atty. Benjamin Tanedo, Jr. The letter contains a warning that unless Clemente settles his outstanding
dues, his share would be included among the delinquent shares to be sold at public auction on 15 January 1993.
Again, this letter was sent to Clemente’s mailing address that had already been closed.6
On 5 January 1993, a notice of auction sale was posted on the Club’s bulletin board, as well as on the club’s
premises. The auction sale took place as scheduled on 15 January 1993, and Clemente’s share sold for ₱64,000.7
According to the Certificate of Sale issued by Calatagan after the sale, Clemente’s share was purchased by a
Nestor A. Virata.8 At the time of the sale, Clemente’s accrued monthly dues amounted to ₱5,200.00.9 A notice of
foreclosure of Clemente’s share was published in the 26 May 1993 issue of the Business World.10
Clemente learned of the sale of his share only in November of 1997.11 He filed a claim with the Securities and
Exchange Commission (SEC) seeking the restoration of his shareholding in Calatagan with damages.
On 15 November 2000, the SEC rendered a decision dismissing Clemente’s complaint. Citing Section 69 of the
Corporation Code which provides that the sale of shares at an auction sale can only be questioned within six (6)
months from the date of sale, the SEC concluded that Clemente’s claim, filed four (4) years after the sale, had
already prescribed. The SEC further held that Calatagan had complied with all the requirements for a valid sale of
the subject share, Clemente having failed to inform Calatagan that the address he had earlier supplied was no
longer his address. Clemente, the SEC ruled, had acted in bad faith in assuming as he claimed that his non-
payment of monthly dues would merely render his share "inactive."
Clemente filed a petition for review with the Court of Appeals. On 1 June 2004, the Court of Appeals promulgated
a decision reversing the SEC. The appellate court restored Clemente’s one share with a directive to Calatagan to
issue in his a new share, and awarded to Clemente a total of ₱400,000.00 in damages, less the unpaid monthly
dues of ₱5,200.00.
In rejecting the SEC’s finding that the action had prescribed, the Court of Appeals cited the SEC’s own ruling in
SEC Case No. 4160, Caram v. Valley Golf Country Club, Inc., that Section 69 of the Corporation Code specifically
refers to unpaid subscriptions to capital stock, and not to any other debt of stockholders. With the insinuation that
Section 69 does not apply to unpaid membership dues in non-stock corporations, the appellate court employed
Article 1140 of the Civil Code as the proper rule of prescription. The provision sets the prescription period of actions
to recover movables at eight (8) years.
The Court of Appeals also pointed out that since that Calatagan’s first two demand letters had been returned to it
as sender with the notation about the closure of the mailing address, it very well knew that its third and final
demand letter also sent to the same mailing address would not be received by Clemente. It noted the by-law
requirement that within ten (10) days after the Board has ordered the sale at auction of a member’s share of stock
for indebtedness, the Corporate Secretary shall notify the owner thereof and advise the Membership Committee
of such fact. Finally, the Court of Appeals ratiocinated that "a person who is in danger of the imminent loss of his
property has the right to be notified and be given the chance to prevent the loss."12
Hence, the present appeal.
Calatagan maintains that the action of Clemente had prescribed pursuant to Section 69 of the Corporation Code,
and that the requisite notices under both the law and the by-laws had been rendered to Clemente.
Section 69 of the Code provides that an action to recover delinquent stock sold must be commenced by the filing
of a complaint within six (6) months from the date of sale. As correctly pointed out by the Court of Appeals, Section
69 is part of Title VIII of the Code entitled "Stocks and Stockholders" and refers specifically to unpaid subscriptions
to capital stock, the sale of which is governed by the immediately preceding Section 68.
The Court of Appeals debunked both Calatagan’s and the SEC’s reliance on Section 69 by citing another SEC
ruling in the case of Caram v. Valley Golf. In connection with Section 69, Calatagan raises a peripheral point made
in the SEC’s Caram ruling. In Caram, the SEC, using as take-off Section 6 of the Corporation Code which refers
to "such rights, privileges or restrictions as may be stated in the articles of incorporation," pointed out that the
Articles of Incorporation of Valley Golf does not "impose any lien, liability or restriction on the Golf Share [of
Caram]," but only its (Valley Golf’s) By-Laws does. Here, Calatagan stresses that its own Articles of Incorporation
does provide that the monthly dues assessed on owners of shares of the corporation, along with all other
obligations of the shareholders to the club, "shall constitute a first lien on the shares… and in the event of
delinquency such shares may be ordered sold by the Board of Directors in the manner provided in the By-Laws to
satisfy said dues or other obligations of the shareholders."13 With its illative but incomprehensible logic, Calatagan
concludes that the prescriptive period under Section 69 should also apply to the sale of Clemente’s share as the
lien that Calatagan perceives to be a restriction is stated in the articles of incorporation and not only in the by-
laws.
We remain unconvinced.
There are fundamental differences that defy equivalence or even analogy between the sale of delinquent stock
under Section 68 and the sale that occurred in this case. At the root of the sale of delinquent stock is the non-
payment of the subscription price for the share of stock itself. The stockholder or subscriber has yet to fully pay
for the value of the share or shares subscribed. In this case, Clemente had already fully paid for the share in
Calatagan and no longer had any outstanding obligation to deprive him of full title to his share. Perhaps the analogy
could have been made if Clemente had not yet fully paid for his share and the nonstock corporation, pursuant to
an article or by-law provision designed to address that situation, decided to sell such share as a consequence.
But that is not the case here, and there is no purpose for us to apply Section 69 to the case at bar.
Calatagan argues in the alternative that Clemente’s suit is barred by Article 1146 of the Civil Code which
establishes four (4) years as the prescriptive period for actions based upon injury to the rights of the plaintiff on
the hypothesis that the suit is purely for damages. As a second alternative still, Calatagan posits that Clemente’s
action is governed by Article 1149 of the Civil Code which sets five (5) years as the period of prescription for all
other actions whose prescriptive periods are not fixed in the Civil Code or in any other law. Neither article is
applicable but Article 1140 of the Civil Code which provides that an action to recover movables shall prescribe in
eight (8) years. Calatagan’s action is for the recovery of a share of stock, plus damages.
Calatagan’s advertence to the fact that the constitution of a lien on the member’s share by virtue of the explicit
provisions in its Articles of Incorporation and By-Laws is relevant but ultimately of no help to its cause. Calatagan’s
Articles of Incorporation states that the "dues, together with all other obligations of members to the club, shall
constitute a first lien on the shares, second only to any lien in favor of the national or local government, and in the
event of delinquency such shares may be ordered sold by the Board of Directors in the manner provided in the
By-Laws to satisfy said dues or other obligations of the stockholders."14 In turn, there are several provisions in the
By-laws that govern the payment of dues, the lapse into delinquency of the member, and the constitution and
execution on the lien. We quote these provisions:
ARTICLE XII – MEMBER’S ACCOUNT
SEC. 31. (a) Billing Members, Posting of Delinquent Members – The Treasurer shall bill al members monthly. As
soon as possible after the end of every month, a statement showing the account of bill of a member for said month
will be prepared and sent to him. If the bill of any member remains unpaid by the 20th of the month following that
in which the bill was incurred, the Treasurer shall notify him that if his bill is not paid in full by the end of the
succeeding month his name will be posted as delinquent the following day at the Clubhouse bulletin board. While
posted, a member, the immediate members of his family, and his guests, may not avail of the facilities of the Club.
(b) Members on the delinquent list for more than 60 days shall be reported to the Board and their shares
or the shares of the juridical entities they represent shall thereafter be ordered sold by the Board at auction
to satisfy the claims of the Club as provided for in Section 32 hereon. A member may pay his overdue
account at any time before the auction sale.
Sec. 32. Lien on Shares; Sale of Share at Auction- The club shall have a first lien on every share of stock to secure
debts of the members to the Club. This lien shall be annotated on the certificates of stock and may be enforced
by the Club in the following manner:
(a) Within ten (10) days after the Board has ordered the sale at auction of a member’s share of
stock for indebtedness under Section 31(b) hereof, the Secretary shall notify the owner thereof, and shall
advise the Membership Committee of such fact.
(b) The Membership Committee shall then notify all applicants on the Waiting List and all registered
stockholders of the availability of a share of stock for sale at auction at a specified date, time and place,
and shall post a notice to that effect in the Club bulletin board for at least ten (10) days prior to the auction
sale.
(c) On the date and hour fixed, the Membership Committee shall proceed with the auction by viva
voce bidding and award the sale of the share of stock to the highest bidder.
(d) The purchase price shall be paid by the winning bidder to the Club within twentyfour (24) hours
after the bidding. The winning bidder or the representative in the case of a juridical entity shall become a
Regular Member upon payment of the purchase price and issuance of a new stock certificate in his name
or in the name of the juridical entity he represents. The proceeds of the sale shall be paid by the Club to
the selling stockholder after deducting his obligations to the Club.
(e) If no bids be received or if the winning bidder fails to pay the amount of this bid within twenty-
four (24) hours after the bidding, the auction procedures may be repeated from time to time at the
discretion of the Membership Committee until the share of stock be sold.
(f) If the proceeds from the sale of the share of stock are not sufficient to pay in full the indebtedness
of the member, the member shall continue to be obligated to the Club for the unpaid balance. If the
member whose share of stock is sold fails or refuse to surrender the stock certificate for cancellation,
cancellation shall be effected in the books of the Club based on a record of the proceedings. Such
cancellation shall render the unsurrendered stock certificate null and void and notice to this effect shall
be duly published.
It is plain that Calatagan had endeavored to install a clear and comprehensive procedure to govern the payment
of monthly dues, the declaration of a member as delinquent, and the constitution of a lien on the shares and its
eventual public sale to answer for the member’s debts. Under Section 91 of the Corporation Code, membership
in a non-stock corporation "shall be terminated in the manner and for the causes provided in the articles of
incorporation or the by-laws." The By-law provisions are elaborate in explaining the manner and the causes for
the termination of membership in Calatagan, through the execution on the lien of the share. The Court is satisfied
that the By-Laws, as written, affords due protection to the member by assuring that the member should be notified
by the Secretary of the looming execution sale that would terminate membership in the club. In addition, the By-
Laws guarantees that after the execution sale, the proceeds of the sale would be returned to the former member
after deducting the outstanding obligations. If followed to the letter, the termination of membership under this
procedure outlined in the By-Laws would accord with substantial justice.
Yet, did Calatagan actually comply with the by-law provisions when it sold Clemente’s share? The appellate court’s
finding on this point warrants our approving citation, thus:
In accordance with this provision, Calatagan sent the third and final demand letter to Clemente on December 7,
1992. The letter states that if the amount of delinquency is not paid, the share will be included among the delinquent
shares to be sold at public auction. This letter was signed by Atty. Benjamin Tanedo, Jr., Calatagan Golf’s
Corporate Secretary. It was again sent to Clemente’s mailing address – Phimco Industries Inc., P.O. Box
240, MCC Makati. As expected, it was returned because the post office box had been closed.
Under the By-Laws, the Corporate Secretary is tasked to "give or cause to be given, all notices required by law or
by these By-Laws. .. and … keep a record of the addresses of all stockholders. As quoted above, Sec. 32 (a) of
the By-Laws further provides that "within ten (10) days after the Board has ordered the sale at auction of a
member’s share of stock for indebtedness under Section 31 (b) hereof, the Secretary shall notify the owner thereof
and shall advise the Membership Committee of such fact.," The records do not disclose what report the Corporate
Secretary transmitted to the Membership Committee to comply with Section 32(a). Obviously, the reason for this
mandatory requirement is to give the Membership Committee the opportunity to find out, before the share is sold,
if proper notice has been made to the shareholder member.
We presume that the Corporate Secretary, as a lawyer is knowledgeable on the law and on the standards of good
faith and fairness that the law requires. As custodian of corporate records, he should also have known that the
first two letters sent to Clemente were returned because the P.O. Box had been closed. Thus, we are surprised –
given his knowledge of the law and of corporate records – that he would send the third and final letter – Clemente’s
last chance before his share is sold and his membership lost – to the same P.O. Box that had been closed.
Calatagan argues that it "exercised due diligence before the foreclosure sale" and "sent several notices to
Clemente’s specified mailing address." We do not agree; we cannot label as due diligence Calatagan’s act of
sending the December 7, 1992 letter to Clemente’s mailing address knowing fully well that the P.O. Box had been
closed. Due diligence or good faith imposes upon the Corporate Secretary – the chief repository of all corporate
records – the obligation to check Clemente’s other address which, under the By-Laws, have to be kept on file and
are in fact on file. One obvious purpose of giving the Corporate Secretary the duty to keep the addresses of
members on file is specifically for matters of this kind, when the member cannot be reached through his or her
mailing address. Significantly, the Corporate Secretary does not have to do the actual verification of other
addressees on record; a mere clerk can do the very simple task of checking the files as in fact clerks actually
undertake these tasks. In fact, one telephone call to Clemente’s phone numbers on file would have alerted him of
his impending loss.
Ultimately, the petition must fail because Calatagan had failed to duly observe both the spirit and letter of its own
by-laws. The by-law provisions was clearly conceived to afford due notice to the delinquent member of the
impending sale, and not just to provide an intricate façade that would facilitate Calatagan’s sale of the share. But
then, the bad faith on Calatagan’s part is palpable. As found by the Court of Appeals, Calatagan very well knew
that Clemente’s postal box to which it sent its previous letters had already been closed, yet it persisted in sending
that final letter to the same postal box. What for? Just for the exercise, it appears, as it had known very well that
the letter would never actually reach Clemente.1avvphi1
It is noteworthy that Clemente in his membership application had provided his residential address along with his
residence and office telephone numbers. Nothing in Section 32 of Calatagan’s By-Laws requires that the final
notice prior to the sale be made solely through the member’s mailing address. Clemente cites our aphorism-like
pronouncement in Rizal Commercial Banking Corporation v. Court of Appeals15 that "[a] simple telephone call and
an ounce of good faith x x x could have prevented this present controversy." That memorable observation is quite
apt in this case.
Calatagan’s bad faith and failure to observe its own By-Laws had resulted not merely in the loss of Clemente’s
privilege to play golf at its golf course and avail of its amenities, but also in significant pecuniary damage to him.
For that loss, the only blame that could be thrown Clemente’s way was his failure to notify Calatagan of the closure
of the P.O. Box. That lapse, if we uphold Calatagan would cost Clemente a lot. But, in the first place, does he
deserve answerability for failing to notify the club of the closure of the postal box? Indeed, knowing as he did that
Calatagan was in possession of his home address as well as residence and office telephone numbers, he had
every reason to assume that the club would not be at a loss should it need to contact him. In addition, according
to Clemente, he was not even aware of the closure of the postal box, the maintenance of which was not his
responsibility but his employer Phimco’s.
The utter bad faith exhibited by Calatagan brings into operation Articles 19, 20 and 21 of the Civil Code, 16 under
the Chapter on Human Relations. These provisions, which the Court of Appeals did apply, enunciate a general
obligation under law for every person to act fairly and in good faith towards one another. A non-stock corporation
like Calatagan is not exempt from that obligation in its treatment of its members. The obligation of a corporation to
treat every person honestly and in good faith extends even to its shareholders or members, even if the latter find
themselves contractually bound to perform certain obligations to the corporation. A certificate of stock cannot be
a charter of dehumanization.
We turn to the matter of damages. The award of actual damages is of course warranted since Clemente has
sustained pecuniary injury by reason of Calatagan’s wrongful violation of its own By-Laws. It would not be feasible
to deliver Clemente’s original Certificate of Stock because it had already been cancelled and a new one issued in
its place in the name of the purchases at the auction who was not impleaded in this case. However, the Court of
Appeals instead directed that Calatagan to issue to Clemente a new certificate of stock. That sufficiently redresses
the actual damages sustained by Clemente. After all, the certificate of stock is simply the evidence of the share.
The Court of Appeals also awarded Clemente ₱200,000.00 as moral damages, ₱100,000.00 as exemplary
damages, and ₱100,000.00 as attorney’s fees. We agree that the award of such damages is warranted.
The Court of Appeals cited Calatagan for violation of Article 32 of the Civil Code, which allows recovery of damages
from any private individual "who directly or indirectly obstructs, defeats, violates or in any manner impedes or
impairs" the right "against deprivation of property without due process of laws." The plain letter of the provision
squarely entitles Clemente to damages from Calatagan. Even without Article 32 itself, Calatagan will still be bound
to pay moral and exemplary damages to Clemente. The latter was able to duly prove that he had sustained mental
anguish, serious anxiety and wounded feelings by reason of Calatagan’s acts, thereby entitling him to moral
damages under Article 2217 of the Civil Code. Moreover, it is evident that Calatagan’s bad faith as exhibited in the
course of its corporate actions warrants correction for the public good, thereby justifying exemplary damages under
Article 2229 of the Civil Code.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. Costs against
petitioner.
SO ORDERED.
DANTE O. TINGA
Associate Justice
G.R. No. 161921 July 17, 2013
JOYCE V. ARDIENTE, PETITIONER,
vs.
SPOUSES JAVIER AND MA. THERESA PASTORFIDE, CAGAYAN DE ORO WATER DISTRICT AND GASPAR
GONZALEZ,* JR., RESPONDENTS.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and
set aside the Decision1 and Resolution2 of the Court of Appeals (CA), dated August 28, 2003 and December 17,
2003, respectively, in CA-G.R. CV No. 73000. The CA Decision affirmed with modification the August 15, 2001
Decision3 of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 24, while the CA Resolution denied
petitioner's Motion for Reconsideration.
The facts, as summarized by the CA, are as follows:
[Herein petitioner] Joyce V. Ardiente and her husband Dr. Roberto S. Ardiente are owners of a housing unit at
Emily Homes, Balulang, Cagayan de Oro City with a lot area of one hundred fifty-three (153) square meters and
covered by Transfer Certificate of Title No. 69905.
On June 2, 1994, Joyce Ardiente entered into a Memorandum of Agreement (Exh. "B", pp. 470473, Records)
selling, transferring and conveying in favor of [respondent] Ma. Theresa Pastorfide all their rights and interests in
the housing unit at Emily Homes in consideration of ₱70,000.00. The Memorandum of Agreement carries a
stipulation:
"4. That the water and power bill of the subject property shall be for the account of the Second
Party (Ma. Theresa Pastorfide) effective June 1, 1994." (Records, p. 47)
vis-a-vis Ma. Theresa Pastorfide's assumption of the payment of the mortgage loan secured by Joyce Ardiente
from the National Home Mortgage (Records, Exh. "A", pp. 468-469)
For four (4) years, Ma. Theresa's use of the water connection in the name of Joyce Ardiente was never questioned
nor perturbed (T.S.N., October 31, 2000, pp. 7-8) until on March 12, 1999, without notice, the water connection of
Ma. Theresa was cut off. Proceeding to the office of the Cagayan de Oro Water District (COWD) to complain, a
certain Mrs. Madjos told Ma. Theresa that she was delinquent for three (3) months corresponding to the months
of December 1998, January 1999, and February 1999. Ma. Theresa argued that the due date of her payment was
March 18, 1999 yet (T.S.N., October 31, 2000, pp. 11-12). Mrs. Madjos later told her that it was at the instance of
Joyce Ardiente that the water line was cut off (T.S.N., February 5, 2001, p. 31).
On March 15, 1999, Ma. Theresa paid the delinquent bills (T.S.N., October 31, 2000, p. 12). On the same date,
through her lawyer, Ma. Theresa wrote a letter to the COWD to explain who authorized the cutting of the water
line (Records, p. 160).
On March 18, 1999, COWD, through the general manager, [respondent] Gaspar Gonzalez, Jr., answered the letter
dated March 15, 1999 and reiterated that it was at the instance of Joyce Ardiente that the water line was cut off
(Records, p. 161).
Aggrieved, on April 14, 1999, Ma. Theresa Pastorfide [and her husband] filed [a] complaint for damages [against
petitioner, COWD and its manager Gaspar Gonzalez] (Records, pp. 2-6).
In the meantime, Ma. Theresa Pastorfide's water line was only restored and reconnected when the [trial] court
issued a writ of preliminary mandatory injunction on December 14, 1999 (Records, p. 237).4
After trial, the RTC rendered judgment holding as follows:
xxxx
In the exercise of their rights and performance of their duties, defendants did not act with justice, gave plaintiffs
their due and observe honesty and good faith. Before disconnecting the water supply, defendants COWD and
Engr. Gaspar Gonzales did not even send a disconnection notice to plaintiffs as testified to by Engr. Bienvenido
Batar, in-charge of the Commercial Department of defendant COWD. There was one though, but only three (3)
days after the actual disconnection on March 12, 1999. The due date for payment was yet on March 15. Clearly,
they did not act with justice. Neither did they observe honesty.
They should not have been swayed by the prodding of Joyce V. Ardiente. They should have investigated first as
to the present ownership of the house. For doing the act because Ardiente told them, they were negligent.
Defendant Joyce Ardiente should have requested before the cutting off of the water supply, plaintiffs to pay. While
she attempted to tell plaintiffs but she did not have the patience of seeing them. She knew that it was plaintiffs
who had been using the water four (4) years ago and not hers. She should have been very careful. x x x5
The dispositive portion of the trial court's Decision reads, thus:
WHEREFORE, premises considered, judgment is hereby rendered ordering defendants [Ardiente, COWD and
Gonzalez] to pay jointly and severally plaintiffs, the following sums:
(a) ₱200,000.00 for moral damages; (b) 200,000.00 for
exemplary damages; and
(c) 50,000.00 for attorney's fee.
The cross-claim of Cagayan de Oro Water District and Engr. Gaspar Gonzales is hereby dismissed. The Court is
not swayed that the cutting off of the water supply of plaintiffs was because they were influenced by defendant
Joyce Ardiente. They were negligent too for which they should be liable.
SO ORDERED.6
Petitioner, COWD and Gonzalez filed an appeal with the CA.
On August 28, 2003, the CA promulgated its assailed Decision disposing as follows:
IN VIEW OF ALL THE FOREGOING, the appealed decision is AFFIRMED, with the modification that the awarded
damages is reduced to ₱100,000.00 each for moral and exemplary damages, while attorney's fees is lowered to
₱25,000.00. Costs against appellants. SO ORDERED.7
The CA ruled, with respect to petitioner, that she has a "legal duty to honor the possession and use of water line
by Ma. Theresa Pastorfide pursuant to their Memorandum of Agreement" and "that when [petitioner] applied for
its disconnection, she acted in bad faith causing prejudice and [injury to] Ma. Theresa Pastorfide."8
As to COWD and Gonzalez, the CA held that they "failed to give a notice of disconnection and derelicted in
reconnecting the water line despite payment of the unpaid bills by the [respondent spouses Pastorfide]."9
Petitioner, COWD and Gonzalez filed their respective Motions for Reconsideration, but these were denied by the
CA in its Resolution dated December 17, 2003.
COWD and Gonzalez filed a petition for review on certiorari with this Court, which was docketed as G.R. No.
161802. However, based on technical grounds and on the finding that the CA did not commit any reversible error
in its assailed Decision, the petition was denied via a Resolution10 issued by this Court on March 24, 2004. COWD
and Gonzalez filed a motion for reconsideration, but the same was denied with finality through this Court's
Resolution11 dated June 28, 2004.
Petitioner, on the other hand, timely filed the instant petition with the following Assignment of Errors:
7.1 HONORABLE COURT OF APPEALS (ALTHOUGH IT HAS REDUCED THE LIABILITY INTO HALF)
HAS STILL COMMITTED GRAVE AND SERIOUS ERROR WHEN IT UPHELD THE JOINT AND
SOLIDARY LIABILITY OF PETITIONER JOYCE V. ARDIENTE WITH CAGAYAN DE ORO WATER
DISTRICT (COWD) AND ENGR. GASPAR D. GONZALES FOR THE LATTER'S FAILURE TO SERVE
NOTICE UPON RESPONDENTS SPOUSES PASTORFIDE PRIOR TO THE ACTUAL
DISCONNECTION DESPITE EVIDENCE ADDUCED DURING TRIAL THAT EVEN WITHOUT
PETITIONER'S REQUEST, COWD WAS ALREADY SET TO EFFECT DISCONNECTION OF
RESPONDENTS' WATER SUPPLY DUE TO NON-PAYMENT OF ACCOUNT FOR THREE (3) MONTHS.
7.2 THE HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS ERROR WHEN IT
RULED TOTALLY AGAINST PETITIONER AND FAILED TO FIND THAT RESPONDENTS ARE GUILTY
OF CONTRIBUTORY NEGLIGENCE WHEN THEY FAILED TO PAY THEIR WATER BILLS FOR THREE
MONTHS AND TO MOVE FOR THE TRANSFER OF THE COWD ACCOUNT IN THEIR NAME, WHICH
WAS A VIOLATION OF THEIR MEMORANDUM OF AGREEMENT WITH PETITIONER JOYCE V.
ARDIENTE. RESPONDENTS LIKEWISE DELIBERATELY FAILED TO EXERCISE DILIGENCE OF A
GOOD FATHER OF THE FAMILY TO MINIMIZE THE DAMAGE UNDER ART. 2203 OF THE NEW CIVIL
CODE.
7.3 THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DISREGARDED THE
FACT THAT RESPONDENT SPOUSES PASTORFIDE ARE LIKEWISE BOUND TO OBSERVE ARTICLE
19 OF THE NEW CIVIL CODE, i.e., IN THE EXERCISE OF THEIR RIGHTS AND IN THE
PERFORMANCE OF THEIR DUTIES TO ACT WITH JUSTICE, GIVE EVERYONE HIS DUE AND
OBSERVE HONESTY AND GOOD FAITH.
7.4 THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT GRANTED AN AWARD OF
MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES AS AGAINST PETITIONER
ARDIENTE.12
At the outset, the Court noticed that COWD and Gonzalez, who were petitioner's co-defendants before the RTC
and her co-appellants in the CA, were impleaded as respondents in the instant petition. This cannot be done.
Being her co-parties before the RTC and the CA, petitioner cannot, in the instant petition for review on certiorari,
make COWD and Gonzalez, adversary parties. It is a grave mistake on the part of petitioner's counsel to treat
COWD and Gonzalez as respondents. There is no basis to do so, considering that, in the first place, there is no
showing that petitioner filed a cross-claim against COWD and Gonzalez. Under Section 2, Rule 9 of the Rules of
Court, a cross-claim which is not set up shall be barred. Thus, for failing to set up a cross-claim against COWD
and Gonzalez before the RTC, petitioner is already barred from doing so in the present petition.
More importantly, as shown above, COWD and Gonzalez's petition for review on certiorari filed with this Court was
already denied with finality on June 28, 2004, making the presently assailed CA Decision final and executory
insofar as COWD and Gonzalez are concerned. Thus, COWD and Gonzalez are already precluded from
participating in the present petition. They cannot resurrect their lost cause by filing pleadings this time as
respondents but, nonetheless, reiterating the same prayer in their previous pleadings filed with the RTC and the
CA.
As to the merits of the instant petition, the Court likewise noticed that the main issues raised by petitioner are
factual and it is settled that the resolution of factual issues is the function of lower courts, whose findings on these
matters are received with respect and considered binding by the Supreme Court subject only to certain exceptions,
none of which is present in this instant petition.13 This is especially true when the findings of the RTC have been
affirmed by the CA as in this case.14
In any case, a perusal of the records at hand would readily show that the instant petition lacks merit.
Petitioner insists that she should not be held liable for the disconnection of respondent spouses' water supply,
because she had no participation in the actual disconnection. However, she admitted in the present petition that it
was she who requested COWD to disconnect the Spouses Pastorfide's water supply. This was confirmed by
COWD and Gonzalez in their crossclaim against petitioner. While it was COWD which actually discontinued
respondent spouses' water supply, it cannot be denied that it was through the instance of petitioner that the
Spouses Pastorfide's water supply was disconnected in the first place.
It is true that it is within petitioner's right to ask and even require the Spouses Pastorfide to cause the transfer of
the former's account with COWD to the latter's name pursuant to their Memorandum of Agreement. However, the
remedy to enforce such right is not to cause the disconnection of the respondent spouses' water supply. The
exercise of a right must be in accordance with the purpose for which it was established and must not be excessive
or unduly harsh; there must be no intention to harm another.15 Otherwise, liability for damages to the injured party
will attach.16 In the present case, intention to harm was evident on the part of petitioner when she requested for
the disconnection of respondent spouses’ water supply without warning or informing the latter of such request.
Petitioner claims that her request for disconnection was based on the advise of COWD personnel and that her
intention was just to compel the Spouses Pastorfide to comply with their agreement that petitioner's account with
COWD be transferred in respondent spouses' name. If such was petitioner's only intention, then she should have
advised respondent spouses before or immediately after submitting her request for disconnection, telling them
that her request was simply to force them to comply with their obligation under their Memorandum of Agreement.
But she did not. What made matters worse is the fact that COWD undertook the disconnection also without prior
notice and even failed to reconnect the Spouses Pastorfide’s water supply despite payment of their arrears. There
was clearly an abuse of right on the part of petitioner, COWD and Gonzalez. They are guilty of bad faith.
The principle of abuse of rights as enshrined in Article 19 of the Civil Code provides that every person must, in
the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.
In this regard, the Court's ruling in Yuchengco v. The Manila Chronicle Publishing
Corporation17 is instructive, to wit:
xxxx
This provision of law sets standards which must be observed in the exercise of one’s rights as well as in the
performance of its duties, to wit: to act with justice; give everyone his due; and observe honesty and good faith.
In Globe Mackay Cable and Radio Corporation v. Court of Appeals, it was elucidated that 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." The Court said:
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 x x x.
xxxx
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.
Corollarilly, Article 20 provides that "every person who, contrary to law, willfully or negligently causes damage to
another shall indemnify the latter for the same." It speaks of the general sanctions of all other provisions of law
which do not especially provide for its own sanction. When a right is exercised in a manner which does not conform
to the standards set forth in the said provision and results in damage to another, a legal wrong is thereby committed
for which the wrongdoer must be responsible. Thus, if the provision does not provide a remedy for its violation, an
action for damages under either Article 20 or Article 21 of the Civil Code would be proper.
The question of whether or not the principle of abuse of rights has been violated resulting in damages under Article
20 or other applicable provision of law, depends on the circumstances of each case. x x x18
To recapitulate, petitioner's acts which violated the abovementioned provisions of law is her unjustifiable act of
having the respondent spouses' water supply disconnected, coupled with her failure to warn or at least notify
respondent spouses of such intention. On the part of COWD and Gonzalez, it is their failure to give prior notice of
the impending disconnection and their subsequent neglect to reconnect respondent spouses' water supply despite
the latter's settlement of their delinquent account.
On the basis of the foregoing, the Court finds no cogent reason to depart from the ruling of both the RTC and the
CA that petitioner, COWD and Gonzalez are solidarily liable.
The Spouses Pastorfide are entitled to moral damages based on the provisions of Article 2219,19 in connection
with Articles 2020 and 2121 of the Civil Code.
As for exemplary damages, Article 2229 provides that exemplary damages may be imposed by way of example
or correction for the public good. Nonetheless, exemplary damages are imposed not to enrich one party or
impoverish another, but to serve as a deterrent against or as a negative incentive to curb socially deleterious
actions.22 In the instant case, the Court agrees with the CA in sustaining the award of exemplary damages,
although it reduced the amount granted, considering that respondent spouses were deprived of their water supply
for more than nine (9) months, and such deprivation would have continued were it not for the relief granted by the
RTC.
With respect to the award of attorney's fees, Article 2208 of the Civil Code provides, among others, that such fees
may be recovered when exemplary damages are awarded, when the defendant's act or omission has compelled
the plaintiff to litigate with third persons or to incur expenses to protect his interest, and where the defendant acted
in gross and evident bad faith in refusing to satisfy the plaintiffs’ plainly valid, just and demandable claim.
WHEREFORE, instant petition for review on certiorari is DENIED. The Decision and Resolution of the Court of
Appeals, dated August 28, 2003 and December 17, 2003, respectively, in CAG.R. CV No. 73000 are AFFIRMED.
SO ORDERED.
Velasco, Jr., (Chairperson), Abad, Mendoza, and Leonen, JJ., concur.
G.R. No. 89252 May 24, 1993
RAUL H. SESBREÑO, Petitioner,
vs.
HONORABLE COURT OF APPEALS, JUAN I. COROMINA (SUBSTITUTED BY ANITA COROMINA,
ELIZABETH COROMINA and ROSIEMARIE COROMINA), VICENTE E. GARCIA (SUBSTITUTED BY EDGAR
JOHN GARCIA), FELIPE CONSTANTINO, RONALD ARCILLA, NORBETO ABELLANA, DEMETRIO
BALICHA, ANGELITA LHUILLIER, JOSE E. GARCIA, AND VISA YAN ELECTRIC COMPANY
(VECO), Respondents.
DECISION
BERSAMIN, J.:
This case concerns the claim for damages of petitioner Raul H. Sesbreño founded on abuse of rights. Sesbreño
accused the violation of contract (VOC) inspection team dispatched by the Visayan Electric Company (VECO) to
check his electric meter with conducting an unreasonable search in his residential premises. But the Regional
Trial Court (RTC), Branch 13, in Cebu City rendered judgment on August 19, 1994 dismissing the claim;1 and the
Court of Appeals (CA) affirmed the dismissal on March 10, 2003.2
Hence, this appeal by Sesbreño.
Antecedents
At the time material to the petition, VECO was a public utility corporation organized and existing under the laws of
the Philippines. VECO engaged in the sale and distribution of electricity within Metropolitan Cebu. Sesbreño was
one of VECO’s customers under the metered service contract they had entered into on March 2,
1982.3 Respondent Vicente E. Garcia was VECO’s President, General Manager and Chairman of its Board of
Directors. Respondent Jose E. Garcia was VECO’s Vice-President, Treasurer and a Member of its Board of
Directors. Respondent Angelita Lhuillier was another Member of VECO’s Board of Directors. Respondent Juan
Coromina was VECO’s Assistant Treasurer, while respondent Norberto Abellana was the Head of VECO’s Billing
Section whose main function was to compute back billings of customers found to have violated their contracts.
To ensure that its electric meters were properly functioning, and that none of it meters had been tampered with,
VECO employed respondents Engr. Felipe Constantino and Ronald Arcilla as violation of contract (VOC)
inspectors.4 Respondent Sgt. Demetrio Balicha, who belonged to the 341st Constabulary Company, Cebu
Metropolitan Command, Camp Sotero Cabahug, Cebu City, accompanied and escorted the VOC inspectors
during their inspection of the households of its customers on May 11, 1989 pursuant to a mission order issued to
him.5
The CA summarized the antecedent facts as follows:
x x x. Reduced to its essentials, however, the facts of this case are actually simple enough, although the
voluminous records might indicate otherwise. It all has to do with an incident that occurred at around 4:00 o’clock
in the afternoon of May 11, 1989. On that day, the Violation of Contracts (VOC) Team of defendants-appellees
Constantino and Arcilla and their PC escort, Balicha, conducted a routine inspection of the houses at La Paloma
Village, Labangon, Cebu City, including that of plaintiff-appellant Sesbreño, for illegal connections, meter
tampering, seals, conduit pipes, jumpers, wiring connections, and meter installations. After Bebe Baledio, plaintiff-
appellant Sesbreño’s maid, unlocked the gate, they inspected the electric meter and found that it had been turned
upside down. Defendant-appellant Arcilla took photographs of the upturned electric meter. With Chuchie Garcia,
Peter Sesbreño and one of the maids present, they removed said meter and replaced it with a new one. At that
time, plaintiff-appellant Sesbreño was in his office and no one called to inform him of the inspection. The VOC
Team then asked for and received Chuchie Garcia’s permission to enter the house itself to examine the kind and
number of appliances and light fixtures in the household and determine its electrical load. Afterwards, Chuchie
Garcia signed the Inspection Division Report, which showed the condition of the electric meter on May 11, 1989
when the VOC Team inspected it, with notice that it would be subjected to a laboratory test. She also signed a
Load Survey Sheet that showed the electrical load of plaintiff-appellant Sesbreño.
But according to plaintiff-appellant Sesbreño there was nothing routine or proper at all with what the VOC Team
did on May 11, 1989 in his house. Their entry to his house and the surrounding premises was effected without his
permission and over the objections of his maids. They threatened, forced or coerced their way into his house.
They unscrewed the electric meter, turned it upside down and took photographs thereof. They then replaced it
with a new electric meter. They searched the house and its rooms without his permission or a search warrant.
They forced a visitor to sign two documents, making her appear to be his representative or agent. Afterwards, he
found that some of his personal effects were missing, apparently stolen by the VOC Team when they searched
the house.6
Judgment of the RTC
On August 19, 1994, the RTC rendered judgment dismissing the complaint.7 It did not accord credence to the
testimonies of Sesbreño’s witnesses, Bebe Baledio, his housemaid, and Roberto Lopez, a part-time salesman,
due to inconsistencies on material points in their respective testimonies. It observed that Baledio could not make
up her mind as to whether Sesbreño’s children were in the house when the VOC inspection team detached and
replaced the electric meter. Likewise, it considered unbelievable that Lopez should hear the exchanges between
Constantino, Arcilla and Balicha, on one hand, and Baledio, on the other, considering that Lopez could not even
hear the conversation between two persons six feet away from where he was seated during the simulation done
in court, the same distance he supposedly had from the gate of Sesbreño’s house during the incident. It pointed
out that Lopez’s presence at the gate during the incident was even contradicted by his own testimony indicating
that an elderly woman had opened the gate for the VECO personnel, because it was Baledio, a lady in her 20s,
who had repeatedly stated on her direct and cross examinations that she had let the VECO personnel in. It
concluded that for Lopez to do nothing at all upon seeing a person being threatened by another in the manner he
described was simply contrary to human experience.
In contrast, the RTC believed the evidence of the respondents showing that the VOC inspection team had found
the electric meter in Sesbreño’s residence turned upside down to prevent the accurate registering of the
electricity consumption of the household, causing them to detach and replace the meter. It held as unbelievable
that the team forcibly entered the house through threats and intimidation; that they themselves turned the electric
meter upside down in order to incriminate him for theft of electricity, because the fact that the team and Sesbreño
had not known each other before then rendered it unlikely for the team to fabricate charges against him; and that
Sesbreño’s non-presentation of Chuchie Garcia left her allegation of her being forced to sign the two documents
by the team unsubstantiated.
Decision of the CA
Sesbreño appealed, but the CA affirmed the RTC on March 10, 2003,8 holding thusly:
x x x. plaintiff-appellant Sesbreño’s account is simply too implausible or far-fetched to be believed. For one thing,
the inspection on his household was just one of many others that the VOC Team had conducted in that
subdivision. Yet, none but plaintiff-appellant Sesbreño complained of the alleged acts of the VOC Team.
Considering that there is no proof that they also perpetrated the same illegal acts on other customers in the guise
of conducting a Violation of Contracts inspection, plaintiff-appellant Sesbreño likewise failed to show why he
alone was singled out. It is also difficult to believe that the VOC Team would be brazen enough to want to
antagonize a person such as plaintiff-appellant Sesbreño. There is no evidence that the VOC Team harbored any
evil motive or grudge against plaintiff-appellant Sesbreño, who is a total stranger to them. Until he came along,
they did not have any prior criminal records to speak of, or at least, no evidence thereof was presented. It is
equally difficult to believe that their superiors would authorize or condone their alleged illegal acts. Especially so
since there is no indication that prior to the incident on May 11, 1989, there was already bad blood or animosity
between plaintiff-appellant Sesbreño and defendant appellees to warrant such a malevolent response. In fact,
since availing of defendant-appellee VECO’s power services, the relationship between them appears to have
been uneventful.
It becomes all the more apparent that the charges stemming from the May 11, 1989 incident were fabricated
when taken together with the lower court’s evaluation of the alleged theft of plaintiff-appellant Sesbreño’s
personal effects. It stated that on August 8, 1989, plaintiff-appellant Sesbreño wrote the barangay captain of
Punta Princesa and accused Chuchie Garcia and Victoria Villarta alias Victoria Rocamora of theft of some of his
things that earlier he claimed had been stolen by members of the VOC Team. When he was confronted with
these facts, plaintiff-appellant Sesbreño further claimed that the items allegedly stolen by Chuchie Garcia were
part of the loot taken by defendants-appellees Constantino and Arcilla. Yet not once did plaintiff-appellant
Sesbreño or any of his witnesses mention that a conspiracy existed between these people. Clearly, much like his
other allegations, it is nothing more than an afterthought by plaintiff-appellant Sesbreño.
All in all, the allegations against defendants-appellees appear to be nothing more than a put-on to save face. For
the simple truth is that the inspection exposed plaintiff-appellant Sesbreño as a likely cheat and thief.
 xxxx
Neither is this Court swayed by the testimonies of Baledio and Lopez.1âwphi1 The lower court rightly described
their testimonies as fraught by discrepancies and inconsistencies on material points and even called Lopez a
perjured witness. On the other hand, it is odd that plaintiff-appellant Sesbreño chose not to present the witness
whose testimony was very crucial. But even though Chuchie Garcia never testified, her absence speaks volumes.
Whereas plaintiff-appellant Sesbreño claimed that the VOC Team forced her to sign two documents that made
her appear to be his authorized agent or representative, the latter claimed otherwise and that she also gave them
permission to enter and search the house. The person most qualified to refute the VOC Team’s claim is Chuchie
Garcia herself. It is axiomatic that he who asserts a fact or claim must prove it. He cannot transfer that burden to
the person against whom he asserts such fact or claim. When certain evidence is suppressed, the presumption is
that it will adversely affect the cause of the party suppressing it, should it come to light. x x x9
Upon denial of his motion for reconsideration,10 Sesbreño appealed.
Issue: Was Sesbreño entitled to recover damages for abuse of rights?
Ruling: The appeal has no merit.
Sesbreño’s main contention is that the inspection of his residence by the VOC team was an unreasonable search
for being carried out without a warrant and for being allegedly done with malice or bad faith.
Before dealing with the contention, we have to note that two distinct portions of Sesbreño’s residence were
inspected by the VOS team – the garage where the electric meter was installed, and the main premises where
the four bedrooms, living rooms, dining room and kitchen were located.
Anent the inspection of the garage where the meter was installed, the respondents assert that the VOC team had
the continuing authority from Sesbreño as the consumer to enter his premises at all reasonable hours to conduct
an inspection of the meter without being liable for trespass to dwelling. The authority emanated from paragraph 9
of the metered service contract entered into between VECO and each of its consumers, which provided as
follows:
9. The CONSUMER agrees to allow properly authorized employees or representatives of the COMPANY to enter
his premises at all reasonable hours without being liable to trespass to dwelling for the purpose of inspecting,
installing, reading, removing, testing, replacing or otherwise disposing of its property, and/or removing the
COMPANY’S property in the event of the termination of the contract for any cause.11
Sesbreño contends, however, that paragraph 9 did not give Constantino, Arcilla and Balicha the blanket authority
to enter at will because the only property VECO owned in his premises was the meter; hence, Constantino and
Arcilla should enter only the garage. He denies that they had the right to enter the main portion of the house and
inspect the various rooms and the appliances therein because those were not the properties of VECO. He posits
that Balicha, who was not an employee of VECO, had no authority whatsoever to enter his house and conduct a
search. He concludes that their search was unreasonable, and entitled him to damages in light of their admission
that they had entered and inspected his premises without a search warrant.12
We do not accept Sesbreño’s conclusion.1avvphi1 Paragraph 9 clothed the entire VOC team with unquestioned
authority to enter the garage to inspect the meter. The members of the team obviously met the conditions
imposed by paragraph 9 for an authorized entry. Firstly, their entry had the objective of conducting the routine
inspection of the meter.13 Secondly, the entry and inspection were confined to the garage where the meter was
installed.14 Thirdly, the entry was effected at around 4 o’clock p.m., a reasonable hour.15 And, fourthly, the
persons who inspected the meter were duly authorized for the purpose by VECO.
Although Balicha was not himself an employee of VECO,16 his participation was to render police assistance to
ensure the personal security of Constantino and Arcilla during the inspection, rendering him a necessary part of
the team as an authorized representative. Under the circumstances, he was authorized to enter considering that
paragraph 9 expressly extended such authority to "properly authorized employees or representatives" of VECO.
It is true, as Sesbreño urges, that paragraph 9 did not cover the entry into the main premises of the residence.
Did this necessarily mean that any entry by the VOS team into the main premises required a search warrant to be
first secured?
Sesbreño insists so, citing Section 2, Article III of the 1987 Constitution, the clause guaranteeing the right of
every individual against unreasonable searches and seizures, viz:
Section 2. The right of the people to be secure in their persons, houses, papers and effects against unreasonable
searches and seizures of whatever nature and for any purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause to be determined personally 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.
He states that a violation of this constitutional guaranty rendered VECO and its VOS team liable to him for
damages by virtue of Article 32 (9) of the Civil Code, which pertinently provides:
Article 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:
xxxx
(9) The right to be secured in one’s person, house, papers, and effects against unreasonable searches and
seizures;
x x x x.
Sesbreño’s insistence has no legal and factual basis.
The constitutional guaranty against unlawful searches and seizures is intended as a restraint against the
Government and its agents tasked with law enforcement. It is to be invoked only to ensure freedom from arbitrary
and unreasonable exercise of State power. The Court has made this clear in its pronouncements, including that
made in People v. Marti,17 viz:
If the search is made upon the request of law enforcers, a warrant must generally be first secured if it is to pass
the test of constitutionality. However, if the search is made at the behest or initiative of the proprietor of a private
establishment for its own and private purposes, as in the case at bar, and without the intervention of police
authorities, the right against unreasonable search and seizure cannot be invoked for only the act of private
individual, not the law enforcers, is involved. In sum, the protection against unreasonable searches and seizures
cannot be extended to acts committed by private individuals so as to bring it within the ambit of alleged unlawful
intrusion by the government.18
It is worth noting that the VOC inspectors decided to enter the main premises only after finding the meter of
Sesbreño turned upside down, hanging and its disc not rotating. Their doing so would enable them to determine
the unbilled electricity consumed by his household. The circumstances justified their decision, and their
inspection of the main premises was a continuation of the authorized entry. There was no question then that their
ability to determine the unbilled electricity called for them to see for themselves the usage of electricity inside. Not
being agents of the State, they did not have to first obtain a search warrant to do so.
Balicha’s presence participation in the entry did not make the inspection a search by an agent of the State within
the ambit of the guaranty. As already mentioned, Balicha was part of the team by virtue of his mission order
authorizing him to assist and escort the team during its routine inspection.19 Consequently, the entry into the main
premises of the house by the VOC team did not constitute a violation of the guaranty.
Our holding could be different had Sesbreño persuasively demonstrated the intervention of malice or bad faith on
the part of Constantino and Arcilla during their inspection of the main premises, or any excessiveness committed
by them in the course of the inspection. But Sesbreño did not. On the other hand, the CA correctly observed that
the inspection did not zero in on Sesbreño’s residence because the other houses within the area were similarly
subjected to the routine inspection.20 This, we think, eliminated any notion of malice or bad faith.
Clearly, Sesbreño did not establish his claim for damages if the respondents were not guilty of abuse of rights. To
stress, the concept of abuse of rights prescribes that a person should not use his right unjustly or in bad faith;
otherwise, he may be liable to another who suffers injury. The rationale for the concept is to present some basic
principles to be followed for the rightful relationship between human beings and the stability of social
order.21 Moreover, according to a commentator,22 "the exercise of right ends when the right disappears, and it
disappears when it is abused, especially to the prejudice of others[;] [i]t cannot be said that a person exercises a
right when he unnecessarily prejudices another." Article 19 of the Civil Code23 sets the standards to be observed
in the exercise of one’s rights and in the performance of one’s duties, namely: (a) to act with justice; (b) to give
everyone his due; and (c) to observe honesty and good faith. The law thereby recognizes the primordial limitation
on all rights – that in the exercise of the rights, the standards under Article 19 must be observed.24
Although the act is not illegal, liability for damages may arise should there be an abuse of rights, like when the act
is performed without prudence or in bad faith. In order that liability may attach under the concept of abuse of
rights, the following elements must be present, to wit: (a) the existence of a legal right or duty, (b) which is
exercised in bad faith, and (c) for the sole intent of prejudicing or injuring another.25 There is no hard and fast rule
that can be applied to ascertain whether or not the principle of abuse of rights is to be invoked. The resolution of
the issue depends on the circumstances of each case.
Sesbreño asserts that he did not authorize Baledio or Chuchie Garcia to let anyone enter his residence in his
absence; and that Baledio herself confirmed that the members of the VOC team had intimidated her into letting
them in.
The assertion of Sesbreño is improper for consideration in this appeal.1âwphi1 The RTC and the CA
unanimously found the testimonies of Sesbreño’s witnesses implausible because of inconsistencies on material
points; and even declared that the non-presentation of Garcia as a witness was odd if not suspect. Considering
that such findings related to the credibility of the witnesses and their testimonies, the Court cannot review and
undo them now because it is not a trier of facts, and is not also tasked to analyze or weigh evidence all over
again.26 Verily, a review that may tend to supplant the findings of the trial court that had the first-hand opportunity
to observe the demeanor of the witnesses themselves should be undertaken by the Court with prudent hesitation.
Only when Sesbreño could make a clear showing of abuse in their appreciation of the evidence and records by
the trial and the appellate courts should the Court do the unusual review of the factual findings of the trial and
appellate courts.27 Alas, that showing was not made here.
Nor should the Court hold that Sesbreño was denied due process by the refusal of the trial judge to inhibit from
the case. Although the trial judge had issued an order for his voluntary inhibition, he still rendered the judgment in
the end in compliance with the instruction of the Executive Judge, whose exercise of her administrative authority
on the matter of the inhibition should be respected.28 In this connection, we find to be apt the following
observation of the CA, to wit:
x x x. Both Judge Paredes and Judge Priscila Agana serve the Regional Trial Court and are therefore of co-equal
rank. The latter has no authority to reverse or modify the orders of Judge Paredes. But in ordering Judge Paredes
to continue hearing the case, Judge Agana did not violate their co-equal status or unilaterally increased her
jurisdiction. It is merely part of her administrative responsibilities as Executive Judge of the Regional Trial Court
of Cebu City, of which Judge Paredes is also a member.29
Lastly, the Court finds nothing wrong if the writer of the decision in the CA refused to inhibit from participating in
the resolution of the motion for reconsideration filed by Sesbrefio. The motion for her inhibition was grounded on
suspicion of her bias and prejudice,30 but suspicion of bias and prejudice were not enough grounds for
inhibition.31
Suffice it to say that the records are bereft of any indication that even suggested that the Associate Justices of
the CA who participated in the promulgation of the decision were tainted with bias against him.
WHEREFORE, the Court DENIES the pet1t1on for review on certiorari; AFFIRMS the decision promulgated on
March 10, 2003; and DIRECTS the petitioner to pay the costs of suit.
SO ORDERED.
A.C. No. 4697 November 25, 2014
FLORENCIO A. SALAD AGA, Complainant,
vs.
ATTY. ARTURO B. ASTORGA, Respondent.
x-----------------------x
A.C. No. 4728
FLORENCIO A. SALADAGA, Complainant, vs.
ATTY. ARTURO B. ASTORGA, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Membership in the legal profession is a high personal privilege burdened with conditions,1 including continuing
fidelity to the law and constant possession of moral fitness. Lawyers, as guardians of the law, play a vital role in
the preservation of society, and a consequent obligation of lawyers is to maintain the highest standards of
ethical conduct.2 Failure to live by the standards of the legal profession and to discharge the burden of the
privilege conferred on one as a member of the bar warrant the suspension or revocation of that privilege.
The Factual Antecedents
Complainant Florencio A. Saladaga and respondent Atty. Arturo B. Astorga entered into a "Deed of Sale with
Right to Repurchase" on December 2, 1981 where respondent sold (with rightof repurchase) to complainant a
parcel of coconut land located at Barangay Bunga, Baybay, Leyte covered by Transfer Certificate of Title (TCT)
No. T-662 for ₱15,000.00. Under the said deed, respondent represented that he has "the perfect right to dispose
as owner in fee simple" the subject property and that the said property is "free from all liens and
encumbrances."3 The deed also provided that respondent, as vendor a retro, had two years within which to
repurchase the property, and if not repurchased within the said period, "the parties shall renew [the]
instrument/agreement."4
Respondent failed to exercise his right of repurchase within the period provided in the deed, and no renewal of
the contract was made even after complainant sent respondent a final demand dated May 10, 1984 for the latter
to repurchase the property. Complainant remained in peaceful possession of the property until December 1989
when he received letters from the Rural Bank of Albuera (Leyte), Inc. (RBAI) informing him that the property was
mortgaged by respondent to RBAI, that the bank had subsequently foreclosed on the property, and that
complainant should therefore vacate the property.5
Complainant was alarmed and made aninvestigation. He learned the following:
(1) TCT No. T-662 was already cancelled by TCT No. T-3211 in the name of Philippine National
Bank (PNB) as early as November 17, 1972 after foreclosure proceedings;
(2) TCT No. T-3211 was cancelled by TCT No. T-7235 in the names of respondent and his wife on
January 4, 1982 pursuant to a deed of sale dated March 27,1979 between PNB and respondent;
(3) Respondent mortgaged the subject property to RBAI on March 14, 1984, RBAI foreclosed on
the property, and subsequently obtained TCT No. TP-10635 on March
27, 1991.6 Complainant was subsequently dispossessed of the property by RBAI.7
Aggrieved, complainant instituted a criminal complaint for estafa against respondent with the
Office of the Provincial Prosecutor of Leyte, docketed as I.S. No. 95-144. The Provincial Prosecutor of Leyte
approved the Resolution8 dated April 21, 1995 in I.S. No. 95-144 finding that "[t]he facts of [the] case are
sufficient to engender a well-founded belief that Estafa x x x has been committed and that respondent herein is
probably guilty thereof."9 Accordingly, an Information10 dated January 8,1996 was filed before the Municipal Trial
Court (MTC) of Baybay, Leyte, formally charging respondent with the crime of estafa under Article 316,
paragraphs 1 and 2 of the Revised Penal Code,11 committed as follows:
On March 14, 1984, accused representing himself as the owner of a parcel of land known as
Lot No. 7661 of the Baybay Cadastre, mortgaged the same to the Rural Bank of Albuera, Albuera, Leyte, within
the jurisdiction of this Honorable Court, knowing fully well that the possessor and owner at that time was private
complainant Florencio Saladaga by virtue of a Pacto de Retro Sale which accused executed in favor of private
complainant on 2nd December, 1981, without first redeeming/repurchasing the same. [P]rivate complainant
knowing of accused[’s] unlawful act only on or about the last week of February, 1991 when the rural bank
dispossessed him of the property, the mortgage having been foreclosed, private complainant thereby suffered
damages and was prejudiced by accused[’s] unlawful transaction and misrepresentation.
The aforementioned estafa case against respondent was docketed as Criminal Case No. 3112-A.
Complainant likewise instituted the instant administrative cases against respondent by filing before this Court an
Affidavit-Complaint12 dated January 28, 1997 and Supplemental Complaint13 dated February 27, 1997, which
were docketed as A.C. No. 4697 and A.C. No. 4728, respectively. In both complaints, complainant sought the
disbarment of respondent.
The administrative cases were referred to the Integrated Bar of the Philippines (IBP) for investigation, report and
recommendation.14
In his Consolidated Answer15 dated August 16, 2003 filed before the IBP, respondent denied that his agreement
with complainant was a pacto de retrosale. He claimed that it was an equitable mortgage and that, if only
complainant rendered an accounting of his benefits from the produce of the land, the total amount would have
exceeded ₱15,000.00.
Report and Recommendation of the Investigating Commissioner and Resolution of the IBP Board of Governors
In a Report and Recommendation16 dated April 29, 2005, the Investigating Commissioner of the IBP’s
Commission on Bar Discipline found that respondent was in bad faith when he dealt with complainant and
executed the "Deed of Sale with Right to Repurchase" but later on claimed that the agreement was one of
equitable mortgage. Respondent was also guilty of deceit or fraud when he represented in the "Deed of Sale with
Right to Repurchase" dated December 2, 1981 that the property was covered by TCT No. T-662, even giving
complainant the owner’s copy of the said certificate of title, when the said TCT had already been cancelled on
November 17, 1972 by TCT No. T-3211 in the name of Philippine National Bank (PNB). Respondent made
matters even worse, when he had TCT No. T-3211 cancelled with the issuance of TCT No. T-7235 under his and
his wife’s name on January 4,1982 without informing complainant. This was compounded by respondent’s
subsequent mortgage of the property to RBAI, which led to the acquisition of the property by RBAI and the
dispossession thereof of complainant. Thus, the Investigating Commissioner recommended that respondent be
(1) suspended from the practice of law for one year, with warning that a similar misdeed in the future shall be
dealt with more severity, and (2) ordered to return the sum of ₱15,000.00, the amount he received as
consideration for the pacto de retrosale, with interest at the legal rate.
Considering respondent’s "commission of unlawful acts, especially crimes involving moral turpitude, actsof
dishonesty, grossly immoral conduct and deceit," the IBP Board of
Governors adopted and approved the Investigating Commissioner’s Report and
Recommendation with modification as follows: respondent is(1) suspended from the practice of law for two
years, with warning that a similar misdeed in the future shall be dealt with more severity, and (2) ordered to
return the sum of ₱15,000.00 received in consideration of the pacto de retrosale, with legal interest.17
The Court’s Ruling
The Court agrees with the recommendation of the IBP Board of Governors to suspend respondent from the
practice of law for two years, but it refrains from ordering respondent to return the ₱15,000.00 consideration, plus
interest.
Respondent does not deny executing the "Deed of Sale with Right to Repurchase" dated December 2, 1981 in
favor of complainant. However, respondent insists that the deed is not one of sale with pacto de retro, but one of
equitable mortgage. Thus, respondent argues that he still had the legal right to mortgage the subject property to
other persons. Respondent additionally asserts that complainant should render an accounting of the produce the
latter had collected from the said property, which would already exceed the ₱15,000.00 consideration stated in
the deed.
There is no merit in respondent’s defense.
Regardless of whether the written contract between respondent and complainant is actually one of sale with
pacto de retroor of equitable mortgage, respondent’s actuations in his transaction with complainant, as well as in
the present administrative cases, clearly show a disregard for the highest standards of legal proficiency, morality,
honesty, integrity, and fair dealing required from lawyers, for which respondent should be held administratively
liable.
When respondent was admitted to the legal profession, he took an oath where he undertook to "obey the laws,"
"do no falsehood," and "conduct [him]self as a lawyer according to the best of [his] knowledge and discretion."18
He gravely violated his oath.
The Investigating Commissioner correctly found, and the IBP Board of Governors rightly agreed, that respondent
caused the ambiguity or vagueness in the "Deed of Sale with Right to Repurchase" as he was the one who
prepared or drafted the said instrument. Respondent could have simply denominated the instrument as a deed of
mortgage and referred to himself and complainant as "mortgagor" and "mortgagee," respectively, rather than as
"vendor a retro" and "vendee a retro." If only respondent had been more circumspect and careful in the drafting
and preparation of the deed, then the controversy between him and complainant could havebeen avoided or, at
the very least, easily resolved. His imprecise and misleading wording of the said deed on its face betrayed lack
oflegal competence on his part. He thereby fell short of his oath to "conduct [him]self as a lawyer according to
the best of [his] knowledge and discretion."
More significantly, respondent transgressed the laws and the fundamental tenet of human relations asembodied
in Article 19 of the Civil Code:
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.
Respondent, as owner of the property, had the right to mortgage it to complainant but, as a lawyer, he should
have seen to it that his agreement with complainant is embodied in an instrument that clearly expresses the
intent of the contracting parties. A lawyer who drafts a contract must see to it that the agreement faithfully and
clearly reflects the intention of the contracting parties. Otherwise, the respective rights and obligations of the
contracting parties will be uncertain, which opens the door to legal disputes between the said parties. Indeed, the
uncertainty caused by respondent’s poor formulation of the "Deed of Sale with Right to Repurchase" was a
significant factor in the legal controversy between respondent and complainant. Such poor formulation reflects at
the very least negatively on the legal competence of respondent.
Under Section 63 of the Land Registration Act,19 the law in effect at the time the PNB acquired the subject
property and obtained TCT No. T-3211 in its name in 1972, where a decree in favor of a purchaser who acquires
mortgaged property in foreclosure proceedings becomes final, such purchaser becomes entitled to the issuance
of a new certificate of title in his name and a memorandum thereof shall be "indorsed upon the mortgagor’s
original certificate."20 TCT No. T-662, which respondent gave complainant when they entered into the "Deed of
Sale with Right to Repurchase" dated December 2, 1981, does not bearsuch memorandum but only a
memorandum on the mortgage of the property to PNB in 1963 and the subsequent amendment of the mortgage.
Respondent dealt with complainant with bad faith, falsehood, and deceit when he entered into the "Deed of Sale
with Right to Repurchase" dated December 2, 1981 with the latter. He made it appear that the property was
covered by TCT No. T-662 under his name, even giving complainant the owner’s copy of the said certificate
oftitle, when the truth is that the said TCT had already been cancelled some nine years earlier by TCT No. T-
3211 in the name of PNB. He did not evencare to correct the wrong statement in the deed when he was
subsequently issued a new copy of TCT No. T-7235 on January 4, 1982,21 or barely a month after the execution
of the said deed. All told, respondent clearly committed an act of gross dishonesty and deceit against
complainant.
Canon 1 and Rule 1.01 of the Codeof Professional Responsibility provide:
CANON 1 – A lawyer shall uphold the constitution, obey the laws of the land and promote respect for law and legal
processes.
Rule 1.01 – A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct. Under Canon 1, a
lawyer is not only mandated to personally obey the laws and the legal processes, he is moreover expected to
inspire respect and obedience thereto. On the other hand, Rule 1.01 states the norm of conduct that is expected
of all lawyers.22
Any act or omission that is contrary to, prohibited or unauthorized by, in defiance of, disobedient to, or disregards
the law is "unlawful." "Unlawful" conduct does not necessarily imply the element of criminality although the
concept is broad enough to include such element.23
To be "dishonest" means the disposition to lie, cheat, deceive, defraud or betray; be untrustworthy; lacking
inintegrity, honesty, probity, integrity in principle, fairness and straightforwardness. On the other hand, conduct
that is "deceitful" means as follows:
[Having] the proclivity for fraudulent and deceptive misrepresentation, artifice or device that is used upon another
who is ignorant of the true facts, to the prejudice and damage of the party imposed upon. In order to be deceitful,
the person must either have knowledge of the falsity or acted in reckless and conscious ignorance thereof,
especially if the parties are not on equal terms, and was done with the intent that the aggrieved party act
thereon, and the latter indeed acted in reliance of the false statement or deed in the manner contemplated to his
