G.R. No. 81262 August 25, 1989 GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C.

HENDRY, petitioners, vs. THE HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS, respondents. Atencia & Arias Law Offices for petitioners. Romulo C. Felizmena for private respondent.

CORTES, J.: Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and Radio Corporation (GLOBE MACKAY) in a dual capacity as a purchasing agent and administrative assistant to the engineering operations manager. In 1972, GLOBE MACKAY discovered fictitious purchases and other fraudulent transactions for which it lost several thousands of pesos. According to private respondent it was he who actually discovered the anomalies and reported them on November 10, 1972 to his immediate superior Eduardo T. Ferraren and to petitioner Herbert C. Hendry who was then the Executive VicePresident and General Manager of GLOBE MACKAY. On November 11, 1972, one day after private respondent Tobias made the report, petitioner Hendry confronted him by stating that he was the number one suspect, and ordered him to take a one week forced leave, not to communicate with the office, to leave his table drawers open, and to leave the office keys. On November 20, 1972, when private respondent Tobias returned to work after the forced leave, petitioner Hendry went up to him and called him a "crook" and a "swindler." Tobias was then ordered to take a lie detector test. He was also instructed to submit specimen of his handwriting, signature, and initials for examination by the police investigators to determine his complicity in the anomalies. On December 6,1972, the Manila police investigators submitted a laboratory crime report (Exh. "A") clearing private respondent of participation in the anomalies. Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G. Fernandez, who on December 10, 1972, submitted a report (Exh.

"2") finding Tobias guilty. This report however expressly stated that further investigation was still to be conducted. Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending Tobias from work preparatory to the filing of criminal charges against him. On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document Examiner, after investigating other documents pertaining to the alleged anomalous transactions, submitted a second laboratory crime report (Exh. "B") reiterating his previous finding that the handwritings, signatures, and initials appearing in the checks and other documents involved in the fraudulent transactions were not those of Tobias. The lie detector tests conducted on Tobias also yielded negative results. Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact that the report of the private investigator, was, by its own terms, not yet complete, petitioners filed with the City Fiscal of Manila a complaint for estafa through falsification of commercial documents, later amended to just estafa. Subsequently five other criminal complaints were filed against Tobias, four of which were for estafa through Falsification of commercial document while the fifth was for of Article 290 of' the Revised Penal Code (Discovering Secrets Through Seizure of Correspondence).lwph1.t Two of these complaints were refiled with the Judge Advocate General's Office, which however, remanded them to the fiscal's office. All of the six criminal complaints were dismissed by the fiscal. Petitioners appealed four of the fiscal's resolutions dismissing the criminal complaints with the Secretary of Justice, who, however, affirmed their dismissal. In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners that his employment has been terminated effective December 13, 1972. Whereupon, Tobias filed a complaint for illegal dismissal. The labor arbiter dismissed the complaint. On appeal, the National Labor Relations Commission (NLRC) reversed the labor arbiter's decision. However, the Secretary of Labor, acting on petitioners' appeal from the NLRC ruling, reinstated the labor arbiter's decision. Tobias appealed the Secretary of Labor's order with the Office of the President. During the pendency of the appeal with said office, petitioners and private respondent Tobias entered into a compromise agreement regarding the latter's complaint for illegal dismissal. Unemployed, Tobias sought employment with the Republic Telephone Company (RETELCO). However, petitioner Hendry, without being asked by RETELCO, wrote a letter to the latter stating that Tobias was dismissed by GLOBE MACKAY due to dishonesty. Private respondent Tobias filed a civil case for damages anchored on alleged unlawful, malicious, oppressive, and abusive acts of petitioners. Petitioner

Hendry, claiming illness, did not testify during the hearings. The Regional Trial Court (RTC) of Manila, Branch IX, through Judge Manuel T. Reyes rendered judgment in favor of private respondent by ordering petitioners to pay him eighty thousand pesos (P80,000.00) as actual damages, two hundred thousand pesos (P200,000.00) as moral damages, twenty thousand pesos (P20,000.00) as exemplary damages, thirty thousand pesos (P30,000.00) as attorney's fees, and costs. Petitioners appealed the RTC decision to the Court of Appeals. On the other hand, Tobias appealed as to the amount of damages. However, the Court of Appeals, an a decision dated August 31, 1987 affirmed the RTC decision in toto. Petitioners' motion for reconsideration having been denied, the instant petition for review on certiorari was filed. The main issue in this case is whether or not petitioners are liable for damages to private respondent. Petitioners contend that they could not be made liable for damages in the lawful exercise of their right to dismiss private respondent. On the other hand, private respondent contends that because of petitioners' abusive manner in dismissing him as well as for the inhuman treatment he got from them, the Petitioners must indemnify him for the damage that he had suffered. One of the more notable innovations of the New Civil Code is the codification of "some basic principles that are to be observed for the rightful relationship between human beings and for the stability of the social order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit, incorporated certain fundamental precepts which were "designed to indicate certain norms that spring from the fountain of good conscience" and which were also meant to serve as "guides for human conduct [that] should run as golden threads through society, to the end that law may approach its supreme ideal, which is the sway and dominance of justice" ( Id.) Foremost among these principles is that pronounced in Article 19 which provides:
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be observed not only in the exercise of one's rights but also in the performance of one's duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized

or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper. Article 20, which pertains to damage arising from a violation of law, provides that:
Art. 20. Every person who contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.

However, in the case at bar, petitioners claim that they did not violate any provision of law since they were merely exercising their legal right to dismiss private respondent. This does not, however, leave private respondent with no relief because Article 21 of the Civil Code provides that:
Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.

This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even though they have actually suffered material and moral injury" [Id.] should "vouchsafe adequate legal remedy for that untold number of moral wrongs which it is impossible for human foresight to provide for specifically in the statutes" [ Id. it p. 40; See also PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247]. In determining whether or not the principle of abuse of rights may be invoked, there is no rigid test which can be applied. While the Court has not hesitated to apply Article 19 whether the legal and factual circumstances called for its application [See for e.g., Velayo v. Shell Co. of the Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra; Grand Union Supermarket, Inc. v. Espino, Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No. L-46558, July 31,1981,106 SCRA 391; United General Industries, Inc, v. Paler G.R. No. L30205, March 15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911, August 21, 1987, 153 SCRA 183] the question of whether or not the principle of abuse of rights has been violated resulting in damages under Article 20 or Article 21 or other applicable provision of law, depends on the circumstances of each case. And in the instant case, the Court, after examining the record and considering certain significant circumstances, finds that all petitioners have indeed abused the right that they invoke, causing damage to private respondent and for which the latter must now be indemnified.

The trial court made a finding that notwithstanding the fact that it was private respondent Tobias who reported the possible existence of anomalous transactions, petitioner Hendry "showed belligerence and told plaintiff (private respondent herein) that he was the number one suspect and to take a one week vacation leave, not to communicate with the office, to leave his table drawers open, and to leave his keys to said defendant (petitioner Hendry)" [RTC Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But regardless of whether or not it was private respondent Tobias who reported the anomalies to petitioners, the latter's reaction towards the former upon uncovering the anomalies was less than civil. An employer who harbors suspicions that an employee has committed dishonesty might be justified in taking the appropriate action such as ordering an investigation and directing the employee to go on a leave. Firmness and the resolve to uncover the truth would also be expected from such employer. But the high-handed treatment accorded Tobias by petitioners was certainly uncalled for. And this reprehensible attitude of petitioners was to continue when private respondent returned to work on November 20, 1972 after his one week forced leave. Upon reporting for work, Tobias was confronted by Hendry who said. "Tobby, you are the crook and swindler in this company." Considering that the first report made by the police investigators was submitted only on December 10, 1972 [See Exh. A] the statement made by petitioner Hendry was baseless. The imputation of guilt without basis and the pattern of harassment during the investigations of Tobias transgress the standards of human conduct set forth in Article 19 of the Civil Code. The Court has already ruled that the right of the employer to dismiss an employee should not be confused with the manner in which the right is exercised and the effects flowing therefrom. If the dismissal is done abusively, then the employer is liable for damages to the employee [Quisaba v. Sta. Ines-Melale Veneer and Plywood Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA 771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L-21871, September 27,1966, 18 SCRA 107] Under the circumstances of the instant case, the petitioners clearly failed to exercise in a legitimate manner their right to dismiss Tobias, giving the latter the right to recover damages under Article 19 in relation to Article 21 of the Civil Code. But petitioners were not content with just dismissing Tobias. Several other tortious acts were committed by petitioners against Tobias after the latter's termination from work. Towards the latter part of January, 1973, after the filing of the first of six criminal complaints against Tobias, the latter talked to Hendry to protest the actions taken against him. In response, Hendry cut short Tobias' protestations by telling him to just confess or else the company would file a hundred more cases against him until he landed in jail. Hendry added that, "You Filipinos cannot be trusted." The threat unmasked petitioner's bad faith in the various actions taken against Tobias. On the other hand, the scornful remark about Filipinos as well as Hendry's earlier statements about Tobias being a "crook" and "swindler" are clear violations of 'Tobias' personal dignity [See Article 26, Civil Code].

The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime in October 1974, stating that Tobias had been dismissed by GLOBE MACKAY due to dishonesty. Because of the letter, Tobias failed to gain employment with RETELCO and as a result of which, Tobias remained unemployed for a longer period of time. For this further damage suffered by Tobias, petitioners must likewise be held liable for damages consistent with Article 2176 of the Civil Code. Petitioners, however, contend that they have a "moral, if not legal, duty to forewarn other employers of the kind of employee the plaintiff (private respondent herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim that "it is the accepted moral and societal obligation of every man to advise or warn his fellowmen of any threat or danger to the latter's life, honor or property. And this includes warning one's brethren of the possible dangers involved in dealing with, or accepting into confidence, a man whose honesty and integrity is suspect" [Id.]. These arguments, rather than justify petitioners' act, reveal a seeming obsession to prevent Tobias from getting a job, even after almost two years from the time Tobias was dismissed. Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias. Petitioners contend that there is no case against them for malicious prosecution and that they cannot be "penalized for exercising their right and prerogative of seeking justice by filing criminal complaints against an employee who was their principal suspect in the commission of forgeries and in the perpetration of anomalous transactions which defrauded them of substantial sums of money" [Petition, p. 10, Rollo, p. 11]. While sound principles of justice and public policy dictate that persons shall have free resort to the courts for redress of wrongs and vindication of their rights [Buenaventura v. Sto. Domingo, 103 Phil. 239 (1958)], the right to institute criminal prosecutions can not be exercised maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 5871.] Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2 SCRA 337, the Court held that the right to file criminal complaints should not be used as a weapon to force an alleged debtor to pay an indebtedness. To do so would be a clear perversion of the function of the criminal processes and of the courts of justice. And in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20 SCRA 536 the Court upheld the judgment against the petitioner for actual and moral damages and attorney's fees after making a finding that petitioner, with persistence, filed at least six criminal complaints against respondent, all of which were dismissed. To constitute malicious prosecution, there must be proof that the prosecution was prompted by a design to vex and humiliate a person and that it was initiated deliberately by the defendant knowing that the charges were false and groundless [Manila Gas Corporation v. CA, G.R. No. L-44190, October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit by itself, does not render a person liable for malicious prosecution [Inhelder Corporation v. CA, G.R. No. 52358, May 301983122 SCRA 576]. The mere dismissal by the fiscal of the

criminal complaint is not a ground for an award of damages for malicious prosecution if there is no competent evidence to show that the complainant had acted in bad faith [Sison v. David, G.R. No. L-11268, January 28,1961, 1 SCRA 60]. In the instant case, however, the trial court made a finding that petitioners acted in bad faith in filing the criminal complaints against Tobias, observing that: xxx
Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six (6) criminal cases, five (5) of which were for estafa thru falsification of commercial document and one for violation of Art. 290 of the Revised Penal Code "discovering secrets thru seizure of correspondence," and all were dismissed for insufficiency or lack of evidence." The dismissal of four (4) of the cases was appealed to the Ministry of Justice, but said Ministry invariably sustained the dismissal of the cases. As above adverted to, two of these cases were refiled with the Judge Advocate General's Office of the Armed Forces of the Philippines to railroad plaintiffs arrest and detention in the military stockade, but this was frustrated by a presidential decree transferring criminal cases involving civilians to the civil courts.

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

xxx [RTC Decision, pp. 5-6; Rollo, pp. 235-236]. In addition to the observations made by the trial court, the Court finds it significant that the criminal complaints were filed during the pendency of the illegal dismissal case filed by Tobias against petitioners. This explains the haste in which the complaints were filed, which the trial court earlier noted. But petitioners, to prove their good faith, point to the fact that only six complaints were filed against Tobias when they could have allegedly filed one hundred

cases, considering the number of anomalous transactions committed against GLOBE MACKAY. However, petitioners' good faith is belied by the threat made by Hendry after the filing of the first complaint that one hundred more cases would be filed against Tobias. In effect, the possible filing of one hundred more cases was made to hang like the sword of Damocles over the head of Tobias. In fine, considering the haste in which the criminal complaints were filed, the fact that they were filed during the pendency of the illegal dismissal case against petitioners, the threat made by Hendry, the fact that the cases were filed notwithstanding the two police reports exculpating Tobias from involvement in the anomalies committed against GLOBE MACKAY, coupled by the eventual dismissal of all the cases, the Court is led into no other conclusion than that petitioners were motivated by malicious intent in filing the six criminal complaints against Tobias. Petitioners next contend that the award of damages was excessive. In the complaint filed against petitioners, Tobias prayed for the following: one hundred thousand pesos (P100,000.00) as actual damages; fifty thousand pesos (P50,000.00) as exemplary damages; eight hundred thousand pesos (P800,000.00) as moral damages; fifty thousand pesos (P50,000.00) as attorney's fees; and costs. The trial court, after making a computation of the damages incurred by Tobias [See RTC Decision, pp. 7-8; Rollo, pp. 154-1551, awarded him the following: eighty thousand pesos (P80,000.00) as actual damages; two hundred thousand pesos (P200,000.00) as moral damages; twenty thousand pesos (P20,000.00) as exemplary damages; thirty thousand pesos (P30,000.00) as attorney's fees; and, costs. It must be underscored that petitioners have been guilty of committing several actionable tortious acts, i.e., the abusive manner in which they dismissed Tobias from work including the baseless imputation of guilt and the harassment during the investigations; the defamatory language heaped on Tobias as well as the scornful remark on Filipinos; the poison letter sent to RETELCO which resulted in Tobias' loss of possible employment; and, the malicious filing of the criminal complaints. Considering the extent of the damage wrought on Tobias, the Court finds that, contrary to petitioners' contention, the amount of damages awarded to Tobias was reasonable under the circumstances. Yet, petitioners still insist that the award of damages was improper, invoking the principle of damnum absque injuria. It is argued that "[t]he only probable actual damage that plaintiff (private respondent herein) could have suffered was a direct result of his having been dismissed from his employment, which was a valid and legal act of the defendants-appellants (petitioners herein). lwph1.t " [Petition, p. 17; Rollo, p. 18]. According to the principle of damnum absque injuria, damage or loss which does not constitute a violation of a legal right or amount to a legal wrong is not actionable [Escano v. CA, G.R. No. L-47207, September 25, 1980, 100 SCRA 197; See also Gilchrist v. Cuddy 29 Phil, 542 (1915); The Board of Liquidators v.

Kalaw, G.R. No. L-18805, August 14, 1967, 20 SCRA 987]. This principle finds no application in this case. It bears repeating that even granting that petitioners might have had the right to dismiss Tobias from work, the abusive manner in which that right was exercised amounted to a legal wrong for which petitioners must now be held liable. Moreover, the damage incurred by Tobias was not only in connection with the abusive manner in which he was dismissed but was also the result of several other quasi-delictual acts committed by petitioners. Petitioners next question the award of moral damages. However, the Court has already ruled in Wassmer v. Velez, G.R. No. L-20089, December 26, 1964, 12 SCRA 648, 653, that [p]er express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in the cases mentioned in Article 21 of said Code." Hence, the Court of Appeals committed no error in awarding moral damages to Tobias. Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of the Civil Code provides that "[i]n quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence," the Court, in Zulueta v. Pan American World Airways, Inc., G.R. No. L- 28589, January 8, 1973, 49 SCRA 1, ruled that if gross negligence warrants the award of exemplary damages, with more reason is its imposition justified when the act performed is deliberate, malicious and tainted with bad faith. As in the Zulueta case, the nature of the wrongful acts shown to have been committed by petitioners against Tobias is sufficient basis for the award of exemplary damages to the latter. WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals in CA-G.R. CV No. 09055 is AFFIRMED. SO ORDERED.

G.R. No. 122823 November 25, 1999 SEA COMMERCIAL COMPANY, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS, JAMANDRE INDUSTRIES, INC. and TIRSO JAMANDRE, respondents.

GONZAGA-REYES, J.: In this petition for review by certiorari, SEA Commercial Company, Inc. (SEACOM) assails the decision of the Court of Appeals in CA-G.R. CV NO. 31263 affirming in toto the decision of the Regional Trial Court of Manila, Branch 5, in Civil Case No. 122391, in favor of Jamandre Industries, Inc. (JII) et al., the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the defendant and against the plaintiff, ordering the plaintiff: 1) To pay defendant the sum of P66,156.15 (minus 18,843.85) with legal interest thereon, from the date of the filing of the counterclaim until fully paid; 2) To pay defendant P2,000.00 as moral and exemplary damages; 3) To pay attorney's fees in the sum of P10,000.00; and 4) To pay the costs of this suit. SO ORDERED.

SEACOM is a corporation engaged in the business of selling and distributing agricultural machinery, products and equipment. On September 20, 1966, SEACOM and JII entered into a dealership agreement whereby SEACOM appointed JII as its exclusive dealer in the City and Province of Iloilo 1. Tirso Jamandre executed a suretyship agreement binding himself jointly and severally with JII to pay for all obligations of JII to SEACOM 2. The agreement was subsequently amended to include Capiz in the territorial coverage and to make the dealership agreement on a non-exclusive basis 3. In the course of the dealership agreement, JII allegedly incurred a balance of P18,843.85 for unpaid deliveries, and SEACOM brought action to recover said amount plus interest and attorney's fees. JII filed an Answer denying the obligation and interposing a counterclaim for damages representing unrealized profits when JII sold to the Farm System Development Corporation (FSDC) twenty one (21) units of Mitsubishi power tillers. In the counterclaim, JII alleged that as a dealer in Capiz, JII contracted to sell in 1977 twenty-four (24) units of Mitsubishi power tillers to a group of farmers

to be financed by said corporation, which fact JII allegedly made known to petitioner, but the latter taking advantage of said information and in bad faith, went directly to FSDC and dealt with it and sold twenty one (21) units of said tractors, thereby depriving JII of unrealized profit of eighty-five thousand four hundred fifteen and 61/100 pesos (P85,415.61). The trial court rendered its decision on January 24, 1990 ordering JII to pay SEACOM the amount of Eighteen Thousand Eight Hundred Forty Three and 85/100 (P18,843.85) representing its outstanding obligation. The trial court likewise granted JII's counterclaim for unrealized profits, and for moral and exemplary damages and attorney' fees as above quoted. SEACOM appealed the decision on the counterclaim. The Court of Appeals held that while there exists no agency relationship between SEACOM and JII, SEACOM is liable for damages and unrealized profits to JII.
This Court, however, is convinced that with or without the existence of an agency relationship between appellant SEACOM and appellee JII and notwithstanding the error committed by the lower court in finding that an agency relationship existed between appellant and defendant corporation the former is liable for the unrealized profits which the latter could have gained had not appellant unjustly stepped in and in bad faith unethically intervened. It should be emphasized that the very purpose of the dealership agreement is for SEACOM to have JII as its dealer to sell its products in the provinces of Capiz and Iloilo. In view of this agreement, the second assigned error that the lower court erred in holding that appellant learned of the FSDC transaction from defendant JII is clearly immaterial and devoid of merit. The fact that the dealership is on a non-exclusive basis does not entitle appellant SEACOM to join the fray as against its dealer. To do so, is to violate the norms of conduct enjoined by Art. 19 of the Civil Code. By virtue of such agreement, the competition in the market as regards the sale of farm equipment shall be between JII, as the dealer of SEACOM and other companies, not as against SEACOM itself. However, SEACOM, not satisfied with the presence of its dealer JII in the market, joined the competition even as the against the latter and, therefore, changed the scenario of the competition thereby rendering inutile the dealership agreement which they entered into the manifest prejudice of JII. Hence, the trial court was correct when it applied Art. 19 of the Civil Code in the case at bar in that appellant SEACOM acted in bad faith when it competed with its own dealer as regards the sale of farm machineries, thereby depriving appellee JII of the opportunity to gain a clear profit of P85,000.00.

and affirmed the judgment appealed from in toto. Hence this petition for review on certiorari, which submits the following reasons for the allowance thereof:
THE RESPONDENT COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW AND JURISPRUDENCE, CONSIDERING THAT:

A THE RESPONDENT COURT OF APPEALS GARAVELY ERRED IN RULING THAT PETITIONER IS LIABLE TO PAY DAMAGES AND UNREALIZED PROFITS TO THE PRIVATE RESPONDENTS DESPITE THE FACT THAT NO AGENCY RELATIONSHIP EXISTS BETWEEN THEM. B THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PETITIONER ACTED IN BAD FAITH AGAINST THE PRIVATE RESPONDENT CORPORATION DESPITE THE FACT THAT SAID RULING IS CONTRARY TO THE EVIDENCE ON RECORD. C THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE NON-EXCLUSIVITY CLAUSE IN THE DEALERSHIP AGREEMENT EXECUTED BETWEEN THE PETITIONER AND PRIVATE RESPONDENT CORPORATION PRECLUDES THE PETITIONER FROM COMPETING WITH THE PRIVATE RESPONDENT CORPORAITON. D THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE RESPONDENT IS ENTITLED TO UNREALIZED PROFITS, MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES. 4

Petitioner SEACOM disputes the conclusion of the Court of Appeals that despite the fact that no agency relationship existed between the parties, the SEACOM is still liable in damages and unrealized profits for the reason that it acted in bad faith. Petitioner SEACOM invokes the non-exclusivity clause in the dealership agreement and claims that the transaction with FSDC was concluded pursuant to a public bidding and not on the basis of alleged information it received from private respondent Tirso Jamandre. Moreover, petitioner SEACOM claims that it did not underprice its products during the public bidding wherein both SEACOM and JII participated. Petitioner also disputes the award of moral damages to JII which is a corporation, in the absence of any evidence that the said corporation had a good reputation which was debased. Private respondents in their comment, contends that the four assigned errors raise mixed questions of fact and law and are therefore beyond the jurisdiction of the Supreme Court which may take cognizance of only questions of law. The assigned errors were also refuted to secure affirmance of the appealed decision. JII maintains that the bidding set by FSDC on March 24, 1997 was scheduled after the demonstration conducted by JII, and after JII informed SEACOM about the preference of the farmers to buy Mitsubishi tillers. JII further rebuts the SEACOM's contention that the transaction with FSDC was pursuant to a public bidding with full disclosure to the public and private respondent JII considering that JII had nothing to do with the list of 37 bidders and cannot be bound by the

listing made by SEACOM's employee; moreover, JII did not participate in the bidding not having been informed about it. Furthermore, the price at which SEACOM sold to FSDC was lower than the price it gave to JII. Also, even if the dealership agreement was not exclusive, it was breached when petitioner in bad faith sold directly to FSDC with whom JII had previously offered the subject farm equipment. With respect to the awards of moral and exemplary damages, JII seeks an affirmation of the ruling of the Court of Appeals justifying the awards. SEACOM filed Reply defending the jurisdiction of this Court over the instant petition since the decision of the Court of Appeals was "based on a misapprehension of facts". SEACOM insists that FSDC's purchase was made pursuant to a public bidding, and even if SEACOM did not participate thereon, JII would not necessarily have closed the deal since thirty seven (37) bidders participated. SEACOM contends that no evidence was presented to prove that the bidding was a fraudulent scheme of SEACOM and FSDC. SEACOM further controverts JII's contention that JII did not take part in the bidding as Tirso Jamandre was one of the bidders and that SEACOM underpriced its products to entice FSDC to buy directly from it. In fine, JII is not entitled to the award of unrealized profits and damages. In its Rejoinder, private responder insist that there is an agency relationship, citing the evidence showing that credit memos and not cash vouchers were issued to JII by SEACOM for every delivery from November 26, 1976 to December 24, 1978. Private respondents maintain that SEACOM "torpedoed the emerging deal between JII and FSDC after being informed about it by JII by dealing directly with FSDC at a lower price" and after betraying JII, SEACOM would cover up the deceit by conniving with FSDC to post up a "sham public bidding. SEACOM's sur-rejoinder contains basically a reiteration of its contention in previous pleadings. Additionally, it is contended that private respondents are barred from questioning in their Rejoinder, the finding of the Court of Appeals that there is no agency relationship between the parties since this matter was not raised as error in their comment. The core issue is whether SEACOM acted in bad faith when it competed with its own dealer as regards the sale of farm machineries to FSDC. Both the trial court and the Court of Appeals held affirmatively; the trial court found that JII was an agent of SEACOM and the act of SEACOM in dealing directly with FSDC was unfair and unjust to its agent, and that there was fraud in the transaction between FSDC and SEACOM to the prejudice of JII. On the other hand, the Court of Appeals ruled that there was no agency relationship between the parties but SEACOM is nevertheless liable in damages for having acted in bad faith when it competed with its own dealer in the sale of the farm

machineries to FSDC. Both courts invoke as basis for the award Article 19 of the Civil Code which reads as follows:
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 principle of abuse of rights stated in the above article, departs from the classical theory that "he who uses a right injures no one". The modern tendency is to depart from the classical and traditional theory, and to grant indemnity for damages in cases where there is an abuse of rights, even when the act is not illicit. 5 Art. 19 was intended to expand the concept of torts by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to provide specifically in statutory law. 6 If mere fault or negligence in one's acts can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable. The absence of good faith is essential to abuse of right. Good faith is an honest intention to abstain from taking any unconscientious advantage of another, even through the forms or technicalities of the law, together with an absence of all information or belief of fact which would render the transaction unconscientious. In business relations, it means good faith as understood by men of affairs. 7 While Article 19 may have been intended as a mere declaration of principle 8, 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. 9 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. 10 The issue whether JII is "entitled to recovery on its counterclaim for unrealized profit in the twenty one (21) units of Mitsubishi power tillers sold by SEACOM to FSDC" was resolved by the trial court in favor of JII on the basis of documentary evidence 11 showing that (1) JII has informed SEACOM as early as February 1977 of the promotions undertaken by JII for the sale of 24 contracted units to FSDC and in connection therewith, requested a 50% discount to make the price competitive, and to increase the warranty period for eight months to one year. In said letter Jamandre clarified that they were not amenable to SEACOM's offering directly to FSDC" and to be only given the usual overriding commission as "we have considerable investments on this transaction". (2) In response, the general sales manager of SEACOM declined to give the requested 50% discount and offered a "less 30% less 10% up to end March . . . on cash before delivery basis", granted the requested extension of the warranty period and stated that

"we are glad to note that you have quite a number of units pending with the FSDC." The trial court ruled that with said information, SEACOM dealt directly with FSDC and offered its units at a lower price, leaving FSDC "no choice but to accept the said offer of (SEACOM)". In affirming the judgment of the of the trial court, the Court of Appeals held that by virtue of the dealership agreement the competition in the market as regards the sale of farm equipment shall be between JII, as the dealer of SEACOM, and other companies, not as against SEACOM itself, the Court stated:
However, SEACOM not satisfied with the presence of its dealer JII in the market, joined the competition even as against the latter, and thereby changed the scenario of the competition thereby rendering inutile the dealership agreement which they entered into to the manifest prejudice of JII. Hence the trial court trial court was correct when it applied Art. 19 of the Civil Code in the case at bar in that appellant SEACOM acted in bad faith when it competed with its own dealer as regards the sale of farm machineries, thereby depriving appellee JII of the opportunity to gain a clear profit of P85,000.00.

We find no cogent reason to overturn the factual finding of the two courts that SEACOM joined the bidding for the sale of the farm equipment after it was informed that JII was already promoting the sales of said equipment to the FSDC. Moreover, the conclusion of the trial court that the SEACOM offered FSDC a lower price than the price offered by JII to FSDC is supported by the evidence: the price offered by JII to FSDC is P27,167 per unit 12 but the prices at which SEACOM sold to FSDC were at P22,867.00 for Model CT 83-2, P21,093.50 for model CT 83-E, and P18,979.25 for model CT 534. The fact that SEACOM may have offered to JII, in lieu of a requested 50% discount, a discount effectively translating to 37% of the list price and actually sold to FSDC at 35% less than the list price 13 does not detract from the fact that by participating in the bidding of FSDC, it actually competed with its own dealer who had earlier conducted demonstrations and promoted its own products for the sale of the very same equipment, Exh. "N" for the plaintiff confirms that both SEACOM and Jamandre participated in the bidding. 14 However, the SEACOM was awarded the contract directly from Manila. 15 The testimony of Tirso Jamandre that JII was the sole representative of SEACOM in the local demonstrations to convince the farmers and cooperative officers to accept the Mitsubishi brand of equipment in preference to other brands, was unrebutted by SEACOM. Clearly, the bad faith of SEACOM was established. By appointing as a dealer of its agricultural equipment, SEACOM recognized the role and undertaking of JII to promote and sell said equipment. Under the dealership agreement, JII was to act as a middleman to sell SEACOM's products, in its area of operations, i.e. Iloilo and Capiz provinces, to the exclusion of other places, 16 to send its men to Manila for training on repair, servicing and installation of the items to be handled by it,

and to comply with other personnel and vehicle requirements intended for the benefit of the dealership. 17 After being informed of the demonstrations JII had conducted to promote the sales of SEACOM equipment, including the operations at JII's expense conducted for five months, and the approval of its facilities (service and parts) by FSDC, 18 SEACOM participated in the bidding for the said equipment at a lower price, placing itself in direct competition with its own dealer. The actuations of SEACOM are tainted by bad faith. Even if the dealership agreement was amended to make it on a non-exclusive basis, 19 SEACOM may not exercise its right unjustly or in a manner that is not in keeping with honesty or good faith; otherwise it opens itself to liability under the abuse of right rule embodied in Article 19 of the Civil Code above-quoted. This provision, together with the succeeding article on human relation, was intended to embody certain basic principles "that are to be observed for the rightful relationship between human being. and for the stability of the social order." 20 What is sought to be written into the law is the pervading principle of equity and justice above strict legalism. 21 We accordingly resolve to affirm the award for unrealized profits. The Court of Appeals noted that the trial court failed to specify to which the two appellees the award for moral and exemplary damages in granted. However, in view of the fact that moral damages are not as a general rule granted to a corporation, and that Tirso Jamandre was the one who testified on his feeling very aggrieved and on his mental anguish and sleepless nights thinking of how SEACOM "dealt with us behind (our) backs", 22 the award should go to defendant Jamandre, President of JII. WHEREFORE. the judgment appealed from is AFFIRMED with the modification that the award of P2,000.00 in moral and exemplary damages shall be paid to defendant Tirso Jamandre. Costs against appellant. SO ORDERED. Melo, Vitug, Panganiban and Purisima, JJ., concur. Footnotes
1 Exh. "A". 2 Exh. "B". 3 Exh. "D". 4 Rollo, pp. 22-23.

5 I, Tolentino, Civil Code of the Philippines, p. 60 et seq. 6 PNB vs. CA, 83 SCRA 237. 7 Tolentino, supra, at pp. 61-62. 8 Velayo vs. Shell Co., 100 Phil. 186. 9 Vitug, Compendium on Civil Law and Jurisprudence, Rev. ed., at p. 17 citing Sanchez vs. Rigos, 45 SCRA 368; Philippine National Bank vs. Court of Appeals, 83 SCRA 237; Llorente vs. Sandiganbayan, 202 SCRA 309. 10 II Sangco, Torts and Damages at pp. 753 et seq. 11 Exh. "6" & "7". 12 Exh. "8"; Tsn., July 30, 1981, pp. 65-66. 13 Tsn., July 27, 1982, pp. 19-21. 14 Tsn., November 25, 1982, pp. 15-17. 15 Tsn, April 5, 1983, pp. 16-21. 16 Exh. "D". 17 Exhibit "A". 18 Exhibit "6". 19 Exhibit "D". 20 Report, Code Commission, p. 39. 21 Sangco, Torts and Damages, at p. 301. 22 Tsn., July 30, 1981, p. 70.

G.R. No. 120639 September 25, 1998 BPI EXPRESS CARD CORPORATION, petitioner, vs. COURT OF APPEALS and RICARDO J. MARASIGAN, respondents.

KAPUNAN, J.: The question before this Court is whether private respondent can recover moral damages arising from the cancellation of his credit card by petitioner credit card corporation. The facts of the case are as stated in the decision of the respondent court, 1 to wit:
The case arose from the dishonor of the credit card of the plaintiff Atty. Ricardo J. Marasigan by Caf Adriatico, a business establishment accredited with the defendant-appellate BPI Express Card Corporation (BECC for brevity), on December 8, 1989 when the plaintiff entertained some guests thereat. The records of this case show that plaintiff, who is a lawyer by profession, was a complimentary member of BECC from February 1988 to February 1989 and was issued Credit Card No. 100-012-5534 with a credit limit of P3,000.00 and with a monthly billing every 27th of the month (Exh. N), subject to the terms and conditions stipulated in the contract (Exh. 1-b). His membership was renewed for another year or until February 1990 and the credit limit was increased to P5,000.00 (Exh. A). The plaintiffs oftentimes exceeded his credit limits (Exhs. I, I-1 to I-12) but this was never taken against him by the defendant and even his mode of paying his monthly bills in check was tolerated. Their contractual relations went on smoothly until his statement of account for October 1989 amounting to P8,987.84 was not paid in due time. The plaintiff admitted having inadvertently failed to pay his account for the said month because he was in Quezon province attending to some professional and personal commitments. He was informed by his secretary that defendant was demanding immediate payment of his outstanding account, was requiring him to issue a check for P15,000.00 which would include his future bills, and was threatening to suspend his credit card. Plaintiff issued Far East Bank and Trust Co. Check No. 494675 in the amount of P15,000.00, postdated December 15, 1989 which was received on November 23, 1989 by Tess Lorenzo, an employee of the defendant (Exhs. J and J-1), who in turn gave the said check to Jeng Angeles, a co-employee who handles the account of the plaintiff. The check remained in the custody of Jeng Angeles. Mr. Roberto Maniquiz, head of the collection department of defendant was formally informed of the postdated check about a week later. On November 28, 2989, defendant served plaintiff a letter by ordinary mail informing him of the temporary suspension of the privileges of his credit card and the inclusion of his account number in their Caution List. He was also told to refrain from further use of his credit card to avoid any inconvenience/embarrassment and that unless he settles his outstanding account with the defendant within 5 days from receipt of the letter, his membership will be permanently cancelled (Exh. 3). There is no showing that the plaintiff received this letter before December 8, 1989. Confidential that he had settled his account with the issuance of the postdated check, plaintiff invited some guests on December 8, 1989 and entertained them at Caf Adriatico. When he presented his credit card to Caf Adriatico for the bill amounting to P735.32, said card was dishonored. One of his guests, Mary Ellen Ringler, paid the bill by using her own credit card a Unibankard (Exhs. M, M-1 and M-2). In a letter addressed to the defendant dated December 12, 1989, plaintiff requested that he be sent the exact billing due him as of December 15, 1989, to withhold the deposit of his postdated check and that said check be returned to him because he had already instructed his bank to stop the payment thereof as the defendant violated their agreement that the plaintiff issue the check to the defendant to cover his account amounting to only P8,987.84 on the condition that the defendant will not suspend the effectivity of the card (Exh. D). A letter dated December 16, 1989 was sent by the plaintiff to the manager of FEBTC, Ramada Branch, Manila requesting the bank to stop the payment of the check (Exhs. E, E-1). No reply was received by plaintiff from the defendant to his letter dated December 12, 1989. Plaintiff sent defendant another letter dated March 12, 1990 reminding the latter that he had long rescinded and cancelled whatever arrangement he entered into with defendant and requesting for his correct billing, less the improper charges and penalties, and for an explanation within five (5) days from receipt thereof why his card was dishonored on December 8, 1989 despite assurance to the contrary by defendant's personnel-in-charge, otherwise the necessary court action shall be filed to hold defendant responsible for the humiliation and embarrassment suffered by him (Exh. F). Plaintiff alleged further that after a few days, a certain Atty. Albano, representing himself to be working with the office of Atty. Lopez, called him inquiring as to how the matter can be threshed out extrajudicially but the latter said that such is a serious matter cannot be discussed over the phone. The defendant served its final demand to the plaintiff dated March 21, 1990 requiring him to pay in full his overdue account, including stipulated fees and charges, within 5 days from receipt thereof or face court action and also to replace the postdated check with cash within the same period or face criminal suit for violation of Bouncing Check Law (Exh. G/Exh. 13). The plaintiff in a reply letter dated April 5, 1990 (Exh.