injury.24 The actions of respondent in connection with the execution of the "Deed of Sale with Right to
Repurchase" clearly fall within the concept of unlawful, dishonest, and deceitful conduct. They violate Article 19
of the Civil Code. They show a disregard for Section 63 of the Land Registration Act. They also reflect bad faith,
dishonesty, and deceit on respondent’s part. Thus, respondent deserves to be sanctioned.
Respondent’s breach of his oath, violation of the laws, lack of good faith, and dishonesty are compounded by his
gross disregard of this Court’s directives, as well as the orders of the IBP’s Investigating Commissioner (who was
acting as an agent of this Court pursuant to the Court’s referral of these cases to the IBP for investigation, report
and recommendation), which caused delay in the resolution of these administrative cases.
In particular, the Court required respondent to comment on complainant’s Affidavit-Complaint in A.C. No. 4697
and Supplemental Complaint in A.C. No. 4728 on March 12, 1997 and June 25, 1997, respectively.25 While he
requested for several extensions of time within which to submit his comment, no such comment was submitted
prompting the Court to require him in a Resolution dated February 4,1998 to (1) show cause why he should not
be disciplinarily dealt with or held in contempt for such failure, and (2) submit the consolidated comment.26
Respondent neither showed cause why he should not be disciplinarily dealt with or held in contempt for such
failure, nor submitted the consolidated comment.
When these cases were referred to the IBP and during the proceedings before the IBP’s Investigating
Commissioner, respondent was again required several times to submit his consolidated answer. He only
complied on August 28, 2003, or more than six years after this Court originally required him to do so. The
Investigating Commissioner also directed the parties to submit their respective position papers. Despite having
been given several opportunities to submit the same, respondent did not file any position paper.27
Respondent’s disregard of the directives of this Court and of the Investigating Commissioner, which caused
undue delay in these administrative cases, contravenes the following provisions of the Code of Professional
Responsibility:
CANON 11 – A lawyer shall observe and maintain the respect due to the courts and to judicial officers and should
insist on similar conduct by others.
xxxx
CANON 12 – A lawyer shall exert every effort and consider it his duty to assist in the speedy and efficient
administration of justice.
xxxx
Rule 12.03 – A lawyer shall not, after obtaining extensions of time to file pleadings, memoranda or briefs, let the
period lapse without submitting the same or offering an explanation for his failure to do so.
Rule 12.04 – A lawyer shall not unduly delay a case, impede the execution of a judgment or misuse court
processes.
Respondent’s infractions are aggravated by the fact that he has already been imposed a disciplinary sanction
before.1âwphi1 In Nuñez v. Atty. Astorga,28 respondent was held liable for conduct unbecoming an attorney for
which he was fined ₱2,000.00.
Given the foregoing, the suspension of respondent from the practice of law for two years, as recommended by the
IBP Board of Governors, is proper.
The Court, however, will not adopt the recommendation of the IBP to order respondent to return the sum of
₱15,000.00 he received from complainant under the "Deed of Sale with Right to Repurchase." This is a civil
liability best determined and awarded in a civil case rather than the present administrative cases.
In Roa v. Moreno,29 the Court pronounced that "[i]n disciplinary proceedings against lawyers, the only issue is
whether the officer of the court is still fit to be allowed to continue as a member of the Bar. Our only concern is
the determination of respondent’s administrative liability. Our findings have no material bearing on other judicial
action which the parties may choose to file against each other."While the respondent lawyer’s wrongful
actuations may give rise at the same time to criminal, civil, and administrative liabilities, each must be
determined in the appropriate case; and every case must be resolved in accordance with the facts and the law
applicable and the quantum of proof required in each. Section 5,30 in relation to Sections 131 and 2,32 Rule 133 of
the Rules of Court states that in administrative cases, such as the ones atbar, only substantial evidence is
required, not proof beyond reasonable doubt as in criminal cases, or preponderance of evidence asin civil cases.
Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion.33
The Court notes that based on the same factual antecedents as the present administrative cases, complainant
instituted a criminal case for estafa against respondent, docketed as Criminal Case No. 3112-A, before the
MTC. When a criminal action is instituted, the civil action for the recovery of civil liability arising from the offense
charged shall be deemed instituted with the criminal action unless the offended party waives the civil action,
reserves the right to institute it separately or institutes the civil action prior to the criminal action.34 Unless the
complainant waived the civil action, reserved the right to institute it separately, or instituted the civil action prior
to the criminal action, then his civil action for the recovery of civil liability arising from the estafa committed by
respondent is deemed instituted with Criminal Case No. 3112-A. The civil liability that complainant may recover
in Criminal Case No. 3112-A includes restitution; reparation of the damage caused him; and/or indemnification
for consequential damages,35 which may already cover the ₱15,000.00 consideration complainant had paid for
the subject property.
WHEREFORE, respondent is hereby found GUILTY of the following: breach of the Lawyer’s Oath; unlawful,
dishonest, and deceitful conduct; and disrespect for the Court and causing undue delay of these cases, for which
he is SUSPENDED from the practice of law for a period of two (2) years, reckoned from receipt of this Decision,
with WARNING that a similar misconduct in the future shall be dealt with more severely.
Let a copy of this Decision be furnished the Office of the Bar Confidant and the Integrated Bar of the Philippines
for their information and guidance. The Court Administrator is directed to circulate this Decision to all courts in
the country.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
WE CONCUR:
[ G.R. No. 190667. November 07, 2016 ]
COCA-COLA BOTTLERS PHILIPPINES, INC., PETITIONER, VS. SPOUSES JOSE R. BERNARDO AND
LILIBETH R. BERNARDO, DOING BUSINESS UNDER THE NAME AND STYLE "JOLLY BEVERAGE
ENTERPRISES," RESPONDENTS.
DECISION
SERENO, C.J.:
This is a Petition for Review[1] filed by Coca-Cola Bottlers Philippines, Inc. (petitioner), from the Court of Appeals
(CA) Decision[2] and Resolution[3] in CA-GR. CV No. 91096. The CA affirmed in toto the Decision[4] of Regional
Trial Court (RTC) Branch 88 in Quezon City in Civil Case No. Q-00-42320.
This case originated from the claim for damages filed by respondent spouses Jose and Lilibeth Bernardo
(respondents) against petitioner for violation of Articles 19, 20, 21, and 28 of the Civil Code. The RTC found
petitioner liable to pay respondents temperate damages in the amount of P500,000 for loss of goodwill, to be
offset against the latter's outstanding balance for deliveries in the amount of P449,154. The trial court ordered
petitioner to pay P50,000 as moral damages, P20,000 as exemplary damages, and P100,000 as attorney's fees.
Petitioner asserts that the Complaint had no basis, and that the trial court had no jurisdiction to award temperate
damages in an amount equivalent to the outstanding obligation of respondents. It prays not only for the reversal
of the assailed judgments, but also for an award of moral and exemplary damages, as well as attorney's fees
and litigation expenses. It also asks that respondents be ordered to pay P449,154 plus legal interest from the
date of demand until full payment.[5]
We deny the Petition.
FACTS
Petitioner is a domestic corporation engaged in the large-scale manufacture, sale, and distribution of beverages
around the country.[6] On the other hand, respondents, doing business under the name "Jolly Beverage
Enterprises," are wholesalers of softdrinks in Quezon City, particularly in the vicinities of Bulacan Street, V. Luna
Road, Katipunan Avenue, and Timog Avenue.[7]
The business relationship between the parties commenced in 1987 when petitioner designated respondents as
its distributor.[8] On 22 March 1994, the parties formally entered into an exclusive dealership contract for three
years.[9] Under the Agreement,[10] petitioner would extend developmental assistance to respondents in the form
of cash assistance and trade discount incentives. For their part, respondents undertook to sell petitioner's
products exclusively, meet the sales quota of 7,000 cases per month, and assist petitioner in its marketing
efforts.[11]
On 1 March 1997, the parties executed a similar agreement tor another two years, or until 28 February 1999.[12]
This time, petitioner gave respondents complimentary cases of its products instead of cash assistance, and
increased the latter's sales quota to 8,000 cases per month.
For 13 years, the parties enjoyed a good and harmonious business partnership.[13] While the contracts contained
a clause for breach, it was never enforced.[14]
Sometime in late 1998 or early 1999, before the contract expired, petitioner required respondents to submit a list
of their customers on the pretext that it would formulate a policy defining its territorial dealership in Quezon
City.[15] It assured respondents that their contract would be renewed for a longer period, provided that they would
submit the list.[16] However, despite their compliance, the promise did not materialize.[17]
Respondents discovered that in February 1999, petitioner started to reach out to the persons whose names were
on the list.[18] Respondents also received reports that their delivery trucks were being trailed by petitioner's
agents; and that as soon as the trucks left, the latter would approach the former's customers.[19] Further,
respondents found out that petitioner had employed a different pricing scheme, such that the price given to
distributors was significantly higher than that given to supermarkets.[20] It also enticed direct buyers and sari-sari
store owners in the area with its "Coke Alok" promo, in which it gave away one free bottle for every case
purchased.[21] It further engaged a store adjacent to respondents' warehouse to sell the former's products at a
substantially lower price.[22]
Respondents claimed that because of these schemes, they lost not only their major customers - such as Peach
Blossoms, May Flower Restaurant, Saisaki Restaurant, and Kim Hong Restaurant but also small stores, such as
the canteen in the hospital where respondent Jose Bernardo worked.[23] They admitted that they were unable to
pay deliveries worth P449,154.[24]
Respondents filed a Complaint[25] for damages, alleging that the acts of petitioner constituted dishonesty, bad
faith, gross negligence, fraud, and unfair competition in commercial enterprise.[26] The Complaint was later
amended[27] to implead petitioner's officers and personnel, include additional factual allegations, and increase the
amount of damages prayed for.
Petitioner denied the allegations.[28] It maintained that it had obtained a list of clients through surveys, and that
promotional activities or developmental strategies were implemented only after the expiration of the
Agreements.[29] It opined that the filing of the complaint was a mere ploy resorted to by respondents to evade the
payment of the deliveries.[30]
The RTC held petitioner liable for damages for abuse of rights in violation of Articles 19, 20, and 21 of the Civil
Code and for unfair competition under Article 28. It found that petitioner's agents solicited the list of clients in
order to penetrate the market and directly supply customers with its products.[31] Moreover, the trial court found
that petitioner had recklessly ignored the rights of respondents to have a fair chance to engage in business or
earn a living when it deliberately used oppressive methods to deprive them of their business.[32] Its officers were,
however, absolved of liability, as there was no showing that they had acted in their individual and personal
capacities.[33]
In the body of its Decision, the RTC stated that petitioner should pay respondents P500,000 as temperate
damages, and that it was only just and fair that the latter offset this amount against their outstanding obligation to
petitioner in the amount of P449,154.[34] In the fallo, the trial court awarded P50,000 as moral damages, P20,000
as exemplary damages, and P100,000 as attorney's fees.[35] It denied petitioner's counterclaim for damages for
lack of factual and legal basis.[36] Petitioner moved for reconsideration, but the motion was denied.[37]
Petitioner then elevated the case to the CA, which affirmed the RTC Decision in toto. According to the appellate
court's ruling, petitioner had used its sizable resources to railroad the business of respondents:[38]
[Petitioner] infiltrated certain areas in Quezon City at the expense of and later, in derogation of its wholesalers,
particularly [respondents]. As admitted by Allan Mercado, the Integrated Selling and Marketing Manager of
appellant, it was previously dependent on wholesalers to circulate its products around the country. x x x.
xxxx
[T]owards the end of the partnership, appellant employed a different marketing scheme purportedly to obviate
the poor dealership management from wholesalers in major areas. But as may be shown by the incidents
leading to the filing of this case, this method was designed strategically to overrun [respondents'] business and
take over the customers of its wholesalers.
xxxx
One such method was "different pricing schemes" wherein the prices given to supermarkets and grocery stores
were considerably lower than those imposed on wholesalers. No prior advice thereof was given to [respondents]
or any of the wholesalers. In fact, they only knew of it when their customers began complaining about the
variation in prices of softdrinks sold in supermarkets and those that were sold by them. When in fact [respondent]
Bernardo personally inspected the products in grocery stores, he discovered that a box of Coke-in-can is sold at
P40.00, lower than those offered by them as wholesalers.
About the same time, [petitioner] also implemented the "Area Market Cooperatives" (AMC) and the "Coke-Alok"
promo. Under the AMC, customers of wholesalers can purchase [petitioner's] products from prominent stores in
heavily crowded areas for P76.00 per case, as opposed to [respondent's] offering of P112.00. In "Coke-Alok,"
[petitioner] directly sold Coke products to wholesale customers with incentives as free bottle of Coke for every
case of softdrinks purchased. Being of limited resources, [respondents had no] means to equal the lucrative
incentives given by [petitioner] to their customers.
xxxx
Apart from direct selling and other promotions, [petitioner] also employed high-handed means that further shrunk
[respondents'] market coverage. In one instance, [petitioner's sales representative] advised [respondents] and
other wholesalers to keep away from major thoroughfares. Apparently, [petitioner] was going to supply their
products to these stores themselves. x x x.
xxxx
x x x Furthermore, one of [petitioner's] representatives, Nelson Pabulayan, admitted that he sold products at the
canteen in V. Luna Hospital [which was then being serviced by respondents].
As if that was not enough, petitioner engaged other stores, such as Freezel's Bakeshop that was located
adjacent to [respondent's] warehouse, to sell Coke products at a price substantially lower than [that offered by
respondents].
ISSUES
Petitioner argues that the trial court had no jurisdiction to award temperate damages that were not prayed for in
the Complaint. It further asserts that it did not violate Articles 19, 20, 21 or 28; hence, the award of damages and
attorney's fees was improper.
OUR RULING
The CA did not err in affirming the finding that petitioner was liable for temperate, moral and exemplary damages,
as well as attorney's fees, tor abuse of rights and unfair competition.
The Petition raises questions of fact.
Petitioner ignores the nature of a petition for review as a remedy against errors of law. Instead, it raises factual
matters that have already been passed upon by the RTC and the CA.
It insists on the following facts: 1) the "promotional activities" were implemented after the dealership agreements
expired;[39] 2) the "developmental strategies" were implemented nationwide and were not meant to destroy the
business of respondents;[40] 3) its agents did not follow the trucks of Jolly Beverages;[41] 4) the price difference
resulted because respondents could no longer avail of trade discounts and incentives under the expired
Agreement;[42] and 5) there is no causal connection between the promotional activities and the claimed losses of
respondents.[43]
Petitioner contends that since it did not assign any exclusive territory to respondents, the latter had no exclusive
right to any customer.[44] It supposedly decided to rely on its own sales personnel to push the sale of its products,
because the distributors had violated the terms of their agreements by selling competing products, failing to meet
the required sales volume, or failing to pay on time.[45] Petitioner, however, did not allege that respondents
committed any of these actions during the existence of the agreement.
We have repeatedly held that factual findings of the trial court, especially when affirmed by the appellate court,
are given great weight, even finality, by this Court.[46] Petitioner fails to make a convincing argument that this
case falls under any of the exceptions to the rule. On the contrary, the Decisions of the RTC and theCA appear to
be supported by the records.
Petitioner bewails the fact that the RTC and the CA, in establishing the facts, relied heavily on the testimony of
respondent Jose Bernardo.[47]
Petitioner, however, forgets that trial courts are in an ideal position to observe the demeanor of the witnesses and
can therefore discern if the latter are telling the truth or not.[48] In this case, both the trial and the appellate courts
found the testimonies of respondent Jose Bernardo and his witnesses more credible than those of the witnesses
presented by petitioners. We shall not substitute our judgment for that of the trial court, absent any compelling
reason.
Petitioner is liable for damages for abuse of rights and unfair competition under the Civil Code.
Both the RTC and the CA found that petitioner had employed oppressive and high-handed schemes to unjustly
limit the market coverage and diminish the investment returns of respondents.[49] The CA summarized its findings
as follows:[50]
This [cut-throat competition] is precisely what appellant did in order to take over the market: directly sell its
products to or deal them off to competing stores at a price substantially lower than those imposed on its
wholesalers. As a result, the wholesalers suffered losses, and in [respondents'] case, laid ofT a number of
employees and alienated the patronage of its major customers including small-scale stores.
It must be emphasized that petitioner is not only a beverage giant, but also the manufacturer of the products;
hence, it sets the price. In addition, it took advantage of the infonnation provided by respondents to facilitate its
takeover of the latter's usual business area. Distributors like respondents, who had assisted petitioner in its
marketing efforts, suddenly found themselves with fewer customers. Other distributors were left with no choice
but to fold.[51]
Articles 19, 20, and 21 of the Civil Code provide the legal bedrock for the award of damages to a party who
suffers damage whenever another person commits an act in violation of some legal provision; or an act which,
though not con'itituting a transgression of positive law, nevertheless violates certain rudimentary rights of the
party aggrieved.[52] The provisions read:
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.
Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the
latter for the same.
Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damage.
In Albenson Enterprises Corp. v. CA,[53] this Court held that under any of the above provisions of law, an act that
causes injury to another may be made the basis for an award of damages.
As explained by this Court in GF Equity, Inc. v. Valenzona:[54]
The exercise of a right ends when the right disappears; and it disappears when it is abused, especially to the
prejudice of others. The mask of a right without the spirit of justice which gives it life is repugnant to the modern
concept of social law. It cannot be said that a person exercises a right when he unnecessarily prejudices another
or offends morals or good customs. Over and above the specific precepts of positive law are the supreme norms
of justice which the law develops and which are expressed in three principles: honeste vivere, alterum non
laedere and jus suum quique tribuere; and he who violates them violates the law.
For this reason, it is not permissible to abuse our rights to prejudice others. Meanwhile, the use of unjust,
oppressive, or high-handed business methods resulting in unfair competition also gives a right of action to the
injured party. Article 28 of the Civil Code provides:
Art. 28. Unfair competition in agricultural, commercial or industrial enterprises or in labor through the use of force,
intimidation, deceit, machination or any other unjust, oppressive or highhanded method shall give rise to a right
of action by the person who thereby sutlers damage.
Petitioner cites Tolentino, who in turn cited Colin and Capitant. According to the latter, the act of "a merchant
[who] puts up a store near the store of another and in this way attracts some of the latter's patrons" is not an
abuse of a right.[55] The scenario in the present case is vastly different: the merchant was also the producer who,
with the use of a list provided by its distributor, knocked on the doors of the latter's customers and offered the
products at a substantially lower price. Unsatisfied, the merchant even sold its products at a preferential rate to
another store within the vicinity. Jurisprudence holds that when a person starts an opposing place of business,
not for the sake of profit, but regardless of Joss and for the sole purpose of driving a competitor out of business,
in order to take advantage of the effects of a malevolent purpose, that person is guilty of a wanton wrong.[56]
Temperate, moral, and exemplary damages, as well as attorney's fees, were properly awarded.
Petitioner argues that the trial court did not have jurisdiction to grant an award of temperate damages, because
respondents did not specifically pray for it in their Amended Complaint: WHEREFORE, premises considered, it is
most respectfully prayed that the Honorable Court render a judgment directing defendants to:
1. Pay plaintiffs the amount of P1,000,000.00 representing loss of goodwill nurtured over the past
13 years as actual damages.
2. Pay plaintiffs the amount of P200,000 representing moral damages.
3. Pay plaintiffs the amount of P100,000 representing exemplary damages.
4. Pay plaintiffs the amount of P100,000 representing attorney's fees.
Other reliefs which are just and equitable under the premises are also prayed for. Petitioner's argument is flimsy
and unsupported even by the cases it has cited.[57] The CA correctly ruled that the award of temperate damages
was justified, even if it was not specifically prayed for, because 1) respondents did pray for the grant of "other
reliefs," and 2) the award was clearly warranted under the circumstances. Indeed, the law permits judges to
award a different kind of damages as an alternative to actual damages:
Civil Code, Art. 2224. Temperate or moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered
but its amount can not, from the nature of the case, be
provided with certainty. (Emphasis supplied)
Compensatory damages may be awarded in the concept of temperate damages for injury to business reputation
or business standing, loss of goodwill, and loss of customers who shifted their patronage to competitors.[58]
It is not extraordinary for courts to award temperate damages in lieu of actual damages. In Canada v. All
Commodities Marketing Corporation,[59] this Court awarded temperate damages in recognition of the pecuniary
loss suffered, after finding that actual damages could not be awarded for lack of proof. In Public Estates Authority
v. Chu,[60] this Court held that temperate damages should have been awarded by the trial court considering that
the plaintiff therein had suffered some pecuniary loss.
In this case, both the RTC and the CA found that respondents had similarly suffered pecuniary loss by reason of
petitioner's high-handed machinations to eliminate competition in the market.[61]
We see no grave error on the part of the RTC when it ruled that the unpaid obligation of respondents shall be
offset against the temperate damages due them from petitioner.[62] However, the trial court was not accurate in
considering the P500,000 temperate damages as adequate to completely extinguish the obligation of
respondents to petitioner.[63] We note that while the principal was P449,154, this amount earned legal interest
from the time of demand. Nonetheless, in view of the established fact that respondents incurred the losses after
their business was systematically crippled by petitioner, it is only proper and just that the obligation, as well as
the legal interest that has accrued, be deemed totally compensated by the temperate damages. Therefore,
respondents do not need to tender the amount of P449,154 plus legal interest to petitioner, while the latter does
not have to tender any amount as temperate damages to the former.
With regard to moral damages, petitioner argues that respondents failed to provide satisfactory proof that the
latter had undergone any suffering or injury.[64] This is a factual question that has been resolved by the trial court
in a Decision affirmed by the CA. The award finds legal basis under Article 2219(10) of the Civil Code, which
states that moral damages may be recovered in acts and actions referred to in Articles 21 and 28.[65]
Petitioner likewise questions the award of exemplary damages without "competent proof."[66] It cites Spouses
Villafuerte v. CA[67] as basis for arguing that the CA should have based its Decision regarding the fact and the
amount of exemplary damages upon competent proof that respondents have suffered injury and upon
evidence of the actual amount thereof. We enjoin petitioner's counsel to fully and carefully read the text of our
decisions before citing them as authority.[68] The excerpt lifted pertains to compensatory damages, not
exemplary damages. We remind counsel that exemplary damages are awarded under Article 2229 of the Civil
Code by way of example or correction for the public good. The determination of the amount is left to the
discretion of the judge; its proof is not incumbent upon the claimant.
There being no meritorious argument raised by petitioner, the award of exemplary damages must be sustained to
caution powerful business owners against the use of oppressive and high-handed commercial strategies to
target and trample on the rights of small business owners, who are striving to make a decent living.
Exemplary damages having been awarded, the grant of attorney's fees was therefore warranted.[69]
Petitioner's counterclaims for moral and exemplary damages, as well as attorney's fees and litigation
expenses, were properly denied.
The counterclaim for the payment of P449,154 plus legal interet was effectively granted when the trial court offset
the temperate damages awarded to respondents against the outstanding obligation of the latter to petitioner.
The counterclaims for moral and exemplary damages, as well as attorney's fees and litigation expenses, had no
basis and were properly denied. The fact that petitioner was compelled to engage the services of counsel in
order to defend itself against the suit of respondents did not entitle it to attorney's fees.
According to petitioner, it is entitled to moral damages, because "respondents clearly acted in a vexatious
manner when they instituted this suit."[70] We see nothing in the record to sustain this argument.
With respect to the prayer for exemplary damages, neither do we find any act of respondents that has to be
deterred.
WHEREFORE, the Petition is DENIED. The Decision dated 23 July 2009 and Resolution dated 19 November
2009 rendered by the Court of Appeals in CA-G.R. CV No. 91096, which affirmed in toto the Decision dated 28
September 2007 issued by Regional Trial Court Branch
88 Quezon City in Civil Case No. Q-00-42320, are
hereby AFFIRMED with MODIFICATION in that the damages awarded shall earn legal interest of 6% per annum
from the date of finality of this Decision until its full satisfaction. The total compensation of respondents' unpaid
obligation, including legal interest that has accrued, and the temperate damages awarded to them, is hereby
upheld.
SO ORDERED.
Leonardo-De Castro, Bersamin, Perlas-Bernabe, and Caguioa, JJ., concur.
[ G.R. No. 217426. December 04, 2017 ]
ST. MARTIN POLYCLINIC, INC., PETITIONER, V. LWV CONSTRUCTION CORPORATION, RESPONDENT.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari[1] are the Decision[2] dated July 11, 2014 and the Resolution[3]
dated February 27, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 125451, which affirmed with
modification the Decision[4] dated December 15, 2011 and the
Order dated May 25, 2012 of the Regional Trial Court of Mandaluyong City, Branch 211 (RTC) in SCA Case No.
MC11-879 (Civil Case No. 21881), and thereby ordered herein petitioner St. Martin Polyclinic, Inc. (petitioner) to
pay respondent LWV Construction Corporation (respondent) temperate damages in the amount of P50,000.00.
The Facts
Respondent is engaged in the business of recruiting Filipino workers for deployment to Saudi
Arabia.[5] On the other hand, petitioner is an accredited member of the Gulf Cooperative Council Approved
Medical Centers Association (GAMCA) and as such, authorized to conduct medical examinations of prospective
applicants for overseas employment.[6]
On January 10, 2008, respondent referred prospective applicant Jonathan V. Raguindin (Raguindin) to petitioner
for a pre-deployment medical examination in accordance with the instructions from GAMCA.[7] After undergoing
the required examinations, petitioner cleared
Raguindin and found him "fit for employment," as evidenced by a Medical Report[8] dated January 11, 2008
(Medical Report).[9]
Based on the foregoing, respondent deployed Raguindin to Saudi Arabia, allegedly incurring expenses in the
amount of P84,373.41.[10] Unfortunately, when Raguindin underwent another medical examination with the
General Care Dispensary of Saudi Arabia (General Care Dispensary) on March 24, 2008, he purportedly tested
positive for HCV or the hepatitis C virus. The Ministry of Health of the Kingdom of Saudi Arabia (Ministry of
Health) required a re-examination of Raguindin, which the General Care Dispensary conducted on April 28,
2008.[11] However, the results of the re-examination remained the same, i.e., Raguindin was positive for HCV,
which results were reflected in a Certification[12] dated April 28, 2008 (Certification). An undated HCV
Confirmatory Test Report[13] likewise conducted by the Ministry of Health affirmed such finding, thereby leading to
Raguindin's repatriation to the Philippines.[14]
Claiming that petitioner was reckless in issuing its Medical Report stating that Raguindin is "fit for employment"
when a subsequent finding in Saudi Arabia revealed that he was positive for HCV, respondent filed a
Complaint[15] for sum of money and damages against petitioner before the Metropolitan Trial Court of
Mandaluyong City, Branch 60 (MeTC). Respondent essentially averred that it relied on petitioner's declaration
and incurred expenses as a consequence. Thus, respondent prayed for the award of damages in the amount of
P84,373.41 representing the expenses it incurred in deploying Raguindin abroad.[16]
In its Answer with compulsory counterclaim,[17] petitioner denied liability and claimed that: first, respondent was
not a proper party in interest for lack of privity of contract between them; second, the MeTC had no jurisdiction
over the case as it involves the interpretation and implementation of a contract of employment; third, the action is
premature as Raguindin has yet to undergo a post-employment medical examination following his repatriation;
and fourth, the complaint failed to state a cause of action as the Medical Report issued by petitioner had already
expired on April 11, 2008, or three (3) months after its issuance on January 11, 2008.[18]
The MeTC Ruling
In a Decision[19] dated December 17, 2010, the MeTC rendered judgment in favor of respondent and ordered
petitioner to pay the amount of P84,373.41 as actual damages, P20,000.00 as attorney's fees, and the costs of
suit.[20]
At the onset, the MeTC held that it had jurisdiction over the case, since respondent was claiming actual damages
incurred in the deployment of Raguindin in the amount of P84,373.41.[21] It further ruled that respondent was a
real party in interest, as it would not have incurred expenses had petitioner not issued the Medical Report
certifying that Raguindin was fit to work.
On the merits, the MeTC found that respondent was entitled to be informed accurately of the precise condition of
Raguindin before deploying the latter abroad and consequently, had sustained damage as a result of the
erroneous certification.[22] In this relation, it rejected petitioner's contention that Raguindin may have contracted
the disease after his medical examination in the Philippines up to the time of his deployment, there being no
evidence offered to corroborate the same.[23]
Aggrieved, petitioner appealed to the RTC, contending,[24] among others, that respondent failed to comply with
the requirements on the authentication and proof of documents under Section 24,[25] Rule 132 of the Rules of
Court, considering that respondent's evidence, particularly the April 28, 2008 Certification issued by the General
Care Dispensary and the HCV Confirmatory Test Report issued by the Ministry of Health, are foreign documents
issued in Saudi Arabia.
The RTC Ruling
In a Decision[26] dated December 15, 2011, the RTC dismissed petitioner's appeal and affirmed the MeTC
Decision in its entirety.[27] Additionally, the RTC pointed out that petitioner can no longer change the theory of the
case or raise new issues on appeal, referring to the latter's argument on the authentication of respondent's
documentary evidence.[28]
Petitioner's motion for reconsideration[29] was denied in an Order[30] dated May 25, 2012.
Dissatisfied, petitioner elevated the case to the CA.[31]
The CA Ruling
In a Decision[32] dated July 11, 2014, the CA affirmed the RTC Decision, with the modification deleting the award
of actual damages and instead, awarding temperate damages in the amount of P50,000.00.[33]
The CA held that petitioner failed to perform its duty to accurately diagnose Raguindin when it issued its Medical
Report declaring the latter "fit for employment", considering that he was subsequently found positive for HCV in
Saudi Arabia.[34] Further, the CA opined that the Certification issued by the General Care Dispensary is not a
public document and in such regard, rejected petitioner's argument that the same is inadmissible in evidence for
not having been authenticated. Moreover, it remarked that petitioner's own Medical Report does not enjoy the
presumption of regularity as petitioner is merely an accredited clinic.[35] Finally, the CA ruled that petitioner could
not disclaim liability on the ground that Raguindin tested positive for HCV in Saudi Arabia after the expiration of
the Medical Report on April 11, 2008, noting that the General Care Dispensary issued its Certification on April 28,
2008, or a mere seventeen (17) days from the expiration of petitioner's Medical Report.[36] Hence, the CA
concluded that "it is contrary to human experience that a newly-deployed overseas worker, such as Raguindin,
would immediately contract a serious virus at the very beginning of a deployment."[37]
However, as the records are bereft of evidence to show that respondent actually incurred the amount of
P84,373.41 as expenses for Raguindin's deployment, the CA deleted the award of actual damages and instead,
awarded temperate damages in the amount of P50,000.00.[38]
Aggrieved, petitioner filed a motion for partial reconsideration,[39] which the CA denied in a Resolution[40] dated
February 27, 2015; hence, this petition.
The Issue Before the Court
The essential issue advanced for the Court's resolution is whether or not petitioner was negligent in issuing the
Medical Report declaring Raguindin "fit for employment" and hence, should be held liable for damages.
The Court's Ruling The petition is
granted.
I.
At the outset, it should be pointed out that a re-examination of factual findings cannot be done acting on a
petition for review on certiorari because the Court is not a trier of facts but reviews only questions of law.[41] Thus,
in petitions for review on certiorari, only questions of law may generally be put into issue. This rule, however,
admits of certain exceptions, such as "when the inference made is manifestly mistaken, absurd or impossible"; or
"when the findings are conclusions without citation of specific evidence on which they are based."[42] Finding a
confluence of certain exceptions in this case, the general rule that only legal issues may be raised in a petition
for review on certiorari under Rule 45 of the Rules of Court would not apply, and the Court retains the authority to
pass upon the evidence presented and draw conclusions therefrom.[43]
II.
An action for damages due to the negligence of another may be instituted on the basis of Article 2176 of the Civil
Code, which defines a quasi-delict:
Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this Chapter.
The elements of a quasi-delict are: (1) an act or omission; (2) the presence of fault or negligence in the
performance or non-performance of the act; (3) injury; (4) a causal connection between the negligent act
and the injury; and (5) no pre-existing contractual relation.[44]
As a general rule, any act or omission coming under the purview of Article 2176 gives rise to a cause of action
under quasi-delict. This, in turn, gives the basis for a claim of damages.[45] Notably, quasi-delict is one among
several sources of obligation. Article 1157 of the Civil Code states:
Article 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts.
However, as explained by Associate Justice Marvic M.V.F. Leonen (Justice Leonen) in his opinion in Alano v.
Magud-Logmao[46] (Alano), "Article 2176 is not an all-encompassing enumeration of all actionable wrongs
which can give rise to the liability for damages. Under the Civil Code, acts done in violation of Articles
19, 20, and 21 will also give rise to damages."[47] These provisions - which were cited as bases by the MTC,
RTC and CA in their respective rulings in this case - read as follows:
Article 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.
Article 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify
the latter for the same.
Article 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good
customs, or public policy shall compensate the latter for the damage.
"[Article 19], 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."[48] Case law states that "[w]hen 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 [then] be proper."[49] Between these two
provisions as worded, it is Article 20 which applies to both willful and negligent acts that are done contrary to
law. On the other hand, Article 21 applies only to willful acts done contra bonos mores.[50]
In the Alano case, Justice Leonen aptly elaborated on the distinctive applications of Articles 19, 20 and 21, which
are general provisions on human relations, vis-a-vis Article 2176, which particularly governs quasi-delicts:
Article 19 is the general rule which governs the conduct of human relations. By itself, it is not the basis of an
actionable tort. Article 19 describes the degree of care required so that an actionable tort may arise when it is
alleged together with Article 20 or Article 21.
Article 20 concerns violations of existing law as basis for an injury. It allows recovery should the act have
been willful or negligent. Willful may refer to the intention to do the act and the desire to achieve the outcome
which is considered by the plaintiff in tort action as injurious. Negligence may refer to a situation where the act
was consciously done but without intending the result which the plaintiff considers as injurious.
Article 21, on the other hand, concerns injuries that may be caused by acts which are not necessarily proscribed
by law. This article requires that the act be willful, that is, that there was an intention to do the act and a desire to
achieve the outcome. In cases under Article 21, the legal issues revolve around whether such outcome should
be considered a legal injury on the part of the plaintiff or whether the commission of the act was done in violation
of the standards of care required in Article 19.
Article 2176 covers situations where an injury happens through an act or omission of the defendant. When it
involves a positive act, the intention to commit the outcome is irrelevant. The act itself must not be a breach
of an existing law or a pre-existing contractual obligation. What will be considered is whether there is "fault
or negligence” attending the commission of the act which necessarily leads to the outcome considered as
injurious by the plaintiff. The required degree of diligence will then be assessed in relation to the circumstances
of each and every case.[51] (Emphases and underscoring supplied)
Thus, with respect to negligent acts or omissions, it should therefore be discerned that Article 20 of the Civil
Code concerns "violations of existing law as basis for an injury", whereas Article 2176 applies when
the negligent act causing damage to another does not constitute "a breach of an existing law or a pre-
existing contractual obligation."
In this case, the courts a quo erroneously anchored their respective rulings on the provisions of Articles 19, 20,
and 21 of the Civil Code. This is because respondent did not proffer (nor have these courts mentioned) any law
as basis for which damages may be recovered due to petitioner's alleged negligent act. In its amended
complaint, respondent mainly avers that had petitioner not issue a "fit for employment" Medical Report to
Raguindin, respondent would not have processed his documents, deployed him to Saudi Arabia, and later on - in
view of the subsequent findings that Raguindin was positive for HCV and hence, unfit to work - suffered actual
damages in the amount of P84,373.41.[52] Thus, as the claimed negligent act of petitioner was not premised on
the breach of any law, and not to mention the incontestable fact that no pre-existing contractual relation was
averred to exist between the parties, Article 2176 - instead of Articles 19, 20 and 21 - of the Civil Code should
govern.
III.
Negligence is defined as the failure to observe for the protection of the interests of another person, that degree of
care, precaution and vigilance which the circumstances justly demand, whereby such other person suffers
injury.[53]
As early as the case of Picart v. Smith,[54] the Court elucidated that "the test by which to determine the existence
of negligence in a particular case is: Did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent person would have used in the same situation?
If not, then he is guilty of negligence."[55] Corollary thereto, the Court stated that "[t]he question as to what would
constitute the conduct of a prudent man in a given situation must of course be always determined in the light of
human experience and in view of the facts involved in the particular case. Abstract speculation cannot here
be of much value x x x: Reasonable men govern their conduct by the circumstances which are before them or
known to them. They are not, and are not supposed to be, omniscient of the future. Hence[,] they can be
expected to take care only when there is something before them to suggest or warn of danger."[56]
Under our Rules of Evidence, it is disputably presumed that a person takes ordinary care of his concerns and
that private transactions have been fair and regular.[57] In effect, negligence cannot be presumed, and thus,
must be proven by him who alleges
it.[58] In Huang v. Philippine Hoteliers, Inc.:[59]
[T]he negligence or fault should be clearly established as it is the basis of her action. The burden of proof is upon
[the plaintiff]. Section 1, Rule 131 of the Rules of Court provides that "burden of proof is the duty of a party to
present evidence on the facts in issue necessary to establish his claim or defense by the amount of evidence
required by law." It is then up for the plaintiff to establish his cause of action or the defendant to establish his
defense. Therefore, if the plaintiff alleged in his complaint that he was damaged because of the negligent
acts of the defendant, he has the burden of proving such negligence. It is even presumed that a person
takes ordinary care of his concerns. The quantum of proof required is preponderance of evidence.[60]
(Emphasis and underscoring supplied)
The records of this case show that the pieces of evidence mainly relied upon by respondent to establish
petitioner's negligence are: (a) the Certification[61] dated April 28, 2008; and (b) the HCV Confirmatory Test
Report.[62] However, these issuances only indicate the results of the General Care Dispensary and Ministry of
Health's own medical examination of Raguindin finding him to be positive for HCV. Notably, the examination
conducted by the General Care Dispensary, which was later affirmed by the Ministry of Health, was conducted
only on
March 24, 2008, or at least two (2) months after petitioner issued its Medical Report on January 11, 2008.
Hence, even assuming that Raguindin's diagnosis for HCV was correct, the fact that he later tested positive for
the same does not convincingly prove that he was already under the same medical state at the time petitioner
issued the Medical Report on January 11, 2008. In this regard, it was therefore incumbent upon respondent to
show that there was already negligence at the time the Medical Report was issued, may it be through
evidence that show that standard medical procedures were not carefully observed or that there were already
palpable signs that exhibited Raguindin's unfitness for deployment at that time. This is hardly the case when
respondent only proffered evidence which demonstrate that months after petitioner's Medical Report was
issued, Raguindin, who had already been deployed to Saudi Arabia, tested positive for HCV and as such, was
no longer "fit for employment".
In fact, there is a reasonable possibility that Raguindin became exposed to the HCV only after his medical
examination with petitioner on January 11, 2008. Based on published reports from the World Health
Organization, HCV or the hepatitis C virus causes both acute and chronic infection. Acute HCV infection is
usually asymptomatic,[63] and is only very rarely associated with life-threatening diseases. The incubation
period[64] for HCV is two (2) weeks to six (6) months, and following initial infection, approximately 80% of
people do not exhibit any symptoms.[65] Indisputably, Raguindin was not deployed to Saudi Arabia immediately
after petitioner's medical examination and hence, could have possibly contracted the same only when he arrived
thereat. In light of the foregoing, the CA therefore erred in holding that "[h]ad petitioner more thoroughly and
diligently examined Raguindin, it would likely have discovered the existence of the HCV because it was contrary
to human experience that a newly-deployed overseas worker, such as Raguindin, would immediately have
contracted the disease at the beginning of his deployment"[66]
While petitioner's Medical Report indicates an expiration of April 11, 2008, the Court finds it fitting to clarify that
the same could not be construed as a certified guarantee coming from petitioner that Raguindin's medical status
at the time the report was issued on January 11, 2008 (i.e., that he was fit for employment) would remain the
same up until that date (i.e., April 11, 2008). As earlier intimated, the intervening period could very well account
for a number of variables that could have led to a change in Raguindin's condition, such as his deployment to a
different environment in Saudi Arabia. If at all, the expiration date only means that the Medical Report is valid -
and as such, could be submitted - as a formal requirement for overseas employment up until April 11, 2008; it
does not, by any means, create legal basis to hold the issuer accountable for any intervening change of
condition from the time of issuance up until expiration. Truly, petitioner could not be reasonably expected to
predict, much less assure, that Raguindin's medical status of being fit for employment would remain unchanged.
Thus, the fact that the Medical Report's expiration date of April 11, 2008 was only seventeen
(17) days away from the issuance of the General Care Dispensary's April 28, 2008 Certification finding Raguindin
positive for HCV should not - as it does not - establish petitioner's negligence.
IV.
At any rate, the fact that Raguindin tested positive for HCV could not have been properly established since the
courts a quo, in the first place, erred in admitting and giving probative weight to the Certification of the General
Care Dispensary, which was written in an unofficial language. Section 33, Rule 132 ofthe Rules of Court states
that:
Section 33. Documentary evidence in an unofficial language. - Documents written in an unofficial language shall
not be admitted as evidence, unless accompanied with a translation into English or Filipino. To avoid
interruption of proceedings, parties or their attorneys are directed to have such translation prepared before
trial.[67]
A cursory examination of the subject document would reveal that while it contains English words, the majority of
it is in an unofficial language. Sans any translation in English or Filipino provided by respondent, the same
should not have been admitted in evidence; thus their contents could not be given probative value, and deemed
to constitute proof of the facts stated therein.
Moreover, the due execution and authenticity of the said certification were not proven in accordance with Section
20, Rule 132 of the Rules of Court:
Section 20. Proof of private document. - Before any private document offered as authentic is received in evidence,
its due execution and authenticity must be proved either:
(a) By anyone who saw the document executed or written; or
(b) By evidence of the genuineness of the signature or handwriting of the maker.
(c) Any other private document need only be identified as that which it is claimed to be.
Notably, the foregoing provision applies since the Certification does not fall within the classes of public
documents under Section 19, Rule 132 of the Rules of Court[68] - and hence, must be considered as private. It
has been settled that an unverified and unidentified private document cannot be accorded probative
value.[69] In addition, case law states that "since a medical certificate involves an opinion of one who must
first be established as an expert witness, it cannot be given weight or credit unless the doctor who
issued it is presented in court to show his qualifications. It is precluded because the party against whom it is
presented is deprived of the right and opportunity to cross-examine the person to whom the statements or
writings are attributed. Its executor or author should be presented as a witness to provide the other party to the
litigation the opportunity to question its contents. Being mere hearsay evidence, failure to present the author of
the medical certificate renders its contents suspect and of no probative value,"[70] as in this case.
Similarly, the HCV Confirmatory Test Report issued by the Ministry of Health of Saudi Arabia should have also
been excluded as evidence. Although the same may be considered a public document, being an alleged written
official act of an official body of a foreign country,[71] the same was not duly authenticated in accordance with
Section 24,[72] Rule 132 of the Rules of Court. While respondent provided a translation[73] thereof from the
National Commission on Muslim Filipinos, Bureau of External Relations, Office of the President, the same was
not accompanied by a certificate of the secretary of the embassy or legation, consul-general, consul, vice-consul,
or consular agent or any officer in the foreign service of the Philippines stationed in Saudi Arabia, where the
record is kept, and authenticated by the seal of his
office.[74]
To be sure, petitioner - contrary to respondent's contention[75] - has not changed its theory of the case by
questioning the foregoing documents. As petitioner correctly argued, it merely amplified its defense[76] that it is
not liable for negligence when it further questioned the validity of the issuances of the General Care Dispensary
and Ministry of Health. In Limpangco Sons v. Yangco[77], the Court explained that "[t]here is a difference x x x
between a change in the theory of the case and a shifting of the incidence of the emphasis placed during the trial
or in the briefs." "Where x x x the theory of the case as set out in the pleadings remains the theory throughout
the progress of the cause, the change of emphasis from one phase of the case as presented by one set of facts
to another phase made prominent by another set of facts x x x does not result in a change of theory x x x".[78] In
any case, petitioner had already questioned the validity of these documents in its Position Paper[79] before the
MeTC.[80] Hence, there is no change of theory that would preclude petitioner's arguments on this score.
All told, there being no negligence proven by respondent through credible and admissible evidence, petitioner
cannot be held liable for damages under Article 2176 of the Civil Code as above-discussed.
WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated July 11, 2014 and the Resolution
dated February 27, 2015 of the Court of Appeals in CA-G.R. SP No. 125451 are REVERSED and SET ASIDE,
and a NEW ONE is entered, DISMISSING the complaint of respondent LWV Construction Corporation for lack of
merit.
SO ORDERED.
Carpio (Chairperson), Peralta, Caguioa, and Reyes, Jr., JJ., concur.
G.R. No. 246012, June 17, 2020
ISMAEL G. LOMARDA AND CRISPINA RASO, PETITIONERS, V. ENGR. ELMER T.
FUDALAN, RESPONDENT, BOHOL I ELECTRIC COOPERATIVE, INC., DEFENDANT.
DECISION
PERLAS-BERNABE, J.:
certiorari1
Assailed in this petition for review on are the Decision 2
dated February 9, 2017 and the Resolution3
dated May 19, 2017 of the Court of Appeals (CA) in CA-G.R. CV No. 04480, which affirmed the Decision4 dated
May 15, 2012 of the Regional Trial Court of Tagbilaran City, Bohol, Branch 49 (RTC) in Civil Case No. 7476,
granting the complaint for damages filed by respondent Engr. Elmer T. Fudalan (respondent) against petitioners
Ismael D. Lomarda (Lomarda) and Crispina Raso (Raso; collectively, petitioners).
The Facts
On September 27, 2006, respondent, through his wife, Alma Fudalan, applied for electrical service from
BOHECO I Electric Cooperative Inc. (BOHECO I) to illuminate their farmhouse located in Cambanac, Baclayon,
Bohol. At the pre-membership seminar, respondent paid the amount of P48.12 as membership fee and was
advised to employ the services of an authorized electrician from BOHECO I.5 Accordingly, on October 7, 2006,
respondent employed the services of Sabino Albelda Sr. (Albelda), a BOHECO I authorized electrician, who
informed him that the electrical connection could only be installed in his farmhouse if he procures a certification
from Raso, the Barangay Power Association (BAPA)6 Chairperson. Respondent then instructed his farmhand to
get a certification from Raso but despite efforts to reach Raso, the latter was unavailable. Thus, respondent
consented to the tapping of his electrical line to that of BAPA upon the assurance of Albelda that he would not be
charged with pilferage of electricity because his electric usage shall be determined by the check meter of
BOHECO I at the base of the drop line and shall be billed accordingly.7
In the morning of October 8, 2006, respondent still tried again to obtain Raso's certification. However, during their
meeting, Raso allegedly got mad, vowed to never issue the said certification, and eventually then reported the
matter to BOHECO I for disconnection.8
Feeling aggrieved, respondent and his wife went to BOHECO I on October 17, 2006 to complain about Raso's
malicious actuations. They were attended to by the receiving clerk, petitioner Lomarda, who, after reviewing their
documents, told them that he would conduct an ocular inspection of their farmhouse. The next day, respondent,
together with his farmhand, went looking for Raso and confronted her about the latter's threat of disconnection.
To appease them, Raso guaranteed not to order the disconnection of respondent's electricity; nevertheless, she
still refused to issue the certification on the premise that respondent's farmhouse already had electricity. In the
course of their conversation, Raso uttered, "Sabut sabuton lang ni nato," which translates to "let us just settle
this."9
On November 5, 2006, respondent and his wife once more went to Raso to follow up on the issuance of such
certification. They met at the purok center, where Raso was conducting a meeting with several purok members.
Thereat, Raso asked why respondent's electricity has not yet been installed. Respondent took this to be a
sarcastic and rhetorical remark because Raso was, in fact, the one withholding the issuance of the BAPA
certification which was
precisely the cause of the delay of the aforesaid installation.10
In another confrontation, Raso explained that she was about to issue the certification but was prevented by
Lomarda, who allegedly apprised her of a pending complaint for premature tapping against respondent. To settle
the misunderstanding, Raso directed respondent to discuss the matter with Lomarda at his house, and again
uttered "Sabut sabuton lang ni nato." During their conversation, Lomarda told respondent that he earlier received
a disconnection order issued a long time ago but misplaced the document, and that an ocular inspection of
respondent's farmhouse will be conducted on November 6, 2006. When respondent informed Raso of the date of
inspection, the latter once again remarked, "Sabut sabuton lang ni nato."11
On the day of inspection, or on November 6, 2006, respondent was assured that his electricity will not be
disconnected and that Raso will issue the certification, provided he would pay the amount of P1,750.00 or sign a
promissory note. Respondent, however, refused to comply with the said conditions, reasoning that there was no
official order from the concerned office. After respondent refused to pay, Lomarda allegedly posed in front of a
camera and while pointing at the slot provided for the electric meter, shouted, "This is an illegal tapping."
Thereafter, Lomarda, in the presence of policemen, the barangay treasurer, and other several passersby,
ordered his linemen to cut off respondent's electricity.12
On November 9, 2006, respondent communicated with BOHECO I, through phone, and inquired about his
electric dues. He was informed that there was no system loss or excess billed to the cooperative, and that his
electric usage amounted only to P20.00.
Claiming that petitioners' acts tarnished his image, besmirched his reputation, and defamed his honor and
dignity, respondent filed a complaint for damages before the RTC. Respondent alleged that petitioners
confederated with one another to purposely delay the approval of his application for electric connection by: (a)
withholding the issuance of the BAPA certification; (b) falsely accusing him of premature tapping and pilferage of
electricity; and (c) demanding
the payment of P1,750.00, when what was due him was only P20.00.13
For their part, petitioners contended that respondent committed premature tapping of electricity, when the latter
consented to the tapping of his line to the service line of BAPA without a "turn-on" order from BOHECO I.
Moreover, they claim that they cannot be faulted for the disconnection, since they gave respondent the option to
pay the penalty or sign a promissory note, which the latter refused.14cralawred
The RTC Ruling
In a Decision15 dated May 15, 2012, the RTC found petitioners liable for damages under Article 21 of the Civil
Code,16 and accordingly, ordered them to jointly and severally pay respondent the following amounts: (a)
P451.65 as actual damages; (b) P200,000.00 as moral damages; (c) P100,000.00 as exemplary damages; (d)
P50,000.00 as attorney's fees; and (e)
P20,000.00 as litigation expenses.17
In so ruling, the RTC held that respondent could not have committed premature electrical connection or electric
pilferage in violation of the existing rules and regulations of BOHECO I, considering that the installation of
respondent's electrical connection was only done upon the advice of Albelda, who is an authorized electrician of
BOHECO I. Moreover, the RTC pointed out that respondent was in good faith and exerted all his efforts to
comply with the requirements of BOHECO I, while petitioners performed acts that are malicious, dishonest, and
in gross bad faith. In particular, petitioners intentionally withheld the issuance of the required BAPA certification
and worse, demanded the payment of P1,750.00, when what was due from respondent was only P20.00.
Consequently, the RTC ruled that petitioners are
liable under Article 21 of the Civil Code.18
Aggrieved, petitioners appealed to the Court of Appeals (CA).
The CA Ruling
In a Decision19 dated February 9, 2017, the CA affirmed the RTC Decision.20
At the onset, the CA observed that respondent exerted all efforts to comply with the prescribed requirements in
good faith. Moreover, it pointed out that respondent was not caught in flagrante delicto of premature tapping
because he was the one who reported to Raso the fact of tapping, which was only done under the context that
the approving authority was then unavailable to issue the certification despite respondent's efforts.21 On the other
hand, the CA ruled that petitioners acted with malice and bad faith, as exhibited by their conduct before, during,
and after the disconnection, which is contrary to morals, good customs, or public policy.
Undaunted, petitioners moved for reconsideration but was denied in a Resolution22 dated May 19, 2017; hence,
this petition.
The Issue Before the Court
The issue for the Court's resolution is whether or not the CA correctly upheld the award of damages under Article
21 of the Civil Code.
The Court's Ruling
At the outset, it bears stressing that factual findings of the trial court, especially when affirmed by the CA,
deserve great weight and respect, unless there are facts of weight and substance that were overlooked or
misinterpreted and that would materially affect the disposition of the case.23 Hence, finding no cogent reason to
the contrary, their factual findings in this case are sustained.
Petitioners mainly argue that they should not be held liable for damages, considering that respondent made a
premature and unauthorized tapping of his electrical connection. In this regard, they invoke the principle that he
who comes to court must come with clean hands. Moreover, petitioners allege that respondent is not entitled to
moral damages in the absence of evidence to show that the acts imputed against them caused respondent moral
suffering.
The arguments of petitioners are untenable.
In this case, petitioners were found liable by both the RTC and CA for abuse of rights under Article 19, in relation
to Article 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." In this regard, case law states that "[a] right, though by itself legal because [it is] 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."24
"Article 19 is the general rule which governs the conduct of human relations. By itself, it is not the basis of an
actionable tort. Article 19 describes the degree of care required so that an actionable tort may arise when it is
alleged together with Article 20 or Article 21."25 In Saudi
Arabian Airlines v. CA,26 the Court explained the relation of Article 19 and Article 21 of the
Civil Code: ChanRoblesVirtualawlibrary
On one hand, Article 19 of the New Civil Code provides:
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.
On the other hand, Article 21 of the New Civil Code provides:
Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for damages.
Thus, in Philippine National Bank vs. CA, this Court held that:
The aforecited provisions on human relations were intended to expand the concept of torts in this jurisdiction by
granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight
to specifically provide in the statutes.
Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions. Thus, we agree
with private respondent's assertion that violations of Articles 19 and 21 are actionable, with judicially
enforceable remedies in the municipal forum.27cralawlawlibrary
In Mata v. Agravante,28 the Court pointed out that Article 21 of the Civil Code "refers to acts contra bonos mores
and has the following elements: (1) an act which is legal; (2) but which is contrary to morals, good customs,
public order or public policy; and (3) is done with intent to injure."29
In this case, records show that respondent had consistently pursued all reasonable efforts to comply with the
prescribed requirements for the installation of electrical connection at his farmhouse. As part of his application for
electrical service with BOHECO I, he attended a pre�membership seminar wherein he duly paid the amount of
P48.12 as membership fee. At the seminar, he was advised to employ the services of a BOHECO I authorized
electrician, which he did by employing Albelda. As the CA pointed out, there were certain advantages to this
course of action, considering that: (a) the said electrician is familiar with the rules and regulations of BOHECO I;
(b) an inspection fee will not be charged if the wiring is done by him; and (c) BOHECO I shall provide a 30-meter
service drop wire, and electric meter, free of charge, upon payment of the bill deposit.30
Eventually, Albelda informed respondent that he could only install the electrical connection in respondent's
farmhouse if the latter becomes a BAPA member and if he can obtain a certification as such from BAPA
Chairperson Raso. Again, respondent took no time in obtaining this certification by instructing his farmhand to
reach the aforesaid chairperson. Unfortunately, Raso was unavailable despite the farmhand's diligent efforts.
Respondent, who was then put into a precarious situation, sought the advice of Albelda, the cooperative's
authorized electrician, on how to deal with the matter. Albelda then assured him that if he will proceed with the
tapping of his electrical line to that of BAPA, he would not be charged with pilferage of electricity and would be
billed accordingly. Relying in good faith on the authorized electrician's advice on the matter, respondent then
consented to the tapping but nonetheless, still instructed his farmhand to secure the certification from Raso to
ensure compliance with the requirements for proper installation. Upon meeting with Raso, respondent, by his own
volition, candidly brought to her attention the tapping of BAPA's line and duly explained to her the situation. This
notwithstanding, Raso was quick to impute malicious actuations against respondent for proceeding with the
tapping and reported the matter to BOHECO I for disconnection.
Faced with this predicament, respondent and his wife went to the cooperative to report Raso's actions. They
were then attended by the receiving clerk, Lomarda, who told them that he would conduct an ocular inspection
of the farmhouse. In the course of trying to comply with the requirements, both Raso and Lomarda gave
respondent the roundabout by consistently assuring him that they were settling the matter ("Sabut sabuton lang
ni nato"). The following excerpt of respondent's testimony during trial is instructive on this score:
ChanRoblesVirtualawlibrary
Q. Now, did Mrs. Raso tell you while that controversy was between you during that time that rather Mrs. Raso told
you in visayan vernacular "Sabut saboton lang ni nato"? (sic)
A. Oh! Ye[s] (sic) she mentioned that p[hrase] (sic) which disturb me so much for 3 three (3) times (sic), 1.) when
I went together with my farm help I went to her house on October 18 her parting words (sic) was don't worry you
will not be disconnected "Sabut sa boton lang ni nato" and the other two (2) was on November 5 when I again
look (sic) her which I found her at the purok center to ask for my certification again and her parting words is (sic)
"Sabut saboton lang ni nato" and then she told me to go (sic) Mr. Lomarda because Mr. Lomarda has the final
say whether she will give me my certification or not. And the 3rd, was again on the same date November 5
already night time when Mr. Lomarda told me that he is going to inspect the house on Monday so that I went
back to Mrs. Raso to inform her that Mr. Lomarda is going to inspect the house on Monday and again Mrs. Raso
told me that "Sabut saboton lang ni nato."
Q. Now, after hearing that statement "Sabut saboton lang ni nato", what did you ask Mrs.
Raso what (sic) was that meaning of "Sabut saboton lang ni nato"?
A. I did not bother to ask her but in my mind it means money that Mrs. Raso together with Mr. Lomarda is out to
victimize me to please me (sic) "[pangkwartahan] ko" (sic) because of that premature connection.31
In this regard, the CA aptly observed that "[c]onfronted with the crisis presented by [respondent], it is only proper
for [petitioners] to tell him what corrective or remedial measures must be done to avoid the commission of any
further infraction. Instead of doing so, x x x Raso made herself unavailable, which delayed the issuance of the
certification. For his part, x x x Lomarda failed to immediately disclose the notice of disconnection to
[respondent], under the pretext that he is yet to conduct an ocular inspection on the subject farmhouse."32
Worse than their inaction and lack of forthrightness, petitioners even tried to extort from respondent the amount
of P1,792.00 in exchange for the issuance of a certification and for the continued availment of their electrical
services. However, respondent refused to accede to this condition since there was no official issuance coming
from BOHECO I itself. In fact, upon reporting the matter to the cooperative, respondent, to his dismay,
discovered that his electric usage amounted to only P20.00. Indeed, as the CA ruled, "[b]y setting these
conditions, it is evident that [petitioners] were induced by an ill motive."
To further exacerbate the situation, petitioner Lomarda even caused a scene in the public's view which made it
appear that respondent was an unscrupulous violator and thereupon, proceeded to disconnect his electricity
that caused him embarrassment and humiliation. As the testimony of respondent during trial shows:
ChanRoblesVirtualawlibrary Q. Now, Mr. witness to refresh your memory according to you on November 6,
2006 Mr.
Ismale (sic) Lomarda went to your house at Cambanac, Baclayon, Bohol what did Mr.
Lomardo do when he reached at (sic) your house?
A. It was in the afternoon of November 6 Mr. Lomarda bringing with him 2 Policemen (sic) they were also
bringing with them camera taking pictures on the post where the electrical line was connected and there were
many people around.
Q. Then after that what did Mr. Lomarda do?
A. Mr. Lomarda in hearing the window (sic) with all the people shouted that "kita mo ha" "kita mo ha" in
our vernacular, "kita mo ha" at the same time pointing to the post where the electrical connection is
made "kita mo ha" witness "ka ha" witness "ka ha" at the same time taking pictures.
Q. So, after that what did Mr. Lomarda do?
A. Mr. Lomarda demanded to (sic) me an amount of One Thousand Pesos (P1,750.00) (sic) according to him as
payment of an allege penalty so that I will not be disconnected.
Q. Did you give that amount?
A. No.
Q. Then considering that you did not give that amount One Thousand (P1,750.00) (sic) what did Mr. Lomarda do?
A. Mr. Lomarda demanded or insisting (sic) that he is going to inspect the house and when I let him in inside the
house he refuse (sic) and told me to sign first his report before he will enter the house.
Q. Did you sign the report?
A. I did not sign the report.
Q. Now considering that you did not sign the report, what did Mr. Lomarda do?
A. Mr. Lomarda instructed his line men because he was also bringing linemen to finally cut (sic). Days after I ask
Mrs. Raso whether she will allow the disconnection which Mrs. Raso answered in the affirmative and after that
Mr. Lomarda instructed his line man to finally cut (sic).
Q. And that was on November 6, 2006?
A. November 6, in the afternoon.
Q. Will (sic) Mrs. Raso present during the time when the line man of Mr. Lomarda cut your electrical connection?

A. Yes. Mrs. Raso was also present because she wanted me to sign a promissory note that if I have no
cash to pay that P1,750.00 allege (sic) penalty then I should sign her promissory note so that I will not also be
disconnected.33 (Emphases supplied) Under the foregoing circumstances, it is clear that petitioners should be
held liable for damages under Article 19, in relation to Article 21, of the Civil Code. While it appears that
petitioners were engaged in a legal act, i.e., exacting compliance with the requirements for the installation of
respondent's electricity in his farmhouse, the circumstances of this case show that the same was conducted
contrary to morals and good customs, and were in fact done with the intent to cause injury to respondent.
Petitioners did not only fail to apprise respondent of the proper procedure to expedite compliance with the
requirements, they also misled him to believe that everything can be settled, extorted money from him when
only a meager amount was due, and worse, publicly humiliated him in front of many people which ended up in
the disconnection of his electricity altogether. To be sure, the clean hands doctrine - which was invoked by
petitioners herein - should not apply in their favor, considering that while respondent may have technically failed
to procure the required BAPA certification and proceeded with the tapping, the same was not due to his lack of
effort or intention in complying with the rules in good faith. As exhibited above, it was, in fact, petitioners' own
acts which made compliance with the rules impossible. Hence, respondent was actually free from fault,
negating the application of the clean hands doctrine, to wit:34 Parties who do not come to court with clean
hands cannot be allowed to profit from their own wrongdoing. The action (or inaction) of the party seeking
equity must be "free from fault, and he must have done nothing to lull his adversary into repose, thereby
obstructing and preventing vigilance on the part of the latter."35
That being said, the awards of damages in favor of respondent are therefore warranted. In this case, both the
RTC and the CA awarded actual, moral, and exemplary damages, including attorney's fees and litigation
expenses.
Actual damages are such compensation or damages for an injury that will put the injured party in the position in
which he had been before he was injured. They pertain to such injuries or losses that are actually sustained and
susceptible of measurement. To justify an award of actual damages, there must be competent proof of the actual
amount of loss.36 In this case, the award of actual damages in the amount of P451.65 was based on the
evidence presented as found by both the RTC and CA. Hence, finding no cogent reason to the contrary, and
given that the same was supported by receipts,37 the said award is sustained.
However, the Court finds otherwise with respect to the awards of moral and exemplary damages, as well as
attorney's fees and litigation expenses (in the amounts of P200,000.00, P100,000.00, P50,000.00, and
P20,000.00, respectively) which appear to be excessive considering the circumstances of this case. Notably, the
amounts of moral and exemplary damages may be discretionary upon the court depending on the attendant
circumstances of the case.38
Under Article 221939 of the Civil Code, moral damages may be recovered, among others, in acts and actions
referred to in Article 21 of the same Code. "[A]n award of moral damages must be anchored on a clear showing
that the party claiming the same actually experienced mental anguish, besmirched reputation, sleepless nights,
wounded feelings, or similar injury."40 In this case, the aforementioned malicious acts, as proven through the
evidence presented by respondent, clearly caused moral suffering to the latter, for which petitioners should be
made liable. As intimated in one case,41 although mental anguish and emotional sufferings of a person are not
quantifiable with mathematical precision, the Court must nonetheless strive to set an amount that would restore
respondent to his moral status quo ante.42 In this regard, the Court finds it reasonable to award the amount of
P50,000.00 as moral damages, considering the meager amount of actual damages awarded despite the public
humiliation and distress suffered by respondent throughout his ordeal.
Meanwhile, case law states that "exemplary or corrective damages are imposed by way of example or correction
for the public good, in addition to moral, temperate, liquidated, or compensatory damages. The award of
exemplary damages is allowed by law as a warning to the public and as a deterrent against the repetition
of socially deleterious actions." In this case, the Court finds the award of exemplary damages in the amount of
P50,000.00 reasonable in order to serve as a reminder against unscrupulous persons - as herein petitioners -
who take undue advantage of their positions to the detriment of the consuming public.
As regards attorney's fees and litigation costs, "Article 2208 of the New Civil Code of the
Philippines states the policy that should guide the courts when awarding attorney's fees to a litigant. As a general
rule, the parties may stipulate the recovery of attorney's fees. In the absence of such stipulation, this article
restrictively enumerates the instances when these fees may be recovered," to wit:
Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot
be recovered, except:
(1) When exemplary damages are awarded; x x x
In view of the award of exemplary damages, the Court finds it proper to award attorney's fees and litigation costs
but in the reduced amount of P25,000.00.
In fine, the Court holds that petitioners, as joint tortfeasors under Article 21 of the Civil Code, are jointly and
severally liable to pay respondent the following amounts: (a) P451.65 as actual damages; (b) P50,000.00 as
moral damages; (c) P50,000.00 as exemplary damages; and (d) attorney's fees and litigation expenses in the
amount of P25,000.00.
WHEREFORE, the petition is DENIED. The Decision dated February 9, 2017 and the Resolution dated May 19,
2017 of the Court of Appeals in CA-G.R. CV No. 04480 are hereby AFFIRMED WITH MODIFICATION in that
petitioners Ismael G. Lomarda and Crispina Raso are ordered to jointly and severally pay respondent Elmer
Fudalan the following amounts: (a) P451.65 as actual damages; (b) P50,000.00 as moral damages; (c)
P50,000.00 as exemplary damages; and (d) attorney's fees and litigation expenses in the amount of
P25,000.00.
SO ORDERED.
Hernando, Inting, Delos Santos, and Gaerlan,*JJ., concur.chanRoblesvirtualLawlibrary
[ G.R. No. 217806, July 28, 2020 ]
DIVISION ADELAIDA C. NAVARRO-BANARIA, PETITIONER, VS. ERNESTO A.
BANARIA, PANFILO A. BANARIA, GRACIA SEVERA BANARIA-ESPIRITU, REINA
CLARA BANARIA- MAGTOTO, MARCELINO S. BANARIA, PAULINA BANARIA-GELIDO,
MARIA LOURDES DIVINE BANARIA-DURAN, GRACIA ISABELITA BANARIA-ESPIRITU, GEOFFREY
BANARIA-ESPIRITU, ANNE MARIE ESPIRITU-PAPPANIA, JUSTIN BANARIA-ESPIRITU, RESPONDENTS.
DECISION
REYES, J. JR., J.:
This resolves the petition for review on certiorari1 filed under Rule 45 of the Rules of Civil Procedure seeking to
review the Decision2 dated October 15, 2014 of the Honorable Court of Appeals (Special First Division) in CA-
G.R. No. 97264, denying the appeal of herein petitioner by affirming with modification the Judgment3 dated May
23, 2011 rendered by the Regional Trial Court (RTC), Branch 216 (Quezon City) in Civil Case No. Q-0452212,
and its Resolution4 dated April 14, 2015, denying petitioner's motion for reconsideration.
The Antecedents
The instant petition arose from the Complaint filed by respondents for Damages with the RTC of Quezon City
against petitioner.
As borne by the records of the case, respondents are brother (Marcelino S. Banaria), sister (Paulina Banaria-
Gelido), sons (Ernesto A. Banaria and Panfilo A. Banaria), daughters (Gracia Severa Banaria-Espiritu and Reina
Clara Banaria-Magtoto), granddaughters (Gracia Isabelita Banaria-Espiritu, Anne Marie Espiritu-Pappania, Maria
Lourdes Divine Banaria-Duran), and grandsons (Geoffrey Banaria-Espiritu and Justin Banaria-Espiritu) of the late
Pasacasio S. Banaria, Sr. (Pascasio), while petitioner Adelaida C. Navarro-Banaria (Adelaida) is the legal wife of
Pascasio and stepmother of the Banaria siblings.5
Pascasio, the family patriarch, at the time of the filing of the complaint, was already frail and suffering from physical
and mental infirmity incapacitating him to fully functioning on his own without any assistance.6
The action for damages of respondents stemmed from the alleged bad faith, malice, and deliberate failure of
Adelaida to keep her word and honor her promise to bring Pascasio to his 90th birthday celebration held on
February 22, 2004. Such special event was prepared by the respondents and the non-appearance of Pascasio
during the event allegedly caused loss and injury to the respondents.7
Respondents alleged that the planning of the event started as early as February 2003 or a year before the planned
90th birthday celebration to be held on February 22, 2004. Between November 2003 and January 2004,
respondents were in continuous contact with Adelaida to remind her of the upcoming event. Adelaida, for her part,
confirmed Pascasio's attendance during the event although it coincides with the death anniversary of Adelaida's
mother. The plan was to bring Pascasio to the venue in the early morning of February 22, 2004 before proceeding
to her hometown in Tarlac. Adelaida promised respondents that she will try her best to attend the birthday
celebration in the evening after going to Tarlac.8
On February 13, 2004, Reina and Gracia Severa, who are both residing in the United States, arrived in the country
to attend the birthday celebration of their father. They were able to visit their father and Adelaida in their home on
February 14 and 15, 2004. Adelaida promised them during their visit that Pascasio would be present in his
scheduled 90n birthday celebration.9
However, much to the dismay of the Banaria siblings as well as their guests, Pascasio was nowhere to be found
in his 90th birthday celebration. Respondents continuously called Adelaida but they were not able to contact her.
Almost 200 guests were at the venue waiting for Pascasio to come. The siblings deemed it proper to continue the
celebration even without the birthday celebrant himself. Worried that there might be something untoward that
happened to their father, respondents went to the nearest police station to report Pascasio as a missing person.
However, they were advised by the police officers that before a person can be considered missing, there should
be a 24-hour waiting period. Thus, respondents just entered their concern in the police blotter. The next day, the
missing person report was officially made after Pascasio and Adelaida have not been seen or heard for more than
24 hours.10
Respondents called and went to the Securities and Exchange Commission (SEC), where Adelaida works but they
failed to see her there. Afterwards, respondent Paulina was able to talk to one of Adelaida's maids named Kit. Kit
told Paulina that she went to Tarlac with Pascasio and Adelaida in the morning of February 21, 2004 but went their
separate ways upon reaching said province. However, when asked about the whereabouts of Pascasio and
Adelaida, she said that she did not know where they were.11
In the evening of February 23, 2004, Marcelino, Pascasio's brother, told the other respondents that Pascasio and
Adelaida were at their residence then at 7-B Sigma Drive, Alpha village, Quezon City. Respondents went to the
said place to ask Adelaida her reason why Pascasio was not able to attend the birthday celebration. Adelaida
reasoned that Pascasio did not want to go to the party. When asked why Adelaida broke her commitment to bring
Pascasio to the party, Adelaida uttered the words, "I am the wife."12
Thus, the Complaint for Damages filed by respondents against Adelaida.
In response, Adelaida rebutted the allegations of the respondents by saying that she was not privy to the
respondents' planned birthday celebration for Pascasio. She also said that she deemed it wise to spare Pascasio
of the embarrassment and humiliation of defecating and urinating without regard to the people around him brought
about by his advanced age.13
Eventually, the RTC rendered its May 23, 2011 Decision, which ordered petitioner to pay the respondents' travel
expenses, actual damages, moral damages, exemplary damages, and attorney's fees. The fallo14 of the decision
reads:
WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered in favor of plaintiffs and
against the defendant Adelaida C. Navarro-Banaria ordering said defendant to pay unto the plaintiffs the following:
1. the total amount of $3,619.00 (US Dollars) which may be paid in Philippine Currency computed
at the exchange rate at the time of payment, representing the total sum for their (plaintiffs) travel
expenses;
2. the amount of P61,200.00, Philippine currency, for the food and refreshments spent during the
birthday of Pascasio S. Banana, Sr., which the latter was not able to attend; the amount of P3,000.00 for
the birthday cake; and the amount of P3,275.00 for the balloon arrangements;
3. the amount of P60,000.00, Philippine Currency, for each and every plaintiff, as and by way of
moral damages;
4. the amount of P50,000.00, Philippine Currency, for the herein plaintiffs, as and by way of
exemplary damages;
5. the amount of P60,000.00, Philippine Currency, as and by way of attorney's fees; and the costs
of suit.
SO ORDERED.
Aggrieved, petitioner elevated the case to the Court of Appeals, which, through the assailed October 15, 2014
Decision, affirmed with modification the Decision of the RTC. The fallo15 of the decision of the appellate court
reads:
WHEREFORE, premises considered, the appeal is hereby DENIED. The Judgment dated 23 May 2011 of the
Regional Trial Court-Branch 216 (Quezon City) is AFFIRMED with the following MODIFICATIONS: a) the amount
of $3,619.00 (US Dollars) awarded as actual damages in favor of the plaintiffs-appellees is DELETED for lack of
factual and legal basis; b) the amount of moral damages awarded for ALL the plaintiffs-appellees is REDUCED to
a fixed amount of Php300,000.00; c) the amount of exemplary damages awarded in favor of the plaintiffs-appellees
is REDUCED to Php30,000.00; and d) the amount of attorney's fees awarded to plaintiffs-appellees is likewise
REDUCED to php50,000.00.
The rest of the challenged Judgment stands.
SO ORDERED.
Despite petitioner's motion for reconsideration, the CA affirmed its October 15, 2014 Decision via the April 14,
2015 Resolution.
Hence, this petition.
The Issues
The petitioner anchors her prayer for the reversal of the October 15, 2014 Decision and the April 14, 2015
Resolution based on the following issues:
A. Whether the Hon. Court of Appeals erred in ruling that petitioner violated Articles 19 and 21 of the Civil Code
regarding Human Relations; and
B. Whether the Hon. Court of Appeals erred in granting damages to the respondents.
The Court's Ruling
After a careful perusal of the arguments presented and the evidence submitted, the Court finds no merit in the
petition.
Petitioner contends that she did not commit any violation under Article 19 of the Civil Code by alleging that the
testimonies of the respondents were pure surmises and conjectures. Aside from that, petitioner avers that
respondents failed to prove bad faith, malice and ill motive on her part. Because of this, petitioner posits that there
can be no award of actual, moral and exemplary damages under the principle of damnum absque injuria or
damage without injury since her legal right was not exercised in bad faith and with no intention to injure another.
Article 19 of the Civil Code provides that every person in the exercise of his rights and in the performance of his
duties must act with justice, give everyone his due, and observe honesty and good faith. The principle embodied
in this provision is more commonly known as the "abuse of right principle." The legal consequence should anyone
violate this fundamental provision is found in Articles 20 and 21 of the Civil Code. The correlation between the two
provisions are showed in the case of GF EQUITY, Inc. v. Valenzona, to wit:
[Article 19, 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.16 (Emphasis
supplied)
While Article 19 of the New Civil Code may have been intended as a mere declaration of principle, the "cardinal
law on human conduct" expressed in said article has given rise to certain rules, e.g., that where a person exercises
his rights but does so arbitrarily or unjustly or performs his duties in a manner that is not in keeping with honesty
and good faith, he opens himself to liability. The elements of an abuse of rights under Article 19 are: (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.17
Consequently, when Article 19 is violated, an action for damages is proper under Article 20 and 21 of the New Civil
Code. Article 20 pertains to damages arising from a violation of law.18
For starters, there is no question that as legal wife and guardian of Pascasio, who is physically and mentally infirm,
Adelaida has the principal and overriding decision when it comes to the affairs of her husband including the
celebration of the latter's 90th birthday.
However, it must be noted Adelaida's right, as with any rights, cannot be exercised without limitation. The exercise
of this right must conform to the exacting standards of conduct enunciated in Article 19. Adelaida was clearly
remiss in this aspect.
Glaring is the fact that long before the scheduled date of Pascasio's 90th birthday celebration, Adelaida was
already informed about the event. As early as February 2003 or a year before the scheduled event, Adelaida was
already reminded of the event by the respondents to which she confirmed Pascasio's attendance. Even though
Adelaida alleges that she was not privy to any birthday celebration for Pascasio, the fact remains that she was
continuously informed and reminded about the scheduled event. She even contributed P5,000.00 for the costs.
Following Adelaida's testimony that Pascasio had already decided not to attend his birthday celebration a day
before such event, she should have contacted the respondents immediately for the respondents to be able to take
appropriate action. Adelaida knew fully well that the respondents already spent a considerable amount of money
and earnest efforts were already made to ensure the success of the event. The least that Adelaida could have
done was to inform the respondents immediately of any unforeseen circumstance that would hinder its success
and to avert any further damage or injury to the respondents. Moreover, considering that numerous guests were
invited and have confirmed their attendance, she placed the respondents in a very embarrassing situation.
Instead of making good on her prior commitment, Adelaida allegedly followed Pascasio's wish of going to Tarlac
and arrived thereat in the afternoon of February 21, 2004. At that time, Adelaida still had the opportunity to contact
the respondents and inform them that they will not be able to come, but she did not. Her excuse, that Pascasio
grabbed her cellular phone and caused damage to it, is feeble and unrealistic. We find incredulous that Pascasio,
who was allegedly infirm, would be able to grab the cellphone from Adelaida and throw it away, when he cannot
even move on his own without any assistance. And even if true, there are certainly other means of communication
aside from her cellphone if she really wanted to call the respondents.
By the same token, the CA correctly awarded attorney's fees in the amount of P50,000.00 in favor of the
respondents considering that they were constrained to file a case because of petitioner's acts characterized by
bad faith, malice and wanton attitude which were intentional to inflict damage upon the former.
WHEREFORE, the Petition is DENIED. The October 15, 2014 of the Court of Appeals is AFFIRMED.
SO ORDERED.