H), demanded defendant's compliance with his request in his first letter dated March 12, 1990 within three 2 (3) days from receipt, otherwise the plaintiff will file a case against them, . . . .

Thus, on May 7, 1990 private respondent filed a complaint for damages against petitioner before the Regional Trial Court of Makati, Branch 150, docketed as Civil Case No. 90-1174. After trial the trial court ruled for private respondent, finding that herein petitioner abused its right in contravention of Article 19 of the Civil Code. 3 The dispositive portion of the decision reads:
Wherefore, judgment is hereby rendered ordering the defendant to pay plaintiff the following: 1. P 100,000.00 as moral damages; 2. P 50,000.00 as exemplary damages; and 3. P 20,000.00 by way of attorney's fees. On the other hand, plaintiff is ordered to pay defendant its outstanding obligation in the amount of 4 P14,439.41, amount due as of December 15, 1989.

The trial court's ruling was based on its findings and conclusions, to wit:
There is no question that plaintiff had been in default in the payment of his billings for more than two months, prompting defendant to call him and reminded him of his obligation. Unable to personally talk with him, this Court is convinced that somehow one or another employee of defendant called him up more that once. However, while it is true that as indicated in the terms and conditions of the application for BPI credit card upon failure of the cardholder to pay his outstanding obligation for more that thirty (30) days, the defendant can automatically suspend or cancel the credit card, that reserved right should not have been abused as it was in fact abused, in plaintiff's case. What is more peculiar here is that there have been admitted communications between plaintiff and defendant prior to the suspension or cancellation of plaintiff's credit card and his inclusion in the cautions list. However, nowhere in any of these communications was there ever a hint given to plaintiff that his card had already been suspended or cancelled. In fact, the Court observed that while defendant was trying its best to persuade plaintiff to update its account and pay its obligation, it had already taken steps to suspend/cancel plaintiff's card and include him in the caution list. While the Court admires defendant's diplomacy in dealing with its clients, it cannot help but frown upon the backhanded way defendant deal with plaintiff's case. For despite Tess Lorenzo's denial, there is reason to believe that plaintiff was indeed assured by defendant of the continued honoring of his credit card so long as he pays his obligation of P15,000.00. Worst, upon receipt of the postdated check, defendant kept the same until a few days before it became due and said check was presented to the head of the collection department, Mr. Maniquiz, to take steps thereon, resulting to the embarrassing situations plaintiff found himself in on December 8, 1989. Moreover, Mr. Maniquiz himself admitted that his request for plaintiff to replace the check with cash was not because it was a postdated check but merely to tally the payment with the account due. Likewise, the Court is not persuaded by the sweeping denials made by Tess Lorenzo and her claim that her only participation was to receive the subject check. Her immediate superior, Mr. Maniquiz testified that he had instructed Lorenzo to communicate with plaintiff once or twice to request the latter to replace the questioned check with cash, thus giving support to the testimony of plaintiff's witness, Dolores Quizon, that it was one Tess Lorenzo whom she had talked over the phone regarding plaintiff's account and plaintiff's own statement that it was this woman who assured him that his card has not yet been and will not be cancelled/suspended if he would pay defendant the sum of P15,000.00. Now, on the issue of whether or not upon receipt of the subject check defendant had agreed that the card shall remain effective the Court takes note of the following: 1. An employee of defendant corporation unconditionally accepted the subject check upon its delivery despite its being a postdated one; and the amount did not tally with plaintiff's obligation; 2. Defendant did not deny nor controvert plaintiff's claim that all of his payments were made in checks;

3. Defendant's main witness, Mr. Maniquiz, categorically stated that the request for plaintiff to replace his postdated check with a cash was merely for the purpose of tallying plaintiff's outstanding obligation with his payment and not to question the postdated check; 4. That the card was suspended almost a week after receipt of the postdated check; 5. That despite the many instances that defendant could have informed plaintiff over the phone of the cancellation or suspension of his credit card, it did not do so, which could have prevented the incident of December 8, 1989, the notice allegedly sent thru ordinary mail is not only unreliable but takes a long time. Such action as suspension of credit card must be immediately relayed to the person affected so as to avoid embarrassing situations. 6. And that the postdated check was deposited on December 20, 1989. In view of the foregoing observations, it is needless to say that there was indeed an arrangement between plaintiff and the defendant, as can be inferred from the acts of the defendant's employees, that the subject credit card is still good and could still be used by the plaintiff as it would be honored by the duly accredited establishment of defendant.

Not satisfied with the Regional Trial Court's decision, petitioner appealed to the Court of Appeals, which in a decision promulgated on March 9, 1995 ruled in its dispositive portion.
WHEREFORE, premises considered the decision appealed from is hereby AFFIRMED with the MODIFICATION that the defendant-appellant shall pay the plaintiff-appellee the following: P50,000.00 as moral damages: P25,000.00 as exemplary damages; and P10,000.00 by way of attorney's fees. SO ORDERED.
6

Hence, the present petition on the following assignment of errors:

I THE LOWER COURT ERRED IN DECLARING THAT THERE WAS INDEED AN AGREEMENT OR ARRANGEMENT ENTERED INTO BETWEEN THE PARTIES WHEREIN THE DEFENDANT REQUIRED THE PLAINTIFF TO ISSUE A POSTDATED CHECK IN ITS FAVOR IN THE AMOUNT OF P15,000.00 AS PAYMENT FOR HIS OVERDUE ACCOUNTS, WITH THE CONDITION THAT THE PLAINTIFF'S CREDIT CARD WILL NOT BE SUSPENDED OR CANCELLED. II THE LOWER COURT ERRED IN HOLDING DEFENDANT LIABLE FOR DAMAGES AND ATTORNEY'S 7 FEES ARISING OUT FROM THE DISHONOR OF THE PLAINTIFF'S CREDIT CARD.

We find the petition meritorious. The first issue to be resolved is whether petitioner had the right to suspend the credit card of the private respondent. Under the terms and conditions of the credit card, signed by the private respondent, any card with outstanding balances after thirty (30) days from original billing/statement shall automatically be suspended, thus:
PAYMENT OF CHARGES BECC shall furnish the Cardholder a monthly statement of account made through the use of the CARD and the Cardholder agrees that all charges made through the use of the CARD shall be paid by the Cardholder on or before the last day for payment, which is twenty (20) days from the date of the said statement of account; and such payment due date may be changed to an earlier date if the Cardholder's account is considered overdue and/or with balances in excess of the approved credit limit; or to such other date as may be deemed proper by the CARD issuer with notice to the Cardholder on the same monthly statement of account. If the last day for payment falls on a Saturday, Sunday or Holiday, the last day for payment automatically becomes the last working day prior to the said payment date. However, notwithstanding the absence or lack of proof of service of the statement of charges to the Cardholder, the

latter shall pay any or all charges made through the use of the CARD within thirty (30) days from the date or dates thereof. Failure of Cardholder to pay any and all charges made through the CARD within the payment period as stated in the statement of charges or with in thirty (30) days from actual date or dates whichever occur earlier, shall render him in default without the necessity of demand from BECC, which the Cardholder expressly waives. These charges or balance thereof remaining unpaid after the payment due date indicated on the monthly statement of account shall bear interest of 3% per month and an additional penalty fee equivalent to another 3% of the amount due for every month or a fraction of a month's delay. PROVIDED, that if there occurs any changes on the prevailing market rates BECC shall have the option to adjust the rate of interest and/or penalty fee due on the outstanding obligation with prior notice to the Cardholder. xxx xxx xxx Any CARD with outstanding balances unpaid after thirty (30) days from original billing/statement date shall automatically be suspended and those with accounts unpaid after sixty (60) days from said original billing/statement date shall automatically be cancelled without prejudice to BECC's right to suspend or cancel any CARD any time and for whatever reason. In case of default in his obligation as provided for in the preceding paragraph, Cardholder shall surrender his CARD to BECC and shall in addition to the interest and penalty charges aforementioned, pay the following liquidated damages and/or fees (a) a collection fee of 25% of the amount due if the account is referred to a collection agency or attorney; (b) a service fee of P100 for every dishonored check issued by the Cardholder's in payment of his account, without prejudice; however to BECC's right of considering Cardholder's obligation unpaid; cable cost for demanding payment or advising cancellation of membership shall also be for Cardholder's account; and (c) a final fee equivalent to 25% of the unpaid balance, exclusive of litigation expenses and judicial costs, if the payment of the 8 account is enforced through court action.

The aforequoted provision of the card cannot be any clearer. By his own admission private respondent no payment within thirty days for his billing/statement dated 27 September 1989. Neither did he make payment for his original billing/statement dated 27 October 1989. Consequently as early as 28 October 1989 thirty days from the non-payment of his billing dated 27 September 1989, petitioner corporation could automatically suspend his credit card. The next issue is whether prior to the suspension of private respondent's credit card on 28 November 1989 the parties entered into an agreement whereby the card could still be used and would be duly honored by duly accredited establishments. We agree with the findings of the respondent court, that there was an arrangement between the parties, wherein the petitioner required the private respondent to issue a check worth P15,000.00 as payment for the latter's billings. However we find that the private respondent was not able to comply with this obligation. As the testimony of private respondent himself bears out, the agreement was for the immediate payment of the outstanding account:
Q In said statement of account that you are supposed to pay the P8,974.84 the charge of interest and penalties, did you note that? A Yes, sir I noted the date. Q When? A When I returned from the Quezon province, sir Q When? A I think November 22, sir. Q So that before you used again the credit card you were not able to pay immediately this P8,987.84 in cash? A I paid P15,000.00, sir.

Q My question Mr. witness is, did you pay this P8,987.84 in charge of interest and penalties immediately in cash? A In cash no, but in check, sir. Q You said that you noted the word "immediately" in bold letters in your statement of accounts, why did not pay immediately? A Because I received that late, sir. Q Yes, on November 22 when you received from the secretary of the defendant telling you to pay the principal amount of P8,987.84, why did you not pay? A There was a communication between me and the defendant, I was required to pay P8,000.00 but I paid in check for P15,000.00, sir. Q Do you have any evidence to show that the defendant required you to pay in check for P15,000.00? A Yes, sir. Q Where is it? A It was telecommunication, sir. Q So there is no written communication between you and the defendant? A There was none, sir. Q There is no written agreement which says that P8,987.84 should be paid for P15,000.00 in check, there is none? A Yes, no written agreement, sir. Q And you as a lawyer you know that a check is not considered as cash specially when it is postdated sent to the defendant? A That is correct, sir.

Clearly the purpose of the arrangement between the parties on November 22, 1989, was for the immediate payment of the private respondent's outstanding account, in order that his credit card would not be suspended. As agreed upon by the parties, on the following day, private respondent did issue a check for P15,000.00. However, the check was postdated 15 December 1989. Settled is the doctrine that a check is only a substitute for money and not money, the delivery of such an instrument does not, by itself operate as payment. 9 This is especially true in the case of a postdated check. Thus, the issuance by the private respondent of the postdated check was not effective payment. It did not comply with his obligation under the arrangement with Miss Lorenzo. Petitioner corporation was therefore justified in suspending his credit card. Finally, we find no legal and factual basis for private respondent's assertion that in canceling the credit card of the private respondent, petitioner abused its right under the terms and conditions of the contract.

To find the existence of an abuse of right Article 19 the following elements must be present (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. 10 Time and again this Court has held that good faith is presumed and the burden of proving bad faith is on the party alleging it. 11 This private respondent failed to do. In fact, the action of the petitioner belies the existence of bad faith. As early as 28 October 1989, petitioner could have suspended private respondent's card outright. Instead, petitioner allowed private respondent to use his card for several weeks. Petitioner had even notified private respondent of the impending suspension of his credit card and made special accommodations for him for setting his outstanding account. As such, petitioner cannot be said to have capriciously and arbitrarily canceled the private respondent's credit card. We do not dispute the findings of the lower court that private respondent suffered damages as a result of the cancellation of his credit card. However, there is a material distinction between damages and injury. 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 results 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. 12 In other words, in order that the plaintiff may maintain an action for the injuries of which he complaints, 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 an 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; 13 and the breach of such duty should be the proximate cause of the injury. We therefore disagree with the ruling of the respondent court that the dishonor of the credit card of the private respondent by Caf Adriatico is attributable to petitioner for its willful or gross neglect to inform the private respondent of the suspension of his credit card, the unfortunate consequence of which brought social humiliation and embarrassment to the private respondent. 14 It was petitioner's failure to settle his obligation which caused the suspension of his credit card and subsequent dishonor at Caf Adriatico. He can not now pass the blame to the petitioner for not notifying him of the suspension of his card. As quoted earlier, the application contained the stipulation that the petitioner could automatically suspend a card whose billing has not been paid for more than thirty days. Nowhere is it stated in the terms and conditions of the application that there is a need of notice before suspension may be affected as private respondent claims. 15 This notwithstanding on November 28, 1989, the day of the suspension of private respondent's card, petitioner sent a letter by ordinary mail notifying private respondent that his card had been temporarily suspended. Under the Rules on Evidence, there is a disputable presumption that letters duly directed and mailed were received on the regular course of mail. 16 Aside from the private respondent's bare denial he failed to present evidence to rebut the presumption that he received said notice. In fact upon cross examination private respondent admitted that he did receive the letter notifying him of the cancellation:
Q Now you were saying that there was a first letter sent to you by the defendant? A Your letter, sir.

Q Was that the first letter that you received? A Yes, sir. Q It is that there was a communication first between you and the defendant? A There was none, sir. I received a cancellation notice but that was after November 17 27.

As it was private respondent's own negligence which was the proximate cause of his embarrassing and humiliating experience, we find the award of damages by the respondent court clearly unjustified. We take note of the fact that private respondent has not yet paid his outstanding account with petitioner. IN VIEW OF THE FOREGOING, the decision of the Court of Appeals ordering petitioner to pay private respondent P100,000.00 as moral damages P50,000.00 as exemplary damages and P20,000.00 as attorney's fees, is SET ASIDE. Private respondent is DIRECTED to pay his outstanding obligation with the petitioner in the amount of P14,439.41. SO ORDERED. Narvasa, C.J. and Romero, JJ., concur. Purisima, J., took no part. Footnotes
1 CA decision penned by: Justice Salome A. Montoya, concurred by: Justices Fidel P. Purisima and Godardo A. Jacinto, Rollo, p. 12. 2 Id., at 24-26. 3 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 honestly and good faith. 4 See note 1, p. 45. 5 Id., at 42-44. 6 Id., at 35. 7 Id., at 6. 8 Records, p. 104. 9 Roman Catholic Bishop of Malolos, Inc. vs. IAC, 191 SCRA 411 (1990). 10 Albenson Enterprises Corp. vs. CA, 217 SCRA 16, 25 (1993). 11 Barons Marketing Corp. vs. Court of Appeals and Phelps Dodge Phils., Inc., G.R No. 126486, February 9, 1998. 12 Custodio vs. CA, 253 SCRA 483 (1996) citing 22 Am Jur 2d, Damages, Sec. 4, 35-36. 13 Ibid.

14 See note 1, p. 33. 15 During cross-examination of plaintiff-private respondent Ricardo Marasigan by counsel for the defendantpetitioner the following exchange ensued: Q Now you know that after using the credit card you have to pay the monthly charges as they fall due in accordance with the obligation/application that you signed? A Yes, sir. Q And if the payments were not made on time they are supposed to earn interest? A Yes, sir. Q They also earn charges, may we know your answer Mr. Witness? A Yes, sir. Q Thank you. In case collection suit is filed you know that there were litigation charges that will be claimed against you, is it not? A I don't know, sir. Q But you as practicing lawyer? A Yes, as a matter of fact that is the procedure. Q But you did not read the contests? A Yes, sir. Q But how did you come to know that you are supposed to pay the charges since you have not read the contents? A By the statement of account, sir. Q What about the date when you should pay your monthly charges, did you know when to pay it? A It is also stated there, sir. Q In the monthly statement of account? A Yes, sir. Q When you received this monthly statement of account did you not complain to the defendant the credit card since you have not read the contents of your application? A No, sir I did not. Q You continued using that credit card until it was suspended and terminated? A Yes, sir. Q Now do you also know from the terms and conditions of the contract between you and the defendant that if the charges for the use of the credit card are not paid it will be suspended? A Yes, sir. But there has got to be a prior notice.

Q Thank you. After a suspension is still not paid you credit card has to be terminated? A I think is the procedure, sir. (TSN, November 5, 1990, pp. 39-42). 16 Revised Rules of Court, Rule 131 Sec. 3 (m). 17 TSN, November 5, 1990, pp. 51-52.

G.R. No. L-21447

February 28, 1966

JOSE REYES, SOLEDAD REYES and CARMELITA REYES DE PASTOR, petitioners, vs. HON. FRANCISCO ARCA, Presiding Judge, Court of First Instance of Manila (Branch I) and EUSEBIO MILLAR, respondents. Jose W. Diokno for the petitioners. L. B. Viloria for the respondents. RESOLUTION BENGZON, J.P., J.: This is a motion for reconsideration of the decision of this Court herein promulgated on November 29, 1965. It raises points deserving of full discussion, particularly the reference to an alleged error in our statement of the facts. An extended resolution is therefore given herein. In the decision we stated inter alia that on December 3, 1949 the spouses Feliciano and Pilar Basa leased to Eusebio Millar three parcels of registered land, with the improvements thereon, situated in Del Pan and Lavezares Streets, Manila. We further said that among the terms of the lease agreement was, as to period, five years, counted from October 1, 1949, renewable for another five years upon written notice. It is now urged by movant that the foregoing is an incorrect finding of fact. For, according to movant, on the same day that the lease agreement was executed i.e., on December 3, 1949 the parties thereto executed a supplemental lease agreement, under which the period of the lease was changed to "ten (10) years from and after October 1, 1949, subject to renewal for a period not later than September 30, 1968, under the same terms and conditions herein stated, on the option of the LESSEE upon thirty days written notice to the LESSOR." Anent this point it should first of all be emphasized that movant does not really dispute the facts stated in our decision, that the parties aforementioned entered into a lease agreement on December 3, 1949 providing among its terms a period of five (5) years renewable for another five (5) years. It is however sought to be added thereto the finding that on the same date a supplemental lease agreement was executed, containing a different stipulation regarding the period of the lease. Such a finding is not proper at this stage in the present suit. The parties herein agree as to the lease agreement, its execution and its terms. They do not agree as to the existence of the supplemental lease agreement, let alone its terms. Such disputed facts ought first to be threshed out in the trial court. Accordingly, the decision of this Court limited its statement of facts to those accepted by the parties..

Furthermore it may not be amiss to note by his own annexes to his present motion, movant has only succeeded in showing that the annotations of the lease at the back of petitioners' title certificates state the lease to be for a period of five years, renewable for another five years (Motion for Reconsideration, Annexes 8 and 9). Said annotation was first inscribed on December 9, 1949 (Ibid), or after the alleged execution of a supplemental agreement providing for a different period.1wph1.t Regardless, however, of whether the lease was for five years or ten years, subject to renewal for the same period of five years or ten years, it remains the controlling fact herein that movant has continued and was allowed to continue possessing and enjoying the properties leased. In any event, therefore, he must still be deemed a lessee of the said properties, either by express agreement or by implied new lease under Article 1670 of the New Civil Code. For it should be stressed that until now the properties have not been sold to movant. It is precisely the reason of movant in filing the pending action in the lower court, to demand specific performance of the alleged obligation to sell the aforesaid leased properties to him. It follows, that for movant now to stop depositing payment for rentals on the pretense that he is already occupying the premises "in the concept of owner" would be to improperly assume as true the very point still in litigation. And for the lower court to allow the same would in effect be to render its decision before the trial is over. Assuming, finally, that movant is right a point we do not for the present decide in saying that if the sale in favor of the Reyeses is declared null and void and the Basas are ordered to sell the properties to him, the sale in his favor would retroact to the filing of his suit in the lower court, still, until that uncertain eventuality happens, there is so far nothing that retroacts. As stated in the decision, movant in depositing rentals in court pending the litigation, stated that he was doing it: "to avoid confusion and further complication as to who [between the Reyeses and the Basa spouses] is the proper party who is entitled to the rents".1 Clearly, therefore, he thereby recognized that, pending the outcome of the suit, he cannot be regarded as owner but only as lessee. Rentals, therefore, must continue to be deposited by him. Never can it be overemphasized that the rentals are not to be given now to any of the parties, but merely deposited in court, to be disposed of in accordance with the final judgment in the main litigation. Anent movant's contention that the Reyeses were guilty of bad faith in purchasing the properties, in view of the annotations of the lease agreement and of the notice of les pendens referring to his present suit for specific performance, all of which were allegedly recorded at the back of the title certificates at the time the Reyeses bought the properties, suffice it to state that the same has to do with the merits of the litigation pending in the lower court, not with the present incident herein. All that we have to resolve at present is whether movant can stop paying rentals although he continues staying on the properties leased by him and is not yet the owner of said properties. It was because of the obvious injustice in allowing the movant to do so that we referred to Article 19 of the New Civil

Code. For such a course is repugnant to the cardinal rule of human relations therein stated. Again, movant raises the argument that appeal and not the present special civil action is petitioners' remedy. For reasons already given in our decision, appeal, in this instance, is not an adequate remedy. Wherefore, respondents' motion for reconsideration is denied for lack of merit. So ordered. Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar and Sanchez, JJ., concur. Barrera, J., took no part. Footnotes
1

See Order dated September 25, 1959, Petition, Annex B.

G.R. No. 140420

February 15, 2001

SERGIO AMONOY, petitioner, vs. Spouses JOSE GUTIERREZ and ANGELA FORNIDA, respondents. PANGANIBAN, J.: Damnum absque injuria. Under this principle, the legitimate exercise of a person's rights, even if it causes loss to another, does not automatically result in an actionable injury. The law does not prescribe a remedy for the loss. This principle does not, however, apply when there is an abuse of a person's right, or when the exercise of this right is suspended or extinguished pursuant to a court order. Indeed, in the availment of one's rights, one must act with justice, give their due, and observe honesty and good faith The Case Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the April 21, 1999 Decision 1 of the Court of Appeals (CA) in CA-GR CV No. 41451, which set aside the judgment 2 of the Regional Trial Court (RTC) of Tanay, Rizal. The RTC had earlier dismissed the Complaint for damages filed by herein respondents against petitioner. The dispositive portion of the challenged CA Decision reads as follows: "WHEREFORE, the appealed Decision is SET ASIDE, and in its stead judgment is rendered ordering the defendantappellee Sergio Amonoy to pay the plaintiffs-appellants bruno and Bernadina Gutierrez as actual damages the sum of [t]wo [h]undred [f]ifty [t]housand [p]esos (P250,000.00)." 3 Likewise assailed is the October 19, 1999 CA Resolution, 4 which denied the Motion for Reconsideration. The Facts The appellate court narrated the factual antecedents of this case as follows: "This case had its roots in Special Proceedings No. 3103 of Branch I of the CFI of Pasig, Rizal, for the settlement of the estate of the deceased Julio Cantolos, involving six(6) parcels of land situated in Tanay Rizal. Amonoy was the counsel of therein Francisca Catolos, Agnes Catolos, Asuncion Pasamba and Alfonso Formida. On 12 January 1965, the Project of Partition submitted was approved and xxx two (2) of the said lots were adjudicated to Asuncion Pasamba and Alfonso Formilda. The Attorney's fees charged by Amonoy was P27,600.00 and on 20 January 1965 Asuncion Pasamba and Alfonso Formida executed a deed of real estate mortgage on the said two (2) lots adjudicated to them, in favor of Amonoy to secure the payment of his attorney's fees. But it was only on 6 August 1969 after the taxes had been paid, the claims settled and the properties adjudicated, that the estate was declared closed and terminated. "Asuncion Pasamba died on 24 February 1969 while Alfonso Fornilda passsed away on 2 July 1969. Among the heirs of the latter was his daughter, plaintiff-appellant Angela Gutierrez. "Because his Attorney's fess thus secured by the two lots were not paid, on 21 January 1970 Amonoy filed for their foreclosure in Civil Code4 No. 12726 entitled Sergio Amonoy vs. Heirs of Asuncion Pasamba and Heirs of Alfonso Fornilda before the CFI of Pasig, Rizal, and this was assigned to Branch VIII. The heirs opposed, contending that the attorney's fees charged [were] unconscionable and that the attorney's fees charged [were] unconscionable and that the agreed sum was only P11,695.92. But on 28 September 1972 judgment was rendered in favor of Amonoy requiring the heirs to pay within 90 days the P27,600.00 secured by the mortgage, P11,880.00 as value of the harvests, and P9,645.00 as another round of attorney's fees. Failing in that, the two (2) lots would be sold at public auction. "They failed to pay. On 6 February 1973, the said lots were foreclosed and on 23 March 1973 the auction sale was held where Amonoy was the highest bidder at P23,760.00. On 2 May 1973 his bid was judicially confirmed. A deficiency was claimed and to satisfy it another execution sale was conducted, and again the highest bidder was Amonoy at P12,137.50. "Included in those sold was the lot on which the Gutierrez spouses had their house. "More than a year after the Decision in Civil Code No. 12726 was rendered, the said decedent's heirs filed on 19 December 1973 before the CFI of Pasig, Rixal[,] Civil case No. 18731 entitled Maria Penano, et al vs. Sergio Amonoy, et al, a suit for the annulment thereof. The case was dismissed by the CFI on 7 November 1977, and this was affirmed by the Court of Appeals on 22 July 1981. "Thereafter, the CFI on 25 July 1985 issued a Writ of Possession and pursuant to which a notice to vacate was made on 26 August 1985. On Amonoy's motion of 24 April 1986, the Orders of 25 April 1986 and 6 May 1986 were issued for the demolition of structures in the said lots, including the house of the Gutierrez spouses.

"On 27 September 1985 the petition entitled David Fornilda, et al vs Branch 164 RTC Ivth Pasig, Deputy Sheriff Joaquin Antonil and Atty. Sergio Amonoy, G.R. No. L-72306, was filed before the Supreme Court. Among the petitioners was the plaintiff-appellant Angela Gutierrez. On a twin musiyun (Mahigpit na Musiyon Para Papanagutin Kaugnay ng Paglalapastangan) with full titles as fanciful and elongated as their Petisyung (Petisyung Makapagsuri Taglay and Pagpigil ng Utos), a temporary restraining order was granted on 2 June 1986 enjoining the demolition of the petitioners' houses. "Then on 5 October 1988 a Decision was rendered in the said G.R. No. L-72306 disposing that: "WHEREFORE, Certiorari is granted; the Order of respondent Trial Court, dated 25 July 1985, granting a Writ of Possession, as well as its Orderd, dated 25 April 1986 and 16 May 1986, directing and authorizing respondent Sheriff to demolish the houses of petitioners Angela and Leocadia Fornilda are hereby ordered returned to petitioners unless some of them have been conveyed to innocent third persons." 5 But by the time the Supreme Court promulgated the abovementioned Decision, respondents' house had already been destroyed, supposedly in accordance with a Writ of Demolition ordered by the lower court. Thus, a Complaint for damages in connection with the destruction of their house was filed by respondents against petitioner before the RTC on December 15, 1989. In its January 27, 1993 Decision, the RTC dismissed respondents' suit. On appeal, the CA set aside the lower court's ruling and ordered petitioner to pay respondents P250,000 as actual damages. Petitioner then filed a Motion for Reconsideration, which was also denied. The Issue In his Memorandum,7 petitioner submits this lone issue for our consideration: "Whether or not the Court of Appeals was correct was correct in deciding that the petition [was] liable to the respondents for damages."8 The Court's Ruling The Petition has no merit. Main Issue: Petitioner's Liability Well-settled is the maxim that damage resulting from the legitimate exercise of a person's rights is a loss without injury- damnum absque injuria - for which the law gives no remedy.9 In other words, one who merely exercises one's rights does no actionable injury and cannot be held liable for damages. Petitioner invokes this legal precept in arguing that he is not liable for the demolition of respondents' house. He maintains that he was merely acting in accordance with the Writ of Demolition ordered by the RTC. We reject this submission. Damnum absque injuria finds no application to this case. True, petitioner commenced the demolition of respondents' house on May 30, 1986 under the authority of a Writ of Demolition issued by the RTC. But the records show that a Temporary Restraining Order (TRO), enjoining the demolition of respondents' house, was issued by the Supreme Court on June 2, 1986. The CA also found, based on the Certificate of Service of the Supreme Court process server, that a copy of the TRO was served on petitioner himself on June 4, 1986. Petitioner, howeverm, did not heed the TRO of this Court. We agree with the CA that he unlawfully pursued the demolition of respondents' house well until the middle of 1987. This is clear from Respondent Angela Gutierrez's testimony. The appellate court quoted the following pertinent portion thereof: 10 "Q. "A. On May 30, 1986, were they able to destroy your house? Not all, a certain portion only xxx xxx xxx

"Q. "A.

Was your house completely demolished? No, sir. xxx xxx xxx

"Q. "A. "Q. "A. "Q. A.

Until when[,] Mrs. Witness? Until 1987. About what month of 1987? Middle of the year. Can you tell the Honorable Court who completed the demolition? The men of Fiscal Amonoy."11

The foregoing disproves the claim of petitioner that the demolition, which allegedly commenced only on May 30, 1986, was completed the following day. It likewise belies his allegation that the demolitions had already ceased when he received notice of the TRO. Although the acts of petitioner may have been legally justified at the outsset, their continuation after the issuance of the TRO amounted to an insidious abuse of his right. Indubitably, his actions were tainted with bad faith. Had he not insisted on completing the demolition, respondents would not have suffered the loss that engendered the suit before the RTC. Verily, his acts constituted not only an abuse of a right, but an invalid exercise of a right that had been suspended when he received thae TRO from this Court on June 4, 1986. By then he was no longer entitled to proceed with the demolition. A commentator on this topic explains: "The exercise of a right ends when the right disappears, and it disappears when it is abused, especially to the prejudice of others. The mask of a right without the spirit of justcie 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 xxx. Over and above the specific precepts of postive law are the supreme norms of justice xxx; and he who violates them violates the law. For this reason it is not permissible to abuse our rights to prejudice others." 12 Likewise, in Albenson Enterprises Corp. v. CA,13 the Court discussed the concept of abuse of rights as follows: "Artilce 19, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which may be observed not only in the exercise of one's rights but also in the performance of one's duties.These standards are the following: to act with justice; to give everyone his due; recognizes the primordial limitation on all rights: that in their exercise, the norms of human conduct set forth in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible xxx." Clearly then, the demolition of respondents' house by petitioner, despite his receipt of the TRO, was not only an abuse but also an unlawful exercise of such right. In insisting on his alleged right, he wantonly violated this Court's Order and wittingly caused the destruction of respondents; house.1wphi1.nt Obviously, petitioner cannot invoke damnum absque injuria, a principle premised on the valid exercise of a right. 14 Anything less or beyond such exercise will not give rise to the legal protection that the principle accords. And when damage or prejudice to another is occasioned thereby, liability cannot be obscured, much less abated. In the ultimate analysis, petitioner's liability is premised on the obligation to repair or to make whole the damage caused to another by reason of one's act or omission, whether done intentionally or negligently and whether or not punishable by law. 15 WHEREFORE, the Petition is DENIED and the appealed Decision AFFIRMED. Costs against petitioner. SO ORDERED. Melo, Vitug, Gonzaga-Reyes, Sandoval-Gutierrez, JJ: concur.

Footnotes:
1

Rollo, pp. 34-44. The CA Decision was penned by Justice Roberto A. Barrios, with the concurrence of Justices Godardo A. Jacinto (Division chairman) and Renato C. Dacudao.
2

Rollo, pp. 83-87; written by Judge Gil P. Fernandez. Rollo, p. 41 Rollo, pp. 43-44. Rollo, pp. 35-37.

The case was deemed submitted for resolution on July 21, 2000, upon receipt by this Court of Respondents' Memorandum signed by Attys. Romeo B. Igot and Liberato F. Mojica. Filed earlier was petitioner's Memorandum, signed by Atty. Gelacio C. Mamaril and Roberto B. Arca.
7

Rollo, pp. 180-210 Ibid., p. 192. Upper case used in the original.

Custodio v. Court of Appeals, 253 SCRA 483, February 9, 1996; China Banking Corporation v. Court of Appeals, 231 SCRA 472, March 28, 1994; Sba v. Court of Appeals, 189 SCRA 50, Auguts 24, 1990; ilocos Norte Electric Company v. Court of Appeals, 179 SCRA 5, November 6, 1989; Auyong Hian v. CTA, 59 SCRA 110, September 12, 1974.
10

CA Decision, pp. 6-7; rollo, pp. 39-40. TSN, February 12, 1991, pp. 14-15 Alicia Gonzales-Decano, Notes on Torts and Damages, p. 97. 217 SCRA 16, 24-25, January 11, 1993, per Bidin, J. Globe Mackay Cable and Radio Corp. v. Cout of Appeals , 176 SCRA 778, August 25, 1989. Occena v. Icamina, 181 SCRA 328, January 22, 1990

11

12

13

14

15

G.R. No. L-26882 April 5, 1978 ROSARIO VDA. DE LAIG, ROMEO, JOSE, NESTOR and BENITO, JR., all surnamed LAIG, minors, assisted by Rosario Vda. de Laig, Their Guardian Ad Litem, petitioners, vs. COURT OF APPEALS, CARMEN VERZO, PETRE GALERO, THE REGISTER OF DEEDS OF CAMARINES NORTE, THE DIRECTOR OF LANDS, AND THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, respondents. Gelasio L. Dimaano for petitioners. Pedro A. Venida for private respondents. Office of the Solicitor General for respondents The Director of Lands, etc., et al.