Adelaida also neglected to contact the respondents immediately after their return to Manila on February 23, 2004.
Peralta, C.J. (Chairperson), Caguioa, Gesmundo* and Lopez, JJ., concur.
If she was sincere in bringing Pascasio to his birthday celebration, then she would have immediately called the
respondents upon returning to Manila to inform them of their whereabouts and to state the reason for Pascasio
non-attendance.

We find it dubious that Pascasio would refuse to attend his birthday celebration. Respondents have sufficiently [ G.R. No. 233846, November 18, 2020 ]
established that it was an annual tradition for the family to celebrate the birthday of their father Pascasio. Besides,
the allegation that Pascasio refused to attend his birthday celebration because of an alleged misunderstanding SPOUSES NESTOR CABASAL AND MA. BELEN CABASAL, PETITIONERS, VS. BPI FAMILY SAVINGS
with his two sons was not duly proven. Common sense dictates that he should have conveyed about the matter BANK, INC. AND ALMA DE LEON, RESPONDENTS.
to Reina and Gracia Severa when they visited him on February 14 and 15, 2004, but he did not.
DECISION
All in all, the foregoing shows that Adelaida intentionally failed to bring Pascasio to the birthday celebration
prepared by the respondents thus violating Article 19 of the Civil Code on the principle of abuse of right. Her failure ZALAMEDA, J.:
to observe good faith in the exercise of her right as the wife of Pascasio caused loss and injury on the part of the
respondents, for which they must be compensated by way of damages pursuant to Article 21 of the Civil Code.
Morality and ethics enjoin everyone to observe the unwritten rule that "one's right ends where others' begin." In a
civilized and peaceful society, an abuse of one's right is eschewed. Statutorily, however, Article 19 of the New Civil
Actual damages are compensation for an injury that will put the injured party in the position where he/she was Code, known to contain what is commonly referred to as the principle of abuse of rights, is not a panacea for all
before the injury. They pertain to such injuries or losses that are actually sustained and susceptible of human hurts and social grievances.1 To warrant reliefs from the courts, the act complained of must be shown to
measurement. Except as provided by law or stipulation, a party is entitled to adequate compensation only for such be done in bad faith or with intent to injure.
pecuniary loss as is duly proven. Basic is the rule that to recover actual damages, not only must the amount of
loss be capable of proof; it must also be actually proven with a reasonable degree of certainty, premised upon
competent proof or the best evidence obtainable.19 The Case

We find proper the modification made by the CA to delete the award of $3,619.00 (US Dollars) as actual damages
for lack of factual and legal bases. We also agree that actual damages in the amount of P61,200.00 for the food
and refreshments spent during the birthday of Pascasio, the amount of P3,000.00 for the birthday cake and the
amount of P3,275.00 for the balloon arrangements should be paid as these expenses were incurred by
respondents for Pascasio's grand birthday celebration.
This petition for review2 under Rule 45 of the Rules of Court, seeks to reverse and set aside the Decision3 dated
15 February 2017 and Resolution4 dated 05 September 2017 of the Court of Appeals (CA) in CA G.R. CV No.
98642. The CA reversed the Decision5 dated 01 December 2011 of Branch 274, Regional Trial Court (RTC) of
Parañaque City, in the consolidated cases for Damages with Annulment of Extra-Judicial Foreclosure of Transfer
Certificate of Title (TCT) No. (35660) 141767 and Injunction and Ex-Parte Proceedings for the Issuance of a Writ
of Possession, docketed as Civil Case No. 01-0014 and Land Registration Case No. 02-0068, respectively.

As for moral damages, the CA is correct in granting a lump sum of P300,000.00. Moral damages are not punitive
Antecedents
in nature but are designed to compensate and alleviate in some way the physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury
unjustly caused to a person.20 In the instant case, the respondents clearly suffered serious anxiety, humiliation Petitioners spouses Nestor Cabasal (Nestor) and Ma. Belen Cabasal (Belen) (collectively, petitioners) were
and embarrassment in front of all guests who expected that Pascasio would be present in the event. granted by BPI Family Savings Bank (BPI) a credit line for their build and sell business. Sometime in 1997,
petitioners purchased two (2) real properties with improvements using said credit line as source of payment.
Consequently, petitioners executed (2) Mortgage Loan Agreements6 in favor of BPI under the following loan
The award of exemplary damages of P30,000.00 is likewise affirmed. Exemplary damages, which are awarded by
accounts: 1) Account No. 0211112476 for Php5,000,000.00; and 2) Account No. 0211291311 for
way of example or correction for the public good, may be recovered if a person acted in a wanton, fraudulent,
Php3,360,000.00.7
reckless, oppressive, or malevolent manner towards another party, as in this case.21 The aim of awarding
exemplary damages is to deter serious wrongdoings.22
While looking for prospective buyers for the properties, petitioners religiously paid their amortizations. However, it
took them three (3) years to find a willing buyer in the person of Eloisa Guevarra Co (Eloisa) who agreed to buy
their properties by way of sale with assumption of mortgage. Accordingly, the parties prepared a Deed of Sale with
Assumption of Mortgage.8 Eloisa undertook to give a down payment of Php7,850,000.00, and assume the balance
of petitioners with BPI in the amount of Php4,462,226.00.9 At that time, petitioners' accounts with BPI were already
past due. Hence, Nestor asked for an updated statement of account from respondent Alma De Leon (respondent).
On 06 July 2000, Nestor and Eloisa went to BPI to obtain a copy of petitioners' statement of account, and to
effectuate the transfer of mortgage to Eloisa. However, respondent informed them that their transfer agreement
would riot be recognized by BPI since Eloisa was not a client of the bank. Nestor pleaded with respondent to
accommodate Eloisa, citing a similar transaction he had in the past, which was authorized by BPI. Respondent,
however, insisted that the transaction was not allowed by BPI, being in the form of assumption of mortgage.10
Petitioners claimed that Eloisa was a sure buyer, given that she already had three (3) air conditioning units
delivered to the properties.11 However, their deal with her fell through because of respondent's irresponsible
handling on the incident. Petitioners assert that they failed to realize an expected profit of Php3,387,773.96.
Consequently, Nestor sent a letter12 of complaint dated 27 July 2000 to BPI. His lawyer likewise sent a letter13
dated 08 December 2000, informing BPI that petitioners would not pay their amortization due to the grossly
negligent act of respondent. In addition, petitioners requested the waiver of all interests and charges on their
loan.14 He did not receive any response from BPI.
Meanwhile, petitioners continued to default on their loan obligation under Account No. 0211291311, eventually
leading to the foreclosure of the mortgage by BPI. The subject property was then sold at public auction, where BPI
was declared the highest bidder.15
Consequently, petitioners instituted Civil Case No. 01-0014, for Damages with Annulment of Extra-Judicial
Foreclosure of TCT No. (35660) 141767 and Injunction, against respondent and BPI.16 Later, BPI filed Land
Registration Case No. 02-0068, an Ex-Parte Petition for the Issuance of Writ of Possession.17 It was ordered
consolidated with Civil Case No. 01-0014 upon motion of petitioners.18
During trial on the merits, respondent and BPI denied petitioners' allegations.
Respondent averred that on 05 July 2000, she talked to Nestor over the phone, and he requested for a statement
of account for his overdue loan accounts. Nestor also informed her about the impending sale of his property to
Eloisa, the proceeds of which would be used to pay off his loan. Respondent dissuaded him from doing so,
explaining that this type of agreement was against the bank's policy and Section 35 of the Mortgage Loan
Agreement. She also told Nestor that she would not entertain any query from his buyer.19 Nestor was nevertheless
adamant, and brought Eloisa to their office the following day. She gave Nestor a copy of the statement of account,
but refused to talk to Eloisa.20 When Nestor pleaded, she relented. Respondent similarly informed Eloisa that the
agreement between her and Nestor would not get BPI's approval. In the vernacular, she said, "kung tutuusin po
kasi para pong illegal itong ginagawa niyo dahil against po sa bank policy, yong loan po nakapangalan pa kay Mr.
Cabasal so hindi po namin talaga kayo irerecognize as client."21 Respondent claimed that her statement was
uttered in good faith and with reference only to Section 35 of the loan agreement signed by petitioners.22 She
maintained that BPI prohibits an assumption of mortgage, and recommended that the interested buyer should
instead take out a separate loan to extinguish the obligation of the first borrower.23
In addition, BPI clarified that the previous sale transaction of petitioners was allowed by BPI only because
petitioners' buyer did not assume the mortgage. Instead, the buyer took out a personal loan with BPI which he
then used to pay off petitioners' loan, and thus cleared the latter's account. In the present transaction, however,
Nestor wanted Eloisa to assume their mortgage liabilities, which BPI prohibits to prevent third parties, who are not
qualified for a loan, from incurring a financial obligation to BPI.24
Finally, BPI claimed that because petitioners' loan account remained delinquent despite several demands, it
instituted a petition for extra-judicial foreclosure of real estate mortgage. Consequently, the sheriff prepared a
notice of sheriff's sale, and caused the posting and publication of the same. The public auction transpired on 27
September 2000, with BPI emerging as the highest bidder. Subsequently, the sheriff issued to BPI a certificate of
sale, which the latter registered. For failure of petitioners to redeem the property within the redemption period, BPI
executed an Affidavit of Consolidation of Ownership, leading to the issuance of a new certificate of title in its name,
in lieu of petitioners' certificate of title. BPI then demanded the petitioners to vacate the property, but they refused.
Hence, BPI filed an exparte petition for issuance of writ of possession.25
Ruling of the RTC
On 01 December 2011, the RTC rendered its Decision, the dispositive portion of which reads: WHEREFORE, all
the foregoing duly considered, judgment is hereby rendered as follows:
(1) For Civil Case no. 01-0014, partly in favor of the plaintiffs, ordering the defendants to jointly and
severally pay the plaintiffs the sum of P3,387,773.96 with legal interest of 12% per annum until fully paid;
the sum of P100,000.00 and P2,000.00 per court appearance and for attorney's fees; the sum of
P200,000.00 as moral damage; the sum of P100,000.00 as exemplary damage; and cost of suit.;
(2) For Land Registration Case No. 02-0068, in favor of defendant bank, allowing the issuance of
writ of possession for the lot covered by Transfer Certificate of Title No. 150985, formerly Transfer
Certificate of Title No. 141767.
SO ORDERED.26
The RTC dismissed the case for annulment of extra-judicial foreclosure of mortgage, and granted the application
for the issuance of a writ of possession. It found the mortgage to be in order, and the foreclosure proceedings to
have duly complied with all the requisites of the law.27
Nonetheless, the RTC found respondent and BPI liable to petitioners for damages on account of their bad faith.
According to the RTC, respondent violated Articles 19 and 20 of the New Civil Code because she failed to exercise
good faith and honesty in dealing with Nestor and Eloisa. She blatantly and thoughtlessly branded the transaction
between Nestor and Eloisa illegal even if the same was not yet consummated, and though she was aware that
another office or division – not the collection department to which she belonged – was better equipped to handle
matters relating to assumption of mortgages. The RTC opined that what respondent should have done was to help
a valued client by referring him to the appropriate office.28
For respondent's acts, the RTC found BPI equally liable for damages, in accordance with Article 2180 of the New
Civil Code.29 The RTC ascribed fault on BPI for failing to prove that it exercised diligence in the selection and
supervision of its employees like respondent.
Finally, the RTC held that neither respondent nor BPI can claim good faith as paragraph 35 of the Mortgage Loan
Agreement was a circumvention of Article 2130 of the Civil Code. In support thereof, the RTC cited Litonjua v. L&R
Corporation,30 where the Court held that a stipulation forbidding the owner from alienating the immovable
mortgage shall be void.31
Both parties appealed the decision. Whereas petitioners filed a Notice of Partial Appeal32 against the RTC's ruling
in Land Registration Case No. 02-0068, respondent and
BPI assailed the RTC's judgment in Civil Case No. 01-0014.33
Ruling of the CA
In the now assailed Decision, the CA affirmed the RTC's ruling in Land Registration Case No. 02-0068, but
reversed the RTC's decision in Civil Case No. 01-0014. The decretal portion of said decision reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
(1.) For Civil Case no. 01-0014, the Appeal filed by appellants BPI and De Leon is GRANTED. The
appealed Decision dated December 1, 2011 of the RTC, Branch 274 of Parañaque City awarding
damages and attorney's fees to spouses Cabasal is REVERSED and SET ASIDE. Accordingly, spouses
Cabasal's Complaint for Damages docketed as Civil Case No. 01-0014 is DISMISSED for lack of merit.
(2) For Land Registration Case No. 02-0068, the Appeal filed by appellants spouses Cabasal is
DISMISSED. The appealed Decision dated December 1, 2011 of the RTC, Branch 274 of Parañaque City
is AFFIRMED.
SO ORDERED.
Anent Land Registration Case No. 02-0068, the CA agreed that the writ of possession should issue as a matter of
course in view of the established facts.34
With respect to Civil Case No. 01-0014, the CA emphasized that the absence of good faith is essential to abuse
of right under Article 19 of the New Civil Code. In this case, however, respondent's utterances cannot be equated
to bad faith, as she adequately explained that the transaction between Nestor and Eloisa violated paragraph 35
of the Mortgage Loan Agreement.35 While respondent admitted that she was not competent to ultimately rule on
the matter, being merely a collection assistant, her statement was based on BPI's policy proscribing such
arrangement.36
Finally, the CA held that although BPI's policy may appear to be unreasonably restrictive to some, the same cannot
be characterized as suffused with bad faith.37 On the contrary, BPI acted appropriately in keeping with its duty as
a banking institution to exercise extra-ordinary care and prudence. The stipulation was in strict adherence of its
own rules, which petitioners, as borrowers, may freely accept or reject.38
Petitioners filed a Motion for Reconsideration,39 but the same was denied. Hence, they filed the present petition,
submitting the following grounds for the allowance thereof:
A. THE INSTANT PETITION FOR REVIEW UNDER RULE 45 OF THE 1997 RULES OF CIVIL
PROCEDURE CAN BE TAKEN COGNIZANCE BY THIS HONORABLE COURT DUE TO THE FINDINGS
OF THE HONORABLE COURT OF APPEALS BEING CONTRARY TO THAT OF THE HONORABLE
TRIAL COURT
B. THE HONORABLE COURT OF APPEALS ERRED IN REVERSING THE HONORABLE TRIAL
COURT'S AWARD OF DAMAGES TO PETITIONERS IN THE INSTANT CASE, BY FAILING TO APPLY
ARTICLE 20 OF THE CIVIL CODE TO THE DULY PROVEN NEGLIGENCE COMMITTED BY
RESPONDENT ALMA DE LEON WHICH RESPONDENT BANK IS VICARIOUSLY LIABLE [SIC]
C. THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE HONORABLE TRIAL
COURT'S GRANTING OF THE SUBJECT WRIT OF POSSESSION CONSIDERING THAT
RESPONDENTS COMMITTED BREACH OF CONTRACT WHICH GIVES PETITIONERS THE RIGHT
TO SUSPEND PAYMENT OF THEIR MORTGAGE LOAN UNDER ARTICLES 1169 AND 1191 OF THE
CIVIL CODE THEREBY MAKING THE FORECLOSURE OF THE [PARAÑAQUE] PROPERTY VOID40
Ruling of the Court
The petition lacks merit.
Prefatorily, it should be pointed out that the present petition conspicuously contains the same factual issues and
arguments already fully passed upon by the CA. As a rule, questions of fact, which would require a re-evaluation
of the evidence, are inappropriate for a Rule 45 petition. Under Section 1 of Rule 45, the Court's jurisdiction is
limited only to errors of law since it is not a trier of facts.41 Although jurisprudence has provided several exceptions
to these rules, exceptions must be alleged, substantiated, and proved by the parties so this court may evaluate
and review the facts of the case. In any event, even in such cases, this court retains full discretion on whether to
review the factual findings of the Court of Appeals.42
In the instant case, the RTC and the CA were unanimous that based on the established facts, BPI is entitled to a
writ of possession. However, they differed on their findings as to the liability of respondent and BPI under the
circumstances.
The Court sustains the CA's decision.
It has long been settled that once title to the property has been consolidated in the buyer's name upon failure of
the mortgagor to redeem the property within the one-year redemption period, the writ of possession becomes a
matter of right belonging to the buyer. Consequently, the buyer can demand possession of the property at any
time. Its right of possession has then ripened into the right of a confirmed absolute owner and the issuance of the
writ becomes a ministerial function that does not admit of the exercise of the court's discretion. The court, acting
on an application for its issuance, should issue the writ as a matter of course and without any delay.43
It is thus befuddling that the proceeding for the issuance of writ of possession was even consolidated with Civil
Case No. 01-0014. To be sure, no hearing is necessary prior to the issuance of a writ of possession, as it is a
proceeding wherein relief is granted without giving the person against whom the relief is sought an opportunity to
be heard.44 By its very nature, an ex-parte petition for issuance of a writ of possession is a non-litigious
proceeding. It is a judicial proceeding for the enforcement of one's right of possession as purchaser in a foreclosure
sale. It is not an ordinary suit filed in court, by which one party sues another for the enforcement of a wrong or
protection of a right, or the prevention or redress of a wrong.45 Petitioners contend that because of the negligent
act of respondent, BPI must be considered guilty of breaching its obligation to observe the highest degree of
diligence in the selection and supervision of their employees.46 For such breach, petitioners additionally contend
that they were justified to suspend payment; hence, they cannot be said to be in default of their obligation.
The argument deserves scant consideration.
Not even any question regarding the validity of the mortgage or its foreclosure is a legal ground for refusing the
issuance of a writ of execution/writ of possession.47 Furthermore, it should be pointed out that even prior to the
incident, petitioners were already in default of their obligations to BPI, precisely why Nestor dealt with respondent,
instead of other BPI employees.
In any case, the Court agrees with the CA that respondents and BPI are not liable in this case.
The principle of abuse of rights, as enshrined in Article 19 of the Civil Code, provides that every person must, in
the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe
honesty and good faith.48 In Arco Pulp and Paper, Inc. v. Dan T. Lim,49 the Court emphasized that Article 19 is
the general rule which governs the conduct of human relations. By itself, it is not the basis of an actionable tort.
Article 19 describes the degree of care required so that an actionable tort may arise when it is alleged together
with Article 20 or Article 21.
Whether the principle of abuse of rights has been violated resulting in damages under Article 20 or other applicable
provision of law depends on the circumstances of each case.50 Article 20 covers violations of existing law as basis
for an injury. It allows recovery should the act have been willful or negligent "Willful" may refer to the intention to
do the act and the desire to achieve the outcome that the plaintiff in tort action considers as injurious. "Negligence"
may refer to a situation where the act was consciously done but without intending the injurious result Article 21,
on the other hand, concerns injuries that may be caused by acts which are not necessarily proscribed by law. This
article requires that the act be willful, that is, that there was an intention to do the act and a desire to achieve the
outcome. In cases under Article 21, the legal issues revolve around whether such outcome should be considered
a legal injury on the part of the plaintiff or whether the commission of the act was done in violation of the standards
of care required in Article 19.51
After a perusal of the facts and evidence on hand, the Court holds that contrary to the RTC's findings, petitioners
failed to prove that respondent and BPI acted in bad faith or negligence so as to be liable under Article 20 and 21
of the New Civil Code.
Bad faith does not simply connote bad judgment or negligence. It imports a dishonest purpose or some moral
obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that
partakes of the nature of fraud. It is, therefore, a question of intention, which can be inferred from one's conduct
and/or contemporaneous statements.52 The settled rule is bad faith should be established by clear and convincing
evidence since the law always presumes good faith.53 Bad faith, like fraud, is never presumed since it is a serious
accusation that can be so conveniently and casually invoked.54 Hence, for anyone who claims that someone is
in bad faith, the former has the duty to convincingly prove the existence of the same.55
Like the CA, the Court sees no intention on the part of respondent to cause harm to the petitioners. She forewarned
Nestor that the BPI would not acquiesce to the agreement between him and Eloisa because the bank does not
allow assumption of mortgage. Despite that, Nestor insisted, and even brought Eloisa to her. Respondent may
have been blunt in her response, but it was Nestor who prodded her to explain, even if she already told him that
she would not entertain any queries from Eloisa.
Respondent's remark may have ultimately put Eloisa off only because it was not what she expected to hear. But it
was not respondent's fault. It was Nestor who put her in that awkward position, and the latter answered only based
on what she understood of the situation.
Further, it cannot even be established from petitioners' evidence whether Eloisa backed out of the agreement
because of the very words spoken by respondent.ℒαwρhi৷ Eloisa was not presented in court; hence, petitioners'
asseveration is merely self-serving, unsubstantiated, and conjectural. It is a fundamental rule that bare allegations,
unsubstantiated by evidence, are not equivalent to proof.56 Charges based on mere suspicion and speculation
cannot be given credence. When the complainant relies on mere conjectures and suppositions, and fails to
substantiate his allegations, the complaint must be dismissed for lack of merit.57
It may be true that Eloisa was a willing buyer, and she actually bought another property afterwards. However, there
can be a myriad of reasons which may have prompted her to cancel the deal with Nestor. Perhaps, it could have
been because Eloisa could not be able to pay for petitioners' properties without a bank loan. Perhaps, too, Eloisa
would not qualify for a bank loan; hence, she only agreed for an assumption of mortgage. It is also possible that
she was poached by another seller or broker who gave her a better or more affordable deal. As petitioners' own
evidence shows, Eloisa bought a different house and lot, also within Parañaque, for only Php3,800,000.00, which
was evidently much lower than the purchase price for petitioners' properties, but within the amount she was willing
to shell out as down payment therefor. What is more, Eloisa was able to conveniently purchase the property on
installment basis, which did not require Eloisa to obtain a bank loan or assume any mortgage.58
Petitioners and the RTC are actually unreasonably passing the blame for the dissolution of the sale with Eloisa to
respondent As the CA aptly pointed out, respondent was only being honest and, in fact, right when she told Nestor
and Eloisa that BPI would not permit their arrangement. If petitioners were bent on being able to sell their properties
to Eloisa, they could have instead assisted her in taking out a loan in her own name, whether with BPI or a different
bank. They did not. If, at all, it was petitioners who were negligent under the circumstances by insisting on a
payment term which may have been favorable for them and their buyer, but was clearly not viable.
Similarly, petitioners cannot also fault respondent for not being able to direct them to the proper loan division of
BPI. Respondent was under no obligation to do that. She could have done so as a courtesy to Nestor, the latter
being a client of BPI, but her failure to extend such assistance at that time is not tantamount to negligence or bad
faith on her part, much less be the proximate cause why the transaction between Nestor and Eloisa failed to
materialize. Nestor, being an engineer and a businessman of experience, should have known what to do under
the circumstances and where to go after, considering that he already had a previous real estate transaction
presented to BPI for loan approval. And even assuming for the nonce that he did not know specific BPI division or
office to inquire from, he should have exerted earnest effort to obtain such information from other BPI employees,
not necessarily from respondent.
Verily, a responsible and diligent businessman would go to great lengths to ensure the consummation of any
transaction. Under the circumstances, however, Nestor clearly failed in this respect. He should thus not be allowed
to pass the blame to other people for his shortcomings. And since respondent cannot be considered to have acted
negligently or in bad faith, BPI is not vicariously liable.
WHEREFORE, all the foregoing considered, the instant Petition is hereby DENIED. Accordingly, the Decision
dated 15 February 2017 and Resolution dated 05 September 2017 promulgated by the Court of Appeals in CA
G.R. CV No. 98642 are AFFIRMED.
SO ORDERED.
On the other hand, Mercado argued that their marriage was valid under Article 26 of the Family Code and not
prohibited by Article 35(4), because she was a United States citizen at the time.[9] Further, she claimed that the
petition was Ongpin's scheme to evade liability in a separate civil case for separation of property she filed in 2002
over the properties acquired during their marriage that Ongpin was allegedly concealing or disposing with intent
to deprive her of her share. She also claimed moral and exemplary damages, and costs of suit.[10]
On November 12, 2009, the Regional Trial Court issued a Decision[11] declaring Ongin and Mercado's marriage
void. The dispositive portion of the Decision stated:

Peralta, C.J., (Chairperson), Caguioa, and Gaerlan, JJ., concur. ACCORDINGLY, judgment is rendered declaring the marriage entered into between Ongpin V. Ongpin and
respondent Mercado Mercado-Ongpin as null and void.
Carandang, J., on official leave.
The petitioner is ordered to pay respondent P250,000.00 as moral damages, P100,000.00 as exemplary damages,
and P150,000.00 as and for attorney's fees.
[ G.R. No. 207324. September 30, 2020 ]

Let copies of this Decision be furnished [to] the parties and their respective counsel, the Office of the Solicitor
MARY ELIZABETH MERCADO, PETITIONER, VS. RENE V. ONGPIN, RESPONDENT.
General, the Office of the Provincial Prosecutor of Cavite, the National Statistics Office and the Offices of the Local
Civil Registrar of the City of Manila, San Pedro, Laguna and Bacoor, Cavite.
DECISION
Considering that the determination of the property regime of petitioner and respondent is pending before Branch
LEONEN, J.: 19 of this Court, let the corresponding Decree of Declaration of Absolute Nullity of Marriage be issued after such
determination and compliance with section 22 of A.M. No. 02-11-10 dated 04 March 2003 of the Supreme Court.
Malice or bad faith must be proved to sustain an action for damages based on Article 19 of the Civil Code.
SO ORDERED.[12]
This is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, assailing the Decision[2] and
Resolution[3] of the Court of Appeals in CA-G.R. CV No. 98320. The Court of Appeals deleted the Regional Trial
The Regional Trial Court found that Ongpin was incapacitated to marry at the time he married Mercado, rendering
Court's award of moral and exemplary damages and attorney's fees to Mary Elizabeth Mercado (Mercado) in a
their marriage null and void pursuant to Article 35(4) of the Family Code.[13]
case for the declaration of nullity of her marriage to Rene V. Ongpin (Ongpin).

On February 5, 1972, Ongpin married Alma D. Mantaring (Mantaring) in Quezon City. Later, Mantaring obtained a
divorce decree from the District Court of Clark County, Nevada, United States of America.[4] Believing he was
divorced from Mantaring, Ongpin married Mercado in Princeton, New Jersey, United States of America on April
21, 1989. However, the two separated on March 16, 2000.[5] Ongpin subsequently obtained a judicial declaration
of the nullity of his marriage to Mantaring on November 25, 2003.[6]
Further, the Regional Trial Court found that Ongpin was liable for moral damages pursuant to Article 2219[14] in
relation to Articles 19,[15] 20,[16] and 21[17] of the Civil Code.[18] The trial court held that Ongpin's act of contracting
a second marriage despite his first marriage not yet being annulled, undermined the family as a social institution,
and went against good morals, and the interest and general welfare of society.[19] Ongpin was also held liable for
exemplary damages because his actions were tainted with bad faith. Finally, he was ordered to pay for attorney's
fees as Mercado had been constrained to incur legal expenses to protect her interest.[20]

On January 8, 2006, Ongpin filed a petition for declaration of nullity of his marriage to Mercado before the Bacoor,
Cavite Regional Trial Court.[7] The petition was based on Article 35(4) of the Family Code, which states: Ongpin filed a partial appeal of the November 12, 2009 Decision, assailing the award of moral and exemplary
damages, and attorney's fees.[21] On February 21, 2013, the Court of Appeals issued a Decision[22] granting his
appeal. The dispositive portion reads:
Art. 35. The following marriages shall be void from the beginning:
. . . .
ACCORDINGLY, the Decision dated November 12, 2009 is MODIFIED, DELETING the award of moral and
(4) Those bigamous or polygamous marriages not falling under Article 41;
exemplary damages and attorney's fees.