MAKASIAR, J.: Appeal by certiorari from the decision of respondent Court of Appeals which affirmed the judgment of the Court of First Instance of Camarines Norte in Civil Case No. 577 entitled "Rosario Vda. de Laig, et al. vs. Carmen Verzo, et al., " dismissing herein petitioners' complaint for the reconveyance of a parcel of land with damages, and declaring herein respondent Carmen Verzo as the lawful owner of the land in issue. It appears that on March 27, 1939, one Petre Galero obtained rained from the Bureau of Lands Homestead Patent No. 53-176 covering 219,949 square meters of land located at Barrio Pinagtambangan, Labo, Camarines Norte, for which Original Certificate of Title No. 1097 was issued in Galero's name. On June 25, 1940, Galero sold the land to a certain Mario Escuta for P300.00. Escuta in turn, sold the same land to Florencio Caramoan in December, 1942, Later, however, Petre Galero, through proper court action, and with Atty. Benito K. Laig the deceased husband of herein petitioner Rosario Vda. de Laig as counsel recovered the land, the court having been convinced that its alienation violated Section 118 of the Public Land Act, which reads:
No alienation, transfer, or conveyance of any homestead after five years and before twenty-five years after issuance of title shall be valid without the approval of the Secretary of Agriculture and Commerce, which approval shall not be denied except on constitutional and legal grounds (Sec. 118, CA No. 141, as amended by CA No. 456).

On June 1, 1948, a deed of sale was executed by and between Petre Galero as vendor and Atty. Benito K. Laig as vendee, whereby the former sold to the latter

the land in question with its improvements, for P1,500.00 plus attorney's fees due Atty. Laig for his legal services as counsel for Galero in the successful reconveyance case (p. 87, rec.; People vs. Petre Galero, CA-G.R. No. 12043-R). This deed of sale was executed in the house of Carmen Verzo and witnessed by one Claudio Muratalla and Rosario Verzo Villarente (p. 87, back, rec., People vs. Petre Galero, supra), sister of herein respondent Carmen Verzo, who was living with her in the same house at that time. Original Certificate of Title No. 1097 was delivered by Galero to Atty. Laig (Exh. J and Annex B, p. 6, CA Brief for Petitioners, p. 137, back, rec.). Unfortunately, vendee Atty. Benito K. Laig failed to solicit the approval of the Secretary of Agriculture and Natural Resources (then Secretary of Agriculture and Commerce), as required by Section 118 of the Public Land Act, as amended. It was only after Atty. Laig's death in 1951 that his wife, herein petitioner Rosario, noticed the deficiency. On November 5, 1951, herein petitioner Vda. de Laig wrote the then Register of Deeds of Camarines Norte, respondent Baldomero M. Lapak, stating that the disputed parcel of land covered by original Certificate of Title No. 1097 in the same of Petre Galero, had been sold to her late husband, requesting that she be informed of any claim of ownership by other parties so that she could take the necessary steps, and serving notice of her claim over the said property as surviving spouse of the late Atty. Laig and as natural guardian of their children. On November 12, 1951, Register of Deeds Lapak replied that Original Certificate of Title No. 1097 was still intact and took note of her letter. On March 29, 1952, petitioner Vda. de Laig filed with the Bureau of Lands an affidavit together with copy of the deed of sale in her husband's favor. Said affidavit stated that she wanted to have the ownership over the land transferred to her husband's name. On August 14, 1952, the Bureau of Lands forwarded the said affidavit of Vda. de Laig, together with the deed of sale, to the Office of the Secretary of Agriculture and Natural Resources with a recommendation that the said deed of sale be approved as the same does not violate any pertinent provisions of the Public Land Act or the corresponding rules and regulations thereunder promulgated. On the same day, the Office of the Secretary of Agriculture and Natural Resources, thru then Undersecretary Jose S. Camus, approved the deed of sale. And also on the same day, the Office of the Director of Lands, thru Vicente Tordesillas, Chief of the Publication Lands Division, addressed a letter to Atty. Benito Laig informing him of the approval of the deed of sale executed by and between him and Petre Galero.

Meanwhile, however, on July 15, 1952, Petre Galero, with the assistance of Atty. Jose L. Lapak, son of respondent Register of Deeds Baldomero M. Lapak sought in court the issuance of a second owner's duplicate copy of OCT No. 1097, claiming that his first duplicate of said OCT was lost during World War 11. On July 19, 1952 or in a span of only four days - a second owner's duplicate copy of OCT No. 1097 was issued by respondent Register of Deeds Baldomero M. Lapak in favor of Petre Galero. And right on that same day, Galero executed in favor of respondent Carmen Verzo a deed of sale of the land in issue for the sum of P600.00. It was claimed that previously, the additional consideration of P500.00 in Japanese war notes was received by Galero from Carmen Verzo, although this amount, or anything to that effect, was not mentioned in the deed of sale executed by and between them. Upon being informed that the sale necessitates the approval of the Secretary of Agriculture and Natural Resources before it could be registered in the Register of Deeds, herein respondent Carmen Verzo, on July 30, 1952, addressed a letter to the Secretary of Agriculture and Natural Resources, through the Director of Lands, seeking the former's required approval Enclosed in the letter was a copy of the deed of sale in Verzo's favor, and an affidavit that the land in point was sold to Verzo by homestead grantee Petre Galero. On August 30, 1952, Assistant Director of Lands Zoilo Castrillo forwarded Verzo's papers to the Secretary of Agriculture and Natural Resources and recommended that the sale, not being violative of the pertinent provisions of the Public Land Act nor the rules and regulations promulgated thereunder, be approved. On September 12, 1952, Acting Secretary of Agriculture Jose S. Camus approved the sale in favor of Carmen Verzo. On September 27, 1952, the office of the Director of Lands notified Carmen Verzo of such approval. Whereupon, on October 13, 1952, Verzo declared the land in her name for taxation purposes, and since then, had been paying the realty taxes thereon. On October 14, 1952, the deed of sale in Verzo's favor was registered, and Transfer Certificate of Title No. T-1055, in lieu of OCT No. 1097, which was cancelled, was issued in her name. On January 26, 1953, petitioner Vda. de Laig, thru counsel, her brother Atty. Dimaano, inquired from the Register of Deeds of Camarines Norte if it was true that OCT No. 1097 in favor of Galero had already been cancelled and a transfer certificate of title had been issued in favor of another person. Respondent Register of Deeds Lapak replied in the affirmative.

In no time at all, petitioners called the attention of the Director of Lands to the existence of two deeds of sale, one in favor of Atty. Benito Laig, and another in favor of Carmen Verzo. On February 25, 1953, the Director of Lands requested Petre Galero to explain within 30 days such double sale, and ordered the Provincial Land Officer in Daet, Camarines Norte to investigate the matter and immediately submit findings thereon. On March 12, 1953, in reply to the Director of Land's request, Petre Galero denied having sold the land in issue to Atty. Benito K. Laig. On March 15, 1953, the Bureau of Lands in Camarines Norte reported to the Director of Lands that second vendee Carmen Verzo had already successfully obtained a transfer certificate of title over the land in question, with the recommendation that the heirs of the first vendee, Benito K. Laig, seek their remedy in court as the status of the property at that stage does not anymore fall within the jurisdiction of the Bureau of Lands. Petre Galero was charged in Criminal Case No. 533 before the Court of First Instance of Camarines with estafa thru falsification of public documents in connection with the sale in favor of Carmen Verzo of the land in point. Galero was convicted on October 29, 1953, which conviction was later affirmed by the Court of Appeals in People vs. Petre Galero (CA-G.R. No. 12043-R, December 2, 1954). On April 13, 1954, petitioner Vda. de Laig, together with her minor children, filed the present action, docketed as Civil Case No. 577 in the Court of First Instance of Camarines Norte against respondents Carmen Verzo, Petre Galero, the Director of Lands, the Register of Deeds of Camarines Norte and the Secretary of Agriculture and Natural Resources praying for the annulment of the sale in favor of Carmen Verzo and the cancellation of the second owner's duplicate of Original Certificate of Title No. 1097 and Transfer Certificate of Title No. T-1055 by declaring the first OCT No. 1097 valid and effective or in the alternative, by ordering Carmen Verzo to reconvey the land in question to petitioners, plus P5,000.00 by way of damages. Sometime in 1958, Galero died while serving his sentence at the National Penitentiary, and was, on November 11, 1958, substituted by his wife, Perpetua Dar, as party defendant (p. 27, ROA; p. 114, rec.). On November 21, 1961, the trial court, in a decision, dismissed the complaint and declared that the land described in TCT No. 1055 to be rightfully owned by Carmen Verzo. The lower court also found Baldomero M. Lapak, then the Register of Deeds of Camarines Norte, guilty of negligence, but exempted him from any liability; found the Director of Lands and the Secretary of Agriculture

and Natural Resources likewise guilty of negligence, but exempted them from any liability on the theory that they are not responsible for the acts of their subordinates; held that the approval of two deeds of sale in favor of two different vendees in a space of less than one month is but a ministerial duty which exculpates the Director of Lands and the Secretary of Agriculture and Natural Resources from liability, and that plaintiffs-appellants slept on their rights in not having the first deed of sale in favor of Atty. Laig registered in the Registry of property, and therefore, have only themselves to blame for losing the land; and exempted Galero from liability (pp. 88-97, ROA; pp. 119-124, rec.). On April 12, 1962, petitioners appealed the decision of the lower court to the Court of Appeals. On September 28, 1966 (p. 32, rec.), the Fifth Division of the Court of Appeals, thru Justice Jesus Y. Perez, affirmed the decision of the Court of First Instance of Camarines Norte. The case unveils a couple of issues to resolve, to wit: 1. Who between petitioner Vda. de Laig and respondent Carmen Verzo should be considered as the rightful owner of the land in question; and 2. Should the respondents register of deeds, Director of Lands and the Secretary of Agriculture and Natural Resources, together with respondent Carmen Verzo, be held liable for damages for approving the sale of one and the same piece of land in favor of two different persons? I As in the present case of Rosario Carbonell vs. Hon. Court of Appeals, et al. (L-29972, Jan. 26, 1976), the first issue calls for the application of Article 1544, paragraph 2, of the New Civil Code regarding double sale. The above-said provision reads:
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith recorded it in the Register of Property (emphasis supplied).

In the Carbonell case, supra, WE held that to be under the protective umbrella of paragraph 2, Article 1544, of the New Civil Code, it is essential that the vendee of the immovable must act in good faith in registering his deed of sale. In other words, good faith must characterize the vendee's act of prior registration. To this effect was Our ruling in a 1918 case that

The force and effect given by law to an inscription in a public record presupposes the good faith of him who enters such inscription; and rights created by statute, which are predicated upon an inscription in a public registry, do not and cannot accrue under an inscription 'in bad faith,' to the benefit of the person who thus makes the inscription (Leung Yee vs. F.L. Strong Machinery Co. and Williamson, No. 11658, Feb. 15, 1918, 37 Phil. 644, 649).

The records reveal that respondent Carmen Verzo was not in good faith when she facilitated the registration of her deed of sale. The following indicia of bad faith characterized NOT ONLY her act of registering her deed of sale, BUT ALSO her purchase of the disputed realty: 1. At the time of the sale of the land in question by Petre Galero to Atty. Benito K. Laig in 1948, the latter was a boarder of Carmen Verzo in her house. As a matter of fact, Atty. Laig maintained his law office, and received his clients (among whom was Petre Galero) therein [p. 81, t.s.n., session of Aug. 23, 1961 ]. Atty. Benito K. Laig, as her boarder, must have mentioned to Carmen Verzo, his landlady, the land sold to him by Galero. By the same token, Carmen Verzo must have known such sale; because transactions of this sort in the rural areas do not escape the knowledge of persons living under one roof with a party to the document, more especially when there exists between such persons and party the peculiarly intimate relationship of landlady and boarder in a small town. 2. One of the witnesses to the deed of sale executed by and between Atty. Laig and Petre Galero was Rosario Verzo Villarente, Carmen Verzo's very own sister who was at that time living with her in her house, where Atty. Laig then boarded. Rosario Verzo Villarente, being in the household of her sister Carmen Verzo, must have likewise informed the latter about the deed of sale executed by Petre in favor of Atty. Laig which she signed as witness. A formal act, such as witnessing a deed of sale, is not a common daily experience. Laymen, especially rural folk like Rosario Verzo Villarente, who participate in the same, ordinarily regard the same as a memorable event. It is not therefore unreasonable to assume that her significant role as an instrumental witness to the deed of sale between Atty. Laig and Petre Galero must have moved Rosario to confide to her sister Carmen the fact of her participation therein. 3. Petre Galero was able to procure another copy of the duplicate of Original Certificate of Title No. 1097 covering the disputed land through the aid of Atty. Jose Lapak who is the son of the respondent register of deeds, Baldomero Lapak, under clearly dubious circumstances. For one, it was done without observing the required formalities of notice and hearing (Sec. 117, Act No. 496). Secondly, it was an over in a record-setting period of ONLY four [41 days. Add to this the fact that respondent register of deeds Baldomero Lapak issued said duplicate of OCT 1097 despite his having received about eight months earlier and taken note on November 12, 1951 of the letter of petitioner Rosario Vda. de

Laig inquiring about the status of the title to the questioned land which was purchased by her husband from Petre Galero; and the process, indeed, reeks with an unpleasant scent. If Atty. Jose Lapak were not the son of respondent Baldomero Lapak, the latter as register of deeds would not have facilitated the issuance of the duplicate copy of the title with such "scandalous haste." He should have informed his son, Atty. Lapak, and Petre Galero about the previous inquiry of petitioner as early as November 5, 1951, to which he replied on November 12, 1951 that OCT No. 1097 was still intact. Moreover, the expeditious disposal of the land in litigation by Petre Galero to Carmen Verzo was done immediately after the death of Atty. Benito Laig, and during the time that his wife Rosario Vda. de Laig, who was residing in faraway Manila, was seeking all legal means to have the title over the property transferred to her name. Such bad faith on the part of respondent Carmen Verzo and Baldomero Lapak is further underscored by the fact that Atty. Jose Lapak himself (a) was the notary public before whom the deed of sale executed by and between Petre Galero and Carmen Verzo was acknowledged, and (b) was the same lawyer who assisted Carmen Verzo in writing the Director of Lands and the Secretary of Agriculture and Natural Resources, enclosing therewith an affidavit also sworn before said Atty. Lapak, praying that the deed of sale be approved. This conspiracy among Petre Galero, register of deeds Baldomero Lapak, his son Atty. Jose Lapak, and Carmen Verzo, could not have been known to petitioner Rosario Vda. de Laig, who was then as now, residing in Manila. 4. Carmen Verzo was familiar with the property in dispute and with the previous legal battle over the same. In fact in her special defense (par. 2, p. 47, ROA), she stated that she gave sums of money to Petre Galero to enable him to institute Civil Case No. 164-R-14 entitled "Petre Galero vs. Macario Escuta and Florendo Caramoan," for the recovery of said parcel of land. Knowing that said case was for the reconveyance from defendants therein of the land in issue and that Atty. Laig was the counsel of Petre Galero, Carmen Verzo must have known likewise that a torrens title to the same was existing and intact and the same was delivered by Petre to Atty. Laig as the buyer of the land. And if she inquired from the wife of Atty. Laig, which was incumbent upon her as she was aware of the antecedent circumstances, she would have been told by petitioner Rosario Vda. de Laig that the owner's copy of the original certificate of title was then in her possession Respondent Carmen Verzo could not pretend that she believed that said owner's duplicate was lost during the war because Civil Case No. 164-R-14 involving the land in point was instituted only AFTER the war and the owner 's duplicate copy of the title was intact and returned to Petre after he won in 1948 the suit for reconveyance. She could have also asked about said title the first buyer, Florencio Caramoan, who was ordered by the court to reconvey the land and return the owner's duplicate of the to title.

5. Prior to the sale in her favor, Carmen Verzo knew that the disputed property belongs to Atty. Laig, because whenever Atty. Laig was in Manila, Carmen Verzo attended to said property and communicated with Atty. Laig in Manila about his share of the harvest from the land (pp. 33-34, t.s.n., session of Aug. 4, 1964). How can Carmen Verzo speak of Atty. Laig's share of the harvest without first knowing that the land from where the crop was harvested was owned by Atty. Benito Laig? Bad faith can be demonstrated, not ONLY by direct proof, but also by substantial evidence.
Bad faith is a state of mind indicated by acts and circumstances and is provable by CIRCUMSTANTIAL ... evidence (Zumwalt v. Utilities Ins. Co., 228 S.W. 2d 750, 754, 360 Mo. 362; Words and Phrases Permanent Ed., Vol. 5, p. 261).

Logically, therefore, since, as has already been earlier shown, respondent Carmen Verzo was not a purchaser in good faith, she could never have been a registrant in good faith of the deed of sale of said land in her favor. Consequently, she cannot claim the protection accorded to a registrant in good faith by paragraph 2, Article 1544 of the New Civil Code. Finally, since there is no valid inscription to speak of in the present case, the applicable provision of law is paragraph 3, Article 1544, New Civil Code (Carbonell vs. Hon. Court of Appeals, supra), which states:
Should there be no insciption, the ownership shall pertain to the person who in good faith was first in the possession; and, in the ab thereat to the person who presents the oldest title, provided there is good faith (emphasis supplied).

In the present case, the fact of Atty. Benito Laig's having been the first possessor in good faith of the property in issue was never disputed by respondent Carmen Verzo. Moreover, the deed of sale in favor of the late Atty. Benito Laig was executed on June 1, 1948, over 4 years earlier than the deed of sale executed on July 19, 1952 in favor of respondent Carmen Verzo. It is Our view that the offices of the Secretary of Agriculture and Natural Resources and the Director of Lands should be cleared of any liability. It is not difficult to see that the reason why separate approvals concerning two separate sale of the same piece of land were had was the fact that two sets of officials took charge of both requests. But no malice can be gleaned from this fact. It should be borne in mind that both officials daily attend to thousands upon thousands of papers. It is also possible that their assistants failed to notice that two deeds of sale covered the same parcel of land or failed to advise these two officials of such fact. As heretofore indicated, the malicious participation of respondent register of deeds Baldomero Lapak and his son Atty. Lapak is evident.

Knowing of the existence in his records of the original of OCT No. 1097, Baldomero Lapak effected the issuance of the second duplicate of OCT No. 1097 to Petre Galero in just four (4) days, dispensing with the requirements of notice and hearing to interested parties. The law in this regard is Section 109 of Act No. 496, which reads:
If the duplicate certificate is lost or destroyed, or cannot be produced by a grantee, heir, devisee, assignee, or other person applying for the entry of a new certificate to him ..., a suggestion may be filed by the registered owner or other person in interest and registered. The court (the Court of First Instance acting as land registration court) may thereupon, upon the petition of the registered owner or other person in interest, AFTER NOTICE AND HEARING, direct the issue of a new duplicate certificate, which shall contain a memorandum of the fact that it is issued in place of the lost duplicate certificate, but shall in all respects be entitled to like faith and credit as the original duplicate, and shall thereafter be regarded as the original duplicate for all the purposes of this Act (Ocampo vs. Garcia, L11260, April 29, 1959, 105 Phil. 553).

For his malicious involvement, WE find Baldomero Lapak liable under the following provision of the Land Registration Act:
Whoever fraudulently procures, or assists in fraudulently procuring or is privy to the fraudulent procurement of any certificate of title or owner's duplicate certificate, shall be fined not exceeding five thousand dollars (ten thousand pesos) or imprisoned not exceeding five years, or both, in the discretion of the court (Sec. 117, Act No. 496).

Baldomero Lapak likewise stands liable under Article 27 of the New Civil Code, which states:
Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against the latter, without prejudice to any disciplinary administrative action that may be taken.

For in essence, his refusal to follow the directive of law (Act No. 496) was a conduct injurious to the petitioner. Thus a chief of police is liable under Article 27 of the New Civil Code for refusal to give assistance to the complainants which was his official duty as an officer of the law (Amarro, et al. vs. Sumanggit, L14986, July 31, 1962, 5 SCRA 707, 708-9). Similarly, a municipal mayor incurs the same liability for neglecting to perform his official functions (Javellana vs. Tayo, L-18919, Dec. 29, 1962, 6 SCRA 1042, 1051). WE also find Atty. Jose L. Lapak liable under the abovequoted Section 117 of Act No. 496 (Land Registration Act), for which he should be, not only prosecuted but also, disciplined as a member of the Bar. Moreover, both Baldomero Lapak and his son Atty. Jose Lapak are likewise civilly liable for failure to observe honesty and good faith in the performance of their duties as public officer and as a member of the Bar (Art. 19, New Civil

Code) or for wilfully or negligently causing damage to another (Art. 20, New Civil Code), or for wilfully causing loss or injury to another in a manner that is contrary to morals, good customs and/or public policy (Art. 21, New Civil Code). WHEREFORE, THE DECISION APPEALED FROM IS HEREBY REVERSED AND I. THE REGISTER OF DEEDS OF CAMARINES NORTE IS HEREBY DIRECTED (A) TO CANCEL TCT NO. T-1055; AND (B) TO ISSUE IN LIEU THEREOF A NEW TRANSFER CERTIFICATE OF TITLE IN FAVOR OF THE HEIRS OF THE LATE BENITO K. LAIG; AND II. ALL THE RESPONDENTS HEREIN, EXCEPT THE DIRECTOR OF LANDS AND THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, ARE HEREBY ORDERED TO PAY JOINTLY AND SEVERALLY PETITIONERS IN THE AMOUNT OF TEN THOUSAND (P10,000.00) PESOS AS MORAL DAMAGES; THE SUM OF FIVE THOUSAND (P5,000.00) PESOS AS ATTORNEY'S FEES; AND THE COSTS: SO ORDERED. Teehankee (Chairman), Muoz Palma, Fernandez, and Guerrero, JJ., concur.

G.R. No. 26795 July 31, 1970 CARMEN QUIMIGUING, Suing through her parents, ANTONIO QUIMIGUING and JACOBA CABILIN, plaintiffs-appellants, vs. FELIX ICAO, defendant-appellee. Torcuato L. Galon for plaintiffs-appellants. Godardo Jacinto for defendant-appellee.

REYES, J.B.L., J.: Appeal on points of law from an order of the Court of First Instance of Zamboanga del Norte (Judge Onofre Sison Abalos, presiding), in its Civil Case No. 1590, dismissing a complaint for support and damages, and another order denying amendment of the same pleading. The events in the court of origin can be summarized as follows: Appellant, Carmen Quimiguing, assisted by her parents, sued Felix Icao in the court below. In her complaint it was averred that the parties were neighbors in Dapitan City, and had close and confidential relations; that defendant Icao, although married, succeeded in having carnal intercourse with plaintiff several times by force and intimidation, and without her consent; that as a result she became pregnant, despite efforts and drugs supplied by defendant, and plaintiff had to stop studying. Hence, she claimed support at P120.00 per month, damages and attorney's fees. Duly summoned, defendant Icao moved to dismiss for lack of cause of action since the complaint did not allege that the child had been born; and after hearing arguments, the trial judge sustained defendant's motion and dismissed the complaint. Thereafter, plaintiff moved to amend the complaint to allege that as a result of the intercourse, plaintiff had later given birth to a baby girl; but the court, sustaining defendant's objection, ruled that no amendment was allowable, since the original complaint averred no cause of action. Wherefore, the plaintiff appealed directly to this Court. We find the appealed orders of the court below to be untenable. A conceived child, although as yet unborn, is given by law a provisional personality of its own for all purposes favorable to it, as explicitly provided in Article 40 of the Civil Code of the Philippines. The unborn child, therefore, has a right to support from

its progenitors, particularly of the defendant-appellee (whose paternity is deemed admitted for the purpose of the motion to dismiss), even if the said child is only "en ventre de sa mere;" just as a conceived child, even if as yet unborn, may receive donations as prescribed by Article 742 of the same Code, and its being ignored by the parent in his testament may result in preterition of a forced heir that annuls the institution of the testamentary heir, even if such child should be born after the death of the testator Article 854, Civil Code).
ART. 742. Donations made to conceived and unborn children may be accepted by those persons who would legally represent them if they were already born. ART. 854. The preterition or omission of one, some, or all of the compulsory heirs in the direct line, whether living at the time of the execution of the will or born after the death of the testator, shall annul the institution of heir; but the devises and legacies shall be valid insofar as they are not inofficious. If the omitted compulsory heirs should die before the testator, the institution shall be effectual, without prejudice to the right of 'representation.

It is thus clear that the lower court's theory that Article 291 of the Civil Code declaring that support is an obligation of parents and illegitimate children "does not contemplate support to children as yet unborn," violates Article 40 aforesaid, besides imposing a condition that nowhere appears in the text of Article 291. It is true that Article 40 prescribing that "the conceived child shall be considered born for all purposes that are favorable to it" adds further "provided it be born later with the conditions specified in the following article" (i.e., that the foetus be alive at the time it is completely delivered from the mother's womb). This proviso, however, is not a condition precedent to the right of the conceived child; for if it were, the first part of Article 40 would become entirely useless and ineffective. Manresa, in his Commentaries (5th Ed.) to the corresponding Article 29 of the Spanish Civil Code, clearly points this out:
Los derechos atribuidos al nasciturus no son simples expectativas, ni aun en el sentido tecnico que la moderna doctrina da a esta figura juridica sino que constituyen un caso de los propiamente Ilamados 'derechos en estado de pendenci'; el nacimiento del sujeto en las condiciones previstas por el art. 30, no determina el nacimiento de aquellos derechos (que ya existian de antemano), sino que se trata de un hecho que tiene efectos declarativos. (1 Manresa, Op. cit., page 271)

A second reason for reversing the orders appealed from is that for a married man to force a woman not his wife to yield to his lust (as averred in the original complaint in this case) constitutes a clear violation of the rights of his victim that entitles her to claim compensation for the damage caused. Says Article 21 of the Civil Code of the Philippines:
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 rule of Article 21 is supported by Article 2219 of the same Code:

ART 2219. Moral damages may be recovered in the following and analogous cases: (3) Seduction, abduction, rape or other lascivious acts: xxx xxx xxx (10) Acts and actions referred to in Articles 21, 26, 27, 28 ....

Thus, independently of the right to Support of the child she was carrying, plaintiff herself had a cause of action for damages under the terms of the complaint; and the order dismissing it for failure to state a cause of action was doubly in error. WHEREFORE, the orders under appeal are reversed and set aside. Let the case be remanded to the court of origin for further proceedings conformable to this decision. Costs against appellee Felix Icao. So ordered. Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo and Villamor, JJ., concur.

G.R. No. L-41182-3 April 16, 1988 DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants, vs. THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and SEGUNDINA NOGUERA, respondents-appellees.

SARMIENTO , J.: The petitioners invoke the provisions on human relations of the Civil Code in this appeal by certiorari. The facts are beyond dispute:
xxx xxx xxx On the strength of a contract (Exhibit A for the appellant Exhibit 2 for the appellees) entered into on Oct. 19, 1960 by and between Mrs. Segundina Noguera, party of the first part; the Tourist World Service, Inc., represented by Mr. Eliseo Canilao as party of the second part, and hereinafter referred to as appellants, the Tourist World Service, Inc. leased the premises belonging to the party of the first part at Mabini St., Manila for the former-s use as a branch office. In the said contract the party of the third part held herself solidarily liable with the party of the part for the prompt payment of the monthly rental agreed on. When the branch office was opened, the same was run by the herein appellant Una 0. Sevilla payable to Tourist World Service Inc. by any airline for any fare brought in on the efforts of Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to be withheld by the Tourist World Service, Inc. On or about November 24, 1961 (Exhibit 16) the Tourist World Service, Inc. appears to have been informed that Lina Sevilla was connected with a rival firm, the Philippine Travel Bureau, and, since the branch office was anyhow losing, the Tourist World Service considered closing down its office. This was firmed up by two resolutions of the board of directors of Tourist World Service, Inc. dated Dec. 2, 1961 (Exhibits 12 and 13), the first abolishing the office of the manager and vice-president of the Tourist World Service, Inc., Ermita Branch, and the second,authorizing the corporate secretary to receive the properties of the Tourist World Service then located at the said branch office. It further appears that on Jan. 3, 1962, the contract with the appellees for the use of the Branch Office premises was terminated and while the effectivity thereof was Jan. 31, 1962, the appellees no longer used it. As a matter of fact appellants used it since Nov. 1961. Because of this, and to comply with the mandate of the Tourist World Service, the corporate secretary Gabino Canilao went over to the branch office, and, finding the premises locked, and, being unable to contact Lina Sevilla, he padlocked the premises on June 4, 1962 to protect the interests of the Tourist World Service. When neither the appellant Lina Sevilla nor any of her employees could enter the locked premises, a complaint wall filed by the herein appellants against the appellees with a prayer for the issuance of mandatory preliminary injunction. Both appellees answered with counterclaims. For apparent lack of interest of the parties therein, the trial court ordered the dismissal of the case without prejudice.

The appellee Segundina Noguera sought reconsideration of the order dismissing her counterclaim which the court a quo, in an order dated June 8, 1963, granted permitting her to present evidence in support of her counterclaim. On June 17,1963, appellant Lina Sevilla refiled her case against the herein appellees and after the issues were joined, the reinstated counterclaim of Segundina Noguera and the new complaint of appellant Lina Sevilla were jointly heard following which the court a quo ordered both cases dismiss for lack of merit, on the basis of which was elevated the instant appeal on the following assignment of errors: I. THE LOWER COURT ERRED EVEN IN APPRECIATING THE NATURE OF PLAINTIFF-APPELLANT MRS. LINA O. SEVILLA'S COMPLAINT. II. THE LOWER COURT ERRED IN HOLDING THAT APPELLANT MRS. LINA 0. SEVILA'S ARRANGEMENT (WITH APPELLEE TOURIST WORLD SERVICE, INC.) WAS ONE MERELY OF EMPLOYER-EMPLOYEE RELATION AND IN FAILING TO HOLD THAT THE SAID ARRANGEMENT WAS ONE OF JOINT BUSINESS VENTURE. III. THE LOWER COURT ERRED IN RULING THAT PLAINTIFF-APPELLANT MRS. LINA O. SEVILLA IS ESTOPPED FROM DENYING THAT SHE WAS A MERE EMPLOYEE OF DEFENDANT-APPELLEE TOURIST WORLD SERVICE, INC. EVEN AS AGAINST THE LATTER. IV. THE LOWER COURT ERRED IN NOT HOLDING THAT APPELLEES HAD NO RIGHT TO EVICT APPELLANT MRS. LINA O. SEVILLA FROM THE A. MABINI OFFICE BY TAKING THE LAW INTO THEIR OWN HANDS. V. THE LOWER COURT ERRED IN NOT CONSIDERING AT .ALL APPELLEE NOGUERA'S RESPONSIBILITY FOR APPELLANT LINA O. SEVILLA'S FORCIBLE DISPOSSESSION OF THE A. MABINI PREMISES. VI. THE LOWER COURT ERRED IN FINDING THAT APPELLANT APPELLANT MRS. LINA O. SEVILLA SIGNED MERELY AS GUARANTOR FOR RENTALS.

On the foregoing facts and in the light of the errors asigned the issues to be resolved are:
1. Whether the appellee Tourist World Service unilaterally disco the telephone line at the branch office on Ermita; 2. Whether or not the padlocking of the office by the Tourist World Service was actionable or not; and 3. Whether or not the lessee to the office premises belonging to the appellee Noguera was appellees TWS or TWS and the appellant. In this appeal, appealant Lina Sevilla claims that a joint bussiness venture was entered into by and between her and appellee TWS with offices at the Ermita branch office and that she was not an employee of the TWS to the end that her relationship with TWS was one of a joint business venture appellant made declarations showing:

1. Appellant Mrs. Lina 0. Sevilla, a prominent figure and wife of an eminent eye, ear and nose specialist as well as a imediately columnist had been in the travel business prior to the establishment of the joint business venture with appellee Tourist World Service, Inc. and appellee Eliseo Canilao, her compadre, she being the godmother of one of his children, with her own clientele, coming mostly from her own social circle (pp. 3-6 tsn. February 16,1965). 2. Appellant Mrs. Sevilla was signatory to a lease agreement dated 19 October 1960 (Exh. 'A') covering the premises at A. Mabini St., she expressly warranting and holding [sic] herself 'solidarily' liable with appellee Tourist World Service, Inc. for the prompt payment of the monthly rentals thereof to other appellee Mrs. Noguera (pp. 14-15, tsn. Jan. 18,1964). 3. Appellant Mrs. Sevilla did not receive any salary from appellee Tourist World Service, Inc., which had its own, separate office located at the Trade & Commerce Building; nor was she an employee thereof, having no participation in nor connection with said business at the Trade & Commerce Building (pp. 16-18 tsn Id.). 4. Appellant Mrs. Sevilla earned commissions for her own passengers, her own bookings her own business (and not for any of the business of appellee Tourist World Service, Inc.) obtained from the airline companies. She shared the 7% commissions given by the airline companies giving appellee Tourist World Service, Lic. 3% thereof aid retaining 4% for herself (pp. 18 tsn. Id.) 5. Appellant Mrs. Sevilla likewise shared in the expenses of maintaining the A. Mabini St. office, paying for the salary of an office secretary, Miss Obieta, and other sundry expenses, aside from desicion the office furniture and supplying some of fice furnishings (pp. 15,18 tsn. April 6,1965), appellee Tourist World Service, Inc. shouldering the rental and other expenses in consideration for the 3% split in the co procured by appellant Mrs. Sevilla (p. 35 tsn Feb. 16,1965). 6. It was the understanding between them that appellant Mrs. Sevilla would be given the title of branch manager for appearance's sake only (p. 31 tsn. Id.), appellee Eliseo Canilao admit that it was just a title for dignity (p. 36 tsn. June 18, 1965testimony of appellee Eliseo Canilao pp. 38-39 tsn April 61965testimony of corporate secretary Gabino Canilao (pp- 2-5, Appellants' Reply Brief) Upon the other hand, appellee TWS contend that the appellant was an employee of the appellee Tourist World Service, Inc. and as such was designated manager.
1

xxx xxx xxx

The trial court 2 held for the private respondent on the premise that the private respondent, Tourist World Service, Inc., being the true lessee, it was within its prerogative to terminate the lease and padlock the premises. 3 It likewise found the petitioner, Lina Sevilla, to be a mere employee of said Tourist World Service, Inc. and as such, she was bound by the acts of her employer. 4 The respondent Court of Appeal 5 rendered an affirmance. The petitioners now claim that the respondent Court, in sustaining the lower court, erred. Specifically, they state: I THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION IN HOLDING THAT "THE PADLOCKING OF THE PREMISES BY TOURIST WORLD SERVICE INC. WITHOUT THE KNOWLEDGE AND CONSENT OF THE APPELLANT LINA SEVILLA ... WITHOUT NOTIFYING MRS. LINA O. SEVILLA OR ANY OF HER EMPLOYEES AND WITHOUT INFORMING COUNSEL FOR THE APPELLANT (SEVILIA), WHO IMMEDIATELY BEFORE THE PADLOCKING INCIDENT, WAS IN CONFERENCE WITH THE CORPORATE SECRETARY OF TOURIST WORLD SERVICE (ADMITTEDLY THE PERSON WHO PADLOCKED THE SAID OFFICE), IN THEIR ATTEMP AMICABLY SETTLE THE CONTROVERSY BETWEEN THE APPELLANT (SEVILLA) AND THE TOURIST WORLD SERVICE ... (DID NOT) ENTITLE THE LATTER TO THE RELIEF OF DAMAGES" (ANNEX "A" PP. 7,8 AND ANNEX "B" P. 2) DECISION AGAINST DUE PROCESS WHICH ADHERES TO THE RULE OF LAW. II THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION IN DENYING APPELLANT SEVILLA RELIEF BECAUSE SHE HAD "OFFERED TO WITHDRAW HER COMP PROVIDED THAT ALL CLAIMS AND COUNTERCLAIMS LODGED BY BOTH APPELLEES WERE WITHDRAWN." (ANNEX "A" P. 8) III THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION IN DENYING-IN FACT NOT PASSING AND RESOLVING-APPELLANT SEVILLAS CAUSE OF ACTION FOUNDED ON ARTICLES 19, 20 AND 21 OF THE CIVIL CODE ON RELATIONS. IV THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS DISCRETION IN DENYING APPEAL APPELLANT SEVILLA

RELIEF YET NOT RESOLVING HER CLAIM THAT SHE WAS IN JOINT VENTURE WITH TOURIST WORLD SERVICE INC. OR AT LEAST ITS AGENT COUPLED WITH AN INTEREST WHICH COULD NOT BE TERMINATED OR REVOKED UNILATERALLY BY TOURIST WORLD SERVICE INC. 6 As a preliminary inquiry, the Court is asked to declare the true nature of the relation between Lina Sevilla and Tourist World Service, Inc. The respondent Court of see fit to rule on the question, the crucial issue, in its opinion being "whether or not the padlocking of the premises by the Tourist World Service, Inc. without the knowledge and consent of the appellant Lina Sevilla entitled the latter to the relief of damages prayed for and whether or not the evidence for the said appellant supports the contention that the appellee Tourist World Service, Inc. unilaterally and without the consent of the appellant disconnected the telephone lines of the Ermita branch office of the appellee Tourist World Service, Inc. 7 Tourist World Service, Inc., insists, on the other hand, that Lina SEVILLA was a mere employee, being "branch manager" of its Ermita "branch" office and that inferentially, she had no say on the lease executed with the private respondent, Segundina Noguera. The petitioners contend, however, that relation between the between parties was one of joint venture, but concede that "whatever might have been the true relationship between Sevilla and Tourist World Service," the Rule of Law enjoined Tourist World Service and Canilao from taking the law into their own hands, 8 in reference to the padlocking now questioned. The Court finds the resolution of the issue material, for if, as the private respondent, Tourist World Service, Inc., maintains, that the relation between the parties was in the character of employer and employee, the courts would have been without jurisdiction to try the case, labor disputes being the exclusive domain of the Court of Industrial Relations, later, the Bureau Of Labor Relations, pursuant to statutes then in force. 9 In this jurisdiction, there has been no uniform test to determine the evidence of an employer-employee relation. In general, we have relied on the so-called right of control test, "where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end." 10 Subsequently, however, we have considered, in addition to the standard of right-of control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, in determining the existence of an employer-employee relationship. 11 The records will show that the petitioner, Lina Sevilla, was not subject to control by the private respondent Tourist World Service, Inc., either as to the result of the enterprise or as to the means used in connection therewith. In the first place, under the contract of lease covering the Tourist Worlds Ermita office, she had bound herself in solidum as and for rental payments, an arrangement that would be like claims of a master-servant relationship. True the respondent Court would later minimize her participation in the lease as one of mere guaranty, 12 that does

not make her an employee of Tourist World, since in any case, a true employee cannot be made to part with his own money in pursuance of his employer's business, or otherwise, assume any liability thereof. In that event, the parties must be bound by some other relation, but certainly not employment. In the second place, and as found by the Appellate Court, '[w]hen the branch office was opened, the same was run by the herein appellant Lina O. Sevilla payable to Tourist World Service, Inc. by any airline for any fare brought in on the effort of Mrs. Lina Sevilla. 13 Under these circumstances, it cannot be said that Sevilla was under the control of Tourist World Service, Inc. "as to the means used." Sevilla in pursuing the business, obviously relied on her own gifts and capabilities. It is further admitted that Sevilla was not in the company's payroll. For her efforts, she retained 4% in commissions from airline bookings, the remaining 3% going to Tourist World. Unlike an employee then, who earns a fixed salary usually, she earned compensation in fluctuating amounts depending on her booking successes. The fact that Sevilla had been designated 'branch manager" does not make her, ergo, Tourist World's employee. As we said, employment is determined by the right-of-control test and certain economic parameters. But titles are weak indicators. In rejecting Tourist World Service, Inc.'s arguments however, we are not, as a consequence, accepting Lina Sevilla's own, that is, that the parties had embarked on a joint venture or otherwise, a partnership. And apparently, Sevilla herself did not recognize the existence of such a relation. In her letter of November 28, 1961, she expressly 'concedes your [Tourist World Service, Inc.'s] right to stop the operation of your branch office 14 in effect, accepting Tourist World Service, Inc.'s control over the manner in which the business was run. A joint venture, including a partnership, presupposes generally a of standing between the joint co-venturers or partners, in which each party has an equal proprietary interest in the capital or property contributed 15 and where each party exercises equal rights in the conduct of the business. 16 furthermore, the parties did not hold themselves out as partners, and the building itself was embellished with the electric sign "Tourist World Service, Inc. 17in lieu of a distinct partnership name. It is the Court's considered opinion, that when the petitioner, Lina Sevilla, agreed to (wo)man the private respondent, Tourist World Service, Inc.'s Ermita office, she must have done so pursuant to a contract of agency. It is the essence of this contract that the agent renders services "in representation or on behalf of another. 18 In the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of her principal, Tourist World Service, Inc. As compensation, she received 4% of the proceeds in the concept of commissions. And as we said,

Sevilla herself based on her letter of November 28, 1961, pre-assumed her principal's authority as owner of the business undertaking. We are convinced, considering the circumstances and from the respondent Court's recital of facts, that the ties had contemplated a principal agent relationship, rather than a joint managament or a partnership.. But unlike simple grants of a power of attorney, the agency that we hereby declare to be compatible with the intent of the parties, cannot be revoked at will. The reason is that it is one coupled with an interest, the agency having been created for mutual interest, of the agent and the principal. 19 It appears that Lina Sevilla is a bona fide travel agent herself, and as such, she had acquired an interest in the business entrusted to her. Moreover, she had assumed a personal obligation for the operation thereof, holding herself solidarily liable for the payment of rentals. She continued the business, using her own name, after Tourist World had stopped further operations. Her interest, obviously, is not to the commissions she earned as a result of her business transactions, but one that extends to the very subject matter of the power of management delegated to her. It is an agency that, as we said, cannot be revoked at the pleasure of the principal. Accordingly, the revocation complained of should entitle the petitioner, Lina Sevilla, to damages. As we have stated, the respondent Court avoided this issue, confining itself to the telephone disconnection and padlocking incidents. Anent the disconnection issue, it is the holding of the Court of Appeals that there is 'no evidence showing that the Tourist World Service, Inc. disconnected the telephone lines at the branch office. 20 Yet, what cannot be denied is the fact that Tourist World Service, Inc. did not take pains to have them reconnected. Assuming, therefore, that it had no hand in the disconnection now complained of, it had clearly condoned it, and as owner of the telephone lines, it must shoulder responsibility therefor. The Court of Appeals must likewise be held to be in error with respect to the padlocking incident. For the fact that Tourist World Service, Inc. was the lessee named in the lease con-tract did not accord it any authority to terminate that contract without notice to its actual occupant, and to padlock the premises in such fashion. As this Court has ruled, the petitioner, Lina Sevilla, had acquired a personal stake in the business itself, and necessarily, in the equipment pertaining thereto. Furthermore, Sevilla was not a stranger to that contract having been explicitly named therein as a third party in charge of rental payments (solidarily with Tourist World, Inc.). She could not be ousted from possession as summarily as one would eject an interloper. The Court is satisfied that from the chronicle of events, there was indeed some malevolent design to put the petitioner, Lina Sevilla, in a bad light following disclosures that she had worked for a rival firm. To be sure, the respondent court speaks of alleged business losses to justify the closure '21 but there is no clear showing that Tourist World Ermita Branch had in fact sustained such reverses,

let alone, the fact that Sevilla had moonlit for another company. What the evidence discloses, on the other hand, is that following such an information (that Sevilla was working for another company), Tourist World's board of directors adopted two resolutions abolishing the office of 'manager" and authorizing the corporate secretary, the respondent Eliseo Canilao, to effect the takeover of its branch office properties. On January 3, 1962, the private respondents ended the lease over the branch office premises, incidentally, without notice to her. It was only on June 4, 1962, and after office hours significantly, that the Ermita office was padlocked, personally by the respondent Canilao, on the pretext that it was necessary to Protect the interests of the Tourist World Service. " 22 It is strange indeed that Tourist World Service, Inc. did not find such a need when it cancelled the lease five months earlier. While Tourist World Service, Inc. would not pretend that it sought to locate Sevilla to inform her of the closure, but surely, it was aware that after office hours, she could not have been anywhere near the premises. Capping these series of "offensives," it cut the office's telephone lines, paralyzing completely its business operations, and in the process, depriving Sevilla articipation therein. This conduct on the part of Tourist World Service, Inc. betrays a sinister effort to punish Sevillsa it had perceived to be disloyalty on her part. It is offensive, in any event, to elementary norms of justice and fair play. We rule therefore, that for its unwarranted revocation of the contract of agency, the private respondent, Tourist World Service, Inc., should be sentenced to pay damages. Under the Civil Code, moral damages may be awarded for "breaches of contract where the defendant acted ... in bad faith. 23 We likewise condemn Tourist World Service, Inc. to pay further damages for the moral injury done to Lina Sevilla from its brazen conduct subsequent to the cancellation of the power of attorney granted to her on the authority of Article 21 of the Civil Code, in relation to Article 2219 (10) thereof
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. 24 ART. 2219. Moral damages 25 may be recovered in the following and analogous cases: xxx xxx xxx (10) Acts and actions refered into article 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The respondent, Eliseo Canilao, as a joint tortfeasor is likewise hereby ordered to respond for the same damages in a solidary capacity.

Insofar, however, as the private respondent, Segundina Noguera is concerned, no evidence has been shown that she had connived with Tourist World Service, Inc. in the disconnection and padlocking incidents. She cannot therefore be held liable as a cotortfeasor. The Court considers the sums of P25,000.00 as and for moral damages,24 P10,000.00 as exemplary damages, 25 and P5,000.00 as nominal 26 and/or temperate 27 damages, to be just, fair, and reasonable under the circumstances. WHEREFORE, the Decision promulgated on January 23, 1975 as well as the Resolution issued on July 31, 1975, by the respondent Court of Appeals is hereby REVERSED and SET ASIDE. The private respondent, Tourist World Service, Inc., and Eliseo Canilao, are ORDERED jointly and severally to indemnify the petitioner, Lina Sevilla, the sum of 25,00.00 as and for moral damages, the sum of P10,000.00, as and for exemplary damages, and the sum of P5,000.00, as and for nominal and/or temperate damages. Costs against said private respondents. SO ORDERED. Yap (Chairman), Melencio-Herrera, Paras and Padilla, JJ., concur.

Footnotes
1 Rollo, 30-45. 2 Court of First Instance of Manila, Branch XIX Montesa, Agustin, Presiding Judge. 3 Rollo, Id 55; Record on Appeal, 38. 4 Record on Appeal, Id., 37-38. 5 Gaviola, Jr., RAmon, J., Reyes, Luis, and De Castro, Pacific, JJ., Conccurring 6 Rollo, Id., 124; Brief for Petitioners, 1-2. 7 Rollo, Id., 36. 8 Id., 21; emphasis in the original. 9 See Rep. Act No. 875 See also Rep. Act No. 1052, as amended by Rep. Act No. 1787. 10 LVN Pictures, Inc. v. Philippine Musicians Guild, No. L-12582, January 28,1961, 1 SCRA 132,173 (1961); emphasis in the original. 11 Visayan Stevedore Trans. Co., et al. v. C.I.R., et al., No. L-21696, February 25,1967,19 SCRA 426 (1967).

12 Rollo, Id., 40. 13 Id 31. 14 Id., 47. 15 BAUTISTA, TREATISE ON PHILIPPINE PARTNERSHIP LAW 34 (1978). 16 Op cit 37. In Tuazon v. Balanos [95 Phil. 106 (1954)], this Court distinguished between a joint venture and a partnership but this view has since raised questions from authorities. According to Campos, there seems to be no fundamental distinction between the two forms of business combinations. CAMPOS, THE CORPORATION CODE 12 (1981).] For p of this case, we use the terms of interchangeable. 17 See rollo, id. 18 CIVIL CODE, art. 1868. 19 See VI PADILLA, CIVIL LAW 350 (1974). 20 Rollo, id., 36. 21 Id, 31. 22 Id. 23 CIVIL CODE, art. 2220. 24 Supra. 25 Supra, art. 2232. 26 Supra art. 2221. 27 Supra, art. 2224.

G.R. No. 88694 January 11, 1993 ALBENSON ENTERPRISES CORP., JESSE YAP, AND BENJAMIN MENDIONA, petitioners, vs. THE COURT OF APPEALS AND EUGENIO S. BALTAO, respondents. Puruganan, Chato, Chato & Tan for petitioners. Lino M. Patajo, Francisco Ma. Chanco, Ananiano Desierto and Segundo Mangohig for private respondent.

BIDIN, J.: This petition assails the decision of respondent Court of Appeals in CA-GR CV No. 14948 entitled "Eugenio S. Baltao, plaintiff-appellee vs. Albenson Enterprises Corporation, et al, defendants-appellants", which modified the judgment of the Regional Trial Court of Quezon City, Branch XCVIII in Civil Case No. Q-40920 and ordered petitioner to pay private respondent, among others, the sum of P500,000.00 as moral damages and attorney's fees in the amount of P50,000.00. The facts are not disputed. In September, October, and November 1980, petitioner Albenson Enterprises Corporation (Albenson for short) delivered to Guaranteed Industries, Inc. (Guaranteed for short) located at 3267 V. Mapa Street, Sta. Mesa, Manila, the mild steel plates which the latter ordered. As part payment thereof, Albenson was given Pacific Banking Corporation Check No. 136361 in the amount of P2,575.00 and drawn against the account of E.L. Woodworks ( Rollo, p. 148). When presented for payment, the check was dishonored for the reason "Account Closed." Thereafter, petitioner Albenson, through counsel, traced the origin of the dishonored check. From the records of the Securities and Exchange Commission (SEC), Albenson discovered that the president of Guaranteed, the recipient of the unpaid mild steel plates, was one "Eugenio S. Baltao." Upon further inquiry, Albenson was informed by the Ministry of Trade and Industry that E.L. Woodworks, a single proprietorship business, was registered in the name of one "Eugenio Baltao". In addition, upon verification with the drawee bank, Pacific Banking Corporation, Albenson was advised that the signature appearing on the subject check belonged to one "Eugenio Baltao."

After obtaining the foregoing information, Albenson, through counsel, made an extrajudicial demand upon private respondent Eugenio S. Baltao, president of Guaranteed, to replace and/or make good the dishonored check. Respondent Baltao, through counsel, denied that he issued the check, or that the signature appearing thereon is his. He further alleged that Guaranteed was a defunct entity and hence, could not have transacted business with Albenson. On February 14, 1983, Albenson filed with the Office of the Provincial Fiscal of Rizal a complaint against Eugenio S. Baltao for violation of Batas Pambansa Bilang 22. Submitted to support said charges was an affidavit of petitioner Benjamin Mendiona, an employee of Albenson. In said affidavit, the abovementioned circumstances were stated. It appears, however, that private respondent has a namesake, his son Eugenio Baltao III, who manages a business establishment, E.L. Woodworks, on the ground floor of the Baltao Building, 3267 V. Mapa Street, Sta. Mesa, Manila, the very same business address of Guaranteed. On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed an information against Eugenio S. Baltao for Violation of Batas Pambansa Bilang 22. In filing said information, Fiscal Sumaway claimed that he had given Eugenio S. Baltao opportunity to submit controverting evidence, but the latter failed to do so and therefore, was deemed to have waived his right. Respondent Baltao, claiming ignorance of the complaint against him, immediately filed with the Provincial Fiscal of Rizal a motion for reinvestigation, alleging that it was not true that he had been given an opportunity to be heard in the preliminary investigation conducted by Fiscal Sumaway, and that he never had any dealings with Albenson or Benjamin Mendiona, consequently, the check for which he has been accused of having issued without funds was not issued by him and the signature in said check was not his. On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal reversed the finding of Fiscal Sumaway and exonerated respondent Baltao. He also instructed the Trial Fiscal to move for dismissal of the information filed against Eugenio S. Baltao. Fiscal Castro found that the signature in PBC Check No. 136361 is not the signature of Eugenio S. Baltao. He also found that there is no showing in the records of the preliminary investigation that Eugenio S. Baltao actually received notice of the said investigation. Fiscal Castro then castigated Fiscal Sumaway for failing to exercise care and prudence in the performance of his duties, thereby causing injustice to respondent who was not properly notified of the complaint against him and of the requirement to submit his counter evidence. Because of the alleged unjust filing of a criminal case against him for allegedly issuing a check which bounced in violation of Batas Pambansa Bilang 22 for a

measly amount of P2,575.00, respondent Baltao filed before the Regional Trial Court of Quezon City a complaint for damages against herein petitioners Albenson Enterprises, Jesse Yap, its owner, and Benjamin Mendiona, its employee. In its decision, the lower court observed that "the check is drawn against the account of "E.L. Woodworks," not of Guaranteed Industries of which plaintiff used to be President. Guaranteed Industries had been inactive and had ceased to exist as a corporation since 1975. . . . . The possibility is that it was with Gene Baltao or Eugenio Baltao III, a son of plaintiff who had a business on the ground floor of Baltao Building located on V. Mapa Street, that the defendants may have been dealing with . . . ." (Rollo, pp. 41-42). The dispositive portion of the trial court 's decision reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants ordering the latter to pay plaintiff jointly and severally: 1. actual or compensatory damages of P133,350.00; 2. moral damages of P1,000,000.00 (1 million pesos); 3. exemplary damages of P200,000.00; 4. attorney's fees of P100,000.00; 5 costs. Defendants' counterclaim against plaintiff and claim for damages against Mercantile Insurance Co. on the bond for the issuance of the writ of attachment at the instance of plaintiff are hereby dismissed for lack of merit. ( Rollo, pp. 3839).

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

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

Dissatisfied with the above ruling, petitioners Albenson Enterprises Corp., Jesse Yap, and Benjamin Mendiona filed the instant Petition, alleging that the appellate court erred in:
1. Concluding that private respondent's cause of action is not one based on malicious prosecution but one for abuse of rights under Article 21 of the Civil Code notwithstanding the fact that the basis of a civil action for malicious prosecution is Article 2219 in relation to Article 21 or Article 2176 of the Civil Code . . . .

2. Concluding that "hitting at and in effect maligning (private respondent) with an unjust criminal case was, without more, a plain case of abuse of rights by misdirection" and "was therefore, actionable by itself," and which "became inordinately blatant and grossly aggravated when . . . (private respondent) was deprived of his basic right to notice and a fair hearing in the so-called preliminary investigation . . . . " 3. Concluding that petitioner's "actuations in this case were coldly deliberate and calculated", no evidence having been adduced to support such a sweeping statement. 4. Holding the petitioner corporation, petitioner Yap and petitioner Mendiona jointly and severally liable without sufficient basis in law and in fact. 5. Awarding respondents 5.1. P133,350.00 as actual or compensatory damages, even in the absence of sufficient evidence to show that such was actually suffered. 5.2. P500,000.00 as moral damages considering that the evidence in this connection merely involved private respondent's alleged celebrated status as a businessman, there being no showing that the act complained of adversely affected private respondent's reputation or that it resulted to material loss. 5.3. P200,000.00 as exemplary damages despite the fact that petitioners were duly advised by counsel of their legal recourse. 5.4. P50,000.00 as attorney's fees, no evidence having been adduced to justify such an award (Rollo, pp. 4-6).

Petitioners contend that the civil case filed in the lower court was one for malicious prosecution. Citing the case of Madera vs. Lopez (102 SCRA 700 [1981]), they assert that the absence of malice on their part absolves them from any liability for malicious prosecution. Private respondent, on the other hand, anchored his complaint for Damages on Articles 19, 20, and 21 ** of the Civil Code. Article 19, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which may be observed not only in the exercise of one's rights but also in the performance of one's duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes the primordial limitation on all rights: that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. Although

the requirements of each provision is different, these three (3) articles are all related to each other. As the eminent Civilist Senator Arturo Tolentino puts it: "With this article (Article 21), combined with articles 19 and 20, the scope of our law on civil wrongs has been very greatly broadened; it has become much more supple and adaptable than the Anglo-American law on torts. It is now difficult to conceive of any malevolent exercise of a right which could not be checked by the application of these articles" (Tolentino, 1 Civil Code of the Philippines 72). There is however, no hard and fast rule which can be applied to determine whether or not the principle of abuse of rights may be invoked. The question of whether or not the principle of abuse of rights has been violated, resulting in damages under Articles 20 and 21 or other applicable provision of law, depends on the circumstances of each case. (Globe Mackay Cable and Radio Corporation vs. Court of Appeals, 176 SCRA 778 [1989]). The elements of an abuse of right under Article 19 are the following: (1) There is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another. Article 20 speaks of the general sanction for all other provisions of law which do not especially provide for their own sanction (Tolentino, supra, p. 71). Thus, anyone who, whether willfully or negligently, in the exercise of his legal right or duty, causes damage to another, shall indemnify his victim for injuries suffered thereby. Article 21 deals with acts contra bonus mores, and has the following elements: 1) There is an act which is legal; 2) but which is contrary to morals, good custom, public order, or public policy; 3) and it is done with intent to injure. Thus, under any of these three (3) provisions of law, an act which causes injury to another may be made the basis for an award of damages. There is a common element under Articles 19 and 21, and that is, the act must be intentional. However, Article 20 does not distinguish: the act may be done either "willfully", or "negligently". The trial court as well as the respondent appellate court mistakenly lumped these three (3) articles together, and cited the same as the bases for the award of damages in the civil complaint filed against petitioners, thus:
With the foregoing legal provisions (Articles 19, 20, and 21) in focus, there is not much difficulty in ascertaining the means by which appellants' first assigned error should be resolved, given the admitted fact that when there was an attempt to collect the amount of P2,575.00, the defendants were explicitly warned that plaintiff Eugenio S. Baltao is not the Eugenio Baltao defendants had been dealing with (supra, p. 5). When the defendants nevertheless insisted and persisted in filing a case a criminal case no less against plaintiff, said defendants ran afoul of the legal provisions (Articles 19, 20, and 21 of the Civil Code) cited by the lower court and heretofore quoted ( supra). Defendants, not having been paid the amount of P2,575.00, certainly had the right to complain. But that right is limited by certain constraints. Beyond that limit

is the area of excess, of abuse of rights. (Rollo, pp. 44-45).

Assuming, arguendo, that all the three (3) articles, together and not independently of each one, could be validly made the bases for an award of damages based on the principle of "abuse of right", under the circumstances, We see no cogent reason for such an award of damages to be made in favor of private respondent. Certainly, petitioners could not be said to have violated the aforestated principle of abuse of right. What prompted petitioners to file the case for violation of Batas Pambansa Bilang 22 against private respondent was their failure to collect the amount of P2,575.00 due on a bounced check which they honestly believed was issued to them by private respondent. Petitioners had conducted inquiries regarding the origin of the check, and yielded the following results: from the records of the Securities and Exchange Commission, it was discovered that the President of Guaranteed (the recipient of the unpaid mild steel plates), was one "Eugenio S. Baltao"; an inquiry with the Ministry of Trade and Industry revealed that E.L. Woodworks, against whose account the check was drawn, was registered in the name of one "Eugenio Baltao"; verification with the drawee bank, the Pacific Banking Corporation, revealed that the signature appearing on the check belonged to one "Eugenio Baltao". In a letter dated December 16, 1983, counsel for petitioners wrote private respondent demanding that he make good the amount of the check. Counsel for private respondent wrote back and denied, among others, that private respondent ever transacted business with Albenson Enterprises Corporation; that he ever issued the check in question. Private respondent's counsel even went further: he made a warning to defendants to check the veracity of their claim. It is pivotal to note at this juncture that in this same letter, if indeed private respondent wanted to clear himself from the baseless accusation made against his person, he should have made mention of the fact that there are three (3) persons with the same name, i.e.: Eugenio Baltao, Sr., Eugenio S. Baltao, Jr. (private respondent), and Eugenio Baltao III (private respondent's son, who as it turned out later, was the issuer of the check). He, however, failed to do this. The last two Baltaos were doing business in the same building Baltao Building located at 3267 V. Mapa Street, Sta. Mesa, Manila. The mild steel plates were ordered in the name of Guaranteed of which respondent Eugenio S. Baltao is the president and delivered to Guaranteed at Baltao building. Thus, petitioners had every reason to believe that the Eugenio Baltao who issued the bouncing check is respondent Eugenio S. Baltao when their counsel wrote respondent to make good the amount of the check and upon refusal, filed the complaint for violation of BP Blg. 22. Private respondent, however, did nothing to clarify the case of mistaken identity at first hand. Instead, private respondent waited in ambush and thereafter

pounced on the hapless petitioners at a time he thought was propitious by filing an action for damages. The Court will not countenance this devious scheme. The criminal complaint filed against private respondent after the latter refused to make good the amount of the bouncing check despite demand was a sincere attempt on the part of petitioners to find the best possible means by which they could collect the sum of money due them. A person who has not been paid an obligation owed to him will naturally seek ways to compel the debtor to pay him. It was normal for petitioners to find means to make the issuer of the check pay the amount thereof. In the absence of a wrongful act or omission or of fraud or bad faith, moral damages cannot be awarded and that the adverse result of an action does not per se make the action wrongful and subject the actor to the payment of damages, for the law could not have meant to impose a penalty on the right to litigate (Rubio vs. Court of Appeals, 141 SCRA 488 [1986]). In the case at bar, private respondent does not deny that the mild steel plates were ordered by and delivered to Guaranteed at Baltao building and as part payment thereof, the bouncing check was issued by one Eugenio Baltao. Neither had private respondent conveyed to petitioner that there are two Eugenio Baltaos conducting business in the same building he and his son Eugenio Baltao III. Considering that Guaranteed, which received the goods in payment of which the bouncing check was issued is owned by respondent, petitioner acted in good faith and probable cause in filing the complaint before the provincial fiscal. To constitute malicious prosecution, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person, and that it was initiated deliberately by the defendant knowing that his charges were false and groundless. Concededly, the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution. (Manila Gas Corporation vs. Court of Appeals, 100 SCRA 602 [1980]). Still, private respondent argues that liability under Articles 19, 20, and 21 of the Civil Code is so encompassing that it likewise includes liability for damages for malicious prosecution under Article 2219 (8). True, a civil action for damages for malicious prosecution is allowed under the New Civil Code, more specifically Articles 19, 20, 26, 29, 32, 33, 35, and 2219 (8) thereof. In order that such a case can prosper, however, the following three (3) elements must be present, to wit: (1) The fact of the prosecution and the further fact that the defendant was himself the prosecutor, and that the action was finally terminated with an acquittal; (2) That in bringing the action, the prosecutor acted without probable cause; (3) The prosecutor was actuated or impelled by legal malice (Lao vs. Court of Appeals, 199 SCRA 58, [1991]). Thus, a party injured by the filing of a court case against him, even if he is later on absolved, may file a case for damages grounded either on the principle of abuse of rights, or on malicious prosecution. As earlier stated, a complaint for damages based on malicious prosecution will prosper only if the three (3)

elements aforecited are shown to exist. In the case at bar, the second and third elements were not shown to exist. It is well-settled that one cannot be held liable for maliciously instituting a prosecution where one has acted with probable cause. "Probable cause is the existence of such facts and circumstances as would excite the belief, in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. In other words, a suit will lie only in cases where a legal prosecution has been carried on without probable cause. The reason for this rule is that it would be a very great discouragement to public justice, if prosecutors, who had tolerable ground of suspicion, were liable to be sued at law when their indictment miscarried" (Que vs. Intermediate Appellate Court, 169 SCRA 137 [1989]). The presence of probable cause signifies, as a legal consequence, the absence of malice. In the instant case, it is evident that petitioners were not motivated by malicious intent or by sinister design to unduly harass private respondent, but only by a well-founded anxiety to protect their rights when they filed the criminal complaint against private respondent.
To constitute malicious prosecution, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person, that it was initiated deliberately by the defendant knowing that his charges were false and groundless. Concededly, the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution. Proof and motive that the institution of the action was prompted by a sinister design to vex and humiliate a person must be clearly and preponderantly established to entitle the victims to damages (Ibid.).

In the case at bar, there is no proof of a sinister design on the part of petitioners to vex or humiliate private respondent by instituting the criminal case against him. While petitioners may have been negligent to some extent in determining the liability of private respondent for the dishonored check, the same is not so gross or reckless as to amount to bad faith warranting an award of damages. The root of the controversy in this case is founded on a case of mistaken identity. It is possible that with a more assiduous investigation, petitioners would have eventually discovered that private respondent Eugenio S. Baltao is not the "Eugenio Baltao" responsible for the dishonored check. However, the record shows that petitioners did exert considerable effort in order to determine the liability of private respondent. Their investigation pointed to private respondent as the "Eugenio Baltao" who issued and signed the dishonored check as the president of the debtor-corporation Guaranteed Enterprises. Their error in proceeding against the wrong individual was obviously in the nature of an innocent mistake, and cannot be characterized as having been committed in bad faith. This error could have been discovered if respondent had submitted his counter-affidavit before investigating fiscal Sumaway and was immediately rectified by Provincial Fiscal Mauro Castro upon discovery thereof, i.e., during the reinvestigation resulting in the dismissal of the complaint.

Furthermore, the adverse result of an action does not per se make the act wrongful and subject the actor to the payment of moral damages. The law could not have meant to impose a penalty on the right to litigate, such right is so precious that moral damages may not be charged on those who may even exercise it erroneously. And an adverse decision does not ipso facto justify the award of attorney's fees to the winning party (Garcia vs. Gonzales, 183 SCRA 72 [1990]). Thus, an award of damages and attorney's fees is unwarranted where the action was filed in good faith. If damage results from a person's exercising his legal rights, it is damnum absque injuria (Ilocos Norte Electric Company vs. Court of Appeals, 179 SCRA 5 [1989]). Coming now to the claim of private respondent for actual or compensatory damages, the records show that the same was based solely on his allegations without proof to substantiate the same. He did not present proof of the cost of the medical treatment which he claimed to have undergone as a result of the nervous breakdown he suffered, nor did he present proof of the actual loss to his business caused by the unjust litigation against him. In determining actual damages, the court cannot rely on speculation, conjectures or guesswork as to the amount. Without the actual proof of loss, the award of actual damages becomes erroneous (Guilatco vs. City of Dagupan, 171 SCRA 382 [1989]). Actual and compensatory damages are those recoverable because of pecuniary loss in business, trade, property, profession, job or occupation and the same must be proved, otherwise, if the proof is flimsy and unsubstantiated, no damages will be given (Rubio vs. Court of Appeals, 141 SCRA 488 [1986]). For these reasons, it was gravely erroneous for respondent court to have affirmed the award of actual damages in favor of private respondent in the absence of proof thereof. Where there is no evidence of the other party having acted in wanton, fraudulent or reckless, or oppressive manner, neither may exemplary damages be awarded (Dee Hua Liong Electrical Equipment Corporation vs. Reyes, 145 SCRA 488 [1986]). As to the award of attorney's fees, it is well-settled that the same is the exception rather than the general rule. Needless to say, the award of attorney's fees must be disallowed where the award of exemplary damages is eliminated (Article 2208, Civil Code; Agustin vs. Court of Appeals, 186 SCRA 375 [1990]). Moreover, in view of the fact that there was no malicious prosecution against private respondent, attorney's fees cannot be awarded him on that ground. In the final analysis, there is no proof or showing that petitioners acted maliciously or in bad faith in the filing of the case against private respondent. Consequently, in the absence of proof of fraud and bad faith committed by

petitioners, they cannot be held liable for damages (Escritor, Jr. vs. Intermediate Appellate Court, 155 SCRA 577 [1987]). No damages can be awarded in the instant case, whether based on the principle of abuse of rights, or for malicious prosecution. The questioned judgment in the instant case attests to the propensity of trial judges to award damages without basis. Lower courts are hereby cautioned anew against awarding unconscionable sums as damages without bases therefor. WHEREFORE, the petition is GRANTED and the decision of the Court of Appeals in C.A. G.R. C.V. No. 14948 dated May 13, 1989, is hereby REVERSED and SET ASIDE. Costs against respondent Baltao. SO ORDERED. Gutierrez, Jr., Davide, Jr., Romero and Melo, JJ., concur .

Footnotes
** "Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. "Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same. "Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.

G.R. No. 106664 March 8, 1995 PHILIPPINE AIR LINES, petitioner, vs. FLORANTE A. MIANO, respondent.