Ongpin claimed that, after he married Mercado, he found that Mantaring was still a Filipino citizen when she
SO ORDERED.[23]
obtained the divorce decree, and as such, his marriage to her was still valid and subsisting at the time of his
second marriage.[8]
According to the Court of Appeals, Ongpin did not deliberately contract a second marriage despite knowing that
his first marriage subsisted. It found that Ongpin believed in good faith that the divorce decree secured by
Mantaring was valid and binding, as he thought she was already a United States citizen. It was only after his
marriage to Mercado that Ongpin consulted a lawyer and learned that the divorce was ineffectual. The Court of
Appeals pointed out that Ongpin would not have married Mercado under pain of indictment for bigamy.[24]
As such, the Court of Appeals held that Ongpin could not be liable for moral damages, which required a showing
of bad faith, or a conscious and intentional design to do a wrongful act. It found that Mercado failed to prove
Ongpin's bad faith by clear and convincing evidence.[25]
Further, the Court of Appeals found that Ongpin did not file the petition to evade liability in the separation of property
case, since the case was still pending and there was no liability to evade. It pointed out that the declaration of
nullity of marriage would include a ruling on Ongpin and Mercado's property relations, notwithstanding the other
case, preventing Ongpin from evading
a settlement of his property relations with Mercado.[26]
In deleting the award of exemplary damages, the Court of Appeals held that Ongpin did not act in a wanton,
fraudulent, reckless, oppressive, or malevolent manner, in merely seeking a judicial declaration of nullity of his
marriage to Mercado. Similarly, it held that the award of attorney's fees should be deleted, as both parties had
incurred costs to protect their interests.[27]
The Court of Appeals denied Mercado's motion for reconsideration in its May 22, 2013 Resolution.[28]
On June 17, 2013, Mercado filed with this Court a Motion to Admit,[29] and with it, her Petition for Review on
Certiorari[30] under Rule 45 of the Rules of Court, assailing the Decision and Resolution of the Court of Appeals.
In her Petition for Review, Mercado argues that the Court of Appeals committed grave abuse of discretion when it
reversed the findings of the Regional Trial Court.[31] She argues that the Court of Appeals ignored that Ongpin filed
two petitions to have his marriage to Mantaring declared void, withdrawing the first one, and filing the second one
only after Mercado filed the case for separation of property with the Regional Trial Court. She alleges that Ongpin
only attempted to remedy the issue of his seemingly bigamous second marriage when it was expedient for him to
do so.[32]
Mercado points out that, unlike Ongpin, she did not do anything wrong. She had the capacity to marry, was a
United States citizen at the time of her marriage, and lived with Ongpin for more than 10 years until she finally left
him in 2000. As such, she was entitled to moral damages.[33]
Moreover, she argues that Ongpin should be made to pay exemplary damages for his blatant disrespect for the
institution of marriage, and to serve as an example for the public. She claims that she should be awarded attorney's
fees for being compelled to litigate after Ongpin initiated the suit against her.[34]
This Court granted the Motion to Admit and ordered Ongpin to comment on the Petition for Review in its August 5,
2013 Resolution.[35]
On September 26, 2013, Ongpin filed his Comment[36] where he argues that the Court of Appeals correctly held
that Mercado failed to prove that he deliberately contracted a second marriage knowing that that his first was still
valid and subsisting. He claims that it was only after he and Mercado separated that Mantaring disclosed her
Filipino citizenship at the time she obtained the divorce decree.[37] He points out that Mercado admitted during trial
that, at the time she married Ongpin, she knew that both he and Mantaring were Filipino citizens, and that it was
Mercado who advised him to get a declaration of nullity of his marriage to Mantaring in 1992.[38]
In her Reply,[39] Mercado claims that Ongpin had known about the invalidity of the divorce decree even before
Mantaring told him.[40] She reiterates her claim that she did not know that Ongpin was incapacitated to marry her
at the start of their marriage.[41]
Ongpin filed a rejoinder to her reply on January 24, 2014.[42]
In its November 19, 2014 Resolution,[43] this Court resolved to give due course to the Petition for Review and
ordered the parties to submit their memoranda, which they complied with.[44]
While the case was pending, Ongpin filed three successive motions praying that this Court direct the Regional
Trial Court to issue a partial entry of judgment and certificate of finality concerning the declaration of nullity of his
and Mercado's marriage, as the only matter to be resolved by this Court is Mercado's entitlement to damages.[45]
The issues to be resolved in this case are: first, whether or not the Petition for Review raises questions of fact not
reviewable in a Rule 45 petition; and second, whether or not Mary Elizabeth Mercado is entitled to moral and
exemplary damages, and attorney's fees.
I
Generally, this Court does not review questions of fact in a petition for review under Rule 45 of the Rules of
Court.[46] Whether or not a party acted in bad faith is a question of fact.[47] Entitlement to damages likewise requires
examination of the factual circumstances of a case.[48] However, when the factual findings of the Regional Trial
Court and Court of Appeals are conflicting, then this Court may resolve these issues.[49]
In its November 18, 2016 Decision, the Regional Trial Court held that respondent's act of marrying petitioner even
though he had an existing first marriage constituted bad faith. The Court of Appeals ruled otherwise because it
found that, at the time respondent married petitioner, he believed in good faith that he was validly divorced from
his first wife. Further, it found that respondent did not seek to have his second marriage declared null and void
only so that he could evade liability in the civil case filed by petitioner.
Considering these conflicting conclusions, this Court must now examine the factual findings to resolve whether or
not respondent acted in bad faith when he married petitioner despite the subsistence of his first marriage.
II
Moral damages are a form of compensation for the "physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury"[50] unjustly sustained
by a person.[51] They are awarded when: (1) there is a physical, mental or psychological injury clearly sustained
by the claimant; (2) a wrongful act or omission is factually established; (3) the act or omission is the proximate
cause of the injury; and (4) the award of damages is based on any of the cases stated in Article 2219 [52] of the
Civil Code.[53]
This Court has sanctioned the award of moral damages m cases of bigamy based on Articles 19, 20 and 21 of the
Civil Code.[54]
Article 19 of the Civil Code sets the standards for the exercise of one's rights and performance of duties:
ARTICLE 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 provision recognizes that even the exercise of a right may be the source of some illegal act, when done in a
manner contrary to the standards it sets, and results in damage to another.[55] Meanwhile, Articles 20 and 21
provide for the legal remedy for a violation of Article 19:[56]
ARTICLE 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify
the latter for the same.
ARTICLE 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.
For there to be a finding of an abuse of rights under Article 19, the following elements must concur: (1) there is a
legal right or duty; (2) the right is exercised or the duty is performed in bad faith; and (3) the sole intent of the
exercise or performance is to prejudice or injure another.[57] It must be shown that the exercise of the right or
performance of the duty was done with bad faith. In Dart Philippines, Inc. v. Spouses Calogcog: [58]
Malice or bad faith is at the core of Article 19 of the Civil Code. Good faith refers to the state of mind which is
manifested by the acts of the individual concerned. It consists of the intention to abstain from taking an
unconscionable and unscrupulous advantage of another. It is presumed. Thus, he who alleges bad faith has the
duty to prove the same. Bad faith does not simply connote bad judgment or simple negligence; it involves a
dishonest purpose or some moral obloquy and conscious doing of a wrong, a breach of known duty due to some
motives or interest or ill will that partakes of the nature of fraud. Malice connotes ill will or spite and speaks not in
response to duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad faith or bad motive.[59]
In Manuel v. People,[60] this Court awarded moral damages to the innocent spouse upon a finding that the
bigamous spouse acted deceitfully and fraudulently when he contracted his second marriage:
In the present case, the petitioner courted the private complainant and proposed to marry her. He assured her that
he was single. He even brought his parents to the house of the private complainant where he and his parents
made the same assurance—that he was single. Thus, the private complainant agreed to marry the petitioner, who
even stated in the certificate of marriage that he was single. She lived with the petitioner and dutifully performed
her duties as his wife, believing all the while that he was her lawful husband. For two years or so until the petitioner
heartlessly abandoned her, the private complainant had no inkling that he was already married to another before
they were married.
Thus, the private complainant was an innocent victim of the petitioner's chicanery and heartless deception, the
fraud consisting not of a single act alone, but a continuous series of acts. Day by day, he maintained the
appearance of being a lawful husband to the private complainant, who changed her status from a single woman
to a married woman, lost the consortium, attributes and support of a single man she could have married lawfully
and endured mental pain and humiliation, being bound to a man who it turned out was not her lawful husband.[61]
There, this Court found that the bigamous spouse's continuous and collective acts of fraud before, during, and
after his marriage were willful, deliberate, and malicious, causing injury to the innocent spouse. It was the
bigamous spouse's continuing bad faith that disregarded public policy, undermined and subverted the family as a
social institution, and went against good morals, and the interest and general welfare of society.[62]
Thus, the Regional Trial Court was in error when it held that the mere contracting of a second marriage despite
the existence of a first marriage is, by itself, a ground for damages under Article 19 in relation to Article 20 or Article
21. As correctly stressed by the Court of Appeals, the bad faith, or deliberate intent to do a wrongful act, of the
bigamous spouse must be established:
Here, it was not convincingly shown that appellant deliberately contracted a second marriage despite knowledge
of the subsistence of his first marriage. He believed in good faith that the divorce decree given to his first wife was
valid and binding in the Philippines because he thought all along that [his] first wife at that time was already an
[American] citizen. Thus, he and Mercado, both consenting adults, freely married each other, both believing that
the final divorce decree was valid and binding in the Philippines. Indeed, both appellant and Mercado would not
have married each other under pain of indictment for bigamy had they known that appellant's first marriage was
still in existence, because it later turned out that Mercado was still a Filipino when the divorce decree was issued.
So how could appellant be held liable for damages when he was not shown to have acted in bad faith when he
married appellee? It has been consistently held that bad faith does not simply mean negligence or bad judgment.
It involves a state of mind dominated by ill-will or motive. It implies a conscious and intentional design to do a
wrongful act for a dishonest purpose or some moral obliquity. The person claiming moral damages must prove the
existence of bad faith by clear and convincing evidence for the law always presumes good faith. Here, appellee
failed to overcome the legal presumption of good faith. Thus, the award of moral damages must be deleted.[63]
Petitioner has not been able to prove that, at the time she and respondent married, respondent knew that his
divorce from his first spouse was invalid. There is no proof that, upon the first spouse's confirmation of her
Philippine citizenship at the time she obtained the divorce decree, respondent concealed this knowledge from
petitioner or allowed her to continue believing that their marriage was valid. The malice or bad faith necessary to
sustain an action based on Article 19 of the Civil Code has not been shown in this case.
Moreover, petitioner has not established that she has sustained an injury in law due to respondent's acts.
A review of the records shows that petitioner had known that there was some sort of anomaly in the dissolution of
respondent's first marriage as early as 1992. As the Regional Trial Court found, within four years of petitioner and
respondent's marriage, they found out that the divorce decree between respondent and Mantaring may not be
valid because of their citizenship.[64] Both petitioner and respondent consulted with a lawyer, who advised them to
have the first marriage annulled on the ground of psychological incapacity.[65] When respondent withdrew his
petition for annulment, petitioner pleaded with him to continue the case.[66]
Petitioner does not dispute any of these findings made by the trial court.[67] She knew, or should have known, that
there existed some issue regarding respondent's first marriage which might adversely affect the validity of her
marriage to him. Yet, she did not initiate any actions of her own to protect her civil status, and appeared complacent interest of justice requires, irrespective of whether the defendant will be favored or prejudiced. The public interest
with the uncertainty that hovered over the validity of her marriage with respondent. demands no less. As the Spanish proverb goes, justice is "no mas pero no menos".[73]

There being no entitlement to moral damages, no exemplary damages can likewise be awarded
to petitioner.[68]
As regards attorney's fees, the Court of Appeals correctly held that none may be awarded to petitioner:
Consequently, the award of attorney's fees must also be deleted. Notably, it was not appellee alone who incurred
costs to protect her interest. Appellant, too, spent for legal costs to finally settle the issue pertaining to the validity
of his marriage with appellee. In the absence of malice and bad faith, the mental anguish suffered by a person for
having been made a party in a civil case is not the kind of anxiety which would warrant the award of moral
damages. Appellee's emotional suffering and anxiety are only such as are usually caused to a party hauled into
[court] as a party in litigation, but is insufficient justification for the award of moral or exemplary damages.[69]
Petitioner can no longer elect to withdraw her Petition for Review at this late stage in the proceedings. It is merely
incidental that, if we had granted petitioner's motion, it would have had the same result as this resolution on the
merits.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The February 21, 2013 Decision and May 22,
2013 Resolution of the Court of Appeals are AFFIRMED.
The December 19, 2019 Entry of Appearance with Motion to Dismiss filed by petitioner Mary Elizabeth Mercado
is NOTED.
SO ORDERED.

Finally, this Court notes that, on December 19, 2019, petitioner filed a motion to dismiss, praying that this Court Gesmundo, Carandang, Hernando,* and Gaerlan, JJ., concur.
consider her appeal withdrawn, the Court of Appeals' ruling binding against her, and directing an entry of judgment
be issued in this case: G.R. No. 127358 March 31, 2005

3. Thus, the Petitioner-Appellant has agreed to accept the decision of the Special Sixteenth Division of the NOEL BUENAVENTURA, Petitioner,
Honorable Court of Appeals in CA-G.R. CV No. 98320 entitled "Ongpin V.
vs.
Ongpin, petitioner-appellant, vs. Mercado Mercado-Ongpin, respondents-appellee" on
COURT OF APPEALS and ISABEL LUCIA SINGH BUENAVENTURA, respondents.
February 21, 2013 modifying the decision of the Regional Trial Court, Fourth Judicial Region, Branch 89, Bacoor,
Cavite, in Civil Case No. BCV-2006-08 dated November 12, 2009 deleting the award to her of moral and
exemplary damages and attorney's fees, to wit: x-------------------x

ACCORDINGLY, the Decision dated November 12, 2009 is MODIFIED, DELETING the award of moral and G.R. No. 127449 March 31, 2005
exemplary damages and attorney's fees.
NOEL BUENAVENTURA, Petitioner, vs.
4. She, therefore, respectfully prays that her appeal be considered withdrawn and consider the Decision of COURT OF APPEALS and ISABEL LUCIA SINGH BUENAVENTURA, Respondents.
the Honorable Court of Appeals as binding upon her.[70]
DECISION
Once a case has been submitted for a court's decision, the petitioning party cannot, at their election, withdraw
their appeal.[71] The grant or denial of the withdrawal is addressed to the sound discretion of the court.[72] AZCUNA, J.:

The practice of the courts has always been to the effect that once a case or appeal is submitted for decision, its These cases involve a petition for the declaration of nullity of marriage, which was filed by petitioner Noel
withdrawal should not be at the discretion of the party, but dependent on the assent thereto of the adjudicating Buenaventura on July 12, 1992, on the ground of the alleged psychological incapacity of his wife, Isabel Singh
authority. Buenaventura, herein respondent. After respondent filed her answer, petitioner, with leave of court, amended his
petition by stating that both he and his wife were psychologically incapacitated to comply with the essential
obligations of marriage. In response, respondent filed an amended answer denying the allegation that she was
.... psychologically incapacitated.1

. . . What is important is that once the finality of the questioned judgment has been arrested by a motion for
On July 31, 1995, the Regional Trial Court promulgated a Decision, the dispositive portion of which reads:
reconsideration, the reviewing officer should be given full opportunity to restudy the records and satisfy himself
whether justice has been done; and if convinced that it was not done, to revise and correct the judgment as the
WHEREFORE, judgment is hereby rendered as follows:
 1) Declaring and decreeing the marriage entered into between plaintiff Noel A. Buenaventura and
defendant Isabel Lucia Singh Buenaventura on July 4, 1979, null and void ab initio;
2) Ordering the plaintiff to pay defendant moral damages in the amount of 2.5 million pesos and
exemplary damages of 1 million pesos with 6% interest from the date of this decision plus attorney’s fees
of P100,000.00;
3) Ordering the plaintiff to pay the defendant expenses of litigation of P50,000.00, plus costs;
4) Ordering the liquidation of the assets of the conjugal partnership property[,] particularly the
plaintiff’s separation/retirement benefits received from the Far East Bank [and] Trust Company[,] by
ceding, giving and paying to her fifty percent (50%) of the net amount of P3,675,335.79 or P1,837,667.89
together with 12% interest per annum from the date of this decision and one-half (1/2) of his outstanding
shares of stock with Manila Memorial Park and Provident Group of Companies;
5) Ordering him to give a regular support in favor of his son Javy Singh Buenaventura in the amount
of P15,000.00 monthly, subject to modification as the necessity arises;
6) Awarding the care and custody of the minor Javy Singh Buenaventura to his mother, the herein
defendant; and
7) Hereby authorizing the defendant to revert back to the use of her maiden family name Singh.
Let copies of this decision be furnished the appropriate civil registry and registries of properties.
SO ORDERED.2
Petitioner appealed the above decision to the Court of Appeals. While the case was pending in the appellate court,
respondent filed a motion to increase the P15,000 monthly support pendente lite of their son Javy Singh
Buenaventura. Petitioner filed an opposition thereto, praying that it be denied or that such incident be set for oral
argument.3
On September 2, 1996, the Court of Appeals issued a Resolution increasing the support pendente lite to P20,000. 4
Petitioner filed a motion for reconsideration questioning the said Resolution.5
On October 8, 1996, the appellate court promulgated a Decision dismissing petitioner’s appeal for lack of merit
and affirming in toto the trial court’s decision.6 Petitioner filed a motion for reconsideration which was denied. From
the abovementioned Decision, petitioner filed the instant Petition for Review on Certiorari.
On November 13, 1996, through another Resolution, the Court of Appeals denied petitioner’s motion for
reconsideration of the September 2, 1996 Resolution, which increased the monthly support for the son.7 Petitioner
filed a Petition for Certiorari to question these two Resolutions.
On July 9, 1997, the Petition for Review on Certiorari8 and the Petition for Certiorari9 were ordered consolidated
by this Court.10
In the Petition for Review on Certiorari petitioner claims that the Court of Appeals decided the case not in accord
with law and jurisprudence, thus:
1. WHEN IT AWARDED DEFENDANT-APPELLEE MORAL DAMAGES IN THE AMOUNT OF P2.5
MILLION AND EXEMPLARY DAMAGES OF P1 MILLION, WITH 6% INTEREST FROM THE DATE
OF ITS DECISION, WITHOUT ANY LEGAL AND MORAL BASIS;
2. WHEN IT AWARDED P100,000.00 ATTORNEY’S FEES AND P50,000.00
EXPENSES OF LITIGATION, PLUS COSTS, TO DEFENDANT-APPELLEE, WITHOUT FACTUAL AND
LEGAL BASIS;
3. WHEN IT ORDERED PLAINTIFF-APPELLANT NOEL TO PAY DEFENDANTAPPELLEE ONE-HALF
OR P1,837,667.89 OUT OF HIS RETIREMENT BENEFITS RECEIVED FROM THE FAR EAST
BANK AND TRUST CO., WITH 12% INTEREST THEREON FROM THE DATE OF ITS DECISION,
NOTWITHSTANDING THAT SAID RETIREMENT BENEFITS ARE GRATUITOUS AND EXCLUSIVE
PROPERTY OF NOEL, AND ALSO TO DELIVER TO DEFENDANT-APPELLEE ONE-HALF OF HIS
SHARES OF STOCK WITH THE MANILA MEMORIAL PARK AND THE PROVIDENT GROUP OF
COMPANIES, ALTHOUGH SAID SHARES OF STOCK WERE ACQUIRED BY NOEL BEFORE HIS
MARRIAGE TO RESPONDENT ISABEL AND ARE, THEREFORE, AGAIN HIS EXCLUSIVE
PROPERTIES; AND
4. WHEN IT AWARDED EXCLUSIVE CARE AND CUSTODY OVER THE PARTIES’ MINOR CHILD TO
DEFENDANT-APPELLEE WITHOUT ASKING THE CHILD (WHO WAS ALREADY 13 YEARS OLD
AT THAT TIME) HIS CHOICE AS TO WHOM, BETWEEN HIS TWO PARENTS, HE WOULD LIKE
TO HAVE CUSTODY OVER HIS PERSON.11
In the Petition for Certiorari, petitioner advances the following contentions:
THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION WHEN IT REFUSED TO SET
RESPONDENT’S MOTION FOR INCREASED SUPPORT FOR THE PARTIES’ SON FOR HEARING.12
THERE WAS NO NEED FOR THE COURT OF APPEALS TO INCREASE JAVY’S MONTHLY SUPPORT
OF P15,000.00 BEING GIVEN BY PETITIONER EVEN AT PRESENT PRICES.13
IN RESOLVING RESPONDENT’S MOTION FOR THE INCREASE OF JAVY’S SUPPORT, THE COURT
OF APPEALS SHOULD HAVE EXAMINED THE LIST OF EXPENSES SUBMITTED BY RESPONDENT
IN THE LIGHT OF PETITIONER’S OBJECTIONS THERETO, INSTEAD OF MERELY ASSUMING THAT
JAVY IS ENTITLED TO A P5,000 INCREASE IN SUPPORT AS SAID AMOUNT IS "TOO MINIMAL."14
LIKEWISE, THE COURT OF APPEALS SHOULD HAVE GIVEN PETITIONER AN OPPORTUNITY TO
PROVE HIS PRESENT INCOME TO SHOW THAT HE CANNOT AFFORD TO INCREASE JAVY’S
SUPPORT.15
With regard to the first issue in the main case, the Court of Appeals articulated:
 On Assignment of Error C, the trial court, after findings of fact ascertained from the testimonies not only
of the parties particularly the defendant-appellee but likewise, those of the two psychologists, awarded
damages on the basis of Articles 21, 2217 and 2229 of the Civil Code of the Philippines.
Thus, the lower court found that plaintiff-appellant deceived the defendant-appellee into marrying him by
professing true love instead of revealing to her that he was under heavy parental pressure to marry and
that because of pride he married defendantappellee; that he was not ready to enter into marriage as in
fact his career was and always would be his first priority; that he was unable to relate not only to
defendantappellee as a husband but also to his son, Javy, as a father; that he had no inclination to make
the marriage work such that in times of trouble, he chose the easiest way out, that of leaving defendant–
appellee and their son; that he had no desire to keep defendant-appellee and their son as proved by his
reluctance and later, refusal to reconcile after their separation; that the aforementioned caused
defendant-appellee to suffer mental anguish, anxiety, besmirched reputation, sleepless nights not only in
those years the parties were together but also after and throughout their separation.
Plaintiff-appellant assails the trial court’s decision on the ground that unlike those arising from a breach
in ordinary contracts, damages arising as a consequence of marriage may not be awarded. While it is
correct that there is, as yet, no decided case by the Supreme Court where damages by reason of the
performance or nonperformance of marital obligations were awarded, it does not follow that no such
award for damages may be made.
Defendant-appellee, in her amended answer, specifically prayed for moral and exemplary damages in
the total amount of 7 million pesos. The lower court, in the exercise of its discretion, found full justification
of awarding at least half of what was originally prayed for. We find no reason to disturb the ruling of the
trial court.16
The award by the trial court of moral damages is based on Articles 2217 and 21 of the Civil Code, which read as
follows:
ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendant’s wrongful act or omission.
ART. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for the damage.
The trial court referred to Article 21 because Article 221917 of the Civil Code enumerates the cases in which moral
damages may be recovered and it mentions Article 21 as one of the instances. It must be noted that Article 21
states that the individual must willfully cause loss or injury to another. There is a need that the act is willful and
hence done in complete freedom. In granting moral damages, therefore, the trial court and the Court of Appeals
could not but have assumed that the acts on which the moral damages were based were done willfully and freely,
otherwise the grant of moral damages would have no leg to stand on.
On the other hand, the trial court declared the marriage of the parties null and void based on Article 36 of the
Family Code, due to psychological incapacity of the petitioner, Noel Buenaventura. Article 36 of the Family Code
states:
A marriage contracted by any party who, at the time of the celebration, was psychologically incapacitated
to comply with the essential marital obligations of marriage, shall likewise be void even if such incapacity
becomes manifest only after its solemnization.
Psychological incapacity has been defined, thus:
. . . no less than a mental (not physical) incapacity that causes a party to be truly incognitive of the
basic marital covenants that concomitantly must be assumed and discharged by the parties to
the marriage which, as so expressed by Article 68 of the Family Code, include their mutual obligations
to live together, observe love, respect and fidelity and render help and support. There is hardly any doubt
that the intendment of the law has been to confine the meaning of "psychological incapacity" to the most
serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give
meaning and significance to the marriage. . . .18
The Court of Appeals and the trial court considered the acts of the petitioner after the marriage as proof of his
psychological incapacity, and therefore a product of his incapacity or inability to comply with the essential
obligations of marriage. Nevertheless, said courts considered these acts as willful and hence as grounds for
granting moral damages. It is contradictory to characterize acts as a product of psychological incapacity, and
hence beyond the control of the party because of an innate inability, while at the same time considering the same
set of acts as willful. By declaring the petitioner as psychologically incapacitated, the possibility of awarding moral
damages on the same set of facts was negated. The award of moral damages should be predicated, not on the
mere act of entering into the marriage, but on specific evidence that it was done deliberately and with malice by a
party who had knowledge of his or her disability and yet willfully concealed the same. No such evidence appears
to have been adduced in this case.
For the same reason, since psychological incapacity means that one is truly incognitive of the basic marital
covenants that one must assume and discharge as a consequence of marriage, it removes the basis for the
contention that the petitioner purposely deceived the private respondent. If the private respondent was deceived,
it was not due to a willful act on the part of the petitioner. Therefore, the award of moral damages was without
basis in law and in fact.
Since the grant of moral damages was not proper, it follows that the grant of exemplary damages cannot stand
since the Civil Code provides that exemplary damages are imposed in addition to moral, temperate, liquidated or
compensatory damages.19
With respect to the grant of attorney’s fees and expenses of litigation the trial court explained, thus:
Regarding Attorney’s fees, Art. 2208 of the Civil Code authorizes an award of attorney’s fees and
expenses of litigation, other than judicial costs, when as in this case the plaintiff’s act or omission has
compelled the defendant to litigate and to incur expenses of litigation to protect her interest (par. 2), and
where the Court deems it just and equitable that attorney’s fees and expenses of litigation should be
recovered. (par. 11)20
The Court of Appeals reasoned as follows:
 On Assignment of Error D, as the award of moral and exemplary damages is fully justified, the award of
attorney’s fees and costs of litigation by the trial court is likewise fully justified.21
The acts or omissions of petitioner which led the lower court to deduce his psychological incapacity, and his act in
filing the complaint for the annulment of his marriage cannot be considered as unduly compelling the private
respondent to litigate, since both are grounded on petitioner’s psychological incapacity, which as explained above
is a mental incapacity causing an utter inability to comply with the obligations of marriage. Hence, neither can be
a ground for attorney’s fees and litigation expenses. Furthermore, since the award of moral and exemplary
damages is no longer justified, the award of attorney’s fees and expenses of litigation is left without basis.
Anent the retirement benefits received from the Far East Bank and Trust Co. and the shares of stock in the Manila
Memorial Park and the Provident Group of Companies, the trial court said:
The third issue that must be resolved by the Court is what to do with the assets of the conjugal partnership in the
event of declaration of annulment of the marriage. The Honorable Supreme Court has held that the declaration of
nullity of marriage carries ipso facto a judgment for the liquidation of property (Domingo v. Court of Appeals, et al.,
G.R. No. 104818, Sept. 17, 1993, 226 SCRA, pp. 572 – 573, 586). Thus, speaking through Justice Flerida Ruth
P. Romero, it was ruled in this case:
When a marriage is declared void ab initio, the law states that the final judgment therein shall provide for
the liquidation, partition and distribution of the properties of the spouses, the custody and support of the
common children and the delivery of their presumptive legitimes, unless such matters had been
adjudicated in the previous proceedings.
The parties here were legally married on July 4, 1979, and therefore, all property acquired during the marriage,
whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses,
is presumed to be conjugal unless the contrary is proved (Art. 116, New Family Code; Art. 160, Civil Code). Art.
117 of the Family Code enumerates what are conjugal partnership properties. Among others they are the following:
1) Those acquired by onerous title during the marriage at the expense of the common fund, whether
the acquisition be for the partnership, or for only one of the spouses;
2) Those obtained from the labor, industry, work or profession of either or both of the spouses;
3) The fruits, natural, industrial, or civil, due or received during the marriage from the common
property, as well as the net fruits from the exclusive property of each spouse. . . .
Applying the foregoing legal provisions, and without prejudice to requiring an inventory of what are the parties’
conjugal properties and what are the exclusive properties of each spouse, it was disclosed during the proceedings
in this case that the plaintiff who worked first as Branch Manager and later as Vice-President of Far East Bank &
Trust Co. received separation/retirement package from the said bank in the amount of P3,701,500.00 which after
certain deductions amounting to P26,164.21 gave him a net amount of P3,675,335.79 and actually paid to him on
January 9, 1995 (Exhs. 6, 7, 8, 9, 10, 11). Not having shown debts or obligations other than those deducted from
the said retirement/separation pay, under Art. 129 of the Family Code "The net remainder of the conjugal
partnership properties shall constitute the profits, which shall be divided equally between husband and wife, unless
a different proportion or division was agreed upon in the marriage settlement or unless there has been a voluntary
waiver or forfeiture of such share as provided in this Code." In this particular case, however, there had been no
marriage settlement between the parties, nor had there been any voluntary waiver or valid forfeiture of the
defendant wife’s share in the conjugal partnership properties. The previous cession and transfer by the plaintiff of
his one-half (1/2) share in their residential house and lot covered by T.C.T. No. S35680 of the Registry of Deeds
of Parañaque, Metro Manila, in favor of the defendant as stipulated in their Compromise Agreement dated July
12, 1993, and approved by the Court in its Partial Decision dated August 6, 1993, was actually intended to be in
full settlement of any and all demands for past support. In reality, the defendant wife had allowed some concession
in favor of the plaintiff husband, for were the law strictly to be followed, in the process of liquidation of the conjugal
assets, the conjugal dwelling and the lot on which it is situated shall, unless otherwise agreed upon by the parties,
be adjudicated to the spouse with whom their only child has chosen to remain (Art. 129, par. 9). Here, what was
done was one-half (1/2) portion of the house was ceded to defendant so that she will not claim anymore for past
unpaid support, while the other half was transferred to their only child as his presumptive legitime.
Consequently, nothing yet has been given to the defendant wife by way of her share in the conjugal
properties, and it is but just, lawful and fair, that she be given one-half (1/2) share of the
separation/retirement benefits received by the plaintiff the same being part of their conjugal partnership
properties having been obtained or derived from the labor, industry, work or profession of said defendant
husband in accordance with Art. 117, par. 2 of the Family Code. For the same reason, she is entitled to
onehalf (1/2) of the outstanding shares of stock of the plaintiff husband with the Manila Memorial Park
and the Provident Group of Companies.22
The Court of Appeals articulated on this matter as follows:
On Assignment of Error E, plaintiff-appellant assails the order of the trial court for him to give one-half of
his separation/retirement benefits from Far East Bank & Trust Company and half of his outstanding shares
in Manila Memorial Park and Provident Group of Companies to the defendant-appellee as the latter’s
share in the conjugal partnership.
On August 6, 1993, the trial court rendered a Partial Decision approving the Compromise Agreement
entered into by the parties. In the same Compromise Agreement, the parties had agreed that henceforth,
their conjugal partnership is dissolved. Thereafter, no steps were taken for the liquidation of the conjugal
partnership.
Finding that defendant-appellee is entitled to at least half of the separation/retirement benefits which
plaintiff-appellant received from Far East Bank & Trust Company upon his retirement as Vice-President
of said company for the reason that the benefits accrued from plaintiff–appellant’s service for the bank
for a number of years, most of which while he was married to defendant-appellee, the trial court
adjudicated the same.
The same is true with the outstanding shares of plaintiff-appellant in Manila Memorial Park and Provident
Group of Companies. As these were acquired by the plaintiffappellant at the time he was married to
defendant-appellee, the latter is entitled to onehalf thereof as her share in the conjugal partnership. We
find no reason to disturb the ruling of the trial court.23
Since the present case does not involve the annulment of a bigamous marriage, the provisions of Article 50 in
relation to Articles 41, 42 and 43 of the Family Code, providing for the dissolution of the absolute community or
conjugal partnership of gains, as the case may be, do not apply. Rather, the general rule applies, which is that in
case a marriage is declared void ab initio, the property regime applicable and to be liquidated, partitioned and
distributed is that of equal coownership.
In Valdes v. Regional Trial Court, Branch 102, Quezon City,24 this Court expounded on the consequences of a void
marriage on the property relations of the spouses and specified the applicable provisions of law:
The trial court correctly applied the law. In a void marriage, regardless of the cause thereof, the property
relations of the parties during the period of cohabitation is governed by the provisions of Article 147 or
Article 148, such as the case may be, of the Family Code. Article 147 is a remake of Article 144 of the
Civil Code as interpreted and so applied in previous cases; it provides:
ART. 147. When a man and a woman who are capacitated to marry each other, live exclusively
with each other as husband and wife without the benefit of marriage or under a void marriage,
their wages and salaries shall be owned by them in equal shares and the property acquired by
both of them through their work or industry shall be governed by the rules on co-ownership.
In the absence of proof to the contrary, properties acquired while they lived together shall be
presumed to have been obtained by their joint efforts, work or industry, and shall be owned by
them in equal shares. For purposes of this Article, a party who did not participate in the
acquisition by the other party of any property shall be deemed to have contributed jointly in the
acquisition thereof if the former's efforts consisted in the care and maintenance of the family and
of the household.
Neither party can encumber or dispose by acts inter vivos of his or her share in the property
acquired during cohabitation and owned in common, without the consent of the other, until after
the termination of their cohabitation.
When only one of the parties to a void marriage is in good faith, the share of the party in bad
faith in the co-ownership shall be forfeited in favor of their common children. In case of default
of or waiver by any or all of the common children or their descendants, each vacant share shall
belong to the respective surviving descendants. In the absence of descendants, such share
shall belong to the innocent party. In all cases, the forfeiture shall take place upon termination
of the cohabitation.
This peculiar kind of co-ownership applies when a man and a woman, suffering no legal impediment to
marry each other, so exclusively live together as husband and wife under a void marriage or without the
benefit of marriage. The term "capacitated" in the provision (in the first paragraph of the law) refers to the
legal capacity of a party to contract marriage, i.e., any "male or female of the age of eighteen years or
upwards not under any of the impediments mentioned in Articles 37 and 38" of the Code.
Under this property regime, property acquired by both spouses through their work and industry shall be
governed by the rules on equal co-ownership. Any property acquired during the union is prima facie
presumed to have been obtained through their joint efforts. A party who did not participate in the
acquisition of the property shall still be considered as having contributed thereto jointly if said party's
"efforts consisted in the care and maintenance of the family household." Unlike the conjugal partnership
of gains, the fruits of the couple's separate property are not included in the co-ownership.
Article 147 of the Family Code, in substance and to the above extent, has clarified Article 144 of the Civil
Code; in addition, the law now expressly provides that —
(a) Neither party can dispose or encumber by act[s] inter vivos [of] his or her share in co-ownership
property, without the consent of the other, during the period of cohabitation; and
(b) In the case of a void marriage, any party in bad faith shall forfeit his or her share in the co-
ownership in favor of their common children; in default thereof or waiver by any or all of the common
children, each vacant share shall belong to the respective surviving descendants, or still in default thereof,
to the innocent party. The forfeiture shall take place upon the termination of the cohabitation or declaration
of nullity of the marriage.
In deciding to take further cognizance of the issue on the settlement of the parties' common property, the
trial court acted neither imprudently nor precipitately; a court which had jurisdiction to declare the marriage
a nullity must be deemed likewise clothed with authority to resolve incidental and consequential matters.
Nor did it commit a reversible error in ruling that petitioner and private respondent own the "family home"
and all their common property in equal shares, as well as in concluding that, in the liquidation and partition
of the property owned in common by them, the provisions on co-ownership under the Civil Code, not
Articles 50, 51 and 52, in relation to Articles 102 and 129, of the Family Code, should aptly prevail. The
rules set up to govern the liquidation of either the absolute community or the conjugal partnership of
gains, the property regimes recognized for valid and voidable marriages (in the latter case until the
contract is annulled), are irrelevant to the liquidation of the co-ownership that exists between common-
law spouses. The first paragraph of Article 50 of the Family Code, applying paragraphs (2), (3), (4) and
(5) of Article 43, relates only, by its explicit terms, to voidable marriages and, exceptionally, to void
marriages under Article 40 of the Code, i.e., the declaration of nullity of a subsequent marriage contracted
by a spouse of a prior void marriage before the latter is judicially declared void. The latter is a special rule
that somehow recognizes the philosophy and an old doctrine that void marriages are inexistent from the
very beginning and no judicial decree is necessary to establish their nullity. In now requiring for purposes
of remarriage, the declaration of nullity by final judgment of the previously contracted void marriage, the
present law aims to do away with any continuing uncertainty on the status of the second marriage. It is
not then illogical for the provisions of Article 43, in relation to Articles 41 and 42, of the Family Code, on
the effects of the termination of a subsequent marriage contracted during the subsistence of a previous
marriage to be made applicable pro hac vice. In all other cases, it is not to be assumed that the law has
also meant to have coincident property relations, on the one hand, between spouses in valid and voidable
marriages (before annulment) and, on the other, between common-law spouses or spouses of void
marriages, leaving to ordain, in the latter case, the ordinary rules on co-ownership subject to the provision
of Article 147 and Article 148 of the Family Code. It must be stressed, nevertheless, even as it may merely
state the obvious, that the provisions of the Family Code on the "family home," i.e., the provisions found
in Title V, Chapter 2, of the Family Code, remain in force and effect regardless of the property regime of
the spouses.25
Since the properties ordered to be distributed by the court a quo were found, both by the trial court and the Court
of Appeals, to have been acquired during the union of the parties, the same would be covered by the co-ownership.
No fruits of a separate property of one of the parties appear to have been included or involved in said distribution.
The liquidation, partition and distribution of the properties owned in common by the parties herein as ordered by
the court a quo should, therefore, be sustained, but on the basis of co-ownership and not of the regime of conjugal
partnership of gains.
As to the issue on custody of the parties over their only child, Javy Singh Buenaventura, it is now moot since he
is about to turn twenty-five years of age on May 27, 200526 and has, therefore, attained the age of majority.
With regard to the issues on support raised in the Petition for Certiorari, these would also now be moot, owing to
the fact that the son, Javy Singh Buenaventura, as previously stated, has attained the age of majority.
WHEREFORE, the Decision of the Court of Appeals dated October 8, 1996 and its Resolution dated December
10, 1996 which are contested in the Petition for Review (G.R. No. 127449), are hereby MODIFIED, in that the
award of moral and exemplary damages, attorney’s fees, expenses of litigation and costs are deleted. The order
giving respondent one-half of the retirement benefits of petitioner from Far East Bank and Trust Co. and one-half
of petitioner’s shares of stock in Manila Memorial Park and in the Provident Group of Companies is sustained but
on the basis of the liquidation, partition and distribution of the co-ownership and not of the regime of
conjugal partnership of gains. The rest of said Decision and Resolution are AFFIRMED.
The Petition for Review on Certiorari (G.R. No. 127358) contesting the Court of Appeals’ Resolutions of September
2, 1996 and November 13, 1996 which increased the support pendente lite in favor of the parties’ son, Javy Singh
Buenaventura, is now MOOT and ACADEMIC and is, accordingly, DISMISSED.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Carpio, JJ., concur.
[ G.R. No. 214016. November 24, 2021 ]
JHONNA GUEVARRA ET AL., PETITIONER, VS. JAN BANACH, RESPONDENT.
DECISION
LEONEN, J.:
A mere breach of a promise to marry is not an actionable wrong, as long as it is not of such extent as would
palpably and unjustifiably contradict good customs.1 In any case, the party seeking to recover damages must
have acted in good faith.
This Court resolves a Petition for Review on Certiorari2 assailing both the Decision3 and
Resolution4 of the Court of Appeals, which reversed the Regional Trial Court Decision5 finding Jhonna Guevarra
(Guevarra) liable to Jan Banach (Banach) for damages arising from a breach of promise to marry.
Based on the Court of Appeals Resolution and other available records, Banach, a German citizen,6 met Guevarra
through a certain Pastor Jun Millamina.7 He went on to court Guevarra, visiting her almost every day, giving her
gifts, and eventually telling her that he intended to marry her.8
What Banach did not tell Guevarra, however, was that he had still been married to his third wife then. Instead, he
told her that he was a divorced man. He also concealed his true identity and made Guevarra and her family believe
that his name was Roger Brawner.9
Guevarra, who would confide in Banach her family problems, even including the chances of their family being
evicted from their home,10 eventually submitted to Banach's wooing as he offered her a better life. The two agreed
to get married, and Banach sent Guevarra P500,000.00 to buy a lot for their conjugal home.11
Yet, when Guevarra found out about Banach's lies and deception, she broke up with him.12
The breakup prompted Banach to sue Guevarra and her parents for damages before the Regional Trial Court.13
Banach anchored his cause of action on the human relations provisions in the Civil Code, particularly Articles 20,
21, and 22.14 He alleged that Guevarra had repeatedly expressed her love and willingness to marry him so that
he would send her money, only to break up with him after he had done so.15 He claimed that these acts amounted
to fraud, or at the very least, unjust enrichment.16
Banach likewise claimed moral damages for the alleged "moral suffering, anguish, anxiety[,] and sleepless nights"
he suffered from Guevarra.17 He also prayed for attorney's fees for having been constrained to litigate to protect
his rights.18
On the other hand, Guevarra argued that the money Banach sent her "was a gift, the return of which [was] not
actionable."19
The Regional Trial Court found Guevarra and her parents liable to Banach for actual damages. It also awarded
moral damages and attorney's fees.20
On appeal, the Court of Appeals, in its January 29, 2007 Decision, similarly ordered Guevarra and her parents to
return the P500,000.00 to Banach under the principle of unjust enrichment. However, it deleted the awards of
moral damages and attorney's fees,21 ruling that Banach's actions were tainted with fraud and deceit, and that he
did not have the purest intentions in expressing his desire to marry Guevarra.22
The parties sought reconsideration of the Decision.
Banach claimed that he was entitled to moral damages and attorney's fees.23 On the other hand, Guevarra, along
with her parents, prayed that the Regional Trial Court's Decision be totally reversed in their favor. She maintained
that the P500,000.00 was a gift given to her and, applying the law on natural obligations under Article 1423 of the
Civil Code, the return of the money was not actionable.24 She also faulted the Court of Appeals for not applying
the doctrine on breach of promise to marry, which states that no such cause of action is recognized in our
jurisdiction.25
In the July 14, 2014 Resolution,26 the Court of Appeals denied the Motions for Reconsideration. It refused to
award moral damages because Banach failed to prove that Guevarra acted with fraud or deceit; the timing of the
breakup was understandable since it happened around the time that Guevarra learned of Banach's
misrepresentation.27 Accordingly, the Court of Appeals found no basis in the claim for attorney's fees.28
However, the Court of Appeals rejected Guevarra and her parents' theory that the law on natural obligations should
apply. It found that since Banach sent Guevarra money for their plan to get married, it was only proper to order
the reimbursement under the principle of unjust enrichment because no marriage ever materialized.29
Thus, Guevarra filed a Petition for Review on Certiorari30 against Banach. Petitioner insists that either the law on
natural obligations or the doctrine on breach of promise to marry is applicable.31 Anchoring her claims on laws
and doctrines that supposedly bar the return of the money, she insists that the P500,000.00 was a gift, the return
of which is not actionable.32
For his part, respondent prefaces his Comment33 by pointing out the Petition's technical deficiencies. He argues
that the Petition fails to state the full names of the parties, as well as the material dates showing when the notice
of judgment, final order, or resolution was received; when a motion for new trial or reconsideration, if any, was
filed; and when a notice of denial was received. He also insists that the Petition did not contain a concise statement
of the issues involved and her arguments supporting her Petition.34 He claims that noncompliance with the
requirements found under Rule 45 renders the Petition dismissible.35
On the substantive grounds, respondent maintains that there was no element of seduction, fraud, or deceit when
he sent the money to petitioner, as respondent was in Germany and not in the Philippines at that time. Respondent
claims that this even shows his sincere desire to marry petitioner, which would have materialized had it not been
for petitioner's sudden change of heart.36
Respondent further refutes petitioner's allegation of ill intentions. He says that he openly courted petitioner in their
home and in the presence of her parents; and that only after he had been accepted in the family did he have
sexual intercourse with petitioner. Hence, he says that there could not have been moral seduction.37
Lastly, respondent repeats that while there can be no action for breach of promise to marry, his claim is anchored
on the violation of the human relations provisions of the Civil Code on unjust enrichment.38 Thus, he maintains
that the order to return the P500,000.00 was proper.39
In her Reply,40 petitioner, along with her parents, reiterates the argument that the P500,000.00 was given in
consideration of the promise to marry, and the breach of such promise cannot give rise to a cause of action.41
The main issue in this case is whether or not the order to return the P500,000.00 is proper.
The Petition is granted.
First, a word on the procedural issue. The Rule 45 requirements on the contents of a petition for review on certiorari
are not empty, technical niceties. The allegations are required primarily to aid this Court in rendering an intelligent
decision on how the law applies to the facts of the case as established by the records. After all, our main duty
when exercising judicial review is to resolve controversies and settle the rights of litigants.
That said, "what should guide judicial action is that a party is given the fullest opportunity to establish the merits of
[their] action or defense rather than for [them] to lose life, honor, or property on mere technicalities."42 In the end,
a Rule 45 review lies within this Court's discretion. In the exercise of this discretion, we find that the allegations in
the Petition, together with other available records, are sufficient, and we deem it best to settle this case on its
merits.
The crux of the matter is whether there is legal basis to order the return of the P500,000.00 that respondent gave
petitioner for their supposed conjugal home.
Under our laws, a breach of promise to marry is not actionable. This doctrine was first pronounced in Hermosisima
v. Court of Appeals,43 where this Court observed that the New Civil Code omitted the provisions in the Spanish
Civil Code of 1889 that allowed actions for breach of promise to marry. Hermosisima treated the omission to mean
that such breach is no longer recognized as an actionable wrong. This doctrine was reiterated in Estopa v.
Piansay44 and Baksh v. Court of Appeals.45
Nevertheless, in Wassmer v. Velez,46 this Court allowed the recovery of damages as a result of a canceled
marriage. In Wassmer, preparations for the wedding had already been made-a marriage license had been secured;
wedding invitations printed and distributed; dresses for the bride, maid of honor, and flower girl purchased; bridal
showers given and gifts received; the matrimonial bed bought, complete with accessories-only to have the wedding
canceled just two days before its intended date.
Wassmer did not depart from the doctrine that a mere breach of promise to many is not an actionable wrong. The
award in Wassmer was not based on the breach of promise to marry, but on Article 21 of the New Civil Code.47
Wassmer ruled that, while a breach of promise to marry was not actionable, walking out of a wedding two days
prior, after all had been prepared, was quite different. The defendant's act was deemed "palpably and unjustifiably
contrary to good customs," for which the award of damages was proper.48 Indeed, "the extent to which acts not
contrary to law may be perpetrated with impunit[y] is not limitless[,]" as these acts are still subject to the human
relations provisions of the New Civil Code.49
Now, respondent proposes the same theory in his attempt to recover the P500,000.00 he had given petitioner. He
argues that petitioner's conduct was actionable, not because of her breach of promise to many, but because of
the law on unjust enrichment in the New Civil Code.
What respondent fails to consider, however, is that the human relations provisions in the New Civil Code
presuppose that the party seeking damages must have acted in good faith. In Wassmer, this Court awarded
damages because the party who sought damages-the brideto-be-did not perpetrate lies, fraud, or deception, which
would have barred recovery. This is the reason why the groom-to-be's conduct in Wassmer was considered unjust
and contrary to good customs. Had the bride-to-be been in bad faith, the human relations provisions would not
have applied.
This case is different. Here, petitioner called off the engagement after she had discovered respondent's lies and
deception. As the Court of Appeals found, respondent's actions were tainted with fraud and deceit; he did not have
the purest intentions in marrying petitioner. He lied about his marital status, and even hid his true name from
petitioner. These acts suffice to justify the wedding's cancellation. Finding out that one's betrothed is still married
to another person, and that they are not who they say they are, are reasons enough to conclude bad faith.
Since respondent himself did not act in good faith, he cannot claim damages under the New Civil Code. The unjust
enrichment principle under Article 2250 only applies if the property is acquired without legal grounds. Here,
respondent gave petitioner P500,000.00 as a gift to help her and her family with their possible eviction from their
home. The money being a gift, petitioner is correct to say that she cannot be compelled to return the P500,000.00
given to her.
Reversing the doctrines in Hermosisima and Wassmer would have far-reaching implications on the fundamental SO ORDERED.
rights enshrined in the Constitution. Hermosisima explains the public policy behind the doctrine on breaches of
promise to marry: Carandang, Zalameda, Rosario, and Marquez, JJ., concur.

The elimination of this Chapter is proposed. That breach of promise to marry is not actionable has been definitely
decided in the case of De Jesus vs. Syquia. The history of breach of promise suit in the United States and in
England has shown that no other action lends itself more readily to abuse by designing women and unscrupulous
G.R. No. 174715 October 11, 2012
men. It is this experience which has led to the abolition of rights of action in the so-called Balm suit in many of the
American States.
FILINVEST LAND, INC., EFREN C. GUTIERRE and LINA DE GUZMANFERRER,
Petitioners, vs.
The Commission perhaps thought that it has followed the more progressive trend in legislation when it provided
ABDUL BACKY, ABEHERA, BAIYA, EDRIS, HADJI GULAM, JAMELLA, KIRAM, LUCAYA, MONER, OMAR,
for breach of promise to marry suits. But it is clear that the creation of such causes of action at a time when so
RAMIR, ROBAYCA, SATAR, TAYBA ALL SURNAMED NGILAY, EDMER ANDONG, UNOS BANTANGAN and
many States, in consequence of years of experience are doing away with them, may well prove to be a step in the
NADJER ESQUIVEL, Respondents.
wrong direction.51 (Citations omitted) Thus, removing the provisions allowing such cause of action to stand was
seen as a measure to discourage litigation that had once been abused. This policy asserts that our civil courts are
not the proper venues to adjudicate interpersonal matters. DECISION

Beyond this public policy, however, is the recognition that the right to marry is a fundamental human right. Marriage
is a social institution that creates a permanent bond between individuals, and the law grants them rights and
obligations unique to married couples. The choice of whether to marry-and necessarily, whom to marry-is a
personal decision that a person makes for themself. This individual choice must be made, as much as possible,
completely free from any external pressures. After all, marriage can and will change a person's life.
Thus, choosing a person to marry is intimately connected to a person's autonomy. Any State interest in the
institution of marriage must not lead to an unjustified intrusion into one's individual autonomy and human dignity.52
It must only be done when public interest is imperiled.53 It is not within the courts' competence to reach too far
into intimate relations. Courts, through litigation, should not dictate on or even pressure a person into accepting a
life of marriage with a person they reject. Courts must, as much as possible, refrain from meddling in these
personal affairs.
PERALTA, J.:
For this Court's consideration is the Petition for Review on Certiorari under Rule 45, dated November 9, 2006, of
petitioner Filinvest Land, Inc., which seeks to set aside the Decision1 dated March 30, 2006 and Resolution2 dated
September 18, 2006 of the Court of Appeals (CA) partially reversing the Decision3 dated October 1, 2003 of the
Regional Trial Court, Las Piñas, Branch 253 (RTC).
The factual antecedents, as found in the records follow.
Respondents were grantees of agricultural public lands located in Tambler, General Santos City through
Homestead and Fee patents sometime in 1986 and 1991 which are covered by and specifically described in the
following Original Certificates of Title issued by the Register of Deeds of General Santos City:

The Constitution directs the State to "[value] the dignity of every human person and [guarantee] full respect for
human rights."54 Freedom of choice to associate or to identify forms part of one's dignity.55 As much as the Family OCT No. Area (sq. m.) Grantee Date Granted
Code provides that the "nature, consequences, and incidents [of marriage] are governed by law and not subject P-5204 38,328 Abdul Backy Ngilay November 11, 1986
to stipulation,"56 one's choice of intimate relations is also protected by the liberty57 and human dignity58 clauses P-5205 49,996 Hadji Gulam Ngilay November 11, 1986
of the Constitution. P-5206 49,875 Edris A. Ngilay November 11, 1986
P-5207 44,797 Robayca A. Ngilay November 11, 1986
P-5209 20,000 Omar Ngilay November 11, 1986
An individual has the autonomy to choose whom to marry, or whether to marry at all. They must be free to make
P-5211 29,990 Tayba Ngilay November 11, 1986
that choice without any fear of legal retribution or liability. The decision on whether to marry is one that should be
P-5212 48,055 Kiram Ngilay November 11, 1986
freely chosen, without the pressures of a possible civil suit should a person realize that their intended partner is
P-5578 20,408 Nadjer Esquevel November 24, 1991
not right for them. We recognize instances when the breach of one's commitment in an intimate relationship is a
P-5579 35,093 Unos Bantangan November 24, 1991
consequence of their realization that marriage may not be the wisest path they could take given their P-5580 39,507 Moner Ngilay November 24, 1991
circumstances. P-5582 44,809 Baiya Ngilay November 24, 1991
P-5583 10,050 Jamela Ngilay November 24, 1991
For this reason, litigation to the sorrows caused by a broken heart and a broken promise must be discouraged. P-5584 49,993 Ramir Ngilay November 24, 1991
P-5586 40,703 Satar Ngilay November 24, 1991
WHEREFORE, the Petition is GRANTED. The award of actual damages worth P500,000.00 is DELETED. P-5590 20,000 Abehara Ngilay November 24, 1991
P-5592 41,645 Lucaya Ngilay November 24, 1991
 P-5595 13,168 Edmer Andong November 24, 1991
Negotiations were made by petitioner, represented by Lina de Guzman-Ferrer with the patriarch of the Ngilays,
Hadji Gulam Ngilay sometime in 1995. Eventually, a Deed of Conditional Sale of the above- enumerated properties
in favor of petitioner Filinvest Land, Inc. was executed. Upon its execution, respondents were asked to deliver to
petitioner the original owner's duplicate copy of the certificates of title of their respective properties. Respondents
received the downpayment for the properties on October 28, 1995.
A few days after the execution of the aforestated deeds and the delivery of the corresponding documents to
petitioner, respondents came to know that the sale of their properties was null and void, because it was done
within the period that they were not allowed to do so and that the sale did not have the approval of the Secretary
of the Department of Environment and Natural Resources (DENR) prompting them to file a case for the declaration
of nullity of the deeds of conditional and absolute sale of the questioned properties and the grant of right of way
with the RTC, Las Piñas, Branch 253.
On the other hand, petitioner claims that sometime in 1995, the representative of Hadji Ngilay approached
petitioner to propose the sale of a portion of his properties. Thereafter, representatives of petitioner flew to General
Santos City from Manila to conduct an ocular inspection of the subject properties. Petitioner was willing to purchase
the properties but seeing that some of the properties were registered as land grants through homestead patents,
representatives of petitioner informed Ngilay that they would return to General Santos City in a few months to
finalize the sale as ten (10) certificates of title were issued on November 24, 1991.
According to petitioner, Ngilay and his children prevailed upon the representatives of petitioner to make an advance
payment. To accommodate the Ngilays, petitioner acceded to making an advance with the understanding that
petitioner could demand anytime the return of the advance payment should Ngilay not be able to comply with the
conditions of the sale. The Ngilays likewise undertook to secure the necessary approvals of the DENR before the
consummation of the sale.
The RTC ruled in favor of Filinvest Land, Inc. and upheld the sale of all the properties in litigation. It found that the
sale of those properties whose original certificates of title were issued by virtue of the 1986 Patents was valid,
considering that the prohibitory period ended in 1991, or way before the transaction took place. As to those patents
awarded in 1991, the same court opined that since those properties were the subject of a deed of conditional sale,
compliance with those conditions is necessary for there to be a perfected contract between the parties. The RTC
also upheld the grant of right of way as it adjudged that the right of way agreement showed that the right of way
was granted to provide access from the highway to the properties to be purchased. The dispositive portion of the
Decision dated October 1, 2003 reads:
WHEREFORE, premises considered, the Court upholds the sale of all the properties in litigation. It likewise upholds
the grant of right of way in favor of the respondent. Consequently, the petition is DISMISSED.
No pronouncement as to damages for failure to prove the same.
Costs against the petitioners.
SO ORDERED.4
Respondents elevated the case to the CA in which the latter modified the judgment of the RTC.1âwphi1 While the
CA upheld the validity of the sale of the properties the patents of which were awarded in 1986, including the
corresponding grant of right of way for the same lots, it nullified the disposition of those properties granted through
patents in 1991 and the right of way on the same properties. As to the "1991 Patents," the CA ruled that the
contract of sale between the parties was a perfected contract, hence, the parties entered into a prohibited
conveyance of a homestead within the prohibitive period of five years from the issuance of the patent. The CA
Decision dated March 30, 2006 disposed the case as follows:
WHEREFORE, the assailed Decision dated October 1, 2003 is MODIFIED:
a) The Deed of Conditional Sale and Deed of Absolute Sale for the properties covered by the "1991
Patents", as well as the Right of Way Agreement thereto, are declared null and void. The Register of
Deeds of General Santos City is consequently directed to cancel the certificates of title covered by the
"1991 Patents" issued in favor of appellee Filinvest and to issue new titles in favor of herein appellants.
b) The sale of the properties covered by the "1986 Patents", including the corresponding grant of
way for said lots, are declared valid.
SO ORDERED.5
Petitioners filed a Motion for Partial Reconsideration, but it was denied by the CA.
Hence, the present petition.
The grounds relied upon are:
1. A CONDITIONAL SALE INVOLVING THE 1991 PATENTS DID NOT VIOLATE THE PROHIBITION AGAINST
ALIENATION OF HOMESTEADS UNDER THE PUBLIC LAND ACT SINCE NO ACTUAL TRANSFER OR
DISPOSITION WAS PERFECTED UNTIL ALL THE CONDITIONS OF THE DEED ARE FULFILLED.
2. REGISTRATION IS THE OPERATIVE ACT THAT CONVEYS OR DISPOSES RIGHTS IN REAL PROPERTY.
BEING UNREGISTERED, THE DEED OF CONDITIONAL SALE DID NOT CONVEY OR DISPOSE OF THE 1991
HOMESTEADS OR ANY RIGHTS THEREIN IN VIOLATION OF THE PUBLIC LAND ACT.
3. ASSUMING THE NULLITY OF THE SALE OF THE 1991 PATENTS, THE HONORABLE COURT OF APPEALS
SHOULD HAVE ORDERED RESPONDENTS AS A MATTER OF LAW TO RETURN TO PETITIONERS WHAT
THEY HAVE RECEIVED.6
In their Comment7 dated March 5, 2007, respondents stated the following counter-arguments:
(1) The Honorable Court of Appeals did not err in holding that the Deed of Conditional Sale and
Deed of Absolute Sale for the properties covered by the 1991 Patents, as well as the Right of Way
Agreement thereto is null and void for the simplest reason that the said transactions were volatile of the
Public Land Act.
(2) The questions raised by the Petitioner, Filinvest Land Inc. (FLI) are unsubstantial to require
consideration.8
In its Reply9 dated July 30, 2007, petitioner insists that the prohibition against alienation and disposition of land
covered by Homestead Patents is a prohibition against the actual loss of the homestead within the five-year
prohibitory period, not against all contracts including those that do not result in such an actual loss of ownership
or possession. It also points out that respondents themselves admit that the transfer certificates of title covering
the ten parcels of land are all dated 1998, which confirms its declaration that the lands covered by 1991 Homestead
Patents were not conveyed to Filinvest until after the five-year prohibitory period.
The petition is unmeritorious.
The five-year prohibitory period following the issuance of the homestead patent is provided under Section 118 of
Commonwealth Act No. 141, as amended by Commonwealth Act No. 456, otherwise known as the Public Land
Act.10 It bears stressing that the law was enacted to give the homesteader or patentee every chance to preserve
for himself and his family the land that the State had gratuitously given to him as a reward for his labour in cleaning
and cultivating it.11 Its basic objective, as the Court had occasion to stress, is to promote public policy that is to
provide home and decent living for destitute, aimed at providing a class of independent small landholders which
is the bulwark of peace and order. 12 Hence, any act which would have the effect of removing the property subject
of the patent from the hands of a grantee will be struck down for being violative of the law.13
In the present case, the negotiations for the purchase of the properties covered by the patents issued in 1991 were
made in 1995 and, eventually, an undated Deed of Conditional Sale was executed. On October 28, 1995,
respondents received the downpayment of P14,000.000.00 for the properties covered by the patents issued in
1991. Applying the five-year prohibition, the properties covered by the patent issued on November 24, 1991 could
only be alienated after November 24, 1996. Therefore, the sale, having been consummated on October 28, 1995,
or within the five-year prohibition, is as ruled by the CA, void.
Petitioner argues that the correct formulation of the issue is not whether there was a perfected contract between
the parties during the period of prohibition, but whether by such deed of conditional sale there was "alienation or
encumbrance" within the contemplation of the law. This is wrong. The prohibition does not distinguish between
consummated and executory sale. The conditional sale entered into by the parties is still a conveyance of the
homestead patent. As correctly ruled by the CA, citing Ortega v. Tan:14
And, even assuming that the disputed sale was not yet perfected or consummated, still, the transaction cannot be
validated. The prohibition of the law on the sale or encumbrance of the homestead within five years after the grant
is MANDATORY. The purpose of the law is to promote a definite policy, i.e., "to preserve and keep in the family of
the homesteader that portion of the public land which the State has gratuitously given to him." Thus, the law does
not distinguish between executory and consummated sales. Where the sale of a homestead was perfected within
the prohibitory period of five years, the fact that the formal deed of sale was executed after the expiration of the
staid period DID NOT and COULD NOT legalize a contract that was void from its inception. To hold valid such
arrangement would be to throw the door open to all possible fraudulent subterfuges and schemes which persons
interested in the land given to a homesteader may devise in circumventing and defeating the legal provisions
prohibiting their alienation within five years from the issuance of the patent.15
To repeat, the conveyance of a homestead before the expiration of the five-year prohibitory period following the
issuance of the homestead patent is null and void and cannot be enforced, for it is not within the competence of
any citizen to barter away what public policy by law seeks to preserve.16
Nevertheless, petitioner does not err in seeking the return of the down payment as a consequence of the sale
having been declared void. The rule is settled that the declaration of nullity of a contract which is void ab initio
operates to restore things to the state and condition in which they were found before the execution thereof. 17
Petitioner is correct in its argument that allowing respondents to keep the amount received from petitioner is
tantamount to judicial acquiescence to unjust enrichment. Unjust enrichment exists "when a person unjustly retains
a benefit to the loss of another, or when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience." 18 There is unjust enrichment under Article 22 of the Civil Code
when (1) a person is unjustly benefited, and (2) such benefit is derived at the expense of or with damages to
another.19 Thus, the sale which created the obligation of petitioner to pay the agreed amount having been declared
void, respondents have the duty to return the down payment as they no longer have the right to keep it. The
principle of unjust enrichment essentially contemplates payment when there is no duty to pay, and the person who
receives the payment has no right to receive it. 20 As found by the CA and undisputed by the parties, the amount
or the down payment made is P14,000,000.00 which shall also be the amount to be returned by respondents.
WHEREFORE, the Petition for Review on Certiorari dated November 9, 2006 or petitioner Filinvest Land, Inc. is
hereby DENIED. Consequently, the Decision dated March 30, 2006 and Resolution dated September 18, 2006 or
the Court of Appeals are hereby AFFIRMED with the MODIFICATION that respondents return the amount of
P14,000,000.00 given by petitioner as down payment for the sale which is ruled to be void ab initio.
SO ORDERED.
[G.R. No. 172027, July 29 : 2010]
GONZALO S. GO, JR., PETITIONER, VS. COURT OF APPEALS AND OFFICE OF THE PRESIDENT,
RESPONDENTS.
DECISION
VELASCO JR., J.:
Assailed in this Petition for Certiorari[1] under Rule 65 are the Resolutions dated August 17, 2005[2] and January
31, 2006[3] of the Court of Appeals (CA) in CA-G.R. SP No. 90665.
The facts are undisputed.
Petitioner Gonzalo S. Go, Jr. (Go) was appointed in 1980 as Hearing Officer III of the Board of Transportation
(BOT), then the government's land transportation franchising and regulating agency, with a salary rate of PhP
16,860 per annum.[4] On June 19, 1987, Executive Order No. (EO) 202[5] was issued creating, within the
Department of Transportation and
Communications (DOTC), the Land Transportation Franchising and Regulatory Board (LTFRB) to replace the
BOT. The issuance placed the LTFRB under the administrative control and supervision of the DOTC Secretary.[6]
On February 1, 1990, the DOTC Secretary extended Go a promotional appointment as Chief
Hearing Officer (Chief, Legal Division), with a salary rate of PhP 151,800 per annum.[7] The Civil Service
Commission (CSC) later approved this permanent appointment.[8] In her
Certification[9] dated October 27, 2005, LTFRB Administrative Division Chief Cynthia G. Angulo stated that the
promotion was to the position of Attorney VI, Salary Grade (SG)-26, obviously following budgetary circulars
allocating SG-26 to division chief positions.
The instant controversy started when the Department of Budget and Management (DBM), by letter[10] of March
13, 1991, informed the then DOTC Secretary of the erroneous classification in the Position Allocation List (PAL)
of the DBM of two positions in his department, one in the LTFRB and, the other, in the Civil Aeronautics Board
(CAB). The error, according to the DBM, stemmed from the fact that division chief positions in quasi-judicial or
regulatory agencies, whose decisions are immediately appealable to the department secretary instead of to the
court, are entitled only to Attorney V, SG-25 allocation. Pertinently, the DBM letter reads:
Under existing allocation criteria division Chief positions in x x x department level agencies performing quasi-
judicial/regulatory functions where decisions are appealable to higher courts shall be allocated to Attorney VI,
SG-26. Division chief positions in quasi-judicial/regulatory agencies lower than departments such as the Civil
Aeronautics Board (CAB) and the Land Transportation Franchising and Regulatory Board (LTFRB) where
decisions are appealable to the Secretary of the DOTC and then the Office of the President shall, however be
allocated to Attorney V, SG-25.[11] (Emphasis supplied.)
After an exchange of communications between the DBM and the DOTC, the corresponding changes in position
classification with all its wage implications were implemented, effective as of April 8, 1991.[12]
Unable to accept this new development where his position was allocated the rank of Attorney V, SG-25, Go
wrote the DBM to question the "summary demotion or downgrading [of his salary grade]" from SG-26 to SG-25.
In his protest-letter,[13] Go excepted from the main reason proferred by the DBM that the decisions or rulings of
the LTFRB are only appealable to the DOTC Secretary under Sec. 6 of EO 202 and not to the CA. As Go
argued, the aforecited proviso cannot prevail over Sec. 9 (3) of Batas Pambansa Blg. (BP) 129, or the Judiciary
Reorganization Act of 1980, under which appeals from decisions of quasijudicial bodies are to be made to the
CA.
Ruling of the DBM Secretary & Office of the President
On September 14, 1998, the DBM Secretary denied Go's protest, holding that decisions, orders or resolutions of
the LTFRB are appealable to the DOTC Secretary.[14] The DBM reminded Go that based on the department's
standards and criteria formulated pursuant to Presidential Decree No. (PD) 985 and Republic Act No. (RA)
6758,[15] the division chief of bureau-level agencies, like the LTFRB, is allocable to Attorney V, SG-25.
In time, Go sought reconsideration, with the following additional argument: LTFRB is similarly situated as
another bureau-level agency under DOTC, the CAB, which is listed under Rule 43 of the Rules of Court as
among the quasi-judicial agencies whose decisions or resolutions are directly appealable to the CA.
Following the denial of his motion for reconsideration, Go appealed to the Office of the President (OP).
On January 7, 2005, in OP Case No. 99-8880, the OP, agreeing with the ruling of the DBM and the premises
holding it together, rendered a Decision dismissing Go's appeal.
The OP would subsequently deny Gonzalo's motion for reconsideration.
Undaunted, Go interposed before the CA a petition for review under Rule 43, his recourse docketed as CA-G.R.
SP No. 90665.
Ruling of the Court of Appeals
By Resolution dated August 17, 2005, the appellate court dismissed the petition on the following procedural
grounds: (a) Go resorted to the wrong mode of appeal, Rule 43 being available only to assail the decision of a
quasi-judicial agency issued in the exercise of its quasi-judicial functions, as DBM is not a quasi-judicial body; (b)
his petition violated Sec. 6 (a) of Rule 43; and (c) his counsel violated Bar Matter Nos. 287 and 1132.
Through the equally assailed January 31, 2006 Resolution, the CA rejected Go's motion for reconsideration.
Hence, the instant petition for certiorari.
The Issues
I
DID RESPONDENT [CA] COMMIT GRAVE ABUSE OF DISCRETION x x x WHEN IT
DISMISSED OUTRIGHT THE PETITION ON THE GROUND OF ALLEGED WRONG MODE
OF APPEAL THROUGH RULE 43 OF THE RULES OF COURT -
- BY CLAIMING THAT WHEN RESPONDENT OP, WHOSE DECISION IN THE EXERCISE
OF ITS QUASI-JUDICIAL POWERS IS APPEALABLE TO THE [CA] UNDER RULE 43,
AFFIRMED THE DECISION OF THE DBM, IT WAS NOT IN THE EXERCISE OF ITS
QUASI-JUDICIAL POWERS BUT IN THE EXERCISE OF ADMINISTRATIVE SUPERVISION
AND CONTROL OVER THE DBM AND THEREFORE APPEAL UNDER RULE 43 CANNOT BE AVAILED OF, --
FOR UNWARRANTEDLY READING WHAT IS NOT IN THE LAW AND NOT BORNE OUT BY THE FACTS OF
THE CASE?
II
DID RESPONDENT [CA] COMMIT GRAVE ABUSE OF DISCRETION x x x WHEN IT
DISMISSED OUTRIGHT THE PETITION ON THE GROUND OF FAILURE TO IMPLEAD A PRIVATE
RESPONDENT -
- BY CLAIMING THAT "NO PRIVATE RESPONDENT IS IMPLEADED IN THE PETITION
WHILE IMPLEADING THE [DBM] AND THE [OP], IN VIOLATION OF SECTION 6 (A) RULE 43 OF THE RULES
OF COURT, -- WHEN SAID PROVISION COULD NOT BE CONSTRUED AS TO HAVE REQUIRED
IMPLEADING A PRIVATE RESPONDENT IN THE PETITION, IF THERE WAS NONE AT ALL?
III
DID THE [CA] COMMIT GRAVE ABUSE OF DISCRETION x x x WHEN IT DISMISSED
OUTRIGHT THE PETITION ON THE GROUND OF FAILURE OF PETITIONER'S COUNSEL TO INDICATE
CURRENT IBP AND PTR RECEIPT NOS. AND DATES OF ISSUE -
- BY CLAIMING THAT "PETITIONER'S COUNSEL HAS NOT INDICATED HIS CURRENT
IBP AND PTR RECEIPT NUMBERS AND DATES OF ISSUE" -- EVEN AS IN THE MOTION
FOR RECONSIDERATION, PETITIONER GO EXPLAINED THAT IT WAS AN HONEST INADVERTENCE AND
HE EVEN ATTACHED THERETO COPIES OF COPIES THEMSELVES OF THE CURRENT IBP AND PTR
RECEIPTS?
IV