PUNO, J.: The petitioner questions the Decision of the Regional Trial Court of Makati, Branch 148, dated July 29, 1992, 1 awarding private respondent moral and exemplary damages and attorney's fees for want of legal justification. We grant the petition. The facts are uncontroverted. On August 31, 1988, private respondent took petitioner's flight PR 722, Mabuhay Class, bound for Frankfurt, Germany. He had an immediate onward connecting flight via Lufthansa flight LH 1452 to Vienna, Austria. At the Ninoy Aquino International Airport, he checked-in one brown suitcase weighing twenty (20) kilograms 2 but did not declare a higher valuation. He claimed that his suitcase contained money, documents, one Nikkon camera with zoom lens, suits, sweaters, shirts, pants, shoes, and other accessories. 3 Upon private respondent's arrival at Vienna via Lufthansa flight LH 1452, his checked-in baggage was missing. He reported the matter to the Lufthansa authorities. After three (3) hours of waiting in vain, he proceeded to Piestany, Czechoslovakia. Eleven (11) days after or on September 11, 1988, his suitcase was delivered to him in his hotel in Piestany, Czechoslovakia. He claimed that because of the delay in the delivery of his suitcase, he was forced to borrow money to buy some clothes, to pay $200.00 for the transportation of his baggage from Vienna to Piestany, and lost his Nikkon camera. 4 In November 1988, private respondent wrote to petitioner a letter demanding: (1) P10,000.00 cost of allegedly lost Nikkon camera; (2) $200.00 for alleged cost of transporting luggage from Vienna to Piestany; and (3) P100,000.00 as damages. In its reply, petitioner informed private respondent that his letter was forwarded to its legal department for investigation. Private respondent felt his demand letter was left unheeded. He instituted an action for Damages docketed as Civil Case No. 89-3496 before the Regional Trial Court of Makati. Petitioner contested the complaint. It disclaimed any liability on the ground that there was neither a report of mishandled baggage on flight PR 722 nor a tracer

telex received from its Vienna Station. It, however, contended that if at all liable its obligation is limited by the Warsaw Convention rate. Petitioner filed a Third-Party Complaint against Lufthansa German Airlines imputing the mishandling of private respondent's baggage, but was dismissed for its failure to prosecute. In its decision, the trial court observed that petitioner's actuation was not attended by bad faith. Nevertheless, it awarded private respondent damages and attorney's fees, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff (private respondent) and against the defendant (petitioner), thereby ordering the latter to pay the following: (a) U.S. $200.00 as cost of transporting the suitcase from Vienna to Czechoslovakia; (b) P40,000.00 as moral damages; (c) P20,000.00 as exemplary damages; and (d) P15,000.00 as attorney's fees. SO ORDERED. 5

Hence, this petition for review. In breach of contract of carriage by air, moral damages are awarded only if the defendant acted fraudulently or in bad faith. 6 Bad faith means a breach of a known duty through same motive of interest or ill will. 7 The trial court erred in awarding moral damages to private respondent. The established facts evince that petitioner's late delivery of the baggage for eleven (11) days was not motivated by ill will or bad faith. In fact, it immediately coordinated with its Central Baggage Services to trace private respondent's suitcase and succeeded in finding it. At the hearing, petitioner's Manager for Administration of Airport Services Department Miguel Ebio testified that their records disclosed that Manila, the originating station, did not receive any tracer telex. 8 A tracer telex, an airline lingo, is an action of any station that the airlines operate from whom a passenger may complain or have not received his baggage upon his arrival. 9 It was reasonable to presume that the handling of the baggage was normal and regular. Upon inquiry from their Frankfurt Station, it was however discovered that the interline tag of private respondent's baggage was accidentally taken off. According to Mr. Ebio, it was customary for destination stations to hold a tagless baggage until properly identified. The tracer telex, which contained information on the baggage, is matched with the tagless luggage for

identification. Without the tracer telex, the color and the type of baggage are used as basis for the matching. Thus, the delay. Worthy to stress, the trial court made an unequivocal conclusion that petitioner did not act in bad faith or with malice, viz.:
xxx xxx xxx Absent a finding as to the bad intention of defendant (petitioner) PAL , this court finds it appropriate to apply the Warsaw Convention with respect to the liability of Air Carriers. 10 xxx xxx xxx The mere fact that defendant (petitioner) exerted effort to assist plaintiff (private respondent) in his predicament as shown in defendant's (petitioner's) letter to plaintiff (private respondent) (Exh. "E") and likewise the letter from Mr. Miguel Ebio, Manager-Airport Services Administration of defendant (petitioner) PAL to its Senior Counsel-Litigation, Atty. Marceliano Calica (Exh. "3") which reveals the fact that an investigation was conducted as to mishandled baggage, coupled with the fact that said information were then relayed to plaintiff (private respondent) as evidenced by a letter of defendant (petitioner) to plaintiff (private respondent) (Exh. "4") does not warrant a showing of malice on the part of defendant ( petitioner). 11 xxx xxx xxx Under the circumstances obtaining, considering that defendant's (petitioner's) actuation was not attendant with bad faith, the award of moral damages in the amount of P40,000.00 is but just and fair. 12

Bad faith must be substantiated by evidence. In LBC vs. Court of Appeals, 13 we ruled:
Bad faith under the law cannot be presumed; it must be established by clear and convincing evidence. Again, the unbroken jurisprudence is that in breach of contract cases where the defendant is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the breach of the obligation which the parties had foreseen or could reasonably have foreseen. The damages, however, will not include liability far moral damages. (Citations omitted)

We can neither sustain the award of exemplary damages. The prerequisite for the award of exemplary damages in cases of contract or quasi-contract 14 is that the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner. 15 The undisputed facts do not so warrant the characterization of the action of petitioner. The award of attorney's fees must also be disallowed for lack of legal leg to stand on. The fact that private respondent was compelled to litigate and incur expenses to protect and enforce his claim did not justify the award of attorney's fees. The

general rule is that attorney's fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. 16 Petitioner is willing to pay the just claim of $200.00 as a result of the delay in the transportation of the luggage in accord with the Warsaw Convention. Needless to say, the award of attorney's fees must be deleted where the award of moral and exemplary damages are eliminated. IN VIEW WHEREOF, the assailed Decision of July 29, 1992 is MODIFIED deleting the award of moral and exemplary damages and attorney's fees. No costs. SO ORDERED. Narvasa, C.J., Bidin, Regalado and Mendoza, JJ., concur.

Footnotes
1 Honorable Oscar B. Pimentel, Presiding Judge. 2 RTC decision, p. 3;. Rollo p. 23. 3 Id., p. 21. 4 Id. 5 Id., p. 28. 6 Civil Code, Article 2220. 7 Lopez, et al. vs. Pan American World Airways, No. L-22415, March 30, 1966, 16 SCRA 431. 8 Rollo, p. 23. 9 Id. 10 Id., p. 27. 11 Id., p. 28. 12 Id. 13 G.R. No. 108670, September 21, 1994. 14 Civil Code, Article 2232.

15 Albenson Enterprises Corp. vs. Court of Appeals, G.R. No. 88694, January 11, 1993, 217 SCRA 16. 16 Firestone Tire & Rubber Company of the Philippines vs. Ines Chaves, No. L-17106, October 19, 1966, 18 SCRA 356.

G.R. No. L-30644 March 9, 1987 COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. FIREMAN'S FUND INSURANCE COMPANY and the COURT OF TAX APPEALS, respondents. B.V. Abela, M.C. Gutierrez & F.J. Malate, Jr., for respondents.

PARAS, J.: This is an appeal from the decision of the respondent Court of Tax Appeals dated May 24, 1969, in C.T.A. Case No. 1629, entitled "FIREMAN'S FUND INSURANCE COMPANY v. COMMISSIONER OF INTERNAL REVENUE," which reversed the decision of petitioner Commissioner of Internal Revenue holding private respondent Fireman's Fund Insurance Company liable for the payment of the amount of P81,406.87 as documentary stamp taxes and compromise penalties for the years 1952 to 1958. Private respondent is a resident foreign insurance corporation organized under the laws of the United States, authorized and duly licensed to do business in the Philippines. It is a member of the American Foreign Insurance Association, through which its business is cleared (Brief for Respondents, pp. 1-2) The antecedent facts of this case are as follows: From January, 1952 to December, 1958, herein private respondent Fireman's Fund Insurance Company entered into various insurance contracts involving casualty, fire and marine risks, for which the corresponding insurance policies were issued. From January, 1952 to 1956, documentary stamps were bought and affixed to the monthly statements of policies issues; and from 1957 to 1958 documentary stamps were bought and affixed to the corresponding pages of the policy register, instead of on the insurance policies issued. On July 3, 1959, respondent company discovered that its monthly statements of business and policy register were lost. The loss was reported to the Building Administration of Ayala Building and the National Bureau of Investigation on July 6, 1959. Herein petitioner was also informed of such loss by respondent company, through the latter's auditors, Sycip, Gorres and Velayo, in a letter dated July 14, 1959. After conducting an investigation of said loss, petitioner's examiner ascertained that respondent company failed to affix the required documentary stamps to the insurance policies issued by it and failed to preserve its accounting records within the time prescribed by Section 337 of the Revenue Code by using loose leaf forms as registers of documentary stamps without written authority from the Commissioner of Internal Revenue as required by Section 4 of Revenue Regulations No. V-1. As a consequence of these findings, petitioner, in a letter

dated December 7, 1962, assessed and demanded from petitioner the payment of documentary stamp taxes for the years 1952 to 1958 in the total amount of P 79,806.87 and plus compromise penalties, a total of P 81,406.87. A breakdown of the amount of taxes due and collectible are as follows:

YEAR 1952 1953 1954 1955 1956 1957 1958

AMOUNT P 6,500.00 9,977.72 10,908.89 14,204.52 12,108.26 7,880.68 16,257.60

Total stamp taxes due on policies issued from 1952 to 1958 77,837.67 Add: Stamp taxes on monthly statements during: 1957..........................................................................................1,2 18.35 1958..........................................................................................3,2 64.39 Total...................................................................................P 82,320.41 Less: Stamp taxes paid per voucher shown: 1957............................................................... p 416.82 1958................................................................2,096.72 2,513.54 AMOUNT DUE & COLLECTIBLE.............................................P 79,906.87

(CTA Decision, Rollo, pp. 16-17).

The compromise penalties consisted of the sum of P1,000.00 as penalty for the alleged failure to affix documentary stamps and the further sum of P 600.00 as penalty for an alleged violation of Revenue Regulations No. V-1 otherwise known as the Bookkeeping Regulations (Brief for Respondents, p. 4) In a letter dated January 14, 1963, respondent company contested the assessment. After petitioner denied the protest in a decision dated March 17, 1965, respondent company appealed to the respondent Court of Tax Appeals on May 8, 1965. After hearing respondent court rendered its decision dated May 24, 1969 (Rollo, pp. 16-21) reversing the decision of the Commissioner of Internal Revenue. The assailed decision reads in part:
The affixture of documentary stamps to papers other than those authorized by law is not tantamount to failure to pay the same. It is true that the mode of affixing the stamps as prescribed by law was not followed, but the fact remains that the documentary stamps corresponding to the various insurance policies were purchased and paid by petitioner. There is no legal justification for respondent to require petitioner to pay again the documentary stamp tax which it had already paid. To sustain respondent's stand would require petitioner to pay the same tax twice. If at all, the petitioner should be proceeded against for failure to comply with the requirement of affixing the documentary stamps to the taxable insurance policies and not for failure to pay the tax. (See Sec. 239 and 332, Rev. Code). It should be observed that the law allows the affixture of documentary stamps' to such other paper as may be indicated by law or regulations as the proper recipient of the stamp.' It appears from this provision that respondent has authority to allow documentary stamps to be affixed to papers other than the documents or instruments taxed. Although the practice adopted by petitioner in affixing the documentary stamps to the business statements and policy register was without specific permission from respondent but only on the strength of his ruling given to Wise & Company (see Petitioner's Memorandum, p. 176, CTA rec.; p. 24, t.s.n.), one of the general agents of petitioner, however, considering that petitioner actually purchased the documentary stamps, affixed them to the business statements and policy register and cancelled the stamps by perforating them, we hold that petitioner cannot be held liable to pay again the same tax. With respect to the 'compromise penalties' in the total sum of P 1,600.00, suffice it to say that penalties cannot be imposed in the absence of a showing that petitioner consented thereto. A compromise implies agreement. If the offer is rejected by the taxpayer, as in this case, respondent cannot enforce it except through a criminal action. (See Comm. of Int. Rev. vs. Abad, L-19627, June 27, 1968.) (CTA Decision, Rollo, pp. 20-21).

Hence, this petition filed on June 26, 1969 (Rollo, pp. 1-8). The petition is devoid of merit.

The principal issue in this case is whether or not respondent company may be required to pay again the documentary stamps it has actually purchased, affixed and cancelled. The relevant provisions of the National Internal Revenue Code provide:
SEC. 210. Stamp taxes upon documents, instruments, and papers. Upon documents, instruments, and papers, and upon acceptances, assignments, sales, and transfers of the obligation, right, or property incident thereto, there shall be levied, collected and paid for and in respect of the transaction so had or accomplished, the corresponding documentary stamp taxes prescribed in the following sections of this Title, by the person making, signing, issuing, accepting, or transferring the same, and at the same time such act is done or transaction had. (Now. Sec. 222). SEC. 232. Stamp tax on life insurance policies. On all policies of insurance or other instruments by whatever name the same may be called, whereby any insurance shall be made or renewed upon any life or lives, there shall be collected a documentary stamp tax of thirty-five centavos on each two hundred pesos or fractional part thereof, of the amount issued by any such policy. (220) (As amended by PD 1457) Insurance policies issued by a Philippine company to persons in other countries are not subject to documentary stamp tax. (Rev. Regs. No. 26) Medical certificate attached to an insurance policy is not a part of the said policy. Insurance policy is subject to Section 232 of the Tax Code while medical certificate is taxable under Section 237 of the same Code. Insurance policies are issued in the place where delivered to the person insured. (As amended.) SEC. 221. Stamp tax on policies of insurance upon property. On all policies of insurance or other instruments by whatever name the same may be called, by which insurance shall be made or renewed upon property of any description, including rents or profits, against peril by sea or on inland waters, or by fire or lightning, there shall be collected a documentary stamp tax of six centavos on each four persons, or fractional part thereof, of the amount of premium charged," (Now Sec. 233.) SEC. 237. Payment of documentary stamp tax. Documentary stamp taxes shall be paid by the purchase and affixture of documentary stamps to the document or instrument taxed or to such other paper as may be indicated by law or regulations as the proper recipient of the stamp, and by the subsequent cancellation of same, such cancellation to be accomplished by writing, stamping, or perforating the date of the cancellation across the face of each stamp in such manner that part of the writing, impression, or perforation shall be on the stamp itself and part on the paper to which it is attached; Provided, That if the cancellation is accomplished by writing or stamping the date of cancellation, a hole sufficiently large to be visible to the naked eye shall be punched, cut or perforated on both the stamp and the document either by the use of a hand punch, knife, perforating machine, scissors, or any other cutting instrument; but if

the cancellation is accomplished by perforating the date of cancellation, no other hole need be made on the stamp. (Now Sec. 249.) SEC. 239. Failure to affix or cancel documentary stamps. Any person who fails to affix the correct amount of documentary stamps to any taxable document, instrument, or paper, or to cancel in the manner prescribed by section 237 any documentary stamp affixed to any document, instrument, or paper, shall be subject to a fine of not less than twenty pesos or more than three hundred pesos. (Emphasis supplied.) (Now Sec. 250.)

As correctly pointed out by respondent Court of Tax Appeals, under the abovequoted provisions of law, documentary tax is deemed paid by: (a) the purchase of documentary stamps; (b) affixture of documentary stamps to the document or instrument taxed or to such other paper as may be indicated by law or regulations; and (c) cancellation of the stamps as required by law (Rollo, p. 18). It will be observed however, that the over-riding purpose of these provisions of law is the collection of taxes. The three steps above-mentioned are but the means to that end. Thus, the purchase of the stamps is the form of payment made; the affixture thereof on the document or instrument taxed is to insure that the corresponding tax has been paid for such document while the cancellation of the stamps is to obviate the possibility that said stamps will be reused for similar documents for similar purposes. In the case at bar, there appears to be no dispute on the fact that the documentary stamps corresponding to the various policies were purchased and paid for by the respondent Company. Neither is there any argument that the same were cancelled as required by law. In fact such were the findings of petitioner's examiner Amando B. Melgar who stated as follows:
Investigation disclosed that the subject insurance company is a duly organized corporation doing business in the Philippines. It keeps the necessary books of accounts and other accounting records needed by the business. Further verification revealed that it has, since July, 1959, been using a "HASLER" franking machine, Model F88, which stamps the documentary stamps on the duplicates of the policies issued. Prior to the acquisition of the said machine, the company buys its stamps by allowing the Manager to issue a Manager's check drawn against the National City Bank of New York and payable to the City Treasurer of Manila. It was also found out that during this period (1952 to 1958), the total purchases of documentary stamps amounted to P77,837.67, while the value of the used stamps lost amounted to P65,901.11. Verification with the files revealed that most of the monthly statements of business and registers of documentary stamps corresponding to insurance policies issued were missing while some where the punched documentary stamps affixed were small in amount are still intact. The taxpayer was found to be negligent in the preservation and keeping of its records. Although the loss was found by the company's private investigator (see attached true copies of his reports) was not an "Inside Job," still the company should be held liable for its negligence, it appearing that the said records were placed in a bodega, where almost all patrons of the coffee shop nearby could see

them. The company also violated the provision of Section 221 of the National Internal Revenue Code which provides that the documentary stamps should be affixed and cancelled on the duplicates of bonds and policies issued. In this case, the said stamps were affixed on the register of documentary stamps. (pp. 35-36, BIR rec.; Emphasis supplied.) (CTA Decision, Rollo, pp, 18-19.)

Such findings were confirmed by the Memorandum of Acting Commissioner of Internal Revenue Jose B. Lingad, dated November 7, 1962 to the Chief, Business Tax Division, which states:
The records show that the FIREMAN'S FUND INSURANCE COMPANY allegedly paid P 77,837.67 in documentary stamp taxes for the policies of insurance issued by it for the years 1952 to 1958 but could only present as proof of payment Pll,936.56 of said taxes as the rest of the amount of P 65,901.11 were lost due to robbery. Upon verification of this payment however it was found that the FIREMAN'S FUND INSURANCE COMPANY affixed the documentary stamps not on the individual insurance policies issued by it but on a monthly statement of business and a register of documentary stamps, the use of which was not authorized by this Office. It was claimed that the same procedure was used in the case of the lost documentary stamps aforementioned. As this practice is irregular and the remaining records are not conclusive proofs of the payment of the corresponding documentary stamp tax on the policies, the FIREMAN'S FUND AND INSURANCE COMPANY is still liable for the payment of the documentary stamp taxes on the policies found not affixed with stamps. (Original B I R Record, p. 87).

Later, respondent Court of Tax Appeals correctly observed that the purchase of documentary stamps and their being affixed to the monthly statements of business and policy registers were also admitted by counsel for the Government as could clearly be gleaned from his Memorandum submitted to the respondent Court. (Decision, CTA Rollo, pp. 4-5). Thus, all investigations made by the petitioner show the same factual findings that respondent company purchased documentary stamps for the various policies it has issued for the period in question although it has attached the same on documents not authorized by law. There is no argument to petitioner's contention that the insurance policies with the corresponding documentary stamps affixed are the best evidence to prove payment of said documentary stamp tax. This rule however does not preclude the admissibility of other proofs which are uncontradicted and of considerable weight, such as: copies of the applications for manager's checks, copies of the manager's check vouchers of the bank showing the purchases of documentary stamps corresponding to the various insurance policies issued during the years 1952-1958 duly and properly Identified by the witnesses for respondent company during the hearing and admitted by the respondent Court of Tax Appeals (Brief for Respondent, p. 15). It is a general rule in the interpretation of statutes levying taxes or duties, that in case of doubt, such statutes are to be construed most strongly against the

government and in favor of the subjects or citizens, because burdens are not to be imposed, nor presumed to be imposed beyond what statutes expressly and clearly import (Manila Railroad Co. v. Collector of Customs, 52 Phil. 950 [1929]). There appears to be no question that the purpose of imposing documentary stamp taxes is to raise revenue and the corresponding amount has already been paid by respondent and has actually become part of the revenue of the government. In the same manner, it is evident that the affixture of the stamps on documents not authorized by law is not attended by bad faith as the practice was adopted from the authority granted to Wise & Company, one of respondent's general agents (CTA Decision, Rollo, p. 20). Indeed, petitioner argued that such authority was not given to respondent company specifically, but under the general principle of agency, where the acts of the agents bind the principal, the conclusion is inescapable that the justification for the acts of the agents may also be claimed for the acts of the principal itself (Brief for the Respondents, pp. 1213). Be that as it may, there is no justification for the government which has already realized the revenue which is the object of the imposition of subject stamp tax, to require the payment of the same tax for the same documents. Enshrined in our basic legal principles is the time honored doctrine that no person shall unjustly enrich himself at the expense of another. It goes without saying that the government is not exempted from the application of this doctrine (Ramie Textiles, Inc. v. Mathay Sr., 89 SCRA 587 [1979]). Under the circumstances, this court RESOLVED to DISMISS this petition and to AFFIRM the assailed decision of the Court of Tax Appeals. Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin and Cortes, JJ., concur. Alampay, J., is on leave.

G.R.NO. L-36249 March 29, 1985 ANIANO OBAA, petitioner, vs. THE COURT OF APPEALS AND ANICETO SANDOVAL, respondents. MELENCIO-HERRERA, J.:

Petitioner seeks a review of the Decision of respondent Appellate Court (in CAG.R. No. 44345-R) ordering him in an action for Replevin to return to Aniceto SANDOVAL, private respondent herein, 170 cavans of rice or to pay its value in the amount of P37.25 per cavan, with legal interest from the filing of the Complaint until fully paid. SANDOVAL is the owner and manager of the "Sandoval and Sons Rice Mill" located in Rosales, Pangasinan. He is engaged in the buying and selling of palay. On November 21, 1964, SANDOVAL was approached by a certain Chan Lin who offered to purchase from him 170 cavans of clean rice (wagwag variety) at the price of P37.26 per cavan, delivery to be made the following day at petitioner's store in San Fernando, La Union, with payment to be made thereat by Chan Lin to SANDOVAL's representative. SANDOVAL accepted the offer as he knew petitioner and had had previous transactions with him. As agreed, the 170 cavans of rice were transported the following day on a truck belonging to SANDOVAL to petitioner's store in San Fernando, La Union. Chan Lin accompanied the shipment. Upon arrival thereat, the goods were unloaded but when the truck driver attempted to collect the purchase price from Chan Lin, the latter was nowhere to be found. The driver tried to collect from petitioner, but the latter refused stating that he had purchase the goods from Chan Lin at P33.00 per cavan and that the price therefore had already been paid to Chan Lin.

Further demands having been met with refusal, SANDOVAL, as plaintiff, filed suit for replevin against petitioner, then the defendant, before the Municipal Court of San Fernando, La Union, which ordered petitioner-defendant to pay to SANDOVAL one-half () of the cost of the rice or P2,805.00. On appeal by petitioner-defendant to the then Court of First Instance of La Union, the parties agreed to adopt SANDOVAL's testimony before the Municipal Court. After trial de novo, judgment was rendered dismissing the complaint against petitioner-defendant. On appeal to respondent Appellate Court, SANDOVAL obtained a reversal in his favor, as follows:
WHEREFORE, the appealed decision is hereby set aside and another one entered ordering defendant-appellee to return the one hundred and seventy cavans of rice to plaintiff- appellant or to pay its value in the amount of P 37.25 per cavan, with legal interest from the filing of the complaint until fully paid and with costs against the appellee. 1

Before us, petitioner-defendant takes issue with the following Appellate Court findings:
From the evidence presented by the parties, it is evident that this is a simple case of swindling perpetuated by Chan Lin at the expense of the plaintiff and the defendant. The act of Chan Lin in purchasing plaintiff's rice at the price of P 37.25 per cavan and thereafter offering the same goods to defendant at a much lower price is an indication that it was never his intention to comply with his obligation to plaintiff. It is clear that Chan Lin's only purpose in entering into said contract with plaintiff was to acquire the physical possession of the goods and then to pass them on to defendant on the pretext that he is the owner thereof. Premises considered, therefore, Chan Lin cannot be considered as the owner of the goods at the time the same was said to have been sold to the defendantappellee. Considering that defendant acquired the 170 cavans of rice from a person who is not the owner thereof, it is therefore clear that he acquired no greater right than his predecessor-in-interest. Finally, on principle of equity, it is but proper that plaintiff-appellant be allowed to recover the one-hundred and seventy cavans of rice or its value. Being the undisputed owner of the above mentioned goods, the appellant cannot be deprived of its ownership without the corresponding payment. 2

We agree with petitioner-defendant that there was a perfected sale. Article 1475 of the Civil Code lays down the general rule that there is perfection when there is consent upon the subject matter and price, even if neither is delivered.
The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. xxx xxx xxx

Ownership of the rice, too, was transferred to the vendee, Chan Lin, upon its delivery to him at San Fernando, La Union, the place stipulated 3 and pursuant to Articles 1477 and 1496 of the same Code:
Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any manner signifying an agreement that the possession is transferred from the vendor to the vendee.

At the very least, Chan Lin had a rescissible title to the goods for the nonpayment of the purchase price, but which had not been rescinded at the time of the sale to petitioner.
However, from petitioner-defendant's own testimony before the Court of First Instance, he admits that three days after the delivery, he was repaid the sum of P5,600.00 by Chan Lin, who was then accompanied by SANDOVAL's driver, and that he had delivered the rice back to them. On rebuttal, however, the driver denied that the rice had ever been returned. 4 The driver's version is the more credible, for, as SANDOVAL's counsel had manifested in open Court, if return of the rice had been effected, they would have withdrawn the complaint. 5 Following is the admission made by petitioner-defendant:
Q After the third day ... when that request for you to hold the rice was already overdue, what happened? A This is what happened. Chan Lin and the driver with the same truck that they used to unload the rice, came to me. Q What day was that? A That was I think, Thursday, about 4:30 P.M. Q Do you know the date? A November 26, I think. Q What did they do when this driver and Mr. Chan Lin came back? A They told me that they wanted the rice back and give my money back. Q Did they give you your money back? A Yes. Q How much? A They gave me P5.600. COURT: Q They gave you that amount?

A Yes, sir. ATTY. GUALBERTO: Q Did they tell you why they were getting back the rice and giving you back your money? A Yes. The complete rice, and Vallo (SANDOVAL's driver) told me, he wanted to return the rice to the ricemill, that is what Vallo and the Chinese agreed with Aniceto Sandoval. Q Did the Chinese tell you that he made agreement with Sandoval to get back the rice? A Yes. COURT: Q Did you receive the money? A Yes , sir
6

Having been repaid the purchases price by Chan Lin , the sale, as between them, had been voluntarily rescinded, and petitioner-defendant was thereby divested of any claim to the rice. Technically, therefore, he should return the rice to Chan Lin, but since even the latter, again from petitioner-defendant's own testimony above-quoted, was ready to return the rice to SANDOVAL, and the latter's driver denies that the rice had been returned by petitioner-defendant cannot be allowed to unjustly enrich himself at the expense of another by holding on to property no longer belonging to him. 7 In law and in equity, therefore, SANDOVAL is entitled to recover the rice, or the value theref since hewas not paid the price therefor. WHEREFORE, albeit on a different premise, the judgment under review is hereby AFFIRMED. Costs against petitioner. SO ORDERED. Plana, Relova, Gutierrez, Jr., De la Fuente and Alampay, JJ., concur. Teehankee, J., took no part.

Footnotes
1 Appendix "A", Brief for Petitioner, p. 61. 2 Ibid., pp. 60-61.

3 Article l521, Civil Code. 4 T.S.N., November 22, 1967, p.3. 5 T.S.N., August 10, 1967, p. 21. 6 T.S.N., August 10, 1967, pp. 18-19. 7 Article 22, Civil Code.

G.R. No. 88582 March 5, 1991 PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. HEINRICH S. RITTER, accused-appellant, The Solicitor General for plaintiff-appellee. Esteban B. Bautista for accused-appellant.

GUTIERREZ, JR., J.:p The appellant challenges his conviction of the crime involving a young girl of about 12 years old who had been allegedly raped and who later died because of a foreign object left inside her vaginal canal. Heinrich Stefan Ritter was charged with the crime of rape with homicide under an information which reads:
That on or about the tenth (10th day of October, 1986 in the City of Olongapo, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused with lewd design and with intent to kill one Rosario Baluyot, a woman under twelve (12) years of age, did then and there wilfully, unlawfully and feloniously have carnal knowledge of said Rosario Baluyot and inserted a foreign object into the vaginal canal of said Rosario Baluyot which caused her death shortly thereafter, to the damage and prejudice of her relatives. (66)

When arraigned, the accused pleaded "Not Guilty". Thereafter, the case was set for trial on the merits. To prove the guilt of the accused, the prosecutor presented the following witnesses, namely: (1) Jessie Ramirez, (2) Maria Burgos y Turla, (3) P/Cpl. Mariano Victoria, (4) Policarpio Baluyot, (5) Dr. Reino Rosete, (6) Sumulong

Daniel, (7) Jessica Herrera, (8) Sister Eva Palencia, (9) Conrado Salonga, (10) Dr. Devonne Loop, (11) Dr. Leo Cruz, (12) Paul Maclor, (13) Aida Sarmiento, (14) Patricia Prollamanta (15) Mel Santos, (16) Lorna Limos, (17) Eduard Lee Bungarner, (18) Ronaldo Marquez, (19) Tom Bonte, (20) 2nd Asst. City Fiscal Nini Alcala, (21) lst Asst. City Fiscal Dorentino Z. Floresta, (22) Corazon Caber, (23) Rodolfo Mercurio and (24) Fe Israel. On the other hand, the defense offered in evidence Exhibits "1" to "24" and the testimonies of (1) Heinrich S. Ritter, (2) Father Roque Villanueva, (3) Angelita Amulong (4) Gaspar Alcantara, (5) Dr. Val Barcinal and (6) Dr. Pedro C. Solis. The facts of the case upon which the lower court based its finding of guilt beyond reasonable doubt are summarized in its decision, as follows:
The people's evidence show that on October 10, 1986 about midnight, accused Heinrich Stefan Ritter brought a boy and girl namely: Jessie Ramirez and Rosario Baluyot inside his hotel room at MGM Hotel along Magsaysay Drive, Olongapo City. These two (2) children were chosen from among a bunch of street children. Once inside the hotel room accused told them to take a bath. Jessie Ramirez, alias "Egan", was the first to take a bath and when he came out Rosario Baluyot went to the bathroom to do the same. While Rosario Baluyot was inside the bathroom, accused Ritter took out some pictures depicting dressed up young boys, and put them on top of the table. Other things which were taken out and placed on top of a table were three (3) other objects which he described as like that of a vicks inhaler. One of these objects the accused played with his hands and placed it on his palms. The color of which is grayish blue which turned out later to be the foreign object which was inserted inside the vagina of Rosario Baluyot. The other objects were later established to be anti-nasal inhalers against pollution purchased by the accused in Bangkok when he went there as a tourist. While Rosario was in the bathroom, accused told Ramirez to lay down on bed, and so did the accused. He then started masturbating the young boy and also guided the boy's hand for him to be masturbated, so that they masturbated each other, while they were both naked, and he gave Jessie Ramirez an erection. When Rosario Baluyot came out of the bathroom, she was told to remove her clothes by accused and to join him in bed. The accused then placed himself between the two (2) children and accused started fingering Rosario. At this time, Ramirez was already sleepy, but Rosario touched him to call his attention. He looked, and he saw accused placing his penis against the vagina of Rosario and that he was trying to penetrate the vagina but it would not fit. After what he saw, Ramirez did not anymore bother to look because he was sleepy and fell asleep. The following morning, the accused, whom the juveniles described as an "American, paid Ramirez alias "Egan" P200.00 and Rosario P300.00. He then left them in the hotel. After the American left, they went downstairs, and Rosario told Egan that the American inserted something in her vagina. But they could not do anything anymore, because the American had already left, and neither did they report the matter to the police. Sometime

the following day, Jessie saw Rosario and he asked her whether the object was already removed from her body and Rosario said "Yes". However, Jessie Ramirez claimed that on the evening of that same date, he saw Rosario and she was complaining of pain in her vagina and when Egan asked her, she said that the foreign object was not yet removed. Then there was another occasion wherein Jessie was summoned and when he came he saw Rosario writhing in pain and when he tried to talk to Rosario she scolded him with defamatory remarks. Thereafter, he did not see Rosario anymore because he already went home to his aunt's house who resided at Barrio Barretto and resumed his studies in the primary grades. On May 14, 1987, Gaspar Alcantara, a defense witness, while garbage scavenging at Lot 21, near the gate of the U.S. Naval Base saw Rosario at Magsaysay Drive near the Happy Bake Shop near Lot 21, being ogled by people because Rosario's skirt was bloodied and she was unconscious and foul smelling. Since nobody helped Rosario, he took pity on her condition and brought her to the Olongapo City General Hospital in an unconscious condition, via jeepney. He went to the Information desk and he was the one who gave the personal circumstances of Rosario as to her name, age, her residence as Nagbakulaw, Lower Kalaklan, and Gaspar Alcantara signed as "guardian" of Rosario, while Rosario was already in the emergency room. Although Gaspar Alcantara denied that he did not know the name of Rosario Baluyot when he brought her to the hospital, this is belied by the testimony of the Information clerk Lorna Limos, who was then on duty. Limos testified that it was Alcantara who supplied the personal circumstances of Rosario. The Court gives more credence to the testimony of Miss Limos as against Gaspar Alcantara who became a defense witness, for the reason that through his own testimony, Gaspar Alcantara claimed that even prior to May 14, 1987, he had already known Rosario Baluyot for more than one (1) year, because he has seen the said girl go to the house of his twin brother, Melchor Alcantara, who is his immediate neighbor. Rosario used to visit a girl by the name of "Nora" who was then in the custody of his brother. His brother Melchor was also living with their mother, brother and sister-in-law and their two (2) children in his house. Rosario as per Gaspar's testimony even stays for one week or a few days at his brother's house when she visits Nora. So the Court can safely assume that of all the more than one (1) year that he had regularly seen Rosario at his brother's house, he must have already did come to know the name of Rosario Baluyot including her age. In his testimony in Court he stated that he even asked Rosario for movie and softdrinks money which can safely be concluded that he knows her very well. It is against normal behavior especially to a Filipino who have a characteristic of curiosity not to have found out the real name of the girl he claims to know only as "Tomboy". While Rosario Baluyot was confined at the Olongapo City General Hospital, nobody was attending to her since she is a street child, having stowed away from the custody of her grandmother. Three (3) good samaritans who belong to religious and civic organizations, in the persons of Jessica Herrera, Fe Israel and Sr. Eva Palencia, in one of their missions in the hospital chanced upon Rosario Baluyot who was all alone with no relatives attending to her and after finding out that she was only 12 years old decided to help her. After a short interview with Rosario, regarding her name and age only because she clamped up about her residence and her relatives, they decided to help her by providing her the medicine she

needed during her confinement in readiness for an operation. It was Fe Israel who was able to get the name and age of Rosario Baluyot from Rosario Baluyot herself when she saw her for the first time. For Fe Israel, the age of Rosario Baluyot was an important factor because their program assisted only indigent patients from infants up to 13 years old. Rosario's first ailment at the Olongapo City General Hospital was loose bowel movement and vomiting, which was first suspected as gastroenteritis, but which came out later as symptoms of peritonitis due to a massive infection in the abdominal cavity. Subsequently, on May 17, 1987, after she was examined by the physicians at the hospital, it was found out that there was a foreign object lodged in her vaginal canal and she had vaginal discharge tinged with blood and foul smelling odor emanating from her body. One of the doctors who attended to her was Dr. Barcinal, an OBGYNE. Dr. Barcinal tried to extract the foreign object by means of a forceps, but several attempts proved futile because said object was deeply embedded in the vaginal canal and was covered by tissues. Her abdomen was enlarged, tender and distended, symptoms of peritonitis. The patient was feverish and incoherent when she was scheduled for operation on May 19, 1987, after the first attempt for an operation on May 17 was aborted allegedly because the consent of Dr. Reino Rosete, the hospital director was not obtained. The surgeon who operated on her was Dr. Rosete himself. He testified that Rosario had to be operated even in that condition in order to save her life. Her condition was guarded. This was corroborated by Dr. Leo Cruz, the anesthesiologist during Rosario's operation. It was in the evening of May 19 at about 7:00 p.m. when Dr. Rosete opened her abdomen by making a 5 inch incision on her stomach. He found out that the fallopian tubes were congested with pus and so with the peritonieum, and the pelvic cavity, and patches of pus in the liver, although the gallbladder and kidney appeared to have septicemia, poisoning of the blood. The peritonitis and septicemia were traced to have been caused through infection by the foreign object which has been lodged in the intravaginal canal of Rosario. The foreign object which was already agreed upon by both parties that it is a portion of a sexual vibrator was extracted from the vagina of Rosario while under anesthesia. Said object was coated with tissues, pus and blood. Dr. Rosete gave it to the assisting surgical nurse for safekeeping and gave instructions to release it to the authorized person. This object was shown by the nurse to Dr. Leo Cruz. Dr. Rosete considered the operation successful and the patient was alive when he left her under Dr. Cruz. Dr. Cruz stayed with said patient in the ward for about 30 minutes and thereafter he left. The following day, Rosario got serious and it was Dr. Leo Cruz who pronounced her death at 2:00 to 2:15 in the afternoon of May 20, 1987. Thereafter, a death certificate was prepared under the direction of Dr. Cruz which was indicated therein that the cause of death was cardio-respiratory arrest, secondary to septicemia caused by the foreign object lodged in the intra uteral vaginal canal of Rosario Baluyot. The foreign object was washed by nurse Obedina, then placed it in a transparent small jar and labelled "Rosario Baluyot". Jessica Herrera asked the nurse for the foreign object, and it was given to her under proper receipt. Herrera then showed the same to the persons who helped financially Rosario's case, and afterwards she gave it to Sister Eva

Palencia. Sis. Palencia was in custody of the said object until Mr. Salonga came and asked her for the object. After Rosario Baluyot died, Sis. Palencia and a companion went to Gaspar Alcantara to ask him in locating the relatives of Rosario. They were able to trace Rosario's grandmother, Mrs. Maria Burgos Turla, and informed her that her granddaughter was already dead and lying in state at St. Martin Funeral Parlor. Mrs. Turla went there with her son, who shouldered all the burial expenses for Rosario. Subsequently, Sis. Palencia, Fr. Cullens and Mr. Salonga came to her residence at Sta. Rita and asked her if she was interested in filing a case against the person who caused the death of her granddaughter. Of course she agreed. Hence, she was brought to the Fiscal's (City) Office to file the same. After the case was filed against the herein accused, Atty. Edmundo Legaspi with his messenger came to her house and told her that the accused was willing to settle the case, but that accused Ritter had only P15,000.00. The old woman did not accept it because she knows that the accused is liable to pay damages anyway. After that, she received a letter from Atty. Legaspi telling her to get a lawyer for her case. By this time, Mrs. Turla, who wanted to have the case settled once and for all giving the reason that she can no longer bear the situation, sent her nephew, Conrado Marcelo to Atty. Legaspi. Her nephew obliged and told her that she will be paid at the office of Atty. Legaspi. On a date not clear in the records, she went with her nephew Conrado Marcelo, and Roberto Sundiam, an assistant barangay tanod of Sta. Rita, and while they were there, she saw Ritter arrive at the law office. Ritter and Atty. Legaspi talked at the office near the bathroom, and thereafter Ritter left. After he left, Atty. Legaspi told Rosario's grandmother that they are willing to settle for P20,000.00, but that Ritter left only P15,000.00, so she received the money with the understanding that there was a balance of P5,000.00 yet. She was made to sign a statement, and she was asked to change the age of her granddaughter Rosario. With the document prepared, she and the lawyer's messenger went to the Fiscal's office to have it subscribed, and was subscribed before an assistant city fiscal. But the balance of P5,000.00 was not paid, because later on Atty. Legaspi became the OIC of Olongapo City and he could no longer attend to it. Atty. Legaspi, during one of the hearings before the Court even apologized to her. As to the case, P/Cpl. Marino Victoria, as criminal investigator of Station "A", was directed by Col. Daos, Station Commander of the Olongapo Police Department to make a follow up of the case of Rosario Baluyot. On the other hand, since the suspect who inserted the foreign object inside Rosario's vagina was said to be an American, the NISRA Subic Naval Base also conducted its investigation headed by criminal investigator Agent Conrado Salonga. Coordinating with the local police and with Sister Eva Palencia, since Rosario was a street child at Magsaysay Drive, they rounded up about 43 street children and from some of them they learned that Rosario Baluyot was with Jessie Ramirez with an American at the MGM Hotel when the foreign object was inserted in her vagina. After finding Jessie Ramirez, they asked him about Rosario Baluyot. They found out that indeed he was with Rosario Baluyot sometime before Christmas of 1986 with an American, who brought them to the said hotel. Jessie Ramirez was

taken inside the U.S. Naval Base, Olongapo City and took his statement. Then he was brought to Mr. Edward Lee Bungarner, a cartographer, and out of the description supplied by Ramirez, a composite drawing was photocopied and copies thereof were distributed to the local police and to the sentries at the gate of the U.S. Naval Base. Some American servicemen who had resemblance to the composite drawing were photographed and these were shown to Jessie Ramirez, but the result was negative. Aside from the physical description by Ramirez about the appearance of the suspect, he also described him as having the mannerisms of a homosexual. After obtaining information that foreign homo-sexuals frequented Ermita, Manila, and thinking that the so-called American may be European or Australian national, the team composed of Agent Salonga, Mr. Heinsell, P/Cpl. Marino Victoria and P/Cpl. Andres Montaon, Jessie Ramirez and Michael Johnson, another juvenile, proceeded to Manila. They first went to the Manila NISRA Office, and thereafter checked in a hotel. That was on September 23, 1987. On the first night, they went to Luneta Park where foreign homo-sexuals were said to be frequenting, but the result was negative. Then on September 25, at about 11:00 p.m., while they were standing at the corner of A. Mabini and M.H. del Pilar Street, a male caucasian who looked like a homo-sexual stopped by admiringly infront of the two (2) juveniles, Ramirez and Johnson. Jessie Ramirez then reported to Mr. Salonga that this foreigner had a similarity with the American suspect, so the two minors were instructed to follow the foreigner and to strike a conversation. They did, and when they returned, Jessie Ramirez told them that indeed the said foreigner was the one who brought him and Rosario Baluyot to the MGM Hotel. Bobby Salonga told Ramirez that this foreigner had no beard while the one previously described by Ramirez had a beard. Jessie Ramirez told them that maybe he have just shaved it off. The said caucasian then entered a bar, and after several minutes he came out, and Jessie Ramirez upon his signal with his thumbs up, as a signal to confirm that the said foreigner is the suspect, arrested Ritter and brought him to the Manila Western Police District. It could be mentioned at this stage that in this operation they were accompanied by two (2) policemen from the Western Police District. The foreigner was hand cuffed and was told that he was a suspect for Rape with Homicide. After the arrest, they first went to the pension house of the suspect in Ermita, Manila to get his shoulder bag which contained his personal belongings, and from there they brought him to the Western Police Department. At the said police headquarters, they were allowed a permissive search by the foreigner of his clutch bag and his small shoulder bag and confiscated his passport, I.D., 3 inhalers, money in the form of dollars and travellers checks amounting about $1,500.00 and about P100.00, all duly receipted for. From the passport they learned that the suspect's name was Heinrich Stefan Ritter, an Austrian national. During the questioning of Hitter, Salonga and his team already left the headquarters and went to their hotel, because at this time Jessie Ramirez was already shaking with fear after he identified the accused. The following day, they brought the accused to Olongapo and was detained at the Olongapo City Jail. The case for Rape with Homicide was filed against him at the City Fiscal of Olongapo. At the preliminary investigation, accused was assisted by his own counsel. The private complainant was Maria Burgos Turla because it was she who had custody of Rosario

Baluyot after her mother Anita Burgos died on January 12, 1982, and their father Policarpio Baluyot had left them under her custody. When this case was filed, the father's whereabouts was unknown, and he only appeared when the trial of this case before the Court was already in progress. And upon his (Policarpio Baluyot) own admission, he only learned about the death of his daughter Rosario Baluyot from the newspaper, long after Rosario was already gone. The defense tried to dislodge the case by claiming that there could be no crime of Rape with Homicide because the suspect was described as an American while Ritter is an Austrian. Also advanced by the defense is that, it is a case of mistaken identity. That Rosario Baluyot was at the time of the commission of the offense, already more than 13 years old, she having been born on December 26, 1973 as per baptismal certificate, wherein it appears that Rosario Baluyot was baptized on December 25, 1974 and was born on December 26, 1973 as testified to by Fr. Roque Villanueva of St. James Parish Church who issued the Baptismal Certificate, having custody and possession of the book of baptism for the year 1975, but admitted that he had no personal knowledge about the matters or entries entered therein. Likewise, the defense's stand is that the accused cannot be liable for Homicide because a vibrator is not a weapon of death but it is a thing for the purpose of giving sexual pleasure, and that the death of Rosario Baluyot was due to the incompetence of Dr. Rosete, the surgeon and Director of the Olongapo City General Hospital, who operated on her. (Rollo, pp. 109-116)

On March 29, 1989, the trial court rendered its decision. The dispositive portion of the decision reads as follows:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Court holds, that the prosecution has established the GUILT of the accused beyond reasonable doubt for the crime of Rape with Homicide as defined and penalized in Art. 335 No. 3 of the Revised Penal Code, and hereby sentences HEINRICH STEFAN RITTER to a penalty of RECLUSION PERPETUA, to indemnify the heirs of the deceased in the sum of SIXTY THOUSAND PESOS (P60,000.00) Philippine Currency, and TEN THOUSAND PESOS (Pl0,000.00) by way of attorney's fees to the private prosecutors and to pay the costs. ( Rollo, p. 126)

The accused now comes to this Court on the following assigned errors allegedly committed by the court:
I THE TRIAL COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN FINDING THAT THE ALLEGED OFFENSE WAS COMMITTED ON OCTOBER 10, 1986 AND THAT IT WAS ACCUSED-APPELLANT WHO COMMITTED IT. II THE TRIAL COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN FINDING THAT ROSARIO BALUYOT WAS LESS THAN TWELVE (12) YEARS

OLD WHEN THE ALLEGED OFFENSE WAS COMMITTED AND IN HOLDING THAT THERE WAS RAPE WITH HOMICIDE. III THE TRIAL COURT GRAVELY ERRED AND ABUSED ITS DISCRETION IN GIVING CREDENCE TO AND NOT REJECTING THE PROSECUTION'S EVIDENCE AND IN NOT UPHOLDING THAT OF THE DEFENSE AND ACQUITTING THE ACCUSED.

Inasmuch as it is the bounden duty of this Court to affirm a judgment of conviction only if the guilt of the accused has been proved beyond reasonable doubt, it behooves us to exert the most painstaking effort to examine the records in the light of the arguments of both parties if only to satisfy judicial conscience that the appellant indeed committed the criminal act (See People v. Villapaa, 161 SCRA 73 [1988]). The appellant was convicted by the trial court of the crime of rape with homicide of a young girl who died after the rape because of a foreign object, believed to be a sexual vibrator, left inside her vagina. As stated by the trial court one crucial issue in this case is the age of the victimwhether or not Rosario Baluyot was less than twelve (12) years old at the time the alleged incident happened on October 10, 1986. The age is important in determining whether or not there was statutory rape, Article 335 of the Revised Penal Code defines the third type of rape as having carnal knowledge of a woman under 12 years of age, in which case force, intimidation, deprivation of reason or unconscious state do not have to be present. The trial court found that Rosario was below 12 years old when she was sexually abused by the accused and, therefore, rape was committed inspite of the absence of force or intimidation. In resolving the issue, the trial court put great weight on the testimonies of the victim's grandmother and father who testified that she was born on December 22, 1975. These oral declarations were admitted pursuant to then Rule 130, Section 33 of the Rules of Court where, in the absence of a birth certificate, the act or declaration about pedigree may be received in evidence on any notable fact in the life of a member of the family. Since birth is a matter of pedigree within the rule which permits the admission of hearsay evidence, oral declarations are therefore admissible as proof of birth (Decision, p. 54). The grandmother, Maria Burgos Turla, testified that she remembered Rosario's birth date because her brother died in Pampanga and her daughter, Anita (Rosario's mother) was the only one who failed to attend

the funeral because the latter has just given birth allegedly to Rosario (T.S.N. p. 8, Jan. 13, 1988). The father likewise testified that as far as he could remember, Rosario was born on December 22, 1975 (T.S.N., p. 4, Jan. 27, 1988) and he was certain that Rosario was more than one (1) year old when she was baptized (T.S.N., p. 45, Jan. 27, 1988). The trial court further added that their testimony is supported by the clinical record and the death certificate indicating that she was 12 years old when she was admitted at the Olongapo City General Hospital for treatment. The age was supplied by Rosario's alleged guardian, Gaspar Alcantara to the hospital's clinical record clerk, Lorna Limos. Fe Israel, a social worker who interviewed Rosario Baluyot also testified that she was told by Rosario that she was 12 years old. The trial court accepted this as adequate evidence of the truth. Moreover, Jessie Ramirez, the principal witness in this case declared that he was born on September 5, 1973 and that he was older than Rosario Baluyot. Therefore, since he was 13 years old in 1986, Rosario must have been less than 12 yeas old in 1986. (Decision, p. 55) The trial court concluded that the oral declarations of the grandmother and father supported by other independent evidence such as the clinical record, death certificate and the testimonies of Fe Israel and Jessie Ramirez, rendered the baptismal certificate presented by the defense without any probative or evidentiary value. (Decision, p. 55) The findings of the trial court with respect to Rosario Baluyot's age cannot stand the application of evidentiary rules. The trial court relied on Section 33, Rule 130 (now Section 40 of Rule 130 of the 1989 Revised Rules of Court). For oral evidence to be admissible under this Rule, the requisites are:
(1) That the declarant must be dead or outside of the Philippines or unable to testify; (2) That pedigree is in issue; (3) That the person whose pedigree is in question must be related to the declarant by birth or marriage; (4) That the declaration must be made before the controversy occurred or ante litem motam; and

(5) That the relationship between the declarant and the person whose pedigree is in question must as a general rule be shown by evidence other than such act or declaration.

These requirements were not satisfied by the evidence for the prosecution nor do the declarations fall within the purview of the rule. The victim's grandmother and father whose declarations regarding Rosario's age were admitted by the trial court are both alive, in the Philippines and able to testify as they both did testify in court. Their declarations were made at the trial which is certainly not before the controversy arose. The other witnesses who testified on Rosario's age are not members of the victim's family. The testimonies of Rosario's relatives must be weighed according to their own personal knowledge of what happened and not as hearsay evidence on matters of family history. At this point, we find the evidence regarding Rosario's age of doubtful value. The trial court justified the admissibility of the grandmother's testimony pursuant to the ruling laid down in U.S. v. Bergantino, (3 Phil., 118 [1903]) where the Court accepted the testimony of the mother that her daughter was 14 years old and 4 months old. The mother stated that she knew the age because the child was born about the time of the cholera epidemic of 1889. This was not hearsay, but came from one who had direct knowledge of the child's birth. It is however, equally true that human memory on dates or days is frail and unless the day is an extraordinary or unusual one for the witness, there is no reasonable assurance of its correctness. (People v. Dasig 93 Phil. 618, 632 [1953]) With respect to the grandmother's testimony, the date of the brother's death or funeral was never established, which indicates that the day was rather insignificant to be remembered. The father's declaration is likewise not entirely reliable. His testimony in court does not at all show that he had direct knowledge of his daughter's birth. He was certain though that she was more than one (1) year old at the time she was baptized. The other witnesses are not at all competent to testify on the victim's age, nor was there any basis shown to establish their competence for the purpose. The clinical records were based on Gaspar Alcantara's incompetent information given when he brought the victim to the hospital. Alcantara came to know her only about a year before her death. He had absolutely no knowledge about the circumstances of Rosario's birth. The death certificate relied upon by the trial court was merely based on the clinical records. It is even less reliable as a record of birth.

All the evidence presented by the prosecution showing that Rosario Baluyot was less than 12 years old at the time of the alleged incident are not adequate to establish the exact date of birth, much less offset a documentary record showing a different date. The defense presented Rosario Baluyot's baptismal certificate which the trial court rejected as being hearsay and of no value. As against the oral declarations made by interested witnesses establishing Rosario's age to be less than 12 years old, the evidence on record is more convincing and worthy of belief. (See Filinvest Land, Inc. v. Court of Appeals, 183 SCRA 664, 673 [1990]). By virtue of a subpoena duces tecum and ad testificandum, issued by the lower court to the St. James Parish Church, Subic, Zambales, Fr. Roque Villanueva a Roman Catholic priest testified and stated that he is the head of said parish. He brought with him Baptismal Register No. 9 entitled "Liber Baptisnorum", a latin term for baptismal book or record. On page 151, No. 3 of the said Registry Book, there appears the name of Rosario Baluyot who was baptized on December 25, 1974, and born on December 26, 1973. Parents are Policarpio Baluyot and Anita Burgos, residents of Subic, Zambales. Edita R. Milan appears as the only sponsor with Olongapo City as her address. In the case of Macadangdang v. Court of appeals (100 SCRA 73 [1980]), we held that:
xxx xxx xxx In our jurisprudence, this Court has been more definite in its pronouncements on the value of baptismal certificates. It thus ruled that while baptismal and marriage certificates may be considered public documents, they are evidence only to prove the administration of the sacraments on the dates therein specifiedbut not the veracity of the status or declarations made therein with respect to his kinsfolk and/or citizenship (Paa v. Chan, L-25945, Oct. 31, 1967). Again, in the case of Fortus v. Novero (L-22378, 23 SCRA 1331 [1968]), this Court held that a baptismal certificate is conclusive proof only of the baptism administered, in conformity with the rites of the Catholic Church by the priest who baptized the child, but it does not prove the veracity of the declarations and statements contained in the certificate that concern the relationship of the person baptized. Such declarations and statements, in order that their truth may be admitted, must indispensably be shown by proof recognized by law. (At pp. 84-85)

In the same light, the entries made in the Registry Book may be considered as entries made in the course of business under Section 43 of Rule 130, which is an exception to the hearsay rule. The baptisms administered by the church are one of its transactions in the exercise of ecclesiastical duties and recorded in a book of the church during the course of its

business. (U.S. v. de Vera, 28 Phil. 105 [1914] Hence, the certificate (Exhibit "22") presented by the defense that Rosario Baluyot was baptized on December 25, 1974 may be admitted in evidence as proof of baptism. Policarpio Baluyot, the victim's father testified that he had in his possession a baptismal certificate different from the one presented in court. However, no other baptismal record was ever presented to prove a date different from that brought by the official custodian. Since the baptismal certificate states that Rosario was baptized on December 25, 1974, it is therefore highly improbable that Rosario could have been born on December 22, 1975. She could not have been baptized before she was born. Exhibit "22" may be proof only of baptism but it puts a lie to the declaration that Rosario was born in 1975. With the father's assertion that Rosario was more than one (1) year old when she was baptized, we are then more inclined to agree that Rosario was born in 1973 as stated in the Baptismal Registry. In the case of People v. Rebancos (172 SCRA 425 [1989]), the Court stated:
xxx xxx xxx . . . Although no birth certificate was presented because her birth had allegedly not been registered, her baptismal certificate, coupled by her mother's testimony, was sufficient to establish that Mary Rose was below twelve years old when she was violated by Rebancos. (At. p. 426)

Unfortunately, in the instant case, nobody could corroborate the date on a more reliable document as to Rosario's birth which could serve as sufficient proof that she was born on December 26, 1973. Therefore, she was more than 12 years old at the time of the alleged incident on October 10, 1986. Moreover, it is not incumbent upon the defense to prove Rosario's age. The burden of proof lies on the prosecution to prove that Rosario was less than 12 years old at the time of the alleged incident in a charge of statutory rape. The prosecution failed in this respect. Since Rosario was not established to have been under 12 years of age at the time of the alleged sexual violation, it was necessary to prove that the usual elements of rape were present; i.e. that there was force of intimidation or that she was deprived of reason or otherwise unconscious in accordance with Article 335 of the Revised Penal Code. We agree with the defense that there was no proof of such facts. On the contrary, the evidence shows that Rosario submitted herself to the sexual advances of the appellant. In fact, she appears to have consented to the act as she was paid P300.00 the next morning while her companion, Jessie Ramirez was paid P200.00 (T.S.N. p. 50, January 6, 1988). The

environmental circumstances coupled with the testimonies and evidence presented in court clearly give the impression that Rosario Baluyot, a poor street child, was a prostitute inspite of her tender age. Circumstances in life may have forced her to submit to sex at such a young age but the circumstances do not come under the purview of force or intimidation needed to convict for rape. In view of these clear facts which the prosecution failed to refute, no rape was committed. But was Ritter guilty of homicide? The trial court justified its ruling by saying that the death of the victim was a consequence of the insertion of the foreign object into the victim's vagina by the appellant. We now ask "Was the appellant responsible for the sexual vibrator left inside Rosario's vagina which led to her death? The trial court convicted the accused based on circumstantial evidence. Unfortunately, the circumstances are capable of varying interpretations and are not enough to justify conviction. Jessie Ramirez, the principal witness did not actually see the object inserted in Rosario's vagina. Neither could he identify the object (Exhibit "C-2") taken from Rosario as the same object which the appellant was holding at that time of the alleged incident. In his sworn statement given to the police investigator on September 4, 1987, he answered that:
xxx xxx xxx T Habang kayo ay nasa loob ng kuwarto ng otel, mayroon ka bang napansin na inilabas ng kano sa kanyang daladalahan kung mayroon man? S Ang Amerikano ay may dala-dalang shoulder bag na kulay itim, at napansin ko na may inilabas siya sa kanyang bag na parang vicks inhaler, na kanyang inamoy-amoy habang nasa otel kami at pagkatapos niya ay inilapag niya sa lamiseta. T Ilarawan mo nga sa akin ang bagay na nakita mong inilabas ng Amerikano? S Ito ay may habang tatlong pulgada at ang takip nito ay may habang dalawang pulgada. Iyong takip ay bilog na patulis at may tabang mga kalahating pulgada. Hindi ko napansin ang hugis ng dulo ng bagay na may takip dahil natatakpan ng kamay at ilong ng Amerikano.

T Ipinakikita ko sa iyo ang isang larawan. Tignan mong mabuti ang larawang ito at sabihin mo nga sa akin kung makikilala mo ang mga bagay na nasa larawang ito, na may kinalaman sa nakita mong kinuha ng Amerikano sa kanyang bag? S Napansin ko na ang kulay asul na bagay sa larawan ay katulad na katulad noong takip ng bagay na inilabas ng Amerikano sa kanyang bag. Kaya lang ay bakit naging kulay asul gayong ng makita ko ito ay kulay puti ? (Exhibit "A", p. 2; Emphasis Supplied)

Presumably, what Jessie Ramirez saw was merely the Vicks inhaler which the appellant does not deny having possessed at that time. He was certain that the object was white. (T.S.N. p. 91, January 6, 1988) Later, Ramirez retracted and corrected himself. He said that it was grayish in color with color blue (Medyo kulay abo na may kulay na parang blue). (T.S.N. p. 92, January 6, 1988) The inconsistency of the witness' testimony casts doubt as to the veracity of the statements made especially when he answered on additional cross-examination that the reason why he concluded that Exhibit "C-2" was the same object being held by Ritter was because it was the only one shown to him by the prosecution (T.S.N. pp. 109-110, January 6, 1988). Jessie Ramirez was not all certain about the sexual vibrator because he did not actually see it in the possession of the appellant. What he merely remembers is the revelation made by Rosario the next morning that the foreigner inserted something inside her vagina. The trial court admitted such statement as part of the res gestae. In a strained effort to accept such statement as part of res gestae, the trial court focused the test of admissibility on the lapse of time between the event and the utterance. For the average 13 years old, the insertion of a mechanical device or anything for that matter into the vagina of a young girl is undoubtedly startling. For Rosario and Jessie, however, there must be more evidence to show that the statement, given after a night's sleep had intervened, was given instinctively because the event was so startling Res gestae does not apply. (Section 42, Rule 130, Rules of Court) Even if it were established that the appellant did insert something inside Rosario's vagina, the evidence is still not adequate to impute the death of Rosario to the appellant's alleged act. Jessie Ramirez testified that Rosario was able to remove the object inserted in her vagina. We quote:
Q Now, you also stated on direct examination that later on Rosario even categorically admitted to you that she was

already able to remove the object allegedly inserted inside her vagina, is that correct? A Yes, sir. xxx xxx xxx ATTY. CARAAN: Q Will you kindly tell to this Honorable Court the exact words used by Rosario Baluyot later on when you met her when you asked her and when she told you that she was already able to remove that object from her vagina? A "Oy, Jessie, natanggal na, "she told me that. I asked her, "Was it already removed?" And she answered, "Yes, it was removed." But the same night, she again complained of pain of her stomach. She sent one of her friends to call for me. And as a matter of fact, Tomboy was uttering defamatory words against me as she was groaning in pain. (TSN, Jan. 6,1988, pp. 72-73)

This encounter happened on the night of the day following the day after both children were invited by the foreigner to the hotel. (T.S.N. p. 73, January 6, 1988). Rosario was said to be groaning in pain so we can just imagine the distress she was undergoing at this point in time. If the device inserted by the appellant caused the pain, it is highly inconceivable how she was able to endure the pain and discomfort until May, 1987, seven (7) months after the alleged incident. Evidence must not only proceed from the mouth of a credible witness but it must be credible in itself such as the common experience and observation of mankind can approve as probable under the circumstances. (People vs. Patog, 144 SCRA 429 [1986]). At this juncture, we find Dr. Pedro Solis' testimony rather significant. Dr. Pedro Solis, a witness for the defense is considered an expert witness. (A Doctor of Medicine and a graduate of the State University in 1940, a degree of Bachelor of Laws and member of the Bar 1949, and a graduate of the Institute of Criminology University. He was awarded Post Graduate Diploma in Criminology in 1963, and also a graduate of United Nations Asia and Far East Asia Institute on the Prevention of Crimes in Tokyo Japan 1965. He was appointed Medico Legal Officer of the National Bureau of Investigation in 1940 until 1944. He became Chief Medico Legal Officer in 1970 and became the Deputy Director of the NBI up to 1984. He is at present a Professorial Lecturer on Legal Medicine at the UP, FEU, UE, and Fatima College of Medicine; a Medico Legal Consultant of the PGH Medical Center, Makati Medical Center, UERM Medical Center, MCU Medical Center. He has been with the NBI for 43 years. He has attended no less than 13 conferences abroad. He is the author of the textbooks entitled "Legal Medicine" and "Medical Jurisprudence".) With his impressive legal and

medical background, his testimony is too authoritative to ignore. We quote the pertinent portions of his testimony:
Q Now Dr. Solis, would you kindly go over this object marked as Exh. "C-2" which object was described as a part of a sexual vibrator battery operated. Now, given this kind of object, would you kindly tell us what would be the probable effect upon a 12 years old girl when it is inserted into her vagina? A Well, this vibrator must be considered a foreign body placed into a human being and as such be considered a foreign object. As a foreign object, the tendency of the body may be: No. 1expel the foreign bodyNo. 2.The tendency of the body is to react to that foreign body. One of the reactions that maybe manifested by the person wherein such foreign body is concerned is to cover the foreign body with human tissue, in a way to avoid its further injury to the body. Now, the second reaction is irritation thereby producing certain manifest symptoms and changes in the area where the foreign body is located. In severe cases, the symptoms manifestation might not only be localized but may be felt all over the body, we call it systemic reaction. Now, considering the fact that this foreign body as shown to me is already not complete, this shows exposure of its different parts for the body to react. If there is mechanism to cause the foreign body to vibrate, there must be some sort of power from within and that power must be a dry cell battery. [The] composition of the battery are, manganese dioxide ammonium, salts, water and any substance that will cause current flow. All of these substances are irritants including areas of the container and as such, the primary reaction of the body is to cause irritation on the tissues, thereby inflammatory changes develop and in all likelihood, aside from those inflammatory changes would be a supervening infection in a way that the whole generative organ of the woman will suffer from diseased process causing her the systemic reaction like fever, swelling of the area, and other systemic symptoms. . . . . (TSN., pp. 13-15, October 19,1988) xxx xxx xxx Q Now, given this object, how long would it take, Doctor before any reaction such as an infection would set in, how many days after the insertion of this object in the vagina of a 12 year old girl? A In the example given to me, considering that one of the ends is exposed, in a way that vaginal secretion has more chance to get in, well, liberation of this irritant chemicals

would be enhanced and therefore in a shorter period of time, there being this vaginal reaction. Q How many days or weeks would you say would that follow after the insertion? A As I said, with my experience at the NBI, insertion of any foreign body in the vaginal canal usually developed within, a period of two (2) weeks . . . xxx xxx xxx Q . . . [T]he subject in this case was allegedly raped, and a sexual vibrator was inserted in her vagina on October 10, 1986 and she was operated on, on May 19, 1987 the following year, so it took more than 7 months before this was extracted, would you say that it will take that long before any adverse infection could set in inside the vagina? A Infection and inflamatory changes will develop in a shorter time. (TSN., Oct. 19,1988, p. 18) xxx xxx xxx Q When you said shorter, how long would that be, Doctor? A As I said, in my personal experience, hair pins, cottonballs and even this lipstick of women usually, there are only about two (2) weeks time that the patient suffer some abnormal symptoms. Q Now, considering that this is a bigger object to the object that you mentioned, this object has a shorter time? A Yes, Sir shorter time. (TSN., Oct. 19. 1988, p. 20)

The trial court, however, ruled that "there is no hard and fast rule as to the time frame wherein infection sets in upon insertion of a foreign body in the vagina canal. For Dr. Solis, the time frame is not more than 10 months, and this case is still within the said time frame." A more generous time interval may be allowed in non-criminal cases. But where an accused is facing a penalty of reclusion perpetua, the evidence against him cannot be based on probabilities which are less likely than those probabilities which favor him. It should be clarified that the time frame depends upon the kind of foreign body lodged inside the body. An examination of the object gave the following results:

(1) Color: Blue Size: (a) Circumference3.031 inches (b) Lengthapproximately 2.179 inches. Composition: Showed the general characteristics of a styrene-butadiene plastic. (2) The specimen can be electrically operated by means of a battery as per certification dated 01 June 1988, signed by Mr. Rodolfo D. Mercuric, Shipboard Electrical Systems Mechanics, Foreman II, SRF Shop 51, Subic (see attached certification). (3) No comparative examination was made on specimen #1 and vibrator depicted in the catalog because no actual physical dimensions and/or mechanical characteristics were shown in the catalog. (Exhibit "LL")

The vibrator end was further subjected to a macro-photographic examination on the open end portion which revealed the following:
Result of Examination Macro-photographic examination on the open end portion of specimen #1 shows the following inscription: MABUCHI MOTOR JAPAN RE 14 PAT (Exhibit "MM")

From the above results, the subject object is certainly not considered as inert and based on Dr. Solis' testimony, it is more likely that infection should set in much earlier. Considering also that the object was inserted inside the vagina which is part of the generative organ of a woman, an organ which is lined with a very thin layer of membrane with plenty of blood supply, this part of the body is more susceptible to infection. (T.S.N. p. 34, October 19, 1988) The truth of Dr. Solis' testimony is more probable under the circumstances of the case. We see no reason why his opinions qualified by training and experience should not be controlling and binding upon the Court in the determination of guilt beyond reasonable doubt. (People v. Tolentino, 166 SCRA 469 [1988]). Dr. Barcinal, another witness for the defense also testified that he examined Rosario Baluyot on May 17, 1986 as a referral patient from the Department of Surgery to give an OB-GYN clearance to the patient prior to operation. (T.S.N. p. 6, September 28, 1988)
Q And how many times did you examine this patient Rosario Baluyot on that day? A I examined her twice on that day.

Q The first time that you examined her, what is the result of your findings, if any? A My first examination, I examined the patient inside the delivery room. The patient was brought to the delivery room wheel-chaired then from the wheel chair, the patient was ambigatory (sic). She was able to walk from the door to the examining table. On examination, the patient is conscious, she was fairly nourished, fairly developed, she had fever, she was uncooperative at that time and examination deals more on the abdomen which shows slightly distended abdomen with muscle guarding with tenderness all over, with maximum tenderness over the hypogastric area. (T.S.N. p. 5, September 28, 1988) xxx xxx xxx Q What about your second examination to the patient, what was your findings, if any? A In my second examination, I repeated the internal examination wherein I placed my index finger and middle finger inside the vagina of the patient and was able to palpate a hard object. After which, I made a speculum examination wherein I was able to visualize the inner portion of the vaginal canal, there I saw purulent foul smelling, blood tints, discharge in the vaginal canal and a foreign body invaded on the posterior part of the vaginal canal. xxx xxx xxx A I referred back to Dr. Fernandez about my findings and he asked me to try to remove the said foreign object by the use of forceps which I tried to do so also but I failed to extract the same. Q All this time that you were examining the patient Rosario Baluyot both in the first and second instance, Rosario Baluyot was conscious and were you able to talk to her when you were examining her? A Yes, sir. Q And did you ask her why there is a foreign object lodge inside her vagina? A Yes, Sir I asked her. Q And what did she tell you, if any? A She said in her own words that "GINAMIT AKO NG NEGRO AT SIYA ANG NAGLAGAY NITO."

Q Did she also tell you when, this Negro who used her and who inserted and placed the foreign object on her vagina? A Yes, Sir I asked her and she said he used me three (3) months ago from the time I examined her. Q Now, you said that you referred the patient to the ward, what happened next with your patient? A To my knowledge, the patient is already scheduled on operation on that date. Q Meaning, May 17, 1987? A Yes, Sir I was presuming that the patient would undergo surgery after that? (TSN, Sept. 28,1988, pp. 8-9; Emphasis supplied)

The trial court debunked Dr. Barcinals testimony considering Rosario's condition at that time. It ruled that it is inconceivable that she would be striking a normal conversation with the doctors and would be sitting on the examination table since Gaspar Alcantara stated that when he brought Rosario Baluyot to the hospital, she was unconscious and writhing in pain. It was not improbable for Rosario Baluyot to still be conscious and ambulant at that time because there were several instances testified to by different witnesses that she was still able to talk prior to her operation: (1) Fe Israel, a witness for the prosecution and a member of the Olongapo Catholic Charismatic Renewal Movement testified that as a member of this group she visits indigent children in the hospital every Saturday and after office hours on working days. On the Saturday prior to Rosario's death which was May 17, she was still able to talk to Rosario Baluyot. In fact, one of her groupmates helped Rosario go to the comfort room to urinate. (T.S.N., pp. 16-19, May 25, 1988) (2) Angelita Amulong, a witness for the defense is another para social worker who worked at Pope John 23rd Community Center under Sister Eva Palencia. In one of her hospital visits, she encountered Rosario Baluyot in the month of May, 1987. She actually saw a child who happened to be Rosario Baluyot seated on the cement floor and when she asked why she was seated there, she was told that it was too hot in the bed. She saw Rosario Baluyot for about 2 or 3 days successively. (T.S.N. pp. 10-13, September 7, 1988)

(3) Gaspar Alcantara, the person who brought Rosario to the hospital actually testified that she was conscious (T.S.N. p. 36, September 14, 1988) but writhing in pain. He took pity on her so he brought her to the hospital (T.S.N. p. 12, September 14, 1988) From the above testimonies, it is clear that Rosario was still conscious and could still answer questions asked of her although she was complaining of stomach pains. Unfortunately, the medical attention given to her failed to halt the aggravation of her condition. The operation on May 19 was too late. Rosario died because of septicemia, which in layman's language is blood poisoning, and peritonitis, which is massive infection, in the abdominal cavity caused by the foreign object or the cut sexual vibrator lodged in the vagina of the victim. This led to the infection from the uterus to the fallopian tubes and into the peritoneum and the abdominal cavity. The trial court convicted the accused citing the rationale of Article 4 of the RPC
He who is the cause of the cause is the cause of the evil caused.