DID RESPONDENT [CA] COMMIT GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION WHEN IT DISMISSED OUTRIGHT THE PETITION ON TECHNICAL AND
FLIMSY GROUNDS -
- THUS SHIRKING FROM ITS BOUNDEN TASK TO ADDRESS A VERY PRESSINIG
LEGAL ISSUE OF WHETHER EO 202 SEC. 6, A MERE EXECUTIVE ORDER, DIRECTING
APPEAL TO THE DOTC SECRETARY SHOULD PREVAIL OVER A LAW, BP BLG. 129,
SEC, 9 (C) AND RULE 43, SEC. 1 DIRECTING APPEAL TO THE COURT OF APPEALS?[16]
The Court's Ruling
There is merit in the petition.
The core issues may be reduced into two, to wit: first, the propriety of the dismissal by the CA of Go's Rule 43
petition for review on the stated procedural grounds; and second, the validity of the reallocation of rank resulting
in the downgrading of position and diminution of salary.
Procedural Issue: Proper Mode of Appeal
As the CA held, Rule 43 is unavailing to Go, the remedy therein being proper only to seek a review of decisions
of quasi-judicial agencies in the exercise of their quasi-judicial powers. It added that the primarily assailed action
is that of the DBM, which is not a quasi-judicial body. In turn, thus, the affirmatory OP decision was made in the
exercise of its administrative supervision and control over the DBM, not in the exercise of its quasi-judicial
powers.
The appellate court is correct in ruling that the remedy availed of by Go is improper but not for the reason it
proffered. Both Go and the appellate court overlooked the fact that the instant case involves personnel action in
the government, i.e., Go is questioning the reallocation and demotion directed by the DBM which resulted in the
diminution of his benefits. Thus, the proper remedy available to Go is to question the DBM denial of his protest
before the Civil Service Commission (CSC) which has exclusive jurisdiction over cases involving personnel
actions, and not before the OP. This was our ruling involving personnel actions in Mantala v. Salvador,[17] cited in
Corsiga v. Defensor[18] and as reiterated in Olanda v. Bugayong.[19] In turn, the resolution of the CSC may be
elevated to the CA under Rule 43 and, finally, before this Court. Consequently, Go availed himself of the wrong
remedy when he went directly to the CA under Rule 43 without repairing first to the CSC.
Ordinarily, a dismissal on the ground that the action taken or petition filed is not the proper remedy under the
circumstances dispenses with the need to address the other issues raised in the case. But this is not a hard and
fast rule, more so when the dismissal triggered by the pursuit of a wrong course of action does not go into the
merits of the case. Where such technical dismissal otherwise leads to inequitable results, the appropriate
recourse is to resolve the issue concerned on the merits or resort to the principles of equity. This is as it should
be as rules of procedure ought not operate at all times in a strict, technical sense, adopted as they were to help
secure, not override substantial justice.[20] In clearly meritorious cases, the higher demands of substantial justice
must transcend rigid observance of procedural rules.
Overlooking lapses on procedure on the part of litigants in the interest of strict justice or equity and the full
adjudication of the merits of his cause or appeal are, in our jurisdiction, matters of judicial policy. And cases
materially similar to the one at bench should invite the Court's attention to the merits if only to obviate the
resulting inequity arising from the outright denial of the recourse. Here, the dismissal of the instant petition would
be a virtual affirmance, on technicalities, of the DBM's assailed action, however iniquitous it may be.
Bearing these postulates in mind, the Court, in the greater interest of justice, hereby disregards the procedural
lapses obtaining in this case and shall proceed to resolve Go's petition on its substantial merits without further
delay. The fact that Go's protest was rejected more than a decade ago, and considering that only legal
questions are presented in this petition, warrants the immediate exercise by the Court of its jurisdiction.
Core Issue: Summary Reallocation Improper
Contrary to the DBM's posture, Go maintains that the LTFRB decisions are appealable to the CA pursuant to
Sec. 9 (3) of BP 129 and Rule 43 of the Rules of Court. He argues that the grievance mechanism set forth in
Sec. 6 of EO 202 cannot prevail over the appeal provisos of a statute and remedial law. Go thus asserts that the
summary reallocation of his position and the corresponding salary grade reassignment, i.e., from Attorney VI,
SG-26 to Attorney V, SG-25, resulting in his demotion and the downgrading of the classification of his position,
are without legal basis.
EO 202 governs appeals from LTFRB Rulings
We understand where Go was coming from since the DBM letter to the DOTC Secretary implementing the
summary reallocation of the classification of the position of LTFRB Chief of the Legal Division gave the following
to justify the reclassification: the forum, i.e, the department secretary or the CA, where the appeal of a decision
of division chief or head of the quasi-judicial agency may be taken. The DBM, joined by the OP, held that LTFRB
decisions are appealable to the DOTC Secretary pursuant to Sec. 6 of EO 202. Therefrom, one may go to the
OP before appealing to the CA.
On this count, we agree with the DBM and the OP. Sec. 6 of EO 202 clearly provides:
Sec. 6. Decision of the Board [LTFRB]; Appeals therefrom and/or Review thereof. The Board, in the exercise of
its powers and functions, shall sit and render its decisions en banc. x x x
The decision, order or resolution of the Board shall be appealable to the [DOTC]
Secretary within thirty (30) days from receipt of the decision: Provided, That the Secretary may motu proprio
review any decision or action of the Board before the same becomes final. (Emphasis supplied.)
As may be deduced from the above provisos, the DOTC, within the period fixed therein, may, on appeal or motu
proprio, review the LTFRB's rulings. While not expressly stated in Sec. 6 of EO 202, the DOTC Secretary's
decision may, in turn, be further appealed to the OP. The "plain meaning" or verba legis rule dictates that if the
statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without
interpretation.[21] Thus, the LTFRB rulings are not directly appealable to the CA under Rule 43.
Go further contends that EO 202, a mere executive issuance, cannot be made to prevail over BP 129, Sec. 9 (3),
which provides for the appeal of the decisions and rulings of quasi-judicial agencies to the CA. Moreover, he
points to the 1997 revision of the Rules of Civil Procedure which now provides under Rule 43 the appeals before
the CA of decisions and rulings of quasi-judicial agencies.
Go is mistaken for the ensuing reasons: First, EO 202 was issued on June 19, 1987 by then President Corazon
C. Aquino pursuant to her legislative powers under the then revolutionary government. The legislative power of
President Aquino ended on July 27, 1987 when the first Congress under the 1987 Constitution convened.[22] For
all intents and purposes, therefore, EO 202 has the force and effect of any legislation passed by Congress.
Second, EO 202, creating the LTRFB, is a special law, thus enjoying primacy over a conflicting general, anterior
law, such as BP 129. In Vinzons-Chato v. Fortune Tobacco Corporation,[23] the Court elucidated on this issue in
this wise:
A general law and a special law on the same subject are statutes in pari materia and should, accordingly, be read
together and harmonized, if possible, with a view to giving effect to both. The rule is that where there are two
acts, one of which is special and particular and the other general which, if standing alone, would include the
same matter and thus conflict with the special act, the special law must prevail since it evinces the
legislative intent more clearly than that of a general statute and must not be taken as intended to affect the
more particular and specific provisions of the earlier act, unless it is absolutely necessary so to construe it in
order to give its words any meaning at all. (Emphasis supplied.)
Given the foregoing premises, BP 129 must, on matters of appeals from LTFRB rulings, yield to the provision of
EO 202, the subsequent special law being regarded as an exception to, or a qualification of, the prior general
act.[24]
DBM has authority to allocate classifications
of different positions in the Government service
There is no dispute that the DBM is vested the authority to enforce and implement PD 985, as amended, which
mandates the establishment of a unified compensation and position classification system for the government.
Sec. 17 (a) of PD 985, as amended by Sec. 14 (a) of RA 6758, and the original Sec. 17 (b) of PD 985 pertinently
provide, thus:
Section 17. Powers and Functions. - The Budget Commission (now DBM), principally through the OCPC (now
CPCB, Compensation and Position Classification Board) shall, in addition to those provided under other Sections
of this Decree, have the following powers and functions:
a. Administer the compensation and position classification system established herein and revise it as
necessary;
b. Define each grade in the salary or wage schedule which shall be used as a guide in placing positions to
their appropriate classes and grades;
Moreover, Secs. 2, 7 and 9 of RA 6758 respectively provide:
Sec. 2. Statement of Policy. -- It is hereby declared the policy of the State to provide equal pay for substantially
equal work and to base differences in pay upon substantive differences in duties and responsibilities, and
qualification requirements of the positions. x x x For this purpose, the x x x (DBM) is hereby directed to
establish and administer a unified Compensation and Position Classification System, hereinafter referred
to as the System, as provided for in [PD] No. 985, as amended, that shall be applied for all government
entities, as mandated by the Constitution.
xxxx
Sec.7. Salary Schedule. -- The [DBM] is hereby directed to implement the Salary Schedule prescribed below:
xxxx
The [DBM] is hereby authorized to determine the officials who are of equivalent rank to the foregoing
Officials, where applicable, and may be assigned the same Salary Grades based on the following guidelines:
xxxx
Sec. 9. Salary Grade Assignments for Other Positions. -- For positions below the Officials mentioned under
Section 8 hereof and their equivalent, whether in the National Government, local government units, government-
owned or controlled corporations or financial institutions, the [DBM] is hereby directed to prepare the Index of
Occupational Services to be guided by the Benchmark Position Schedule prescribed hereunder and the
following factors: (1) the education and experience required x x x; (2) the nature and complexity of the work to be
performed; (3) the kind of supervision received; (4) mental and/or physical strain required x x x; (5) nature and
extent of internal and external relationships; (6) kind of supervision exercised; (7) decision-making responsibility
x x x. (Emphasis supplied.)
And while the Office of Compensation and Position Classification, now Compensation and Position Classification
Board (CPCB), is vested, under Sec. 8[25] of PD 985, the sole authority to allocate the classification of positions,
its determinations relative to the allocations require the approval of the DBM Secretary to be binding.
This brings us to the validity of the reallocation.
Summary reallocation illegal
Go argues that the summary reallocation of the classification of his position as Chief, LTFRB Legal Division to a
lower grade substantially reduced his salary and other benefits, veritably depriving him of property, hence,
illegal.
We agree with Go on this count. The summary reallocation of his position to a lower degree resulting in the
corresponding downgrading of his salary infringed the policy of non-diminution of pay which the Court recognized
and applied in Philippine Ports Authority v. Commission on Audit,[26] as well as in the subsequent sister cases[27]
involving benefits of government employees. Running through the gamut of these cases is the holding that the
affected government employees shall continue to receive benefits they were enjoying as incumbents upon the
effectivity of RA 6758.
Relevant to the critical issue at hand is Sec. 15 (b) of PD 985 which, as amended by Sec. 13 (a) of RA 6758,
pertinently reads:
SEC. 13. Pay Adjustments.- x x x
(b) Pay Reduction -- If an employee is moved from a higher to a lower class, he shall not suffer a reduction
in salary: Provided, That such movement is not the result of a disciplinary action or voluntary demotion.
(Emphasis supplied.)
Prior to its amendment, Sec. 15 (b) of PD 985 reads:
(b) Pay Reduction -- If an employee is moved from a higher to a lower class, he shall not suffer a reduction in
salary except where his current salary is higher than the maximum step of the new class in which case
he shall be paid the maximum: Provided, That such
movement is not the result of a disciplinary action. (Emphasis supplied.)
As may be noted, the legislature dropped from the original proviso on pay reduction the clause: "except where
his current salary is higher than the maximum step of the new class in which case he shall be paid the
maximum." The deletion doubtless indicates the legislative intent of maintaining, in line with the non-diminution
principle, the level or grade of salary enjoyed by an incumbent before the reallocation to a lower grade or
classification is effected. It must be made absolutely clear at this juncture that Go received his position
classification of Attorney VI and assigned SG-26 upon his promotional appointment as Chief, LTFRB Legal
Division on February 1, 1990, or after the effectivity of RA 6758. Following the clear mandate of the aforequoted
Sec. 15(b) of PD 985, as amended, Go must not suffer a reduction in his salary even if there was a reallocation
of his position to a lower grade.
Lest it be overlooked, the transition provisos of RA 6758 provide additional justification for Go's entitlement to
continue receiving the compensation and emoluments previously granted him upon his promotion as Chief,
LTFRB Legal Division. Go, as an incumbent of said position before the assailed reallocation was effected
ostensibly through the implementation of RA 6758, the statute's transition provisions should apply mutatis
mutandis to him. The pertinent provisions are Secs. 12 and 17 of RA 6758, to wit:
Section 12. Consolidation of Allowances and Compensation.--All allowances, except for representation and
transportation allowances, clothing and laundry allowances; x x x and such other additional compensation not
otherwise specified herein as may determined by the [DBM], shall be deemed included in the standardized
salary rates herein prescribed. Such other additional compensation, whether in cash or in kind, being received by
incumbents only as of July 1, 1989 not integrated into the standardized salary rates shall continue to be
authorized.
xxxx
Section 17. Salaries of Incumbents.--Incumbents of positions presently receiving salaries and additional
compensation/fringe benefits including those absorbed from local government units and other emoluments, the
aggregate of which exceeds the standardized salary rate as herein prescribed, shall continue to receive such
excess compensation, which shall be referred to as transition allowance. The transition allowance shall be
reduced by the amount of salary adjustment that the incumbent shall receive in the future.
Pursuant to the principle of non-diminution and consistent with the rule on the prospective application of laws in
the spirit of justice and fair play,[28] the above provisions are, indeed, meant to protect incumbents who are
receiving salaries and allowances beyond what may be allowable under RA 6758. It may be that Go was not the
occupant of his present position as of July 1, 1989. Still the positions in the plantilla of the LTFRB were properly
subjected to the standardization under RA 6758. In fact, the matter of excess of salary and benefits in the
application of RA 6758 and PD 985 is a non-issue. What is at issue is the reallocation of the position from
Attorney VI, SG-26 to Attorney V, SG-25. Obviously, the question of who was sitting as Chief of the Legal
Division as of July 1, 1989 is of no moment. Of particular significance is the issue of whether the reallocation to
a lower degree is proper given that Go was already enjoying the salary and emoluments as Attorney VI, SG-26
upon his appointment on February 1, 1990 as Chief, LTFRB Legal Division.
While the DBM is statutorily vested with the authority to reclassify or allocate positions to their appropriate classes,
with the concomitant authority to formulate allocating policies and criteria for bureau-level agencies, like the
LTFRB, the investiture could not have plausibly included unchecked discretion to implement a reallocation system
offensive to the due process guarantee.
It is recognized that one's employment is a property right within the purview of the due process clause. So it was
that in Crespo v. Provincial Board of Nueva Ecija[29] the Court categorically held that "one's employment,
profession, trade or calling is a `property right,' and the wrongful interference therewith is an actionable
wrong. The right is considered to be property within the protection of a constitutional guaranty of due process of
law."[30]
Per our count, from his promotional appointment as Chief, LTFRB Legal Division to the time (April 8, 1991) the
summary reallocation was implemented, Go had occupied the position and enjoyed the corresponding salary
and emoluments therefor for one year, two months and eight days. In this length of time, Go's entitlement to the
benefits appurtenant to the position has well nigh ripened into a vested right.
As the records show, Go, as Attorney VI, SG-26, was receiving an annual salary of PhP
151,800. Consequent to the enforcement of the summary reallocation of his position to
Attorney V, SG-25, this was effectively reduced, reckoned from April 8, 1991, to PhP 136,620,[31] or a salary
reduction of PhP 15,180 a year. These figures of course have yet to factor in supervening pay adjustments
occurring through the years.
A vested right is one whose existence, effectivity and extent do not depend upon events foreign to the will of the
holder, or to the exercise of which no obstacle exists, and which is immediate and perfect in itself and not
dependent upon a contingency.[32] The term "vested right" expresses the concept of present fixed interest
which, in right reason and natural justice, should be protected against arbitrary State action, or an innately just
and imperative right which enlightened free society, sensitive to inherent and irrefragable individual rights, cannot
deny.[33]
To be vested, a right must have become a title--legal or equitable--to the present or future enjoyment of property.[34]
To us, Go has established a clear, equitable vested right to the emoluments of his position as Attorney VI, SG-26.
He continues to occupy--at least up to April 11, 2006 when he filed this petition--the position of Chief, LTFRB
Legal Division. His title to Attorney VI, SG-26 is without question, having been legally appointed to the position
on February 1, 1990. And being an incumbent to that position, he has, at the very least, an equitable right to
receive the corresponding salary and emoluments attached thereto. The summary demotion to a lower salary
grade, with the corresponding decrease in salary and emoluments after he has occupied his current rank and
position, goes against his right to continue enjoying the benefits accorded the position and which his
predecessors must have been receiving. His right thereto has ripened into a vested right, of which he could be
deprived only by due process of law, but which we believe he was denied through the summary reallocation.
With the view we take of this case, Go was neither apprised nor given the opportunity to contest the reallocation
before its summary implementation.
Lest this Decision is taken out of context, the Court wishes to emphasize that it is not its intention to disturb the
reallocation of the position Chief, LTFRB Legal Division to Attorney V, SG-25. Accordingly, it behooves the DBM
and the LTFRB to enforce the classification of position of Attorney V, SG-25 to those who will succeed Go in the
said position.
It bears to stress nonetheless that this pro hac vice case disposition is predicated on the following key
considerations: (1) Go was duly appointed to an office previously classified as a division chief position with an
Attorney VI, SG 26 assignment; (2) under DBM circulars then obtaining, it would appear that division chief
positions carried a SG-26 classification without the qualification set forth in the DBM's letter of March 31, 1991.
In a real sense, therefore, the present controversy is attributable to the DBM's failure to incorporate, at the
outset, the necessary clarificatory qualifications/ distinctions in its position and salary allocation rules/circulars;
(3) Go's receipt for some time of the salary and other emoluments attached to the position was cut short by the
reallocation of the position, resulting in his demotion and downgrading of salary; and (4) the reallocation was
effected by the DBM in a summary manner.
WHEREFORE, the instant petition is GRANTED. The Resolutions dated August 17, 2005 and January 31,
2006 of the Court of Appeals in CA-G.R. SP No. 90665 are hereby REVERSED and SET ASIDE. The
January 7, 2005 Decision and June 28, 2005 Order of the Office of the President in OP Case No. 99-8880
are
likewise REVERSED and SET ASIDE. Accordingly, the summary reallocation enforced and implemented on April
8, 1991 is declared NULL and VOID. The Department of Transportation and Communications is hereby
ORDERED to reinstate Gonzalo S. Go, Jr. to the position of Attorney VI, SG-26 as the Chief of the Legal Division
of the Land Transportation Franchising and Regulatory Board, with the corresponding release to him of the
differential of all emoluments reckoned from April 8, 1991.
No pronouncement as to costs.
SO ORDERED.
Corona, C.J., Carpio, Carpio Morales, Nachura, Leonardo-De Castro, Brion, Peralta, Bersamin, Del
Castillo, Abad, Villarama, Jr., Perez, and Mendoza, JJ., concur.
[ G.R. No. 213233. August 05, 2015 ]
BLISS DEVELOPMENT CORP./HOME GUARANTY CORPORATION, PETITIONER, VS.
MONTANO DIAZ, DOMINGO TAPAY, AND EDGAR H. ARREZA, RESPONDENTS.
DECISION
VELASCO JR., J.:
The Case
This is a Petition for Review on Certiorari assailing the Decision[1] of the Court of Appeals (CA), promulgated on
January 21, 2014, and its subsequent Resolution dated June 27, 2014, both in CA-G.R. CV No. 99179. The
assailed Decision reversed and set aside the Decision of the Regional Trial Court (RTC), Makati City, Branch 59,
dated November 21, 2011, in Civil Case No. 96-1372. The assailed Resolution, meanwhile, denied petitioner’s
Motion for Reconsideration.
The Facts
Petitioner Bliss Development Corporation (BDC) (subsequently reorganized as Home
Guaranty Corporation) is the registered owner of Lot No. 27, Block 30, New Capitol Estates I,
Brgy. Matandang Balara, Diliman, Quezon City, and covered by Transfer Certificate of Title (TCT) No. 331582.
On October 19, 1984, it entered into and executed a Deed of Sale over the said property in favor of Spouses
Emiliano and Leonila Melgazo (Sps. Melgazo), both of whom are now deceased.[2]
On May 7, 1991, a certain Rodolfo Nacua (Nacua) sent a letter to BDC, saying that Sps. Melgazo transferred to
him their rights over the property. He further expressed willingness to pay the outstanding obligations of Sps.
Melgazo to BDC. Before the property was fully paid, however, Nacua sold his rights to Olivia Garcia (Garcia),
through a Deed of Transfer of Rights. Later, Garcia transferred her rights to Elizabeth Reyes (Reyes). Reyes
then transferred her rights to Domingo Tapay (Tapay), who then later sold his rights to herein respondent
Montano Diaz (Diaz) for Six Hundred Thousand Pesos (P600,000.00). Diaz then paid BDC the amortizations due
on the property, amounting to P406,915.15, and BDC issued a permit to occupy the property in favor of Diaz.
Diaz then introduced improvements on the property, amounting to P700,000.00.
On April 14, 1992, BDC executed a Contract to Sell in favor of Diaz.[3] On April 15, 1994, however, BDC informed
Diaz that respondent Edgar Arreza (Arreza) was claiming that the heirs of Sps. Melgazo sold to him the rights
over the property.[4] BDC then placed Diaz’s account in “inactive status.” To resolve the conflicting claims of
Arreza and Diaz, BDC filed a complaint for Interpleader against them, before the RTC, Makati City, Branch 146.
On March 27, 1996, the Makati City RTC Branch 146 ruled that the signatures of Sps. Melgazo transferring their
rights to Nacua were mere forgeries. Thus, it ruled that Arreza had a better right over the property. This decision
became final and executory.[5]
On August 27, 1996, Diaz filed the present complaint for sum of money against BDC before the RTC, Makati
City, Branch 59.[6] This was later amended to include Arreza and Tapay as defendants. Diaz argued that BDC
and Tapay’s representations led him to believe that he had a good title over the property, but due to the court’s
ruling in the interpleader case, he was constrained to transfer the property to Arreza. Thus, he prayed for the
following:
(1) For BDC and Arreza to pay him P1,106,915.58, plus interest, representing the amount he paid for the
assumption of Tapay’s rights;
(2) For Tapay to pay him P600,000.00, plus interests, representing the amount he paid
Tapay;
(3) For BDC and Tapay to pay him P500,000.00 as moral damages;
(4) For BDC to pay him P500,000 as exemplary damages; and
(5) For BDC, Tapay, and Arreza to pay him ?100,000 as attorney’s fees and costs of suit.[7]
Both BDC and Tapay argued that their respective acts were lawful and done in good faith.Arreza filed a Motion to
Dismiss, citing res judicata, arguing that the claim of Diaz is a compulsory counterclaim that should have been
pleaded in the Interpleader case. The RTC denied the Motion to Dismiss, which the CA, on certiorari, affirmed.
When the issue reached this Court in G.R. No. 133113,[8] this Court ruled that the claim as against Arreza is
barred by res judicata. The Court upheld the argument that the claim is in the nature of a compulsory
counterclaim. Thus, the case against Arreza was dismissed.
The Decision of the RTC
After trial, the RTC rendered its Decision on November 21, 2011, finding that Diaz failed to prove that he is an
assignee in good faith, and thus dismissed the complaint for lack of merit in this wise:
Plaintiff must show that he inquired not only into the title of the assignor but also into the assignor’s capacity to
convey. The failure of plaintiff to diligently inquire as such, indicated that he is not an assignee in good faith.
Plaintiff Diaz downplays the need to extend his examination to intervening transferor farther than Domingo Tapay
from whom he acquired the subject property. Such attitude, however, is not in accord with what a reasonably
prudent person would do under the circumstances.
xxxx
WHEREFORE, premises considered, plaintiff’s Complaint is hereby DISMISSED for lack of merit. Defendant
Domingo Tapay’s [counterclaim] is likewise dismissed. No costs. [9]
Aggrieved, Diaz appealed to the CA.
The Decision of the CA
In its presently assailed Decision promulgated on January 21, 2014, the CA reversed the ruling of the RTC and,
instead, ruled that Diaz is entitled to be paid reimbursement and damages. The CA anchored its ruling on its
finding that Diaz is both a buyer in good faith and a builder in good faith, thus:
A careful examination of the records convinces Us that Diaz is both a buyer and builder in good faith. We note
that while Bliss executed a Deed of Sale with Mortgage in favor of the spouses Emiliano and Leonila Melgazo,
title over the property was in Bliss’ name. The title remained in Bliss’ name when Tapay offered to transfer his
rights over the property to Diaz. Considering that the property involved is registered land, Diaz need not go
beyond the title to be considered a buyer in good faith. Indeed, after Diaz accepted Tapay’s offer, he dealt
directly with Bliss which received the monthly amortizations due on the property. For almost three years, from
1991 to 1994, Bliss accepted Diaz’s payment without informing Diaz of Arreza’s conflicting claim over the
property. Bliss even issued Diaz a permit to occupy the property in 1992; thus, allowing Diaz to introduce
improvements on the property. In other words, at the time when Diaz purchased the property from Tapay and
when he introduced the improvements, he had no notice that some other person has a right over the property.
He also had a well-founded belief that the property he was building on was his. Accordingly, Diaz is a buyer and
builder in good faith.[10]
In ruling that Diaz is a buyer in good faith, the CA noted that Diaz need not go beyond the title to be considered a
buyer in good faith, because what is involved is a registered land.
With regard to the liability of BDC, the CA ruled that the provision in the Contract to Sell excusing it from
reimbursing the monthly amortizations to Diaz cannot exempt it from liability, because it acted in bad faith. The
CA said:
Next, Bliss’ argument that the Additional Provision in the Contract to Sell excuses it from reimbursing the monthly
amortizations paid by Diaz cannot be given credence. Any stipulation exempting the vendor from the obligation
to answer for eviction shall be void, if he acted in bad faith. The vendor’s bad faith consists in his knowledge
beforehand at the time of the sale, of the presence of the fact giving rise to eviction, and its possible
consequence. It is undisputed that Bliss knew about Arreza’s claim in 1991. It even received amortization
payments from Arreza. Yet, Bliss is aware that should Arreza pursue his claim in court, Diaz may be evicted from
the property. Yet, Bliss only informed Diaz about Arreza’s claim in 1994 when Arreza followed up his claim.
Indubitably, Bliss acted in bad faith in dealing with Diaz and should not be absolved from liability by the Additional
Provision in the Contract to Sell.[11]
Thus, the CA dispositively held:
FOR THESE REASONS, the November 21, 2011 Decision of the Regional Trial Court of
Makati City, Branch 59, is SET ASIDE. The Court hereby DIRECTS: (1) Defendant-appellee Bliss Development
Corporation/Home Guaranty Corporation to PAY plaintiff-apellant Montano Diaz P1,106,915.58 for the
amortizations paid and amount spent on improvements on the property, P100,000.00 as moral damages,
P50,000.00 as exemplary damages, and P25,000.00 as attorney’s fee; and (2) defendant-appellee Domingo
Tapay to PAY plaintiffappellant Montano M. Diaz P600,000.00, the amount he paid for the transfer of rights.
Petitioner BDC moved for reconsideration, insisting that Diaz cannot be declared a buyer in good faith, in light of
the March 27, 1996 Decision of the Makati City RTC, Branch 146 in the Interpleader case, which had long been
final and executory. Tapay also moved for reconsideration, arguing that he was not aware of the defect in the title
sold to Diaz, and, hence, he should not be made liable for the P600,000.00 that Diaz paid to him. In the CA’s
assailed Resolution dated June 27, 2014,[12] the CA denied both motions for reconsideration.
Hence, the present Petition for Review on Certiorari filed by BDC, raising the following issues:
I.
WHETHER THE CA ERRED IN NOT DISMISSING THE APPEAL, IN VIEW OF THE
APPLICATION OF THE DOCTRINE OF IMMUTABILITY OF JUDGMENT IN THE DECISION OF THE COURT IN
G.R. NO. 133113
II.
WHETHER THE CA ERRED IN DECLARING BDC IN BAD FAITH
III.
WHETHER THE CA ERRED IN DECLARING THAT THERE WAS UNJUST ENRICHMENT ON THE PART OF
BDC
IV.
WHETHER DIAZ CAN STILL CLAIM REIMBURSEMENT EVEN IF UNDER THE CONTRACT, HIS POSSESSION
IS IN THE NATURE OF A LESSOR
V.
WHETHER BDC IS LIABLE TO REIMBURSE DIAZ OF THE AMOUNT OF P1,106,915.58
In fine, petitioner argues that it is not liable to respondent Diaz, both for the amortizations that Diaz paid to it, and
the value of the improvements that Diaz introduced to the property.
Meanwhile, Tapay failed to elevate before this Court the CA’s ruling against him.
The Court’s Ruling
The petition is partially granted. The CA committed reversible error in ruling that Diaz was a buyer in good faith
and for value. Nevertheless, BDC is liable to Diaz because it acted in bad faith, as discussed below.
The claim is not barred by the doctrine of immutability of judgment
First, We dispose of the issue of the applicability of the doctrine of immutability of judgment, in view of the ruling
of this Court in G.R. No. 133113. We find that the present claim is not barred by the court’s ruling in G.R. No.
133113––to the effect that Diaz can no longer claim reimbursement from Arreza because of res judicata––for his
failure to allege the claim in the interpleader case between them.
In G.R. No. 133113, We ruled that the claim against Arreza is barred by res judicata, because of a prior
Interpleader case between Arreza and Diaz. We ruled that the claim for reimbursement should have been
alleged and proved in the prior case, and failure to do so bars any future action on such claims. We reiterated the
rule on res judicata, thus:
In cases involving res adjudicata, the parties and the causes of action are identical or substantially the same in
the prior as well as the subsequent action. The judgment in the first action is conclusive as to every matter
offered and received therein and as to any other matter admissible therein and which might have been offered
for that purpose, hence said judgment is an absolute bar to a subsequent action for the same cause.The bar
extends to questions necessarily involved in an issue, and necessarily adjudicated, or necessarily implied in the
final judgment, although no specific finding may have been made in reference thereto, and although such
matters were directly referred to in the pleadings and were not actually or formally presented. Said prior
judgment is conclusive in a subsequent suit between the same parties on the same subject matter, and
on the same cause of action, not only as to matters which were decided in the first action, but also as to every
other matter which the parties could have properly set up in the prior suit.[13] (emphasis added)
In the case at bar, We find that the essential elements of res judicata are not present. First, the interpleader
case was between Arreza and Diaz. While it was BDC that initiated the interpleader case, the opposing
parties in that prior case is, in fact, Arreza and Diaz. Second, the issues resolved in the interpleader case
revolved around the conflicting claims of Arreza and Diaz, and not whatever claim either of them may have
against BDC. Thus, there is no identity of parties, nor identity of subject matter, between the interpleader case
and the one at bar.
Petitioner BDC acted in bad faithin dealing with respondent Diaz
On the second issue, We find that the CA committed no reversible error in finding that BDC acted in bad faith,
when it allowed Diaz to take over the payment of the amortizations over the subject property. As the CA correctly
noted, “It is undisputed that Bliss knew about Arreza’s claim in 1991. It even received amortization payments
from Arreza. Yet, Bliss acknowledged the transfer to Diaz and received the monthly amortizations paid by Diaz.
Also, Bliss is aware that should Arreza pursue his claim in court, Diaz may be evicted from the property.”[14]
BDC anchors its claim of good faith on the fact that it did not act as seller to Diaz. Rather, BDC claims, it was
Diaz who came forward and presented himself to BDC as the lawful successor-in-interest of Emiliano and
Leonila Melgazo, by virtue of the several deeds of transfer of rights, all of which he presented to BDC. It was on
the basis of this claim that BDC allowed Diaz to occupy the property and pay amortizations accruing over the
property.[15]
Nevertheless, BDC does not dispute that as early as 1991, even before respondent came forward presenting the
deeds of transfer to BDC, BDC was already aware of the claim of Arreza. In fact, it even received amortizations
from Arreza. Despite this, BDC also later acknowledged the transfer to Diaz, and also accepted amortizations
from him.[16] This uncontroverted sequence of events led the CA to correctly rule that BDC, indeed, acted in bad
faith.
When Diaz came forward and presented the deeds of transfer, including the deed of transfer executed by Tapay
in his favor, BDC was already well aware of a conflicting claim by Arreza. Instead of waiting for the resolution on
the matter, BDC immediately accepted the deed of transfer presented by Diaz, as well as the amortizations he
paid over the property. It was only in 1994 that BDC filed the Interpleader case to resolve the conflicting case.
This is nothing short of evident bad faith.
Respondent Diaz is not a purchaser for value and in good faith
We, however, fail to find sufficient basis for the CA’s ruling that Diaz is a purchaser for value and in good faith. In
a long line of cases, this Court had ruled that a purchaser in good faith and for value is one who buys property of
another without notice that some other person has a right to, or interest in, such property and pays full and fair
price for the same at the time of such purchase or before he or she has notice of the claim or interest of some
other person in the property.[17]For one to be considered a purchaser in good faith, the following requisites must
concur: (1) that the purchaser buys the property of another without notice that some other person has a right to
or interest in such property; and (2) that the purchaser pays a full and fair price for the property at the time of
such purchase or before he or she has notice of the claim of another.[18] We find that in the case at bar, the first
element is lacking.
The CA, in disposing the issue of Diaz’s good faith, merely said that “considering that the property involved is
registered land, Diaz need not go beyond the title to be considered a buyer in good faith.”[19]We find this to be a
serious and reversible error on the part of the CA. In the first place, while it is true that the subject lot is
registered lot, the doctrine of not going beyond the face of the title does not apply in the case here, because
what was subjected to a series of sales was not the lot itself but the right to purchase the lot from BDC. The CA
itself observed: “while [BDC] executed a Deed of Sale with Mortgage in favor of the spouses Emiliano and
Leonila Melgazo, title over the property was in [BDC’s] name. The title remained in [BDC’s] name when Tapay
offered to transfer his rights over the property to Diaz.”[20]Notably, the several transfers themselves did not
purport to be Deeds of Absolute Sale, but merely deeds of assignment of rights. The subject of those deeds of
assignment was never the real right over the subject property, but merely the personal right to purchase
it. Therefore, the mirror doctrine finds no application in the case at bar.
A careful review of the records of this case reveals that Diaz, in fact, failed to diligently inquire into the title of his
predecessor before entering into the contract of sale. As such, he cannot be considered a buyer in good faith.
There is no issue that despite the several transfers of rights from Nacua to Garcia to Reyes to Tapay to Diaz, title
over the property remained in BDC’s name.When Diaz transacted with Tapay, it was also clear that what was
being transferred was merely rights to purchase the property, and not title over the lot itself; if it were, the sale
would have been void because Tapay never had ownership over the subject property. As the buyer in such a
transaction, it was incumbent upon Diaz not only to inquire as to the right of Tapay to transfer his rights, but also
to trace the source of that right to purchase the property. Had he discharged this duty diligently, he would have
found out that Nacua’s right was without basis, because it was founded on a forged deed. For his failure to
inquire diligently and trace the source of the right to purchase the property, Diaz cannot claim to be a purchaser
in good faith and for value.
Petitioner BDC is liable to return the amortizations paid by respondent Diaz under the doctrine of unjust
enrichment
Notwithstanding the fact that Diaz is not an innocent purchaser in good faith and for value, BDC is nevertheless
liable to return to him the amortizations which he already paid on the property, applying the rule on unjust
enrichment.
Unjust enrichment exists when a person unjustly retains a benefit to the loss of another, or when a person retains
money or property of another against the fundamental principles of justice, equity and good conscience. Under
Article 22 of the Civil Code,[21] there is unjust enrichment when (1) a person is unjustly benefited and (2) such
benefit is derived at the expense of or with damages to another.[22]
Allowing BDC to keep the amortizations paid by Diaz is tantamount to unjust enrichment. It would result in BDC
receiving amortizations twice the amount it should have received, that is, the amortizations paid by Diaz and
Arreza. While BDC claims that it did not receive amortizations from both Diaz and Arreza covering the same
period, such a claim is selfserving, and is not amply supported by any documentary evidence.
Even if BDC can prove that there was no overlap between the payments made by Diaz and those made by
Arreza, allowing it to keep the amortizations paid by Diaz still amounts to unjust enrichment. As a direct result of
the final and executory ruling that Arreza is the rightful buyer of the subject property, the buyer-seller relationship
between Diaz and BDC is rendered null and void. Consequently, there remains no valid consideration
whatsoever for the payments made by Diaz to BDC. There being no indication of intent to donate, because such
payments were made under the impression that Diaz is the rightful buyer of the property, it is only but just that
Diaz be allowed to claim back what he has paid. This is only a natural consequence of the final and executory
ruling that Diaz is not the rightful buyer of the subject property. Allowing BDC to keep such payments, at the
expense of and to the damage of Diaz, still amounts to unjust enrichment.
Both parties being in bad faith, BDC is liable to Diaz for the valueof the improvements he introduced on
the subject property
Next, We resolve the issue of whether BDC is liable to Diaz for the value of the improvements that Diaz
introduced to the property. Arts. 448, 453, 546, and 548 of the Civil Code are material in resolving the issue:
Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the
right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of
the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon
the terms of the lease and in case of disagreement, the court shall fix the terms thereof.
Art. 453. If there was bad faith, not only on the part of the person who built, planted or sowed on the land of
another, but also on the part of the owner of such land, the rights of one and the other shall be the same as
though both had acted in good faith.
It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge
and without opposition on his part.
Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may
retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the
person who has defeated him in the possession having the option of refunding the amount of the expenses or of
paying the increase in value which the thing may have acquired by reason thereof.
Art. 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he
may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if
his successor in the possession does not prefer to refund the amount expended.
The CA may have made the erroneous conclusion that Diaz acted in good faith, but because BDC equally acted
in bad faith, Art. 453 of the Civil Code commands that the rights of one and the other shall be the same as
though both had acted in good faith. The CA made the correct observation then, when it said:
Under Article 448, the landowner is given the option, either to appropriate the improvement as his own upon
payment of the proper amount of indemnity or to sell the land to the possessor in good faith. Relatedly Article
546 provides that a builder in good faith is entitled to full reimbursement for all the necessary and useful
expenses incurred. In this case, however, the option of selling the land to the builder in good faith is no longer
viable in light of the ruling in the interpleader case. Hence, there is only one thing left for [BDC] to do:
indemnify Diaz for the improvements introduced on the property. [23]
Nevertheless, because the law treats both parties as if they acted in good faith, the CA committed reversible
error in awarding moral and exemplary damages, there being no basis therefor. We find it proper to delete the
award of P100,000.00 as moral damages, P50,000.00 as exemplary damages, and P25,000.00 as attorney’s
fees.
In sum, the CA correctly reversed the ruling of the RTC, and ordered BDC to pay Diaz the amount he paid as
amortizations, as well as the value of the improvements that he introduced on the subject property. However,
because both parties acted in bad faith, there is no basis for the award of moral and exemplary damages, as well
as attorney’s fees.
WHEREFORE, in view of the foregoing, the January 21, 2014 Decision of the Court of
Appeals in CA-G.R. CV No. 99179 is hereby MODIFIED to read as follows: (1) petitioner Bliss Development
Corporation/Home Guaranty Corporation is ordered to pay respondent Montano M. Diaz the amount of
P1,106,915.58 for the amortizations paid and the amount spent on improvements on the property; and (2)
Domingo Tapay is ordered to pay respondent Montano M. Diaz the amount of P600,000.00, the amount he paid
for the transfer of rights.
SO ORDERED.
Peralta, Villarama, Jr., Perez,* and Jardeleza, JJ., concur.
[ G.R. No. 225538, October 14, 2020 ]
YON MITORI INTERNATIONAL INDUSTRIES,* PETITIONER, VS. UNION BANK OF THE PHILIPPINES,
RESPONDENT.
D E C I S I O N CAGUIOA, J:
The Case
This is a Petition for Review on Certiorari1 (Petition) filed under Rule 45 of the Rules of Court assailing the February
3, 2016 Decision2 (assailed Decision) and July 5, 2016 Resolution3 (assailed Resolution) rendered by the Court
of Appeals (CA), Eleventh Division in CA-G.R. CV No. 102802.
The assailed Decision and Resolution affirmed, with modification, the February 24, 2014 Decision4 and May 19,
2014 Order5 issued by the Regional Trial Court (RTC) of Pasig City, Branch 166, in Civil Case No. 71670.
The RTC granted the Complaint for Sum of Money filed by Union Bank of the Philippines (Union Bank) against
Rodriguez Ong Tan (Tan), the registered owner and operator of Yon Mitori
International Industries (Yon Mitori).6
The Facts
The CA summarized the facts as follows:
[Tan], doing business under the name and style of [Yon Mitori], is a depositor, maintaining Current Account No.
027-03-000181-8, [with] the Commonwealth, Quezon City branch of [Union Bank].
On November 12, 2007, Tan deposited in said Union Bank account, the amount of P420,000.00 through Bank of
the Philippine Islands (BPI) Check No. 0180724 [(BPI Check)]. x x x
[The BPI Check was drawn against the account of Angli Lumber & Hardware, Inc.7 (Angli Lumber), one of Tan's
alleged clients.]8
[The BPI Check was entered in Tan's bank record thereby increasing his balance to P513,700.60 from his previous
deposit of P93,700.60.9 In the morning of November 14, 2007, Tan withdrew from the said account the amount of
P480,000.00. Later that day, the BPI Check was returned to Union Bank as the account against which it was drawn
had been closed. It was then that Union Bank discovered that Tan's account had been mistakenly credited. Thus,
the branch manager of Union Bank's Commonwealth, Quezon City branch immediately called Tan to recover the
funds mistakenly released. However, Tan refused to return the funds, claiming that the BPI Check proceeded from
a valid transaction between Angli Lumber and Yon Mitori.10
During the course of its investigation, Union Bank discovered that Tan previously deposited five BPI checks drawn
by Angli Lumber against the same BPI account, and that these five checks were all previously dishonored.11
Thereafter, on November 20, 2007, Union Bank [through the bank manager of its Commonwealth branch,12 sent
Tan a letter demanding reimbursement of the amount of P420,000.00, by reason of the fact that [the] "(f)unds
against said deposit was inadvertently allowed due to technical error on the system prior to actual return of your
check deposit which was not yet clear on withdrawal date," it appearing that [the BPI Check] was dishonored by
BPI for being drawn against a closed account. Tan refused to return the said amount. Union Bank then debited
the available balance reflected in [Tan's] account amounting to P34,700.6013 and thereafter instituted [a Complaint
for Sum of Money (Complaint)] before the RTC, for the recovery of [the remaining balance amounting to]
P385,299.40 plus consequential damages.14 RTC Proceedings
In its Complaint, Union Bank alleged that the value of the BPI Check had been inadvertently credited to Tan's
account due to a technical error in its system.15
For his part, Tan alleged that the BPI Check had been given to him for value in the course of business. Tan claimed
that he should not be faulted for withdrawing the value of said check from his account since Union Bank made the
corresponding funds available by updating his account to reflect his new balance. After ascertaining that the value
of the BPI Check had been credited, Tan withdrew P480,000.00 from his account to pay one of his suppliers.16
Tan further argued that Union Bank wrongfully and unlawfully deducted the amount of P34,700.60 from his
account.17
On February 24, 2014, the RTC ruled in favor of Union Bank. The dispositive portion of the RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of [Union Bank] and against [Yon Mitori
and Tan] by ordering the latter:
1. To pay [Union Bank] the amount of P385,299.40 representing the withdrawal mistakenly given
to x x x Tan;
2. To pay [Union Bank] 12% per annum legal interest computed from the time judicial demand was
made on June 13, 2008 until the same is fully paid; 3. To pay [Union Bank] the amount of P100,000.00
as attorney's fees; and
4. To pay the duly receipted cost of suit in the amount of P14,954.20.
SO ORDERED.18
The RTC found all the requisites for the application of solutio indebiti under Article 2154 of the Civil Code present.
It held that since Union Bank mistakenly released the amount of P480,000.00 in favor of Tan without being
obligated to do so, Tan must be ordered to return said amount to preclude unjust enrichment at Union Bank's
expense.19
Further, the RTC ruled that under Article 1980 of the Civil Code, "fixed, savings, and current deposits of money in
banks and similar institutions shall be governed by the provisions concerning [simple] loan." By reason of the
erroneous payment made in Tan's favor, Tan and Union Bank became mutual debtors and creditors of each other.
This gave rise to Union Bank's right to set-off the erroneous payment made against Tan's remaining deposit,
consistent with the principle of legal compensation under the Civil Code.20
Finally, the RTC held that Union Bank should be awarded attorney's fees and cost of suit since it was compelled
to litigate due to Tan's unjustified refusal to return the funds mistakenly released to him.21
Aggrieved, Tan filed a motion for reconsideration which the RTC denied in its Order dated May 19, 2014.22 The
RTC held that "[although [Union Bank may have been] negligent when it paid to [Tan] the face value of the check
as alleged by [Tan],"23 Tan is still liable to return the funds mistakenly released to him since Union Bank was under
no obligation to release these funds in his favor.24
CA Proceedings
Tan filed an appeal via Rule 41 and named Yon Mitori as co-appellant.25 Therein, Tan maintained that the
proximate cause of Union Bank's loss is its own gross negligence.26
Following an exchange of pleadings, the CA issued the assailed Decision, the dispositive portion of which reads:
WHEREFORE, in light of all the foregoing, the [D]ecision dated February 24, 2014 of Branch
166 of the [RTC] of Pasig City in Civil Case No. 71670 is hereby AFFIRMED with MODIFICATION in that the
award of attorney's fees and cost of suit in favor of [Union Bank] are hereby deleted, and the rate of legal interest
imposed on the awarded sum, reduced to six percent (6%) per annum.
SO ORDERED. 27
Foremost, the CA stressed that the fact of dishonor of the BPI Check for the reason "Account Closed" is
undisputed. On this basis, the CA affirmed the RTC's findings and held that Tan would be unjustly enriched at
Union Bank's expense if he were permitted to derive benefit from the funds erroneously credited to his account.28
As well, the CA upheld the application of legal compensation in the case.29
Nevertheless, the CA found the award of attorney's fees and cost of suit in favor of Union Bank improper. Since
the banking industry is impressed with public interest, all bank personnel are burdened with a high level of
responsibility insofar as care and diligence in the custody and management of funds are concerned.30 Here, the
evidence shows that the proximate cause of the unwarranted crediting of the value of the BPI Check was Union
Bank's technical error. Thus, while Union Bank was compelled to litigate to protect its rights, such fact alone does
not justify an award of attorney's fees and cost of suit there being no showing that Tan acted in bad faith in refusing
to reimburse the amount so credited.31
Finally, the CA modified the legal interest rate applied on the awarded sum from 12% to 6% per annum, in
accordance with the Court's ruling in Nacar v. Gallery Frames.32
Subsequently, Tan filed a Motion for Reconsideration,33 still with Yon Mitori as co-appellant. Tan argued that the
uniform findings of the RTC and CA with respect to Union Bank's negligence serves as sufficient basis to hold the
latter solely liable for its loss.34 Tan also averred that the principle of solutio indebiti applies only in cases where
the claimant unduly delivers something because of mistake, and not when such delivery results from the claimant's
negligence, as in this case.35
On July 5, 2016, the CA issued the assailed Resolution denying said Motion for
Reconsideration for lack of merit.36 Tan received a copy of the assailed Resolution on July 11, 2016.37
Subsequently, Tan's counsel filed a "Motion for Additional Time to File Appeal"38 (Motion for Time) before the
Court, praying for an additional period of thirty (30) days from July 26, 2016, or until August 25, 2016 to file a
petition for review.39
On August 25, 2016, Tan's counsel filed this Petition. Notably, the Petition names Yon Mitori as sole petitioner even
as it describes Yon Mitori as "a single proprietorship duly registered under Philippine law, owned and operated by
[Tan]."40
On November 9, 2016, the Court issued a Resolution41 granting the Motion for Time and directing Union Bank to
file its comment on the Petition within ten (10) days from notice.
In compliance with the Court's Resolution, Union Bank filed its Comment42 on April 17, 2017, to which a Reply43
had been filed.
The Petition maintains that the proximate cause of Union Bank's loss is its own gross negligence. Thus, it is barred
from recovering damages under Article 2179 of the Civil Code.44
In addition, the Petition reiterates that Union Bank's gross negligence also precludes the application of solutio
indebiti in this case45 as there can be no reimbursement under this principle if payment is made as a result of
one's negligence.46 The Petition relies on the Court's ruling in Philippine National Bank v. Cheah Chee Chong47
(PNB v. Cheah) where the Court held that under the principle of solutio indebiti, no recovery is due "if the mistake
done is one of gross negligence."48
Finally, the Petition contends that as collecting agent, Union Bank is responsible for losses arising from its own
negligence pursuant to Article 1909 of the Civil Code. Thus, the Petition argues that Article 1909 should be applied
to hold Union Bank solely liable for its own loss, based on the Court's ruling in Metropolitan Bank and Trust
Company v. Court of Appeals49 (Metrobank v. CA).50
Issue
The sole issue for the Court's resolution is whether the CA erred when it affirmed the RTC Decision directing Tan
to return the value of the BPI Check with legal interest.
The Court's Ruling
The Petition is denied for lack of merit.
Yon Mitori has no separate juridical personality.
Before delving into the substantive issues, the Court must emphasize that as a general rule, every civil action must
be prosecuted, or defended in the name of the real party in interest, that is, the party who stands to be benefited
or injured by the judgment in the suit, or the party entitled to the avails of the suit.51
In turn, Section 1, Rule 3 of the 1997 Rules of Court provides that only natural and juridical persons or entities
authorized by law may be parties in a civil action. A single proprietorship is not considered a separate juridical
person under the Civil Code.52
The Petition was filed solely in the name of Yon Mitori. As a single proprietorship, Yon Mitori has no juridical
personality separate and distinct from its owner and operator Tan. Accordingly, the Petition should have been filed
in Tan's name, the latter being the real party in interest who possesses the legal standing to file this Petition.
Nevertheless, the Court permits the substitution of Tan as petitioner herein in the interest of justice, pursuant to