But before the conviction is affirmed, we must first follow the rule as stated in the case of Urbano vs. Intermediate Appellate Court (157 SCRA 1 [1988]) to wit:
The rule is that the death of the victim must be the direct, natural and logical consequence of the wounds inflicted upon him by the accused . And since we are dealing with a criminal conviction, the proof that the accused caused the victim's death must convince a rational mind beyond reasonable doubt. (Emphasis supplied)

In People v. Tempongko, Jr., (144 SCRA 583, 592 [1986]), we explained that:
xxx xxx xxx The basic principle in every criminal prosecution is that accusation is not synonymous with guilt. The accused is presumed innocent until the contrary is proved by the prosecution. If the prosecution fails, it fails utterly, even if the defense is weak or, indeed, even if there is no defense at all. The defendant faces the full panoply of state authority with all "The People of the Philippines" arrayed against him. In a manner of speaking, he goes to bat with all the bases loaded. The odds are heavily against him. It is important, therefore, to equalize the positions of the prosecution and the defense by presuming the innocence of the accused until the state is able to refute the presumption by proof of guilt beyond reasonable doubt. (At. p. 592)

The evidence for the accused maybe numerically less as against the number of witnesses and preponderance of evidence presented by the

prosecution but there is no direct and convincing proof that the accused was responsible for the vibrator left inside the victim's vagina which caused her death seven (7) months after its insertion. What the prosecution managed to establish were mere circumstances which were not sufficient to overcome the constitutional presumption of innocence. While circumstantial evidence may suffice to support a conviction it is imperative, though, that the following requisites should concur: (a) There is more than one circumstance; (b) The facts from which the inferences are derived are proven; and (c) The combination of all the circumstances is such as to produce a conviction beyond reasonable doubt. (Rule 133, Sec. 4 Revised Rules of Court) For the well-entrenched rule in evidence is that "before conviction can be had upon circumstantial evidence, the circumstances proved should constitute an unbroken chain which leads to one fair and reasonable conclusion pointing to the defendant, to the exclusion of all others, as the author of the crime (People v. Subano, 73 Phil. 692 [1942]; Emphasis supplied). It must fairly exclude every reasonable hypothesis of innocence (Dorado v. Court of Appeals, 153 SCRA 420, 433 [1987]). In this case the circumstantial evidence presented by the prosecution does not conclusively point to the liability of the appellant for the crime charged. (People v. Tolentino, supra) We are aware of the wide publicity given to the plight of Rosario Baluyot and how her death exemplified starkly the daily terrors that most street children encounter as they sell their bodies in order to survive. At an age when innocence and youthful joys should preponderate in their lives, they experience life in its most heartless and inhuman form. Instead of nothing more than gentle disappointments occupying their young minds, they daily cope with tragedies that even adults should never be made to carry. It is with distressing reluctance that we have to seemingly set back the efforts of Government to dramatize the death of Rosario Baluyot as a means of galvanizing the nation to care for its street children. It would have meant a lot to social workers and prosecutors alike if one pedophile-killer could be brought to justice so that his example would arouse public concern, sufficient for the formulation and implementation of meaningful remedies. However, we cannot convict on anything less than proof beyond reasonable doubt. The protections of the Bill of Rights and our criminal justice system are as much, if not more so, for the perverts and outcasts of society as they are for normal, decent, and law-abiding people.

The requirement of proof which produces in an unprejudiced mind moral certainty or conviction that the accused did commit the offense has not been satisfied. By way of emphasis, we reiterate some of the factors arousing reasonable doubt: 1. The evidence on Rosario Baluyot's baptism creates reasonable doubt about her being less than 12 years old when the carnal knowledge took place. If the evidence for the prosecution is to be believed, she was not yet born on the date she was baptized. 2. Since the proof of Rosario's being under 12 years of age is not satisfactory, the prosecution has to prove force, intimidation, or deprivation of reason in order to convict for rape. There is no such proof. In fact, the evidence shows a willingness to submit to the sexual act for monetary considerations. 3. The only witness to the fact of Ritter's placing a vibrator inside the vagina of Rosario was Jessie Ramirez. This witness did not see Ritter insert the vibrator. The morning after the insertion, he was only told by Rosario about it. Two days later, he allegedly met Rosario who informed him that she was able to remove the object. And yet, Ramirez testified that on the night of that second encounter, he saw Rosario groaning because of pain in her stomach. She was even hurling invectives. Ramirez' testimony is not only hearsay, it is also contradictory. 4. It was improbable, according to expert medical testimony, for a foreign object with active properties to cause pain, discomfort, and serious infection only after seven months inside a young girl's vaginal canal. Infection would have set in much earlier. Jessie Ramirez recalled that the incident happened in December of 1986. (TSN., January 6, 1988, pp. 15-17) The evidence, however shows that the appellant was not here in the Philippines that December. As per the Commission on Immigration Arrival and Departure Report, Heinrich Ritter arrived in the Philippines on October 7, 1986 and left on October 12, 1986. He never returned until September 23, 1987 (Exhibits "DD" and "EE") The incident could have happened only in October, but then it would have been highly improbable for the sexual vibrator to stay inside the vagina for seven (7) months with the kind of serious complications it creates. 5. The gynecologist who attended to Rosario during her hospital confinement testified that she told him "Ginamit ako ng Negro at siya ang naglagay nito." The accused is not a black.

Noteworthy is the fact that nothing was mentioned about Rosario's activities after the hotel incident. Considering Dr. Barcinal's testimony indicating that she was "used" by a "Negro" three (3) months prior to admission in the hospital and Rosario's unfortunate profession, there is always the possibility that she could have allowed herself to be violated by this perverse kind of sexual behavior where a vibrator or vibrators were inserted into her vagina between October, 1986 and May, 1987. Moreover, the long delay of seven (7) months after the incident in reporting the alleged crime renders the evidence for the prosecution insufficient to establish appellant's guilty connection with the requisite moral certainty. (See People v. Mula Cruz, 129 SCRA 156 [1984]). The established facts do not entirely rule out the possibility that the appellant could have inserted a foreign object inside Rosario's vagina. This object may have caused her death. It is possible that the appellant could be the guilty person. However, the Court cannot base an affirmance of conviction upon mere possibilities. Suspicions and possibilities are not evidence and therefore should not be taken against the accused. (People v. Tolentino, supra) Well-established is the rule that every circumstance favorable to the accused should be duly taken into account. This rule applies even to hardened criminals or those whose bizarre behaviour violates the mores of civilized society. The evidence against the accused must survive the test of reason. The strongest suspicion must not be allowed to sway judgment. (See Sacay v. Sandiganbayan, 142 SCRA 593 [1986]). As stated in the case of People v. Ng (142 SCRA 615 [1986]):
. . . [F]rom the earliest years of this Court, it has emphasized the rule that reasonable doubt in criminal cases must be resolved in favor of the accused. The requirement of proof beyond reasonable doubt calls for moral certainty of guilt. It has been defined as meaning such proof "to the satisfaction of the court, keeping in mind the presumption of innocence, as precludes every reasonable hypothesis except that which it is given to support. It is not sufficient for the proof to establish a probability, even though strong, that the fact charged is more likely to be true than the contrary. It must establish the truth of the fact to a reasonable and moral certaintya certainty that convinces and satisfies the reason and the conscience of those who are to act upon it. (Moreno, Philippine Law Dictionary, 1972 Edition, p. 379, citing U.S. v. Reyes, 3 Phil. 3). . . .

In the instant case, since there are circumstances which prevent our being morally certain of the guilt of the appellant, he is, therefore, entitled to an acquittal. This notwithstanding, the Court can not ignore the acts of the appellant on the children, Jessie Ramirez and Rosario Baluyot in October, 1986 at the

MGM Hotel. Inspite of his flat denials, we are convinced that he comes to this country not to look at historical sights, enrich his intellect or indulge in legitimate pleasures but in order to satisfy the urgings of a sick mind. With the positive Identification and testimony by Jessie Ramirez that it was the appellant who picked him and Rosario from among the children and invited them to the hotel; and that in the hotel he was shown pictures of young boys like him and the two masturbated each other, such actuations clearly show that the appellant is a pedophile. When apprehended in Ermita, he was sizing up young children. Dr. Solis defined pedophilia in his book entitled Legal Medicine, 1987 edition, as follows:
PedophiliaA form of sexual perversion wherein a person has the compulsive desire to have sexual intercourse with a child of either sex. Children of various ages participate in sexual activities, like fellatio, cunnilingus, fondling with sex organs, or anal sexual intercourse. Usually committed by a homosexual between a man and a boy the latter being a passive partner.

Ritter was prosecuted for rape with homicide and not pedophilia, assuming this is a crime by itself. Pedophilia is clearly a behavior offensive to public morals and violative of the declared policy of the state to promote and protect the physical, moral, spiritual and social well-being of our youth. (Article II, Section 13, 1987 Constitution) (Harvey v. Defensor Santiago, 162 SCRA 840, 848 [1989]). Pedophiles, especially thrill seeking aliens have no place in our country. In this case, there is reasonable ground to believe that the appellant committed acts injurious not only to Rosario Baluyot but also to the public good and domestic tranquility of the people. The state has expressly committed itself to defend the right of children to assistance and special protection from all forms of neglect, abuse, cruelty, exploitation and other conditions prejudicial to their development. (Art. XV, Section 3 [2] . . . (Harvey v. Santiago, supra). The appellant has abused Filipino children, enticing them with money. The appellant should be expelled from the country. Furthermore, it does not necessarily follow that the appellant is also free from civil liability which is impliedly instituted with the criminal action. (Rule III, Section 1) The well-settled doctrine is that a person while not criminally liable, may still be civilly liable. We reiterate what has been stated in Urbano v. IAC, supra.
. . . While the guilt of the accused in a criminal prosecution must be established beyond reasonable doubt, only a preponderance of evidence is required in a civil action for damages. (Article 29, Civil Code). The judgment of acquittal extinguishes the civil liability of the accused only when it

includes a declaration that the facts from which the civil liability might arise did not exist. (Padilla v. Court of Appeals, 129 SCRA 559). The reason for the provisions of Article 29 of the Civil Code, which provides that the acquittal of the accused on the ground that his guilt has not been proved beyond reasonable doubt does not necessarily exempt him from civil liability for the same act or omission, has been explained by the Code Commission as follows: The old rule that the acquittal of the accused in a criminal case also releases him from civil liability is one of the most serious flaws in the Philippine legal system. It has given rise to numberless instances of miscarriage of justice, where the acquittal was due to a reasonable doubt in the mind of the court as to the guilt of the accused. The reasoning followed is that inasmuch as the civil responsibility is derived from the criminal offense, when the latter is not proved, civil liability cannot be demanded. This is one of those causes where confused thinking leads to unfortunate and deplorable consequences. Such reasoning fails to draw a clear line of demarcation between criminal liability and civil responsibility, and to determine the logical result of the distinction. The two liabilities are separate and distinct from each other. One affects the social order and the other, private rights. One is for the punishment or correction of the offender while the other is for the reparation of damages suffered by the aggrieved party. The two responsibilities are so different from each other that article 1813 of the present (Spanish) Civil Code reads thus: "There may be a compromise upon the civil action arising from a crime; but the public action for the imposition of the legal penalty shall not thereby be extinguished." It is just and proper that, for the purposes of the imprisonment of or fine upon the accused, the offense should be proved beyond reasonable doubt. But for the purpose of indemnifying the complaining party, why should the offense also be proved beyond reasonable doubt? Is not the invasion or violation of every private right to be proved only by a preponderance of evidence? Is the right of the aggrieved person any less private because the wrongful act is also punishable by the criminal law? For these reasons, the Commission recommends the adoption of the reform under discussion. It will correct a serious defect in our law. It will close up an inexhaustible source of injusticea cause for disillusionment on the part of the innumerable persons injured or wronged.

Rosario Baluyot is a street child who ran away from her grandmother's house. Circumstances forced her to succumb and enter this unfortunate profession. Nonetheless, she has left behind heirs who have certainly suffered mental anguish, anxiety and moral shock by her sudden and incredulous death as reflected in the records of the case. Though we are

acquitting the appellant for the crime of rape with homicide, we emphasize that we are not ruling that he is innocent or blameless. It is only the constitutional presumption of innocence and the failure of the prosecution to build an airtight case for conviction which saved him, not that the facts of unlawful conduct do not exist. As earlier stated, there is the likelihood that he did insert the vibrator whose end was left inside Rosario's vaginal canal and that the vibrator may have caused her death. True, we cannot convict on probabilities or possibilities but civil liability does not require proof beyond reasonable doubt. The Court can order the payment of indemnity on the facts found in the records of this case. The appellant certainly committed acts contrary to morals, good customs, public order or public policy (see Article 21 Civil Code). As earlier mentioned, the appellant has abused Filipino children, enticing them with money. We can not overstress the responsibility for proper behavior of all adults in the Philippines, including the appellant towards young children. The sexual exploitation committed by the appellant should not and can not be condoned. Thus, considering the circumstances of the case, we are awarding damages to the heirs of Rosario Baluyot in the amount of P30,000.00. And finally, the Court deplores the lack of criminal laws which will adequately protect street children from exploitation by pedophiles, pimps, and, perhaps, their own parents or guardians who profit from the sale of young bodies. The provisions on statutory rape and other related offenses were never intended for the relatively recent influx of pedophiles taking advantage of rampant poverty among the forgotten segments of our society. Newspaper and magazine articles, media exposes, college dissertations, and other studies deal at length with this serious social problem but pedophiles like the appellant will continue to enter the Philippines and foreign publications catering to them will continue to advertise the availability of Filipino street children unless the Government acts and acts soon. We have to acquit the appellant because the Bill of Rights commands us to do so. We, however, express the Court's concern about the problem of street children and the evils committed against them. Something must be done about it. WHEREFORE, the appealed judgment is REVERSED and SET ASIDE. Appellant HEINRICH STEFAN RITTER is ACQUITTED on grounds of reasonable doubt. The appellant is ordered to pay the amount of P30,000.00 by way of moral and exemplary damages to the heirs of Rosario Baluyot. The Commissioner of Immigration and Deportation is hereby directed to institute proper deportation proceedings against the appellant and to immediately expel him thereafter with prejudice to re-entry into the country. SO ORDERED.

Fernan, C.J., Feliciano, Bidin and Davide, Jr., JJ, concur.

G.R. No. 76487 November 9, 1990 HEIRS OF JOHN Z. SYCIP NAMELY NATIVIDAD D. SYCIP, JOSE SYCIP, JOHN SYCIP, JR., ALFONSO SYCIP ROSE II, MARIE NATIVIDAD D. SYCIP, petitioners, vs. COURT OF APPEALS, MELENCIO YU AND TALINANAP MATUALAGA respondents. Ildefonso V. Lagcao for petitioners. Camilo Cario Dionio, Jr. for private respondents.

PARAS, J.: This is a petition for review on certiorari seeking the reversal of the September 22, 1986 decision ** of the Court of Appeals in CA-G.R. No. 69000 entitled "Melencio Yu, et al. v. Heirs of John Z. Sycip" affirming the decision *** of the Court of First Instance of South Cotabato, Branch I dated April 22, 1982 in Civil Case No. 1291 which, among others, adjudged private respondents Melencio Yu and Talinanap Matualaga as the registered absolute owners of Lot No. 4 and ordered the petitioner to deliver to the private respondents the property in question and to pay the attorney's fees. The decretal portion of the appealed decision reads as follows:

WHEREFORE no reversible error in the decision appealed from, the same is hereby affirmed with costs againsts defendant-appellants. SO ORDERED. (p. 50, Rollo)

The antecedent facts of the case as found by the appellate court are as follows:
The plaintiffs-spouses are native muslims. Prior to 1952, Talinanap Matualaga bought a parcel of land with an area of 54.4980 hectares more or less, situated at Makar, General Santos City (using the money given to her by her parents) from vendors Cosin Bentaib and Hadji Abdaua Mohamad. The land was, however, surveyed in the name of Bangon Yu (father of plaintiff Melencio Yu) on June 14 to 16, 1952 by private surveyor Justino Mendoza which was approved by the Director of Lands on March 4, 1953. On September 11 to 12, 1953, the land was subdivided into five (5) lots in another survey conducted and executed by Justino Mendoza, and approved by the Director of Lands on July 1, 1954. The subdivision was as follows: Lot No. 1 for Bengon Yu; Lot No. 2 for Melencio Yu; Lot No. 3 for Dominga Pinagawang; Lot No. 4 for Talinanap Matualaga and Lot No. 5 for Ison Yu (the brother of plaintiff Melencio Yu). (Exh. "A") Melencio Yu, together with his wife, Talinanap Matualaga filed on December 21, their respective Free Patent Application for both Lot Nos. 4 and 2. On April 18, 1961, the approval of the Director of Lands of the Free Patent Application, Free Patent No. V-178889 was issued on June 22, 1961 by authority of the President of the Philippines (Exh. "A"). Upon transmittal to the Register of Deeds on July 17, 1961, the latter issued to Melencio Yu, married to Talinanap Matualaga, Original Certificate of Title No. (C-14496) (P-523) on August 23, 1961 (Exh. "B"), "B-1" and "BB"). The owner's copy of said title, however, was not received by the patentee Melencio Yu because the same was given to defendant John Z. Sycip (now deceased). In 1958, on account of jealousy, Talinanap Matualaga left her husband at Tocanabago, General Santos, South Cotabato, where they had a house in the land in question since their marriage and lived with her parents at Baluan, Cotabato. For the same period, Melencio Yu lived in Tupi South Cotabato. They reconciled, however, in 1963 and since then lived together in Buluan. Upon their reconciliation, however, Melencio Yu asked his wife if a certain Alfonso Non had approached her regarding the sale of their land to John Sycip. Talinanap Matualaga answered in the negative and further said that she never executed any instrument conveying her property to anyone. Melencio Yu then explained that while they were separated, Alfonso Non approached him and told him that there was a buyer interested in their land at a price of P200.00 per hectare. Melencio told Non that the land belonged to his wife as her paraphernal property, hence, he did not have authority to sell the same. Alfonso Non, however, convinced Melencio that if he would only sign the documents which Non had prepared then Non will secure the signature of Talinanap in Buluan, and if Non fails to get Talinanap's signature, then Melencio's signature will be null and void. With such understanding, Melencio signed the "Agreement of Transfer of Rights and Deed of Sale" (Exh. "B") and the "Quitclaim Deed" (Exh. "D") without receiving any consideration therefor. It turned out that the deeds involved the sale of the whole parcel of land consisting of more than 54 hectares in favor of John Sycip for a consideration of P9,500.00.

By reason of these information, the spouses sought the assistance of the Commission on National Integration of Southern Mindanao office which informed them that their original certificate of titles were taken and delivered to John Sycip by virtue of the sale documents in question. Plaintiffs demanded the return of their land to them and the declaration of nullity of the documents in question. (pp. 45-46, Rollo)

On December 6, 1986, private respondents filed a complaint against John Z. Sycip, (later substituted by his heirs upon his death) petitioners herein, before the trial court, docketed as Civil Case No. 969 for the Declaration of Nullity of Document and Recovery of Possession of Real Property with a prayer for a writ of Preliminary Mandatory Injunction and Damages, with Lot No. 4 Psu-135740Amd, as the subject matter which was adjacent to Lot No. 2, Psu-135740-Amd. (Rollo, p. 149). On March 2, 1971 the trial court upheld the right of the private respondents to be restored to the possession of the aforesaid parcel of land by declaring null and void ab initio or inexistent all documents of conveyance of sale by the petitioners. On appeal, the appellate court in its decision dated October 2, 1978 affirmed in toto the decision of the trial court. Said decision became final and executory and the private respondents were restored to the possession of Lot No. 4 Psu-135740-Amd by virtue of the writ of execution issued by the trial court. (Rollo, p. 150) Meanwhile, on May 2, 1972, private respondents filed another complaint in the Court of First Instance of Cotabato Branch I for the Declaration of Nullity of Documents and Recovery of Possession of Real Property with a prayer for a Writ of Preliminary Mandatory Injunction and Damages docketed as Civil Case No. 1291, this time it was Lot No. 2 Psu-135740-Amd as the subject matter of the aforesaid case. On June 21, 1973, the trial court issued its order dismissing the case on the ground of prescription (Rollo, p. 95). It was on July 18, 1973 that private respondents filed their urgent motion for reconsideration to set aside the order dated June 21, 1973 which was denied on October 1, 1973 (Rollo, p. 146). On appeal, the Court of Appeals, Special Eighth Division, rendered its decision in favor of private respondents thereby setting aside the order of dismissal of the trial court dated June 21, 1973 and remanding the case for further proceedings (Rollo, p. 147). On April 22, 1981, the trial court in its order adopted the evidence presented in Civil Case No. 969 both oral and documentary and reversed its Order dated June 21, 1973 dismissing the complaint and declared private respondent as the registered and absolute owners of the land in question. (Rollo, p. 147; Record on Appeal p. 71)

Petitioners' motion for reconsideration was denied by the trial court on June 5, 1981. (Rollo, p. 96) Hence, this petition for review before Us. The pivotal issue of this case is whether or not the sale of lot No. 2 Psu-135740Amd is null and void ab initio. The petition is devoid of merit. It is not disputed that the private respondents are Muslims who belong to the cultural minority or non-Christian Filipinos as members of the Maguindanao Tribe. Any transaction, involving real property with them is governed by the provisions of Sections 145 and 146 of the Revised Administrative Code of Mindanao and Sulu, Section 120 of the Public Land Act (Commonwealth Act No. 141), as amended, and Republic Act No. 3872, further amending the Public Land Act. Section 145 of the Revised Administrative Code of Mindanao and Sulu provides that any transaction involving real property with said non-Christian tribes shall bear the approval of the provincial governor wherein the same was executed or of his representative duly authorized in writing for such purpose, indorsed upon it. Section 146 of the same code considers every contract or agreement made in violation of Section 145 as null and void. (Emphasis supplied) Section 120 of the Public Land Act (Commonwealth Act No. 141) provides that conveyances and encumbrances made by persons belonging to the so-called "non-Christian tribes" shall be valid if the person making the conveyance or encumbrance is able to read and can understand the language in which the instrument of conveyance or encumbrance is written. Conveyances and encumbrances made by illiterate non-Christians shall not be valid unless duly approved by the Commissioner of Mindanao and Sulu. Republic Act No. 3872 provides that conveyances and encumbrances made by illiterate non-Christian or literate non-Christians where the instrument of conveyance or encumbrance is in a language not understood by said literate non-Christians shall not be valid unless duly approved by the Chairman of the Commission on National Integration. All the documents declared null and void or inexistent by the trial court and affirmed by the Court of Appeals were found to have been falsified in Civil Case No. 969; without consideration and more importantly without approval by any of the following officials: the Provincial Governor of Cotabato, Commissioner of Mindanao and Sulu, or the Chairman of the Commission on National Integration and therefore nun and void.

With the resolution of this issue there appears to be no necessity to dwell on the other issues of this case. PREMISES CONSIDERED, the petition is hereby DISMISSED and the decision of the Court of Appeals is hereby AFFIRMED. SO ORDERED. Melencio-Herrera (Chairman), Padilla, Sarmiento and Regalado, JJ., concur.

Footnotes
* Penned by Associate Justice Jose C. Campos, Jr., and concurred in by Associate Justices Reynato S. Puno and Venancio D. Aldecoa, Jr. ** Penned by Judge Pedro Samson C. Animas.

G.R. No. L-46061 November 14, 1984 ST. LOUIS REALTY CORPORATION, petitioner, vs. COURT OF APPEALS and CONRADO J. ARAMIL, respondents. Romeo Z. Comia for petitioner. Roman R. Bersamin for private respondent.

AQUINO, J.: This case is about the recovery of damages for a wrongful advertisement in the Sunday Times where Saint Louis Realty Corporation misrepresented that the house of Doctor Conrado J. Aramil belonged to Arcadio S. Arcadio. St. Louis Realty caused to be published with the permission of Arcadio S. Arcadio (but without permission of Doctor Aramil) in the issue of the Sunday Times of December 15, 1968 an advertisement with the heading "WHERE THE HEART IS". Below that heading was the photograph of the residence of Doctor Aramil and the Arcadio family and then below the photograph was the following write-up:
Home is where the heart is. And the hearts of MR. AND MRS. ARCADIO S. ARCADIO and their family have been captured by BROOKSIDE HILLS. They used to rent a small 2-bedroom house in a cramped neighborhood, sadly

inadequate and unwholesome for the needs of a large family. They dream(ed) of a more pleasant place free from the din and dust of city life yet near all facilities. Plans took shape when they heard of BROOKSIDE HILLS. With thrift and determination, they bought a lot and built their dream house ... for P31,000. The Arcadios are now part of the friendly, thriving community of BROOKSIDE HILLS... a beautiful first-class subdivision planned for wholesome family living.

The same advertisement appeared in the Sunday Times dated January 5, 1969. Doctor Aramil a neuropsychiatrist and a member of the faculty of the U. E. Ramon Magsaysay Memorial Hospital, noticed the mistake. On that same date, he wrote St. Louis Realty the following letter of protest:
Dear Sirs: This is anent to your advertisements appearing in the December 15, 1968 and January 5, 1969 issues of the Sunday Times which boldly depicted my house at the above-mentioned address and implying that it belonged to another person. I am not aware of any permission or authority on my part for the use of my house for such publicity. This unauthorized use of my house for your promotional gain and much more the apparent distortions therein are I believe not only transgression to my private property but also damaging to my prestige in the medical profession I have had invited in several occasions numerous medical colleagues, medical students and friends to my house and after reading your December 15 advertisement some of them have uttered some remarks purporting doubts as to my professional and personal integrity. Such sly remarks although in light vein as "it looks like your house," "how much are you renting from the Arcadios?", " like your wife portrayed in the papers as belonging to another husband," etc., have resulted in no little mental anguish on my part. I have referred this matter to the Legal Panel of the Philippine Medical Association and their final advice is pending upon my submission of supporting ownership papers. I will therefore be constrained to pursue court action against your corporation unless you could satisfactorily explain this matter within a week upon receipt of this letter.

The letter was received by Ernesto Magtoto, an officer of St. Louis Realty in charge of advertising. He stopped publication of the advertisement. He contacted Doctor Aramil and offered his apologies. However, no rectification or apology was published. On February 20, 1969, Aramil's counsel demanded from St. Louis Realty actual, moral and exemplary damages of P110,000 (Exh. D). In its answer dated March 10, St. Louis Realty claimed that there was an honest mistake and that if Aramil so desired, rectification would be published in the Manila Times (Exh. 3).

It published in the issue of the Manila Times of March 18, 1969 a new advertisement with the Arcadio family and their real house. But it did not publish any apology to Doctor Aramil and an explanation of the error. On March 29, Aramil filed his complaint for damages. St. Louis Realty published in the issue of the Manila Times of April 15, 1969 the following "NOTICE OF RECTIFICATION" in a space 4 by 3 inches:
This will serve as a notice that our print ad 'Where the Heart is' which appeared in the Manila Times issue of March 18, 1969 is a rectification of the same ad that appeared in the Manila Times issues rectification of the same ad that appeal of December 15, 1968 and January 5, 1969 wherein a photo of the house of another Brookside Homeowner (Dr. Aramil-private respondent) was mistakenly used as a background for the featured homeowner's the Arcadio family. The ad of March 18, 1969 shows the Arcadio family with their real house in the background, as was intended all along.

Judge Jose M. Leuterio observed that St. Louis Realty should have immediately published a rectification and apology. He found that as a result of St. Louis Realty's mistake, magnified by its utter lack of sincerity, Doctor Aramil suffered mental anguish and his income was reduced by about P1,000 to P1,500 a month. Moreover, there was violation of Aramil's right to privacy (Art. 26, Civil Code). The trial court awarded Aramil P8,000 as actual damages, P20,000 as moral damages and P2,000 as attorney's fees. St. Louis Realty appealed to the Court of Appeals. The Appellate Court affirmed that judgment, with Acting Presiding Justice Magno S. Gatmaitan as ponente, and Justices Sixto A. Domondon and Samuel F. Reyes concurring. The Appellate Court reasoned out that St. Louis Realty committed an actionable quasi-delict under articles 21 and 26 of the Civil Code because the questioned advertisements pictured a beautiful house which did not belong to Arcadio but to Doctor Aramil who, naturally, was annoyed by that contretemps. In this appeal, St. Louis Realty contends that the Appellate Court ignored certain facts and resorted to surmises and conjectures. This contention is unwarranted. The Appellate Court adopted the facts found by the trial court. Those factual findings are binding on this Court. St. Louis Realty also contends that the decision is contrary to law and that the case was decided in a way not in conformity with the rulings of this Court. It argues that the case is not covered by article 26 which provides that "every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons". "Prying into the privacy of another's residence"

and "meddling with or disturbing the private life or family relations of another" and "similar acts", "though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief". The damages fixed by Judge Leuterio are sanctioned by Articles 2200, 2208 and 2219 of the Civil Code. Article 2219 allows moral damages for acts and actions mentioned in Article 26. As lengthily explained by Justice Gatmaitan, the acts and omissions of the firm fan under Article 26. St. Louis Realty's employee was grossly negligent in mixing up the Aramil and Arcadio residences in a widely circulated publication like the Sunday Times. To suit its purpose, it never made any written apology and explanation of the mix-up. It just contented itself with a cavalier "rectification ". Persons, who know the residence of Doctor Aramil, were confused by the distorted, lingering impression that he was renting his residence from Arcadio or that Arcadio had leased it from him. Either way, his private life was mistakenly and unnecessarily exposed. He suffered diminution of income and mental anguish. WHEREFORE, the judgment of the Appellate Court is affirmed. Costs against the petitioner. SO ORDERED.

G.R. NO. L-48276 September 30, 1987 DR. PEDRO A. DANAO (substituted by his heirs MARTIN DANAO, MINDA DANAO and co-petitioner CONCEPCION S. DANAO) and CONCEPCION S. DANAO, petitioners, vs. HON. COURT OF APPEALS, BANK OF THE PHILIPPINE ISLANDS, Successor to the PEOPLES BANK & TRUST COMPANY, respondents. No. L-48980 September 30, 1987 BANK OF THE PHILIPPINE ISLANDS, Successor to the PEOPLES BANK & TRUST COMPANY, petitioner, vs. HON. COURT OF APPEALS, DR. PEDRO A. DANAO (Substituted by his heirs MARTIN DANAO, MINDA DANAO and correspondent CONCEPCION S. DANAO) and CONCEPCION S. DANAO, respondents.

PARAS, J.: These are two petitions for review on certiorari of the decision 1 of respondent Court of Appeals in CA-G.R. No. 59865-R promulgated on April 14, 1978 (Rollo,

p. 22), affirming the decision 2 of the Court of First Instance of Manila with modifications. The dispositive portion of the appellate judgment reads;
WHEREFORE, with the modifications that the actual and compensatory damages are eliminated the moral damages are reduced to P30,000.00, and the attorney's fees are likewise reduced to P5,000.00 the decision appealed from is affirmed.

The facts of the cases involved are quoted from the decision of respondent Court of Appeals as follows:
On February 27, 1963, spouses Pedro Danao and Concepcion S. Danao applied for a commercial credit line of P20,000.00 with the People's Bank and Trust Company. The application having been granted, the parties on March 14, 1963, executed a Commercial Credit Agreement and Mortgage in which, among others, they stipulated: WHEREFORE, the said mortgagor(s) have offered and agreed to secure the repayment of the said credits and advances with interest due or accruing thereon as well as any other liability or liabilities of the said mortgagors to the said mortgagee, now existing, due or to become due, or hereafter incurred by means of a good and valid mortgage as hereinafter stated, and the mortgagee has consented to grant the line of credit applied for a good and sufficient security; NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein set forth the parties do have agreed and do hereby agree, as follows: The said mortgagor(s) shall be and are hereby granted a line of credit not to exceed at any one time the sum total of TWENTY THOUSAND AND 00/000 (P20,000.00) at NINE (9%) per cent per annum, which credit shall be available to said Mortgagor(s) or EITHER OF THEM in the form of advances from time to time to be evidenced by promissory note or notes. ... and on the mortgage that-This mortgage shall continue as security for the payment of the indebtedness herein contracted by said Mortgagor(s) as aforesaid, and of all money expanded or abilities incurred by virtue hereof, with interest thereon, as well as security for the repayment of any other sums now or hereafter owing to the said Mortgagee in addition to or aside from the credit facilities herein granted by the Mortgagee to the Mortgagor(s). F.--In the event that the Mortgagor(s) should fail to pay the sums of money secured by the mortgage, or any part thereof, in accordance with the terms and conditions herein set forth, ..., the Mortgagee shall have the right, at its election, to foreclose this mortgage extrajudicially. ...

The proceeds of such sale of the mortgaged properties shall be applied as follows: ... 3) To the satisfaction of the principal amount of obligation herein secured; and 4) To the satisfaction of all further obligations owing by the Mortgagor(s) to the Mortgagee. Given as a security for the credit line of P20,000.00 was a parcel of land in the City of Baguio, covered by Transfer Certificate of Title No. T-223, together with the buildings and improvements thereon. The spouses availed of the credit facility granted them by the People's Bank and Trust Company not only during the original term of one year, but also during the renewals or extensions thereof. The last promisory not signed by Pedro Danao during the extensions was fully paid on July 5, 1968. It appears the October 28, 1963, Antonio Co Kit and Pedro Danao signed a promissory not for P10,000.00. The two agreed to pay the note, jointly and severally, within 179 days after date. The check for the proceeds of the note was issued in the name of Antonio Co Kit alone. The note was renewed by Antonio Co Kit and Pedro Danao for the amount of P8,650.00 on April 27, 1964, payable within 91 days. The promised to pay the amount, jointly and severally. On September 30, 1968, counsel for the People's Bank and Trust Company wrote a demand letter to Antonio Co Kit a demand letter to Antonio Co Kit and Pedro Danao for the payment of the balance of the promissory note in the amount of P5,870.09. On July 14, 1969, the manager of the People's Bank and Trust Company wrote another demand letter, this time to Pedro Danao, for the payment of the balance of P4,225.15, excluding interest. On September 19, 1969, the People's Bank and Trust Company filed a complaint in the City Court of Baguio City against Antonio Co Kit and Pedro Danao, praying that judgment be rendered, ordering defendants, jointly and severally, to pay it (plaintiff) the sum of P4,225.15, plus interest thereon at the rate of 13.5% per annum from July 8, 1969, until full payment, attorney's fees in that sum equal 10% of the total amount due, and the cost of suit. On January 5, 1971 the City Court issued an order, dismissing the complaint "for lack of interest on the part of the plaintiff". On March 1, 1971, the branch manager of the People's Bank and Trust Company, Baguio Branch, wrote a letter to Pedro Danao, informing the latter that they had filed a petition for foreclosure to the City Sheriff of Baguio City, attaching therewith a copy of the petition. Stated therein is that the parcel of land covered by Transfer Certificate of Title No. 2033 will be sold at public auction. according to the petition, the land is security for the payment of any other sums owing to the Bank "in addition to or aside from ... credit facility." The indebtedness to be satisfied out of the proceeds of the foreclosure sales is P3,024.03, exclusive of interest. On March 4, 1971 notice of public auction sale was published in the Baguio Midland Courier, a weekly newspaper published and edited in the City of Baguio and which is of wide circulation in the City, province of Benguet and in the

Philippines, for three consecutive weeks, once a week. Copies of the notice were also posted in three public and conspicuous places in Baguio for the information of the public. In the published notice of public auction sale, it is stated that in the petition for foreclosure it is alleged that Mortgagors' spouses PEDRO DANAO and CONCEPCION DANAO, ... failed to pay the ... loan when it fell due thereby violating the terms and conditions of the real estate mortgage above mentioned. On March 10, 1971, counsel for the People's Bank and Trust Company, Baguio Branch, wrote a letter, informing the Bank of the full payment of the obligations of Antonio Co Kit and Pedro Danao. On March 16, 1971, the branch manager of the People's Bank and Trust Company executed a cancellation of the real estate mortgage, stating therein that the mortgagors had fully paid the obligation or indebtedness secured by the mortgage. On June 16, 1972, Pedro Danao and Concepcion S. Danao filed a complaint for damages against the Bank of Philippine Islands, as successor to the People's Bank and Trust Company, in the Court of First Instance of Manila, where it was docketed as Civil Case No. 8781. The complaint alleged, inter alia, that both the petition for foreclosure and the notice of public auction sale published in the "Baguio Midland Courier" have neither legal nor factual bases, because (1) while the credit line was availed of from time to time in different amounts by promissory notes, the credits and loans obtained where duly paid in 1968 and since then no further loans were assailed of under the credit line secured by mortgage of the plaintiffs' properties; (2) the plaintiffs' alleged indebtedness mentioned in the defendant's petition for foreclosure and in the consequent notice of public auction sale was the balance due on a "clean loan" granted by the defendant to Antonio Co Kit, although admittedly the promissory note was co-signed by plaintiff Pedro Danao, and the same was a distinct and separate transaction from the plaintiffs' credit line, and was not covered nor secured by the plaintiffs' properties mortgaged to the defendant. The complaint further alleged that the publication of the notice of public auction sale in the "Baguio Midland Courier" was malicious and/or with deliberate intent, or was due to gross negligence, causing the plaintiffs, who are respected members of the community of Baguio Cities untold mental and moral anguish, serious anxiety, besmirched reputation and social humiliation; that as a result of his social humiliation, anxiety, mental and moral anguish, plaintiff Pedro Danao suffered serious heart attack and was hospitalized and confined in bed for a period of one year, causing him to incur hospitalization and medical expenses, and resulting in the loss of his income from his medical practice. The plaintiffs ask for actual or compensatory, moral and exemplars, damages, as well as attorney's fees. In its answer with counterclaim, the People's Bank and Trust Company contended that in firing the petition for extra-judicial foreclosure of the mortgage with the consequent publication of notice of public auction sale, it merely exercised its legal right as creditor-mortgagee after plaintiff Pedro Danao had defaulted, despite repeated demands, in the payment of the indebtedness or obligation contracted by him jointly and severally with Antonio Co Kit; that in exercising such right, it acted lawfully, in good faith and with full justification to protect its interest; and, as affirmative defense, alleged that, contrary to plaintiffs' allegations, the Commercial Credit Agreement and Mortgagee provides that the mortgage shall continue as security for the payment of the indebtedness therein

contracted by the mortgagors, as well as security for the repayment of any other sums ... (then or thereafter) owing to the said mortgagee in addition to or aside from the credit facilities therein) granted by the Mortgagee to the Mortgagors: and that plaintiff Pedro Danao's solidarity obligation upon the promissory note signed by him as co-maker jointly and severally with Antonio Co Kit constitutes a further obligation secured by the aforementioned mortgage, in addition to the indebtedness arising from the commercial credit line, which additional obligation was subsisting at tile time the extrajudicial foreclosure proceeding was commenced. After the issues had been joined upon the filing of the answer to the counterclaim and reply to answer, the case was set for pre-trial. After trial on the merits, the Court of First Instance of Manila rendered a decision the dispositive part of which read as follows: WHEREFORE, in view of all the foregoing considerations, the Court hereby renders judgment in favor of the plaintiffs and against the defendant ordering the latter to pay the former the sum of P14,290.00 as actual and compensatory damages, P100,000.00, as moral damages, and P10,000.00, as exemplary damages, in addition to P20,000.00 as and for attorney's fees, as well as the costs of suit. The counterclaim is dismissed. SO ORDERED.