Section 4, Rule 10 of the 1997 Rules of Court:
SEC. 4. Formal Amendments. — A defect in the designation of the parties and other clearly clerical or typographical
errors may be summarily corrected by the court at any stage of the action, at its initiative or on motion, provided
no prejudice is caused thereby to the adverse party. (Emphasis supplied)
In Juasing Hardware v. Mendoza53 (Juasing), the Court held that the filing of a civil action in the name of a single
proprietorship is merely a formal, and not a substantial defect. Substitution of the party in such cases would not
constitute a change in the identity of the parties, and would not cause any prejudice on the adverse party, thus:
Contrary to the ruling of respondent Judge, the defect of the complaint in the instant case is merely formal, not
substantial. Substitution of the party plaintiff would not constitute a change in the identity of the parties. No
unfairness or surprise to private respondent Dolla, defendant in the court a quo, would result by allowing the
amendment, the purpose of which is merely to conform to procedural rules or to correct a technical error.54
In Juasing, the Court ruled that the lower court erred in not allowing the amendment of the complaint filed therein
to correct the designation of the party plaintiff, for while the complaint named the sole proprietorship "Juasing
Hardware" as plaintiff, the allegations therein show that said complaint was actually brought by its owner.55
This Petition warrants the same course of action. As in Juasing, no prejudice will result from Yon Mitori's
substitution in this case. Tan has been consistently named as owner and operator of Yon Mitori throughout the
proceedings below. Moreover, the fact that this Petition was filed in furtherance of Tan's interests is apparent from
the allegations in the pleadings filed before the Court and accordingly furnished to Union Bank.
Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive issues.
Tan is bound to return the proceeds of the dishonored BPI Check based on the principle of unjust enrichment.
Jurisprudence defines a collecting bank as "any bank handling an item for collection except the bank on which the
check is drawn."56 Upon receipt of a check for deposit, the collecting bank binds itself to "credit the amount in [the
depositor's] account or infuse value thereon only after the drawee bank shall have paid the amount of the check
or [after] the check [is] cleared for deposit."57
In this case, Tan deposited the BPI Check in his account with Union Bank for collection. Clearly, Union Bank stands
as the collecting bank in this case. By receiving the BPI Check from Tan, Union Bank obliged itself, as collecting
bank, to credit Tan's account only after BPI, as drawee, shall have paid the amount of the said check or after the
check is cleared for deposit.58
As correctly observed by the CA, the dishonor of the BPI Check is not disputed. Evidently, Union Bank was under
no obligation to effect payment in favor of Tan precisely because the BPI Check which Tan deposited for collection
had been dishonored. Allowing Tan to retain the proceeds of the dishonored BPI Check despite not being entitled
thereto would therefore permit unjust enrichment at Union Bank's expense.
The principle of unjust enrichment is codified under Article 22 of the Civil Code. It states:
ART. 22. Every person who through an act of performance by another, or any other means, acquires or comes into
possession of something at the expense of the latter without just or legal ground, shall return the same to him.
There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains
money or property of another against the fundamental principles of justice, equity, and good conscience.59
For the principle to apply, the following requisites must concur: (i) a person is unjustly benefited; and (ii) such
benefit is derived at the expense of or with damages to another.60 Expounding on these requisites, the Court, in
University of the Philippines v. Philab Industries, Inc.,61 held:
Unjust enrichment claims do not lie simply because one party benefits from the efforts or obligations of others, but
instead it must be shown that a party was unjustly enriched in the sense that the term unjustly could mean illegally
or unlawfully.
Moreover, to substantiate a claim for unjust enrichment, the claimant must unequivocally prove that another party
knowingly received something of value to which he was not entitled and that the state of affairs are such that it
would be unjust for the person to keep the benefit. Unjust enrichment is a term used to depict result or effect of
failure to make remuneration of or for property or benefits received under circumstances that give rise to legal or
equitable obligation to account for them; to be entitled to remuneration, one must confer benefit by mistake, fraud,
coercion, or request. Unjust enrichment is not itself a theory of reconvey. Rather, it is a prerequisite for the
enforcement of the doctrine of restitution.62 (Emphasis and underscoring supplied; italics omitted)
The requisites for the application of the principle of unjust enrichment are clearly present in this case. Here, it was
unequivocally established that Tan withdrew and utilized the proceeds of the BPI Check fully knowing that he was
not entitled thereto.
To note, Tan's transaction records show that prior to the deposit of the BPI Check subject of the present case, Tan
had deposited five other checks drawn against the same account.63 During Tan's cross-examination before the
RTC, Tan admitted that Union Bank notified him that all five checks he had previously deposited had all been
dishonored for the reason "Account Closed" — which notification was made before he deposited the BPI Check
subject of the present case, thus:
"Q: Mr. Witness, it appears that you had previously deposited BPI Checks also issued or also made by [Angli
Lumber]. I think these x x x BPI Checks were also deposited in your bank, Union Bank, is that correct Mr. Witness?
A: That is correct, sir.
Q: In fact on five (5) occasions you had deposited BPI Checks [i]ssued by [Angli Lumber] drawn against its BPI
[a]ccount and you deposited the same to your bank, x x x Union Bank in this case, is that correct, Mr. Witness?
A: Yes, sir.
Q: In those five (5) occasions, Mr. witness, do you confirm that all of these checks were returned to you because
the account of [Angli Lumber] was closed, is that correct?
A: Yes, sir. x x x
Q: Mr. Witness, I have here a return Check Advise dated November 5, 2007. This is before the subject transaction.
Can you please tell this [court] if you recognize this written Check Advise?
A: Yes, sir.
Q: You also pointed to a signature. Are you confirming that, that is your signature, Mr. Witness? A: Yes, sir.
Q: Also, this refers to Check No. 0206925, BPI San Fernando Highway, drawee bank. It was deposited on October
30, 2007?
A: Yes, sir.
Q: Mr. Witness, I also have here a return check advise dated November 7, 2007, can you please tell the court if
you recognize this document?
A: Yes, sir. x x x x
Q: Whose signature is that, Mr. Witness?
A: My signature, sir.
Q: This return check advise refers to Check No. 0206927 and also Check No. 0206926 and Check No. 0180723.
The drawee bank of these checks are all BPI San Fernando Highway and the date[s] of the deposits are as follows:
November 5, 2007 for Check No. 0206926 and November 3, 2007 for Check No. 0180723 all of these return check
advise, Mr. Witness [state] that the reason for the return is account closed, do you confirm that, Mr. Witness?
A: Yes, sir. x x x x
[Q]: So as early as October, Mr. Witness, you have been given [c]hecks by this [Angli Lumber] and you have been
depositing the same in your bank account and all of these checks were returned to you because you were informed
that the account had been closed, is that correct?
xxxx
Q: So these checks were all returned to you for being Account closed?
A: Yes, sir." x x x64 (Emphasis and underscoring supplied)
Tan's testimony confirms that he was fully aware that Angli Lumber's account with BPI had been closed. So he
could not have expected that the BPI Check in question would be honored. Stated differently, he was cognizant of
the BPI Check's impending dishonor at the time he withdrew its proceeds from his Union Bank account. That Tan
withdrew the proceeds of the BPI Check soon after discovering that the corresponding funds had been credited to
his account despite his knowledge that the account from which the BPI Check was issued had been closed for
some time smacks of bad faith if not fraud. Tan's refusal to return the funds despite Union Bank's repeated
demands is reprehensible.
On this score, reference to the Court's ruling in Equitable Banking Corporation v. Special Steel Products, Inc.65
(Equitable Banking) is proper. In said case, a certain Jose Isidoro Uy (Uy), purchasing officer of International Copra
Export Corporation (Interco), presented three crossed checks to Equitable Banking Corporation (Equitable) for
collection. These crossed checks were made payable to the order of Special Steel Products, Inc. (SSPI), Interco's
supplier.
The crossed checks bore the notation "account payee only". Despite this notation, Equitable deposited the
proceeds of the three checks to Uy's personal account upon the latter's instructions. Equitable claimed that it did
so believing that Uy was acting upon Interco's instructions. Due to the incident, SSPI and its President Augusto
Pardo (Pardo) filed an action for damages against Equitable and Uy.
The Court adjudged Equitable and Uy jointly and severally liable to pay SSPI and Pardo actual, moral, and
exemplary damages, as well as costs of suit. Nevertheless, to preclude unjust enrichment, the Court directed Uy
to reimburse Equitable whatever amount it may be required to pay SSPI and Pardo, thus:
Equitable then insists on the allowance of [its] cross-claim against Uy. The bank argues that it was Uy who was
enriched by the entire scheme and should reimburse Equitable for whatever amounts the Court might order it to
pay in damages to SSPI.
Equitable is correct. There is unjust enrichment when (1) a person is unjustly benefited, and (2) such benefit is
derived at the expense of or with damages to another. In the instant case, the fraudulent scheme concocted by
Uy allowed him to improperly receive the proceeds of the three crossed checks and enjoy the profits from these
proceeds during the entire time that it was withheld from SSPI. Equitable, through its gross negligence and mislaid
trust on Uy, became an unwitting instrument in Uy's scheme. Equitable's fault renders it solidarity liable with Uy,
insofar as respondents are concerned. Nevertheless, as between Equitable and Uy, Equitable should be allowed
to recover from Uy whatever amounts Equitable may be made to pay under the judgment. It is clear that Equitable
did not profit in Uy's scheme. Disallowing Equitable's cross-claim against Uy is tantamount to allowing Uy to
unjustly enrich himself at the expense of Equitable. For this reason, the Court allows Equitable's cross-claim
against Uy.66 (Emphasis supplied)
The circumstances which impelled the Court to apply the principle of unjust enrichment in Equitable Banking are
present in this case.
As stated, Union Bank's obligation to credit Tan's account is contingent upon actual receipt of the value of the BPI
Check or notice of its clearance. Due to the dishonor of the BPI Check, Union Bank's obligation to credit Tan's
account with its proceeds did not attach. Conversely, Tan's right to receive the proceeds of said check did not
arise. Nevertheless, Tan withdrew the proceeds of the BPI Check with full and established knowledge that the
account against which it was drawn had been closed. As in Equitable Banking, Tan, the depositor herein, was
unjustly benefited by reason of the erroneous credit made in his favor. Such benefit, in turn, was derived at the
expense of Union Bank as the collecting bank.
Thus, based on the principle of unjust enrichment, Tan is bound to return the proceeds of the BPI Check which he
had no right to receive.
PNB v. Cheah is inapplicable.
Tan argues that Union Bank should not be allowed to recover the amount erroneously deposited in his account,
since said payment was made not because of any mistake of fact or law, but because of Union Bank's own gross
negligence. According to Tan, such negligence on the part of Union Bank precludes recovery, pursuant to the
Court's ruling in PNB v. Cheah. The Court disagrees.
In PNB v. Cheah, petitioner Ofelia Cheah (Ofelia) agreed to accommodate Filipina Tuazon's (Filipina) request to
have the latter's Bank of America (BOA) Check cleared and encashed for a service fee of 2.5%. Filipina was a
mere acquaintance introduced to Ofelia by her friend Adelina Guarin (Adelina). Filipina enlisted Ofelia's assistance
since she did not have a dollar account necessary to encash the BOA Check which was drawn for the amount of
$300,000.00.
On November 4, 1992, Ofelia deposited the BOA Check to her joint PNB dollar savings account (DSA) with her
Malaysian husband Cheah Chee Chong. Five days later, PNB received a credit advice from Philadelphia National
Bank in the United States, stating that the proceeds of the BOA Check had been temporarily credited to PNB's
account as of November 6, 1992.
On November 16, 1992, PNB Division Chief Alberto Garin called Ofelia to inform her that the BOA Check had been
cleared and that her joint DSA with Cheah Chee Chong had been credited the amount of $299,248.37
(representing the face value of the BOA Check sans bank charges). Hence, the proceeds of the BOA Check were
withdrawn and delivered to Filipina.
On November 20, 1992, PNB received notice that the BOA Check bounced for being drawn against insufficient
funds. PNB demanded that Ofelia and Cheah Chee Chong return the funds withdrawn. In turn, Ofelia attempted
to retrieve the funds from Filipina, but Filipina claimed that the funds had already been distributed to several other
individuals. Thus, Ofelia and Cheah Chee Chong (Spouses Cheah) requested the assistance of the National
Bureau of Investigation (NBI) to apprehend the beneficiaries of the BOA Check. Meanwhile, Spouses Cheah and
PNB negotiated the terms of reimbursement pending NBI's investigation.
After negotiations between Spouses Cheah and PNB fell through, PNB filed a complaint for sum of money before
the RTC. As their main defense, Spouses Cheah claimed that the proximate cause of PNB's injury was its own
negligence in paying the BOA Check without waiting for the expiration of its own 15-day clearing period.
The RTC ruled in favor of PNB. However, the CA reversed on appeal, finding that PNB exhibited negligence in
allowing the premature withdrawal of the proceeds of the BOA Check. However, the CA also found Ofelia guilty of
contributory negligence. Thus, the CA ruled that Spouses Cheah and PNB should be made equally responsible
for the resulting loss.
Unsatisfied, the parties filed their respective petitions for review before the Court. Affirming the CA's Decision, the
Court ruled:
Here, while PNB highlights Ofelia's fault in accommodating a stranger's check and depositing it to the bank, it
remains mum in its release of the proceeds thereof without exhausting the 15day clearing period, an act which
contravened established banking rules and practice.
It is worthy of notice that the 15-day clearing period alluded to is construed as 15 banking days. As declared by
Josephine Estella, the Administrative Service Officer who was the bank's Remittance Examiner, what was unusual
in the processing of the check was that the "lapse of 15 banking days was not observed." Even PNB's agreement
with Philadelphia National Bank regarding the rules on the collection of the proceeds of US dollar checks refers to
"business/banking days." Ofelia deposited the subject check on November 4, 1992. Hence, the 15th banking day
from the date of said deposit should fall on November 25, 1992. However, what happened was that PNB Buendia
Branch, upon calling up Ofelia that the check had been cleared, allowed the proceeds thereof to be withdrawn on
November 17 and 18, 1992, a week before the lapse of the standard 15-day clearing period.
This Court already held that the payment of the amounts of checks without previously clearing them with the
drawee bank especially so where the drawee bank is a foreign bank and the amounts involved were large is
contrary to normal or ordinary banking practice. Also, in Associated Bank v. Tan, wherein the bank allowed the
withdrawal of the value of a check prior to its clearing, we said that "[b]efore the check shall have been cleared for
deposit, the collecting bank can only 'assume' at its own risk x x x that the check would be cleared and paid out."
The delay in the receipt by PNB Buendia Branch of the November 13, 1992 SWIFT message notifying it of the
dishonor of the subject check is of no moment, because had PNB Buendia Branch waited for the expiration of the
clearing period and had never released during that time the proceeds of the check, it would have already been
duly notified of its dishonor. Clearly, PNB's disregard of its preventive and protective measure against the possibility
of being victimized by bad checks had brought upon itself the injury of losing a significant amount of money.
It bears stressing that "the diligence required of banks is more than that of a Roman pater familias or a good father
of a family. The highest degree of diligence is expected." PNB miserably failed to do its duty of exercising
extraordinary diligence and reasonable business prudence. The disregard of its own banking policy amounts to
gross negligence, which the law defines as "negligence characterized by the want of even slight care, acting or
omitting to act in a situation where there is duty to act, not inadvertently but wilfully and intentionally with a
conscious indifference to consequences in so far as other persons may be affected." x x x
Incidentally, PNB obliges the [S]pouses Cheah to return the withdrawn money under the principle of solutio indebiti,
which is laid down in Article 2154 of the Civil Code[.] x x x x
"[T]he indispensable requisites of the juridical relation known as solutio indebiti, are, (a) that he who paid was not
under obligation to do so; and (b) that the payment was made by reason of an essential mistake of fact.
In the case at bench, PNB cannot recover the proceeds of the check under the principle it invokes. In the first
place, the gross negligence of PNB, as earlier discussed, can never be equated with a mere mistake of fact, which
must be something excusable and which requires the exercise of prudence. No recovery is due if the mistake
done is one of gross negligence.
The [S]pouses Cheah are guilty of contributory negligence and are bound to share the loss with the bank
"Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he
has suffered, which falls below the standard to which he is required to conform for his own protection."
The CA found Ofelia's credulousness blameworthy. We agree. Indeed, Ofelia failed to observe caution in giving
her full trust in accommodating a complete stranger and this led her and her husband to be swindled. Considering
that Filipina was not personally known to her and the amount of the foreign check to be encashed was
$300,000.00, a higher degree of care is expected of Ofelia which she, however, failed to exercise under the
circumstances. Another circumstance which should have goaded Ofelia to be more circumspect in her dealings
was when a bank officer called her up to inform that the [BOA C]heck has already been cleared way earlier than
the 15-day clearing period. The fact that the check was cleared after only eight banking days from the time it was
deposited or contrary to what [PNB Division Chief Alfredo Garin] told her that clearing takes 15 days should have
already put Ofelia on guard. She should have first verified the regularity of such hasty clearance considering that
if something goes wrong with the transaction, it is she and her husband who would be put at risk and not the
accommodated party. However, Ofelia chose to ignore the same and instead actively participated in immediately
withdrawing the proceeds of the check. Thus, we are one with the CA in ruling that Ofelia's prior consultation with
PNB officers is not enough to totally absolve her of any liability. In the first place, she should have shunned any
participation in that palpably shady transaction.67 (Emphasis supplied; citations omitted)
In PNB v. Cheah, the Court ruled that PNB was guilty of gross negligence as its own bank officer permitted Ofelia
to prematurely withdraw the proceeds of the BOA Check by advising her of the funds' availability before the
expiration of the 15-day clearing period mandated by its own internal rules (i.e., PNB General Circular No. 52-
101/88). Despite PNB's gross negligence, the Court nevertheless tempered PNB's liability due to Ofelia's
contributory negligence. Thus, in PNB v. Cheah, the parties were made to suffer the resulting loss equally.
A juxtaposition of the circumstances attendant in PNB v. Cheah and the present case shows that Tan's reliance
on PNB v. Cheah does not support his cause. In fact, reliance on PNB v. Cheah actually weakens Tan's claim.
It is well established that whoever alleges a fact has the burden of proving it because mere allegation is not
evidence.68 The records show that while Tan harped on Union Bank's alleged gross negligence, he failed to cite
the specific provision of law, banking regulation, or internal rule which had been violated by Union Bank. What is
clear from the evidence on record is that due to a technical error in Union Bank's system, the funds corresponding
to the value of the BPI Check were credited to Tan's account before actual return and clearance. Because of this
error, said funds were inadvertently made available for Tan's withdrawal upon Union Bank's mistaken belief that
the check had already been cleared. Upon notice of the BPI Check's dishonor, Union Bank's officer immediately
notified Tan of such fact.69 However, despite repeated demands, Tan refused to return the amount he had
withdrawn insisting that the BPI
Check was given to him for value and in the course of business.70
Clearly, Tan failed to substantiate his imputation of gross negligence. While Union Bank concedes that a technical
error in its own system allowed Tan to withdraw the proceeds of the BPI Check before clearance, this error cannot
be likened to the blatant violation of internal procedure committed by PNB's Division Chief in PNB v. Cheah.
More importantly, in PNB v. Cheah, respondent Ofelia did not benefit from the proceeds of the dishonored BOA
Check. While Ofelia deposited said check to facilitate encashment, she subsequently delivered the proceeds to
Filipina. In this case, it is established that the funds in dispute had been withdrawn by Tan himself. In fact, Tan
acknowledged that he used said funds to pay one of his suppliers.71 Allowing Tan to benefit from the erroneous
payment would undoubtedly permit unjust enrichment at Union Bank's expense particularly in light of
circumstances which indicate that Tan withdrew in bad faith the mistakenly released funds.
Article 1909 does not preclude recovery on the part of Union Bank.
In an attempt to evade liability, Tan also argues that, as his collecting agent, Union Bank should be held solely
responsible for losses arising from its own negligence, pursuant to Article 1909 of the Civil Code. Tan invokes the
Court's ruling in Metrobank v. CA as basis.
Tan's reliance on Metrobank v. CA is misplaced.
In said case, a certain Eduardo Gomez (Eduardo) deposited 38 treasury warrants with a total amount of
P1,755,228.37 to his account with Golden Savings and Loan Association (Golden Savings). Since Golden Savings
did not have its own clearing facilities, its cashier Gloria Castillo endorsed said warrants and deposited them in
Golden Savings' account with petitioner Metropolitan Bank and Trust Company (Metrobank).
Gloria went to Metrobank several times to confirm whether the warrants had been cleared. While Gloria was initially
told to wait, Metrobank eventually allowed her to withdraw the proceeds of the warrants on behalf of Golden
Savings due to "exasperation" over her repeated inquiries, and as a form of accommodation to Golden Savings
as a valued Client. Thereafter, Eduardo was allowed to withdraw from his deposit account with Golden Savings.
Five days after Eduardo's last withdrawal, Metrobank informed Golden Savings that 32 out of the 38 treasury
warrants were dishonored by the Bureau of Treasury. Thus, Metrobank demanded that Golden Savings refund the
proceeds previously withdrawn to make up for the deficit in its account. Golden Savings rejected the demand,
causing Metrobank to file a complaint for collection of sum of money with the RTC.
The RTC ruled in favor of Golden Savings. The CA affirmed on appeal. Aggrieved, Metrobank filed a petition for
review before the Court, alleging, among others, that "[it] cannot be held liable for its failure to collect on the
warrants" since it merely acted as a collecting agent.72
In its Decision, the Court applied Article 1909 to hold Metrobank liable for the losses suffered by Golden Savings
as a result of Metrobank's negligence.ℒαwρhi৷ The Court held:
From the above undisputed facts, it would appear to the Court that Metrobank was indeed negligent in giving
Golden Savings the impression that the treasury warrants had been cleared and that, consequently, it was safe to
allow [Eduardo] to withdraw the proceeds thereof from his account with it. Without such assurance, Golden
Savings would not have allowed the withdrawals; with such assurance, there was no reason not to allow the
withdrawal. Indeed, Golden Savings might even have incurred liability for its refusal to return the money that to all
appearances belonged to the depositor, who could therefore withdraw it any time and for any reason he saw fit.
It was, in fact, to secure the clearance of the treasury warrants that Golden Savings deposited them to its account
with Metrobank. Golden Savings had no clearing facilities of its own. It relied on Metrobank to determine the validity
of the warrants through its own services. The proceeds of the warrants were withheld from [Eduardo] until
Metrobank allowed Golden Savings itself to withdraw them from its own deposit. It was only when Metrobank gave
the go-signal that [Eduardo] was finally allowed by Golden Savings to withdraw them from his own account.73
(Emphasis supplied)
By invoking Article 1909 as applied in Metrobank v. CA, Tan appears to assert that he, as principal-depositor,
suffered losses because of the technical error in Union Bank's system. This assertion is clearly false.
As stated, Tan had no right to receive the proceeds of the BPI Check. Evidently, Tan did not suffer any loss as a
result of Union Bank's technical error. On the contrary, Tan unduly gained from the technical error, as it allowed
him to withdraw and utilize funds which he had no right to receive.
The fact that Tan received the BPI Check for value in the ordinary course of business does not negate his obligation
to return the funds erroneously credited in his favor. Tan's remedy, if any, lies not against Union Bank, but against
the drawer of the BPI Check Angli Lumber. All told, Tan's obligation to return the erroneously credited funds to
Union Bank stands.
Amount due
The records show that Tan had a balance amounting to P93,700.60 before the value of the BPI Check was
erroneously credited to his Union Bank account.74 Due to Union Bank's system error, Tan's account was credited
with the amount of P420,000.00, thereby increasing his balance to P513,700.60. Subsequently, Tan's account was
credited an additional amount of P1,000.00 as a result of a separate encashment.
Later still, Tan withdrew the amount of P480,000.00. This left Tan's account with the balance of P34,700.60. To
illustrate:
Account balance prior to deposit P 93,700.60
Amount credited due to system error 420,000.00
Separate encashment 1,000.00
Account balance prior to withdrawal 514,700.60
Amount withdrawn (480,000.00)
Account balance after withdrawal P 34,700.60
Since Tan refused to return the mistakenly credited amount of P420,000.00, Union Bank applied Tan's remaining
balance of P34,700.60 to set off his debt before it filed its Complaint before the RTC.
Thus, the sum due to Union Bank is P385,299.40, as stated in the RTC Decision. This awarded sum, not being a
loan or forbearance of money, is subject to 6% interest per annum. In turn, such interest should be computed from
the time when the amount due had been established with reasonable certainty, which, in this case, was the date
of Union
Bank's extrajudicial demand on November 20, 2007.
The deletion of damages, attorney's fees and costs of suit was not assailed.
Finally, the Court shall not delve into the issue of damages, attorney's fees, and cost of suit in this Decision
considering that Union Bank no longer assailed the deletion of these awards before this Court.
WHEREFORE, the Petition is DENIED. The Decision dated February 3, 2016 and Resolution dated July 5, 2016
rendered by the Court of Appeals, Eleventh Division in CA-G.R. CV No. 102802 are AFFIRMED.
Petitioner Rodriguez Ong Tan, doing business under the name and style Yon Mitori International Industries, is
ORDERED to pay respondent Union Bank of the Philippines the amount of P385,299.40 with legal interest at the
rate of 6% per annum, computed from the time of extrajudicial demand on November 20, 2007 until full payment.
SO ORDERED.
Peralta, C.J., (Peralta), Lazaro-Javier, Lopez, and Rosario,** JJ., concur.
[G.R. NO. 180832 : July 23, 2008]
JEROME CASTRO, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
CORONA, J.:
This petition for review on certiorari1 emanated from the complaint for grave oral defamation2 filed by Albert P.
Tan against petitioner Jerome Castro.
The facts follow.
On November 11, 2002, Reedley International School (RIS) dismissed Tan’s son, Justin Albert (then a Grade 12
student), for violating the terms of his disciplinary probation.3 Upon Tan’s request, RIS reconsidered its decision
but imposed "non-appealable" conditions such as excluding Justin Albert from participating in the graduation
ceremonies.
Aggrieved, Tan filed a complaint in the Department of Education (Dep-Ed) for violation of the Manual of
Regulation of Private Schools, Education Act of 1982 and Article 19 of the Civil Code4 against RIS. He alleged
that the dismissal of his son was undertaken with malice, bad faith and evident premeditation. After investigation,
the Dep-Ed found that RIS’ code violation point system allowed the summary imposition of unreasonable
sanctions (which had no basis in fact and in law). The system therefore violated due process. Hence, the Dep-Ed
nullified it. 5
Meanwhile, on November 20, 2002, the Dep-Ed ordered RIS to readmit Justin Albert without any
condition.6 Thus, he was able to graduate from RIS and participate in the commencement ceremonies held on
March 30, 2003.
After the graduation ceremonies, Tan met Bernice C. Ching, a fellow parent at RIS. In the course of their
conversation, Tan intimated that he was contemplating a suit against the officers of RIS in their personal
capacities, including petitioner who was the assistant headmaster.
Ching telephoned petitioner sometime the first week of April and told him that Tan was planning to sue the
officers of RIS in their personal capacities. Before they hung up, petitioner told Ching:
Okay, you too, take care and be careful talking to [Tan], that’s dangerous.
Ching then called Tan and informed him that petitioner said "talking to him was dangerous."
Insulted, Tan filed a complaint for grave oral defamation in the Office of the City Prosecutor of Mandaluyong City
against petitioner on August 21, 2003.
On November 3, 2003, petitioner was charged with grave oral defamation in the Metropolitan Trial Court (MeTC)
of Mandaluyong City, Branch 607 under the following Information:
That on or about the 13th day of March, 2003 in the City of Mandaluyong, Philippines, a place within the
jurisdiction of this Honorable Court, the above-named [petitioner], with deliberate intent of bringing ATTY.
ALBERT P. TAN, into discredit, dishonor, disrepute and contempt, did then and there, willfully, unlawfully and
feloniously speak and utter the following words to Ms. Bernice C. Ching:
"OK, YOU TOO, YOU TAKE CARE AND BE CAREFUL TALKING TO [TAN], THAT’S DANGEROUS."
and other words of similar import of a serious and insulting nature.
CONTRARY TO LAW.
Petitioner pleaded not guilty during arraignment.
The prosecution essentially tried to establish that petitioner depicted Tan as a "dangerous person." Ching testified
that petitioner warned her that talking to Tan was dangerous. Tan, on the other hand, testified that petitioner’s
statement shocked him as it portrayed him as "someone capable of committing undesirable acts." He added that
petitioner probably took offense because of the complaint he filed against RIS in the Dep-Ed.
For his defense, petitioner denied harboring ill-feelings against Tan despite the latter’s complaint against RIS in
the Dep-Ed. Although he admitted conversing with Ching (whom he considered as a close acquaintance) on the
telephone a few days after RIS’ 2003 commencement exercises, petitioner asserted that he never said or
insinuated that Tan or talking to Tan was dangerous. On cross-examination, however, he did not categorically
deny the veracity of Ching’s statement.
The MeTC found that Ching’s statements in her affidavit and in open court were consistent and that she did not
have any motive to fabricate a false statement. Petitioner, on the other hand, harbored personal resentment,
aversion and ill-will against Tan since the Dep-Ed compelled RIS to readmit his son. Thus, the MeTC was
convinced that petitioner told Ching talking to Tan was dangerous and that he uttered the statement with the
intention to insult Tan and tarnish his social and professional reputation.
In a decision dated December 27, 2005, the MeTC found petitioner guilty beyond reasonable doubt of grave oral
defamation:8
WHEREFORE, judgment is hereby rendered finding accused, Jerome Castro GUILTY beyond reasonable doubt
of the crime of Grave Oral Defamation, sentencing him therefore, in accordance to Article 358(1) of the Revised
Penal Code and applying the Indeterminate Sentence Law to suffer the penalty of imprisonment of 1 month and 1
day of arresto mayor as minimum to 4 months and 1 day of arresto mayor as maximum.
On appeal, the Regional Trial Court (RTC) affirmed the factual findings of the MeTC. However, in view of the
animosity between the parties, it found petitioner guilty only of slight oral defamation. But because Tan filed his
complaint in the Office of the City Prosecutor of Mandaluyong City only on August 21, 2003 (or almost five
months from discovery), the RTC ruled that prescription had already set in; it therefore acquitted petitioner on that
ground. 9
On April 19, 2007, the Office of the Solicitor General (OSG) filed a petition for certiorari in the Court of Appeals
(CA) assailing the decision of the RTC.10 It contended that the RTC acted with grave abuse of discretion when it
downgraded petitioner’s offense to slight oral defamation. The RTC allegedly misappreciated the antecedents
which provoked petitioner to utter the allegedly defamatory statement against Tan.
The CA found that the RTC committed grave abuse of discretion when it misapprehended the totality of the
circumstances and found petitioner guilty only of slight oral defamation. Thus, the CA reinstated the MeTC
decision.11
Petitioner moved for reconsideration but it was denied.12 Hence, this recourse.
Petitioner basically contends that the CA erred in taking cognizance of the petition for certiorari inasmuch as the
OSG raised errors of judgment (i.e., that the RTC misappreciated the evidence presented by the parties) but
failed to prove that the RTC committed grave abuse of discretion. Thus, double jeopardy attached when the RTC
acquitted him.
We grant the petition.
No person shall be twice put in jeopardy of punishment for the same offense.13 This constitutional mandate is
echoed in Section 7 of Rule 117 of the Rules of Court which provides:
Section 7. Former conviction or acquittal; double jeopardy. – When an accused has been convicted or acquitted
or the case against him dismissed or otherwise terminated without his express consent by a court of competent
jurisdiction, upon a valid complaint or in information or other formal charge sufficient in form and substance to
sustain a conviction and after the accused had pleaded to the charge, the conviction or acquittal of the accused
or the dismissal of the case shall be a bar to another prosecution for the offense charged or for any attempt to
commit the same or frustration thereof, or for any offense which necessarily includes or is necessarily included in
the offense charged in the former complaint or information.
Under this provision, double jeopardy occurs upon (1) a valid indictment (2) before a competent court (3) after
arraignment (4) when a valid plea has been entered and (5) when the accused was acquitted or convicted or the
case was dismissed or otherwise terminated without the express consent of the accused.14 Thus, an acquittal,
whether ordered by the trial or appellate court, is final and unappealable on the ground of double jeopardy.15
The only exception is when the trial court acted with grave abuse of discretion or, as we held in Galman v.
Sandiganbayan,16 when there was mistrial. In such instances, the OSG can assail the said judgment in a petition
for certiorari establishing that the State was deprived of a fair opportunity to prosecute and prove its case.17
The rationale behind this exception is that a judgment rendered by the trial court with grave abuse of discretion
was issued without jurisdiction. It is, for this reason, void. Consequently, there is no double jeopardy.
In this case, the OSG merely assailed the RTC’s finding on the nature of petitioner’s statement, that is, whether it
constituted grave or slight oral defamation. The OSG premised its allegation of grave abuse of discretion on the
RTC’s "erroneous" evaluation and assessment of the evidence presented by the parties.1awph!1
What the OSG therefore questioned were errors of judgment (or those involving misappreciation of evidence or
errors of law). However, a court, in a petition for certiorari, cannot review the public respondent’s evaluation of the
evidence and factual findings.18 Errors of judgment cannot be raised in a Rule 65 petition as a writ of certiorari
can only correct errors of jurisdiction (or those involving the commission of grave abuse of discretion).19
Because the OSG did not raise errors of jurisdiction, the CA erred in taking cognizance of its petition and, worse,
in reviewing the factual findings of the RTC.20 We therefore reinstate the RTC decision so as not to offend the
constitutional prohibition against double jeopardy.
At most, petitioner could have been liable for damages under Article 26 of the Civil Code21 :
Article 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and
other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a
cause of action for damages, prevention and other relief:
xxx xxx xxx
(3) Intriguing to cause another to be alienated from his friends;
xxx xxx xxx
Petitioner is reminded that, as an educator, he is supposed to be a role model for the youth. As such, he should
always act with justice, give everyone his due and observe honesty and good faith.22
WHEREFORE, the petition is hereby GRANTED. The August 29, 2007 decision and December 5, 2007
resolution of the Court of Appeals in CA-G.R. SP No. 98649 are REVERSED and SET ASIDE. The November
20, 2006 decision of the Regional Trial Court of Mandaluyong City, Branch 212 is REINSTATED. Petitioner
Jerome Castro is ACQUITTED of slight oral defamation as defined and penalized in Article 358 of the Revised
Penal Code.
No pronouncement as to costs.
SO ORDERED.
A.C. No. 8261, March 11, 2015
JESSIE T. CAMPUGAN AND ROBERT C. TORRES, Complainants, v. ATTY. FEDERICO S. TOLENTINO, JR.,
ATTY. RENATO G. CUNANAN, ATTY. DANIEL F. VICTORIO, JR., AND
ATTY. ELBERT T. QUILALA, Respondents.
A.C. No. 8725
JESSIE T. CAMPUGAN AND ROBERT C. TORRES, Complainants, v. ATTY. CONSTANTE P. CALUYA, JR., AND
ATTY. ELBERT T. QUILALA, Respondent.
DECISION
BERSAMIN, J.:
In this consolidated administrative case, complainants Jessie T. Campugan and Robert C. Torres seek the
disbarment of respondents Atty. Federico S. Tolentino, Jr., Atty. Daniel F. Victorio, Jr., Atty. Renato G. Cunanan,
Atty. Elbert T. Quilala and Atty. Constante P. Caluya, Jr. for allegedly falsifying a court order that became the basis
for the cancellation of their annotation of the notice of adverse claim and the notice of lis pendens in the Registry
of Deeds in Quezon City.chanRoblesvirtualLawlibrary
Antecedents
Atty. Victorio, Jr. had replaced Atty. Edgardo Abad as counsel of the complainants in a civil action they brought to
seek the annulment of Transfer Certificate of Title (TCT) No. N-290546 of the Registry of Deeds of Quezon City in
the first week of January 2007 in the Regional Trial Court (RTC) in Quezon City (Civil Case No. Q-07-59598). They
impleaded as defendants Ramon and Josefina Ricafort, Juliet Vargas and the Register of Deeds of Quezon City.
They caused to be annotated on TCT No. N-290546 their affidavit of adverse claim, as well as the notice of lis
pendens.1 Atty. Tolentino, Jr. was the counsel of defendant Ramon and Josefina Ricafort.
In their sworn complaint for disbarment dated April 23, 2009 (later docketed as A.C. No. 8261),2 the complainants
narrated that as the surviving children of the late Spouses Antonio and Nemesia Torres, they inherited upon the
deaths of their parents a residential lot located at No. 251 Boni Serrano Street, Murphy, Cubao, Quezon City
registered under Transfer Certificate of Title (TCT) No. RT-64333(35652) of the Register of Deeds of Quezon City;3
that on August 24, 2006, they discovered that TCT No. RT-64333(35652) had been unlawfully cancelled and
replaced by TCT No. N-290546 of the Register of Deeds of Quezon City under the names of Ramon and Josefina
Ricafort;4 and that, accordingly, they immediately caused the annotation of their affidavit of adverse claim on TCT
No. N-290546.
It appears that the parties entered into an amicable settlement during the pendency of Civil Case No. Q-07-59598
in order to end their dispute,5 whereby the complainants agreed to sell the property and the proceeds thereof
would be equally divided between the parties, and the complaint and counterclaim would be withdrawn
respectively by the complainants (as the plaintiffs) and the defendants. Pursuant to the terms of the amicable
settlement, Atty. Victorio, Jr. filed a Motion to Withdraw Complaint dated February 26, 2008, 6 which the RTC
granted in its order dated May 16, 2008 upon noting the defendants' lack of objection thereto and the defendants'
willingness to similarly withdraw their counterclaim.7
The complainants alleged that from the time of the issuance by the RTC of the order dated May 16, 2008, they
could no longer locate or contact Atty. Victorio, Jr. despite making several phone calls and visits to his office; that
they found out upon verification at the Register of Deeds of Quezon City that new annotations were made on TCT
No. N-290546, specifically: (1) the annotation of the letter-request appearing to be filed by Atty. Tolentino, Jr.8
seeking the cancellation of the affidavit of adverse claim and the notice of lis pendens annotated on TCT No. N-
290546; and (2) the arinotation of the decision dated May 16, 2008 rendered in Civil Case No. Q-07-59598 by the
RTC, Branch 95, in Quezon City, granting the complainants' Motion to Withdraw Complaint;9 and that a copy of
the letter-request dated June 30, 2008 addressed to Atty. Quilala, Registrar of Deeds of Quezon City, disclosed
that it was defendant
Ramon Ricafort who had signed the letter.
Feeling aggrieved by their discovery, the complainants filed an appeal en consulta with the Land Registration
Authority (LRA), docketed as Consulta No. 4707, assailing the unlawful cancellation of their notice of adverse
claim and their notice of lis pendens under primary entries PE-2742 and PE-3828-9, respectively. The LRA set
Consulta No. 4707 for hearing on March 30, 2009, and directed the parties to submit their respective memoranda
and/or supporting documents on or before such scheduled hearing.10 However, the records do not disclose
whether Consulta No. 4707 was already resolved, or remained pending at the LRA.
Unable to receive any response or assistance from Atty. Victorio, Jr. despite their having paid him for his
professional services, the complainants felt that said counsel had abandoned their case. They submitted that the
cancellation of their notice of adverse claim and their notice of lis pendens without a court order specifically
allowing such cancellation resulted from the connivance and conspiracy between Atty. Victorio, Jr. and Atty.
Tolentino, Jr., and from the taking advantage of their positions as officials in the Registry of Deeds by respondents
Atty. Quilala, the Chief Registrar, and Atty. Cunanan, the acting Registrar and signatory of the new annotations.
Thus, they claimed to be thereby prejudiced.
On July 6, 2009, the Court required the respondents to comment on the verified complaint.11
Atty. Victorio, Jr. asserted in his Comment dated August 17, 200912 that complainant Robert Torres had been
actively involved in the proceedings in Civil Case No. Q-07-59598, which included the mediation process; that the
complainants, after having aggressively participated in the drafting of the amicable settlement, could not now claim
that they had been deceived into entering the agreement in the same way that they could not feign ignorance of
the conditions contained therein; that he did not commit any abandonment as alleged, but had performed in good
faith his duties as the counsel for the complainants in Civil Case No. Q-07-59598; that he should not be held
responsible for their representation in other proceedings, such as that before the LRA, which required a separate
engagement; and that the only payment he had received from the complainants were those for his appearance
fees of P1,000.00 for every hearing in the RTC.
In his Comment dated August 24, 2009,13 Atty. Tolentino, Jr. refuted the charge of conspiracy, stressing that he
was not acquainted with the other respondents, except Atty. Victorio, Jr. whom he had met during the hearings in
Civil Case No. Q-07-59598; that although he had notarized the letter-request dated June 30, 2008 of Ramon
Ricafort to the Register of Deeds, he had no knowledge about how said letter-request had been disposed of by
the Register of Deeds; and that the present complaint was the second disbarment case filed by the complainants
against him with no other motive except to harass and intimidate him.
Atty. Quilala stated in his Comment dated September 1, 200914 that it was Atty. Caluya, Jr., another Deputy
Register of Deeds, who was the actual signing authority of the annotations that resulted in the cancellation of the
affidavit of adverse claim and the notice of lis pendens on TCT No. N-290546; that the cancellation of the
annotations was undertaken in the regular course of official duty and in the exercise of the ministerial duty of the
Register of Deeds; that no irregularity occurred or was performed in the cancellation of the annotations; and that
the Register of Deeds was impleaded in Civil Case No. Q-07-59598 only as a nominal party, thereby discounting
any involvement in the proceedings in the case.
Atty. Cunanan did not file any comment.15
As the result of Atty. Quilala's allegation in his Comment in A.C. No. 8261 that it had been Atty. Caluya, Jr.'s
signature that appeared below the cancelled entries, the complainants filed another sworn disbarment complaint
dated August 26, 2010 alleging that Atty. Caluya, Jr. had forged the signature of Atty. Cunanan.16 This disbarment
complaint was docketed as A.C. No. 8725, and was later on consolidated with A.C. No. 8261 17 because the
complaints involved the same parties and rested on similar allegations against the respondents.
Atty. Quilala filed his Comment in A.C. No. 8725 to belie the allegation of forgery and to reiterate the arguments
he had made in A.C. No. 8261.18 On his part, Atty. Caluya, Jr. manifested that he adopted Atty. Quilala's
Comment.19
Ruling
We dismiss the complaints for disbarment for being bereft of merit.
Well entrenched in this jurisdiction is the rule that a lawyer may be disciplined for misconduct committed either in
his professional or private capacity. The test is whether his conduct shows him to be wanting in moral character,
honesty, probity, and good demeanor, or whether his conduct renders him unworthy to continue as an officer of
the Court.20 Verily, Canon 7 of the Code of Professional Responsibility mandates all lawyers to uphold at all times
the dignity and integrity of the Legal Profession. Lawyers are similarly required under Rule 1.01, Canon 1 of the
same Code not to engage in any unlawful, dishonest and immoral or deceitful conduct. Failure to observe these
tenets of the Code of Professional Responsibility exposes the lawyer to disciplinary sanctions as provided in
Section 27, Rule 138 of the Rules of Court, as amended, viz.:chanroblesvirtuallawlibrary
Section 27. Disbarment or suspension of attorneys by Supreme Court, grounds therefor. � A member of the bar
may be disbarred or suspended from his office as attorney by the Supreme Court for any deceit, malpractice, or
other gross misconduct in such office, grossly immoral conduct, or by reason of his conviction of a crime involving
moral turpitude, or for any violation of the oath which he is required to take before the admission to practice, or for
a wilful disobedience appearing as an attorney for a party to a case without authority so to do. The practice of
soliciting cases at law for the purpose of gain, either personally or through paid agents or brokers, constitutes
malpractice.
The complainants' allegations of the respondents' acts and omissions are insufficient to establish any censurable
conduct against them.
Section 10 of Presidential Decree No. 1529 (Property Registration Decree) enumerates the general duties of the
Register of Deeds, as follows:
Section 10. General functions of Registers of Deeds. - x x x
It shall be the duty of the Register of Deeds to immediately register an instrument presented for registration
dealing with real or personal property which complies with all the requisites for registration. He shall see to it that
said instrument bears the proper documentary science stamps and that the same are properly canceled. If the
instrument is not registrable, he shall forthwith deny registration thereof and inform the presenter of such denial in
writing, stating the ground or reason therefor, and advising him of his right to appeal by consulta in accordance
with Section 117 of this Decree. (Emphasis supplied)
The aforementioned duty of the Register of Deeds is ministerial in nature.21 A purely ministerial act or duty is one
that an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to the mandate
of a legal authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of the
act done. If the law imposes a duty upon a public officer and gives him the right to decide how or when the duty
shall be performed, such duty is discretionary, not ministerial. The duty is ministerial only when its discharge
requires neither the exercise of official discretion nor the exercise of judgment.22
In Gabriel v. Register of Deeds of Rizal,23 the Court underscores that registration is a merely ministerial act of the
Register of Deeds, explaining:
[W]hether the document is invalid, frivolous or intended to harass, is not the duty of a Register of Deeds to decide,
but a court of competent jurisdiction, and that it is his concern to see whether the documents sought to be
registered conform with the formal and legal requirements for such documents.
In view of the foregoing, we find no abuse of authority or irregularity committed by Atty. Quilala, Atty. Cunanan,
and Atty. Caluya, Jr. with respect to the cancellation of the notice of adverse claim and the notice of lis pendens
annotated on TCT No. N-290546. Whether or not the RTC order dated May 16, 2008 or the letter-request dated
June 30, 2008 had been falsified, fraudulent or invalid was not for them to determine inasmuch as their duty to
examine documents presented for registration was limited only to what appears on the face of the documents. If,
upon their evaluation of the letter-request and the RTC order, they found the same to be sufficient in law and t]o
be in conformity with existing requirements, it became obligatory for them to perform their ministerial duty without
unnecessary delay.24
Should they be aggrieved by said respondents' performance of duty, complainants were not bereft of any remedy
because they could challenge the performance of duty by bringing the matter by way of consulta with the LRA, as
provided by Section 11725 of Presidential Decree No. 1529. But, as enunciated in Gabriel v. Register of Deeds of
Rizal,26 it was ultimately within the province of a court of competent jurisdiction to resolve issues concerning the
validity or invalidity of a document registered by the Register of Deeds.
The complainants charge Atty. Victorio, Jr. and Atty. Tolentino, Jr. with having conspired with each other to
guarantee that the parties in Civil Case No. Q-59598 would enter into the amicable settlement, and then to cause
the cancellation of the affidavit of adverse claim and notice of lis pendens annotated on TCT No. N-290546. The
complainants further fault Atty. Victorio, Jr. with having abandoned their cause since the issuance of the RTC of
its order dated May 16, 2008.
The complainants'charges are devoid of substance.
Although it is not necessary to prove a formal agreement in order to establish conspiracy because conspiracy may
be inferred from the circumstances attending the commission of an act, it is nonetheless essential that conspiracy
be established by clear and convincing evidence.27 The complainants failed in this regard. Outside of their bare
assertions that Atty. Victorio, Jr. and Atty. Tolentino, Jr. had conspired with each other in order to cause the
dismissal of the complaint and then discharge of the annotations, they presented no evidence to support their
allegation of conspiracy. On the contrary, the records indicated their own active pjarticipation in arriving at the
amicable settlement with the defendants in Civil Case No. Q-0759598. Hence, they could not now turn their backs
on the amicable settlement that they had themselves entered into.
Even assuming that Atty. Victorio, Jr. and Atty. Tolentino, Jr. initiated ahd participated in the settlement of the case,
there was nothing wrong in their doing so. It was actually their obligation as lawyers to do so, pursuant to Rule
1.04, Canon 1 of the Code of Professional Responsibility,
RULE 1.04 - A lawyer shall encourage his clients to avoid, end or settle a controversy if it will admit of a fair
settlement.
In fine, the presumption of the validity of the amicable settlement of the complainants and the defendants in Civil
Case No. Q-07-59598 subsisted.28
Anent the complainants' charge of abandonment against Atty. Victorio, Jr., Rule 18.03 and Rule 18.04, Canon 18
of the Code of Professional Responsibility are applicable, to wit:
CANON 18 - A lawyer shall serve his client with competence and diligence.
Rule 18.03 - A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith
shall render him liable.
Rule 18.04 - A lawyer shall keep the client informed of the status of his case and shall respond within a reasonable
time to the client's request for information.
There is no issue that the complainants engaged the services of Atty. Victorio, Jr. as their counsel in Civil Case
No. Q-07-59598. Atty. Victorio, Jr. served as such counsel. With Atty. Victorio, Jr. assistance, the complainants
obtained a fair settlement consisting in receiving half of the proceeds of the sale of the property in litis, without any
portion of the proceeds accruing to counsel as his legal fees. The complainants did not competently and
persuasively show any unfaithfulness on the part of Atty. Victorio, Jr. as far as their interest in the litigation was
concerned. Hence, Atty. Victorio, Jr. was not liable for abandonment.
Atty. Victorio, Jr. could not be faulted for the perceived inattention to any other matters subsequent to the
termination of Civil Case No. Q-07-59598. Unless otherwise expressly stipulated between them at any time during
the engagement, the complainants had no right to assume that Atty. Victorio, Jr.'s legal representation was
indefinite as to extend to his representation of them in the LRA. The Law Profession did not burden its members
with the responsibility of indefinite service to the clients; hence, the rendition of professional services depends on
the agreement between the attorney and the client. Atty. Victorio, Jr.'s alleged failure to respond to the
complainants' calls or visits, or to provide them with his whereabouts to enable them to have access to him despite
the termination of his engagement in Civil Case No. Q-07-59598 did not equate to abandonment without the
credible showing that he continued to come under the professional obligation towards them after the termination
of Civil Case No.
Q-07-59598.cralawred
WHEREFORE, the Court DISMISSES the baseless disbarment complaints against Atty. Federico S. Tolentino, Jr.,
Atty. Renato G. Cunanan, Atty. Daniel F. Victorio, Jr., Atty. Elbert T.
Quilala and Atty. Constante P. Caluya, Jr.
SO ORDERED
Sereno, C. J., Leonardo-De Castro, Perez, and Perlas-Bernabe, JJ., concur.