From this decision only the Bank of the Philippine Islands as successor of Peoples Bank and Trust Company appealed. Respondent Court affirmed the trial court's decision with some modifications as earlier quoted. Both parties moved for reconsideration. The motion for reconsideration filed by Pedro and Concepcion Danao, as plaintiff-appellees (Rollo, p. 39) was denied in respondent Court's resolution dated May 9, 1978 (Rollo, P. 48), while the motion for reconsideration filed by the Bank of the Philippines Islands, as defendantappellant (Rollo, p. 41), was also denied in the resolution of the same Appellate Court dated September 6, 1978 (rollo, p. 53). Hence, these petitions filed by both parties. The petition in G.R. No. L-48276 was filed with the Court by the spouses Dr. Pedro A. Danao and Concepcion S. Danao on June 7, 1978 (Rollo, p. 5); while the petition in G.R. No. L-48980 was filed by the Bank of the Philippine Islands on October 7, 1978 (Rollo, p. 7). In G.R. No. L-48276 respondent be filed its comment on the petition for review on certiorari (Rollo, L-48276, p. 114) in compliance with the resolution of the First Division of this Court dated June 27, 1978 ( ibid, p. 107) on August 8, 1978 while the petitioners filed their reply on September 14, 1978 ( ibid, p. 265) in compliance with the resolution of August 21, 1978 ( ibid, p. 261). The Court gave due course to the petition in the resolution dated October 4, 1978 ( ibid, p. 274). The brief for the petitioners was filed on December 5, 1978 ( ibid, p. 277); while

the brief for the respondent, was filed on February 3, 1979 ( ibid, p. 301). Petitioner having failed to file the required reply brief within the period granted by the Court which expired on March 1, 1979, the Court resolved on April 16, 1979 (ibid, p. 305) to declare the case submitted for decision. In G.R. No. L-48980, respondents filed their comment on the petition for review on certiorari on November 15, 1978 (Rollo, L-48980, p. 62) in compliance with the resolution of the Second Division of this Court dated October 18, 1978 ( ibid, p. 61) while petitioner filed its Reply on January 18, 1979 ( ibid, p. 76) in compliance with the resolution of December 4, 1978 (Rollo, p. 73). The Court resolved to give due course to the petition in the resolution of March 21, 1979 respondent was filed on July 8, 1979 (ibid, P. 101). On September 14, 1979 the Court resolved to consider the case submitted for decision ( ibid, p. 105), petitioner having failed to file its reply brief within the period granted by the Court which expired on August 7, 1979. On April 29, 1980, the spouses Pedro and Concepcion Danao, petitioners in L8276 and private respondents in L-48980 moved for the consolidation of the two cases (Rollo, L-48276, p. 308) which was granted by the First Division of the Court in its resolution dated May 7, 1980 (ibid, p. 311). On July 2, 1980 the Second Division of the Court also ordered the consolidation of L-48980 with L48276 and the transfer of the case to the First Division of the Court (Rollo, L48980, p. 110). On August 16, 1985, counsel for the spouses Pedro and Concepcion Danao manifested to the Court the death of his client Pedro Danao and moved for the substitution of the heirs Martin Danao and Minda Danao as co-petitioners and corespondents of Concepcion Danao in the instant cases (Rollo, L-48276, p. 327). On September 4, 1985 the heirs submitted to the Court a copy of the death certificate of Pedro A. Danao (ibid, p. 341), hence the effecting of the substitution. In L-48276, petitioners raised the following assignment of errors:
FIRST THE COURT OF APPEALS ERRED IN FINDING THAT THE REAL ESTATE MORTGAGED UNDER THE COMMERCIAL CREDIT AGREEMENT & MORTGAGE BY AND BETWEEN THE PARTIES ALSO SECURED THE CLEAN LOAN EXTENDED TO MR. ANTONIO CO KIT, THE PROMISSORY NOTE FOR WHICH WAS CO-SIGNED BY PETITIONER DR. PEDRO A. DANAO. SECOND THE COURT OF APPEALS ERRED IN FINDING THAT THE ILLNESS AND HEART ATTACKS SUFFERED BY PETITIONER DR. PEDRO A. DANAO HAD NO CASUAL RELATIONSHIP TO THE FORECLOSURE OF MORTGAGE AND PUBLICATION OF THE NOTICE OF AUCTION SALE. THIRD THE COURT OF APPEALS ERRED IN REDUCING THE MORAL DAMAGES AND ATTORNEY'S FEES AWARDED BY THE TRIAL COURT.

In L-48980, petitioner bank raised the following assignment of errors:

I. The Court of Appeals erred in holding that petitioner's predecessor Peoples Bank and Trust Company, by filing a civil complaint against Antonio Co Kit and Pedro A. Danao in the Baguio City Court for the collection of the unpaid balance of the latter's promissory note "had waived" the remedy of extra-judicial foreclosure of mortgage, and "such complaint barred the subsequent petition for foreclosure of mortgage." II. The Court of Appeals erred in concluding that the extrajudicial foreclosure of mortgage ultimately resorted to as a last recourse to enforce payment of the outstanding balance long past due on Co Kit and Danao's promissory note "was unwarranted", and in not holding that said bank as creditor-mortgagee acted lawfully and was fully justified in exercising such remedy. III. The Court of Appeals erred in awarding moral damages, exemplary damages and attorney's fees to the plaintiffs-appellees, private respondents herein. IV. The Court of Appeals erred in not awarding at least temperate damages and reasonable attorney's fees upon defendant-appellant bank's counterclaim against the plaintiffs-appellees, private respondents herein.

Plaintiffs' (Petitioners in L-48276 and respondents in L-48980) claim for damages is predicated on the theory that the real estate mortgage executed by them on March 14, 1963 in favor of defendant did not secure the solidarity obligation of Dr. Danao upon the promissory note signed by him jointly and severally with Antonio C. Kit on October 28, 1963 and therefore, defendant's act in foreclosing said mortgagee extra-judicially was unwarranted. (Respondent's brief in L-48276, Rollo, p. 301). Placed in proper perspective, the deed of mortgage otherwise called "Commercial Credit Agreement and Mortgage" is under scrutiny not for the purposes of the loan itself because the same has been fully paid but for the determination of the legality or illegality of the foreclosure proceedings instituted by the bank, which is now the subject of the action for damages. The creditor bank insists that the promissory note co-signed by Dr. Danao with Antonio C. Kit as accommodation party for the latter, is secured by the deed of mortgage in favor of the bank so that in the foreclosure proceedings so instituted, it was merely exercising its rights as stipulated in the contract and was acting with justification. (L-48980, Petition, Rollo, p. 19). Be that as it may, such distinction is in fact immaterial for even assuming that the promissory note of Antonio C. Kit was indeed included among the obligations secured by the deed of mortgage of Dr. Danao, still the creditor bank in opting to file a civil action (Civil Case No. 4281) in the Baguio City Court for the collection of the unpaid balanced of P4,225.15 plus interest has abandoned its mortgage lien on the property in question.

Thus the Court has invariably held that:

... The rule is now settled that a mortgage creditor may elect to waive his security and bring, instead, an ordinary action to recover the indebtedness with the right to execute a judgment thereon on all the properties of the debtor, including the subject matter of the mortgage . . ., subject to the qualification that if he fails in the remedy by him elected, he cannot pursue further the remedy he has waived. (Manila Trading and Supply Co. vs. Co Kim, et al. 71 Phil. 448 [1941]; Movido v. RFC et al., 105 Phil. 886 [1959]).

Anent real properties in particular, the Court has laid down the rule that a mortgage creditor may institute against the mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In other words, he may pursue either of the two remedies, but not both. As explained by the Court, the rule is as follows:
For non-payment of a note secured by mortgage, the creditor has a single cause of action against the debtor. This single cause of action consists in the recovery of the credit with execution of the security. In other words, the creditor in his action may make two demands, the payment of the debt and the foreclosure of the mortgage. But both demands arise from the same cause, the non-payment of the debt, and, for that reason, they constitute a single cause of action. Though the debt and the mortgage constitute separate agreements, the latter is subsidiary to the former, and both refer to one and the same obligation. Consequently there exists only once cause of action for a single breach of that obligation. Plaintiff, then, by applying the rule above stated cannot split up his single cause of action by filing a complaint for payment of the debt, and thereafter another complaint for foreclosure of the mortgage. If he does so, the fishing of the first complaint will bar the subsequent complaint. By allowing the creditor to file two separate complaints simultaneously or successively, one to recover his credit and another to foreclose his mortgage, we will, in effect, be authorizing him plural redress for a single breach of contract at much cost to the courts and with so much vexation and oppression to the debtor. ... a rule that would authorize the plaintiff to bring a personal action against the debtor and simultaneously or successively another action against the mortgaged property, would result not only in multiplicity of suits so offensive to justice (Soriano v. Enriquez, 24 Phil. 584) and obnoxious to law and equity (Osorio v. San Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of being sued in the place of his residence or of the residence of the Icarangal et al., 38 Off. Gaz. 389 [1939]).

Evidently, the prior recourse of the creditor bank in filing a civil action against the Danao spouses and subsequently resorting to the complaint of foreclosure proceedings, are not only a demonstration of the prohibited splitting up of a cause of action but also of the resulting vexation and oppression to the debtor. Both the lower court and the Court of Appeals found that the People's Bank and Trust Co. (succeeded by the Bank of the Philippine Islands) acted unlawfully and without justification in extra-judicially foreclosing the disputed mortgage and hence the Danao spouses are entitled to damages.

As basis for actual damages, the lower court relied on the testimonies of Mrs. Danao and Dr. Rodolfo Perez and the medical certificates of the various doctors and came out with the award of actual and compensatory damages in the total amount of P14,290.00 in favor of the same spouses, computed as follows: (1) P1,290.00 representing medical and hospitalization expenses of Pedro Danao while confined at the Manila Medical Center from October 1 to October 12, 1972; (2) P7,000.00 as costs for various examinations; and (3) P6,000.00 supposed to be the amount of income lost by Pedro Danao from his medical practice because of thing incident. But the evidence as correctly appreciated by the Court of Appeals shows that the first mild heart attack suffered by Pedro Danao occurred in October 1977 or more than seven months after the initial publication of the notice of foreclosure sale and the second heart attack occurred in October 1978 or more than 19 months after said publication. No less important is the fact that Dr. Rodolfo Perez, the regular attending physician of Pedro Danao and the latter's own witness, testified to the effect that aforesaid heart attacks were the natural result or outgrowth of a chronic rheumatic heart disease of long standing which developed over a period of years, possibly even before 1966. (Decision D.A., G.R. No. 59865-R; Rollo, pp. 36-37). The second item was found to be unsupported by evidence while as to the third item, Pedro Danao did not testify to prove the alleged lost income. ( Ibid, p. 37). In the case of Sy vs. Court of Appeals (131 SCRA 127 [1984]) the Court ruled that an alleged loss of income is not recoverable for being speculative if no receipt or any kind of evidence on the matter is presented to prove it. The Court has ruled that actual or compensatory damages are "those recoverable because of pecuniary loss in business, trade, property, profession, job or occupation and the same must be proved, otherwise if the proof is flimsy and non-substantial, no damages will be given." (Perfecto vs. Gonzales, 128 SCRA 640 [1984]). More specifically in point to the case at bar, the Court has said:
... Well settled is the rule that even if the complaint filed by one against the other is clearly unfounded this does not necessarily mean, in the absence of specific facts proving damages, that said defendant really suffered actual damages over and above attorney's fees and costs. The Court cannot rely on its speculations as to the fact and amount of damages. It must depend on actual proof of the damages alleged to have been suffered. (Ibid, p. 640).

On the other hand, moral damages may be recovered if they are the proximate result of the defendant's wrongful act or omission. The assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of the case. (People v. Baylon, 129 SCRA 63 [984]).

As a general rule, the filing alone of the foreclosure application should not be a ground for an award of moral damages. In the case at bar, however, the main bone of contention is not only the filing of the petition for foreclosure proceedings but the manner in which the same was carried out, such as the publication of the notice of extrajudicial foreclosure and sale at public auction in a Sunday edition of the Baguio Midland Courier in the society page, instead of in the "legal notices" or "classified ads" sections as usual in these types of notices, in extra-ordinarily large and boxed advertisements, which allegedly bespoke the bank's malicious intent to embarrass and harass the Danao spouses which actuations are contrary to the canons of conduct provided for in Articles 19, 20 and 21 of the Civil Code. (Comment, Rollo, p. 67) Both the lower court and the Court of Appeals took cognizance of the spouses' mental anguish, serious anxiety and besmirched reputation traceable to the unfortunate publication (Record on Appeal, p. 79; Rollo, p. 38). For moral damages, the lower court awarded P100,000.00 but the Court of Appeals reduced said amount to P30,000.00 and attorney's fees from P20,000.00 to P5,000.00. We have laid down the rule that the fairness of the award of damages by the trial court also calls for appellate determination (Luzon Concrete Products Inc. vs Court of Appeals, 135 SCRA 456 [1985]), such that where the award of moral damages is far too excessive compared to the actual losses sustained by the claimants the former may be reduced. (Siguenza vsCourt of Appeals, 137 SCRA 577-579). In fact, We have held that reduction of moral damages is justified where the negligence of petitioner bank and its employees is not wanton and reckless. (Bank of the Philippine Islands vs Court of Appeals, 117 SCRA 628). After a careful review of the records, no plausible reason can be found to justify the reversal of the findings of the Court of Appeals, however in view of the embarrassing circumstances attendant to the foreclosure notice, as already explained herein above, We hereby MODIFY the judgment of the respondent Court of Appeals by increasing the award of moral damages to P60,000.00 and the attorney's fees to P1,000.00 and by imposing exemplary damages in the amount of P20,000.00. SO ORDERED. Teehankee, C.J., Narvasa, and Cruz, JJ., concur.

G.R. No. L-33535 January 17, 1975 SERGIO M. ISADA, in his capacity as Acting General Manager of the National Waterworks & Sewerage Authority (NWSA) and in his personal capacity, petitioner, vs. JUDGE JUAN L. BOCAR as Judge, Court of First Instance of Manila, Branch XVI; ANGELINO S. PASCUAL, FRANCISCO R. UNTALAN, ALEJANDRO S. REYES, ROLANDO M. MAZO, ICASIANO M. SANTOS, SEVERINO MATEO, BENJAMIN M. TULALI, TEODORO M. SALINAS, and more than 700 others in a class suit; GENARO C. BAUTISTA, in his capacity as attorney-in-fact of NWSA Employees Housing Project; and RELITO M. PUMARADA, in his capacity as Chairman of the Housing Project Implementation Committee created by employees-awardees for the implementation of the NWSA Employees Housing Project, respondents. Gov't. Corp. Counsel Leopoldo M. Abellera, Asst. Govt. Corp. Counsel Manuel M. Lazaro and Trial Attorney Virgilio A. Abejo for petitioner. Benito P. Fabie for private respondents.

BARREDO, J.:

Petition for certiorari and prohibition praying that the orders of respondent court of March 5, 1971 and May 11, 1971, granting the mandatory preliminary injunction applied for by private respondents, which commands petitioner to execute certain deeds of sale of lots of the NWSA or the National Waterworks & Sewerage Authority (now the Metropolitan Waterworks & Sewerage System), be set aside, with prayer for preliminary injunction. Acting on the petition, on May 26, 1971, the Court issued the preliminary injunction prayed for. Respondents filed their answer in due time, after which the parties filed their respective memoranda in lieu of oral argument and the case was submitted for decision. On June 18, 1968, pursuant to its collective bargaining agreement with two unions of its employees and workers, the KKMK-NWSA (Kaisahan at Kapatiran ng Mga Manggagawa sa NWSA) and BELA (Balara Employees and Laborers Association), and "in line with the Housing Program of the Administration", NWSA, through its board of directors, segregated and set aside a portion of its land below the La Mesa Dam in Quezon City, consisting of 58 hectares, as the initial site of the proposed NWSA Housing Project for said workers and employees. (Resolution 415-'68, Annex A of the petition, p. 43, Record.) On December 23, 1968, a raffle was held to determine who among its employees and workers would be allowed to purchase housing units, considering that the estimated number of said units would not be enough for all the members of the two unions. Only 1,411 awardees were selected. With the prospective awardees thus known, the NWSA Board approved Resolution No. 113-'69, on March 11, 1969 worded as follows:
RESOLVED, That in pursuance to Resolution No. 415, series 1968, and as a gesture of harmonious Labor-Management relationships in the NWSA, the sale to the NWSA Labor Unions (KKMK & BELA) of raw land with a total area of 479,433 square meters consisting of: Area for proposed main and side streets 130,735 sq. m. Saleable Area 348,698 sq. m. within the portion of the NWSA property below the La Mesa Dam, Quezon City, as reserved and allotted for the NWSA Housing Project under said Res. No. 415, s. 1968, at the minimal price of P4.00 per square meter or at a total value of P1,917,732.00, be and is hereby approved, Provided That, in the repayment of the land by the Unions, a housing lot in the said housing project, shall be priced at P5.50 per square meter in order to absorb the cost of the land to be converted into streets. xxx xxx xxx (Annex B P. 45, Record.)

Shortly thereafter, upon request of the unions made on March 24 and 26, 1969, the Board approved Resolution No. 154-'69 on April 1, 1969 reading thus:

RESOLVED, That in order to facilitate the financing of the housing project for the NWSA rank and file as contemplated under Resolution No. 415 series 1968 and Resolution No. 113, series 1969, the request of the Unions (KKMK-BELA) for the mass preparation of lot titles and the transfer of the same to the individual employee-awardees so that such titles can be deposited under the care and custody of the GSIS to serve as collaterals of individual real estate loan applications, be and is hereby approved, provided that the individual employeeawardees shall make a down payment in the amount of P100.00 for the awarded lot, deductible from the payrolls, or payable in cash. RESOLVED FURTHER, That in the preparation of the aforesaid Transfer Certificate of Titles (TCT) to the individual employee-awardees, a notation of conviction of final transfer should be entered at the back thereof under the column "Memorandum of Encumbrance," to the effect that absolute ownership of the lot will only be obtained upon full payment of the individual loan applications to the GSIS, a provision shall be inserted therein whereby the cost of the lot or the unpaid balance of the cost of the same, shall be deducted from the proceeds of the loan in favor of the NWSA. xxx xxx xxx (Annex C p. 47, Record.)

This resolution was subsequently amended on June 17, 1969 to read as follows:
RESOLVED, That the second paragraph of Resolution No. 154, series 1969, which approved the request of the Union (KKMK-BELA) for the mass preparation of Transfer Certificate of Titles to individual employee-awardees in the NWSA Housing Project, be and is hereby amended to read as follows: "Resolved Further, That in the preparation of the aforesaid Transfer Certificate of Title to individual employee-awardees, a notation should be entered at the back of said titles under the column "Memorandum of Encumbrances" that the said lot is mortgaged to the NWSA for the balance of the purchase price, and that in the preparation of the individual loan applications to the GSIS, a provision shall be inserted, therein whereby the cost of the lot or the unpaid balance of the cost of the same, shall be deducted from the proceeds of the GSIS loan and paid to the NWSA, after which the NWSA shall execute the corresponding Deed of Release and Cancellation of Mortgage." RESOLVED FURTHER, That the Acting General Manager, NWSA, be and is hereby authorized to sign for and in behalf of the Authority the individual deed of sale to employee-awardees. xxx xxx xxx (Resolution No. 283-'69, Annex D, p. 49, Record.)

In other words, by way of implementing the sale of the homesite to the unions for the benefit of its individual members who had won in the raffle, it was necessary to execute deeds of sale in favor respectively of each awardee. Accordingly, a subdivision plan was prepared, on the basis of which each awardee was to be allotted his respective lot. 1 This lot, to be identified by block number and lot

number, would be the basis of the deeds. Obviously, no titles could be immediately issued because payment to the NWSA would have to come from the GSIS, and the GSIS is agreeable to this arrangement, so much so that, as will be stated more in detail later, it has gone to the extent of already granting the KKKNWSA, one of the unions, an interim loan of P1.5 M. to pay the contractor who had already started the work. Indeed, in the meanwhile, the awardees, through an attorney-in-fact, the respondent Genero C. Bautista, who acted with the assistance of a Housing Project Implementation Committee, appointed and created, respectively, by them, called for bids in the newspapers, through paid advertisements, among contractors, and on April 24, 1969, the job was awarded to Builders Heavy Equipment and Service Corporation or BHESCO. And in order not to lose time, the KKK-NWSA requested the Board to allow it to obtain an interim loan with the GSIS, on the security of the lots sold by NWSA to its members, so BHESCO could immediately start working on the project. Acting on this request, on August 29, 1969, the Board approved the following resolution:
RESOLVED, That in line with the recommendation of Management, the request of the KKMK-NWSA for authority to mortgage with the Government Service Insurance System the mother title of the land allotted as housing project of the KKMK-NWSA, identified as TCT No. 141924 of the Registry of Deeds of Quezon City, for an interim loan pending completion of the individual lot titles of the NWSA employee-awardees who are qualified to borrow real estate loans with the GSIS, be and is hereby granted and approved subject to the following conditions: 1. That the GSIS shall make a written commitment to the NWSA that it will deduct from the loan of every individual awardee, the amount corresponding to the balance of the purchase price of the lot sold to the individual NWSA employee-awardee, and shall remit the same to the NWSA. . 2. That at the back of the aforesaid TCT No. 141924, under the column "Memorandum of Encumbrance", shall be entered a notation to the effect that the total area of 130,735 square meters earmarked for the proposed main and side streets valued at P522,940.00 is not included as being mortgaged. xxx xxx xxx (Resolution No. 410-'69, Annex B, p. 353, Record.)

Accordingly, BHESCO proceeded to develop the site. Incidentally, it may be mentioned at this point that the P1.5 M. interim loan given by the GSIS to the KKK-NWSA by virtue of the above resolution has to be assumed pro-rata by the individual awardees, and as it is drawing interest in the meanwhile, the awardees will have to carry the burden of said interests until the work on the project is resumed. Please note that the award to BHESCO took place, presumably with the knowledge of NWSA before the resolution of June 17, 1969 was approved. During the month of January, 1970, petitioner, as manager of NWSA and pursuant to the terms of above-quoted resolution No. 283-'69, began executing

deeds of sale with mortgage in favor of individual awardees. He has signed already 29 of them. 2 On February 24, 1970, due to intra-union disputes, the President ordered the suspension of the Housing Project but later, on May 22, 1970, upon the joint request of the two unions, the suspension was lifted. After this lifting, the NWSA approved the following resolution (No. 150-'70) on August 18, 1970:
RESOLVED, That Condition No. 1 of Resolution No. 410-'69, be and is hereby amended to read as follows: "1. That the GSIS shall make a written commitment to the NWSA that it will deduct from the loan of every individual awardee, the amount corresponding to the balance of the purchase price of the lot sold to the individual NWSA employee-awardee, and that such amount to be deducted in favor of NWSA shall be set off against the outstanding accounts of the NWSA with the GSIS, like the unremitted insurance and retirement premiums as well as salary loan deductions, instead of remitting the same directly to the NWSA." xxx xxx xxx (Annex C, p. 354, Record.)

GSIS agreed to these conditions and forthwith granted the interim loan of P1.5 M. above-referred to. All these notwithstanding, Isada has refused and continues to refuse to sign the rest of the deeds corresponding to the remaining awardees. Hence, the petition for mandamus in the lower court. And in connection with said petition, private respondents asked for a writ of preliminary mandatory injunction, which, after a hearing wherein practically all the issues on the merits of the mandamus were threshed out and made the subject of the presentation of evidence by both parties, respondent court granted. It is against this provisional remedy that the instant petition before Us was filed. At first blush it would seem to appear that the remedy sought by respondents in their special civil action of mandamus is specific performance of their contract with NWSA embodied in the resolutions aforequoted. A closer scrutiny of the circumstances related to such contract readily shows, however, that NWSA is not reneging nor does it refuse to comply with its obligations. There can be no question that as between NWSA and the 1,411 awardees selected by raffle on December 23, 1968 and listed in Annex G of the answer herein of respondents, there is already not only a perfected but a partially consummated contract of sale, considering that it is not denied that the awardees listed in said Annex G have already paid the NWSA the corresponding down payment required by Resolution l54-'69. And since it is not pretended that NWSA is backing out of said contract, there is no need to compel it to comply. It is only petitioner, Manager Isada who is adamantly and arbitrarily failing to comply with his clear official duty in the premises, thereby obstructing and impeding the implementation of a contract, the legality of which is not in issue. We reiterate that there can be no dispute that as between respondent employees and their unions, on the one

hand, and NWSA, on the other, there is already a partially consummated sale by the latter to the former of 479,433 square meters of raw land, the technical description of which is known and definite, for a price fixed in the resolution aforequoted of March 11, 1969. The method of financing this purchase by respondents was duly approved by NWSA in its above resolutions of April 1, 1969 and June 17, 1969. In plain terms, the arrangement is as follows: Respondent employees would secure individual loans from the GSIS. Accordingly, NWSA would have to execute the corresponding deeds in favor of the individual employees who won in the raffle to enable them to mortgage their respective lots to the GSIS. While, as a matter of procedure, the said deeds would provide for a mortgage in favor of NWSA to secure the payment to it of the lots, under the arrangement, upon approval of the individual loans, GSIS would credit to NWSA's account therewith the amount corresponding to the purchase price thereof, and the mortgage will forthwith be transferred from NWSA to the GSIS as mortgagee. Under this procedure, upon being duly credited for the value of the lots, NWSA would have nothing to do anymore with the project, as the completion thereof would already be a matter exclusively between the GSIS, on the one hand, and the awardees and the contractor, on the other. It is not pretended that there is any legal obstacle or any other factor impeding the consummation of the sale contract between the NWSA and the awardees. It is true that for a time, the President ordered the suspension of the project in question, but this injunction was subsequently lifted. The inter-union trouble which caused said suspension has already been finally settled. The civil action filed by officers of PAFLU questioning the powers of respondents to enter into the agreements with NWSA and GSIS has been dismissed by the Court of First Instance of Manila, and said decision is now final. Indeed, even the excuse which petitioner attempted to give to the effect that he had to stop signing the deeds in question because of said union trouble has, therefore, become definitely untenable. Proof of the fact that the GSIS has agreed and is irrevocably committed to finance the project in dispute in the manner aforestated is that, actually, with the approval of the NWSA Board, upon recommendation of no less than petitioner himself, the GSIS has already granted an interim loan of P1.5 million to the respondents to pay the developer who had already started the work. Indeed, nothing, but absolutely nothing remains for the completion of the project except for the petitioner to sign the deeds in question and, of course, to also sign the corresponding documents to complete the requirements for the final approval by the Land Registration Commission of the subdivision plan already bearing the imprimatur of the Quezon City Council. It is, therefore, clear that the mandamus being sought by respondents is not for the specific performance of a contract. In essence, what respondent employees are asking for is a mandamus to compel an officer of a corporation to perform a

duty imposed upon him by law. Under Section 7 of Republic Act 1383 creating the NWSA, among the functions of the Manager of NWSA is "to represent the Authority in all its business matters ... and (to) perform such other executive duties as may be prescribed by law or may be required of him by resolution of the Board." In this connection, petitioner's contention that Resolution 283-'69 above merely "authorized" him to sign the deeds at issue but did not impose upon him the duty to do so cannot be sustained. There is nothing in the resolution granting him any discretion to interpose his own will and thereby set at naught the action of the Board selling land of the Authority to respondents. Under the terms of the resolution, petitioner's duty to sign the deeds properly prepared in conformity with the conditions agreed between the parties is as ministerial as the duty of an auditor to sign the warrant for the payment of an obligation of a government office to pay money pursuant to a contract the legality of which is not in dispute. In several cases, We have held that mandamus would lie to compel the auditor to sign the warrant. 3 In Vda. de Serra vs. Salas, 30 SCRA 541, the rule in mandamus that the rights of a party in a contract cannot be enforced by such remedy was held not to be really absolute. We said: .
A rule long familiar is that mandamus never issues in doubtful cases. (Valdez vs. Gutierrez (1968), 23 SCRA 661, 664, citing Aprueba vs. Ganzon (1966), 18 SCRA 8, 12.) It requires a showing of a complete and clear legal right in the petitioner to the performance of ministerial acts. (Section 3, Rule 65, Rules of Court; Palileo vs. Ruiz Castro, 85 Phil. 272, 275; Aquino vs. General Manager (1968), 22 SCRA 415, 420, citing Zamora vs. Wright, 53 Phil. 613, Palileo vs. Ruiz Castro, supra, Cochoco vs. Icasiano, L-599, March 20, 1954, and Aprueba vs. Ganzon, supra. See also: Ramos vs. Diaz (1967), 21 SCRA 1243, 1246.) In varying language, the principle echoed and re-echoed is that legal rights may be enforced by mandamus only if those rights are well-defined, clear and certain. (JRS Business Corporation vs. Montesa (1968), 23 SCRA 190, 197-198, citing cases.) Otherwise, the mandamus petition must be dismissed. (Id., citing 3 Moran Comments on the Rules of Court [1963 ed.] 172. See also: Viuda e Hijos de Crispulo Zamora vs. Wright, 53 Phil. 613, 621; Alzate vs. Aldana (1963), 8 SCRA 219, 223, citing Tabigne vs. Duvall, 16 Phil. 324.) This is not to say of course, that we should overlook the equally tested precept that where government contracts are completely performed on the part of the private party, and there is nothing more to do but to effect payment, mandamus will avail to command the government's proper officials to sign and issue the corresponding warrants. (Hoey vs. Baldwin, 1 Phil. 551, 558; Compania General de Tabacos vs. French, 39 Phil. 34, 59; Quiogue vs. Romualdez, 46 Phil. 337, 341. See also: Villegas vs. Auditor General (1966), 18 SCRA 877, 888-890, 893, citing Hoey vs. Baldwin, supra, Ynchausti & Co. vs. Wright, 47 Phil. 866, 891, Radiowealth, Inc. vs. Agregado, 86 Phil. 429, 440, and Guevara vs. Gimenez (1962), 6 SCRA 807, 812-813.).

It is difficult to understand, much less sanction, the position of petitioner. In effect, by his refusal to sign the deeds in question, he is not only obstructing the implementation of a laudable project of the NWSA for the benefit of its employees and workers, he is in fact prevailing the compliance by the corporation with its legal obligation under the contract of sale with the awardees

among said employees and workers. Not only that. His act has the effect of setting aside at least two other contracts already in the process of consummation, namely, the contract of the unions or the awardees with the BHESCO and the contract of loan with the GSIS, which, of course, has yet to be individualized and put in final form. Mandamus is a remedy in equity, and equitable considerations, not to speak of the legal ones, demand that these contracts be respected and enforced, and that petitioner does not put any further hindrance thereto. We are not overlooking the strong suggestion of petitioner that respondent employees might be victimized by those in charge of the project, but aside from the fact that the apprehension is not shown to be beyond being merely speculative, not factual, the employees themselves are the ones who have gone to court for relief. There is no showing that any of them, much less a substantial number of them, are complaining about the way the affairs of the project are being undertaken by those whom they have designated for the purpose. Indeed, in some instances, the Court has refused to deny mandamus on the ground thus invoked by petitioner. 4 We cannot see any adequate administrative remedy which respondents have not exhausted. Their complaint to the President has been referred to NWSA for action, and We do not expect the Board to replace petitioner with another official who would be willing to execute the deeds in question because, after all, the law imposes the function only on him. As to the allegation that the preliminary mandatory injunction has prejudged the case, We can only say that indeed, there is hardly anything else that remains to be litigated subsequently in the court below. Everything related to the rights of the parties is already before Us. If technically, there might be reason for Us to require a trial on the principal petition by the court below, such a roundabout procedure can serve no useful purpose. The final decision of the case would be nothing more than a reiteration of the order of mandatory injunction. We will only be delaying the housing project which has long been the dream of the respondent employees. The common man, like, for example, a salaried employee, is entitled not only "to a little more food in his stomach, a little more clothing on his back, and a little more shelter over his head" but also to a lot, even small, where he can build his house and establish a permanent abode. "A man with a home and a means of subsistence is a lover of peace and order and will profess affections for his country, whereas one without a home and in penury is not only a social parasite but also a dangerous element in the social order" (Moran, J., dissent in Kasilag vs. Rodriguez, 69 Phil. 217, 254, 264). The Government, as the biggest employer, should be the first to help its employees in the solution of their housing problem. WHEREFORE, the petition is dismissed. No costs.

Makalintal, C.J., Antonio and Fernandez, JJ., concur. Fernando J., concurs in the result. Aquino, J., took no part.

Footnotes
1 When the petition in the court below was filed and at the time the questioned orders were issued, the subdivision plan had not yet been approved by the Quezon City Council, but according to Annexes D and D1 of Petitioner's Memorandum in Lieu of Oral Argument, the same was approved, under the terms therein set forth by said Council on May 18, 1971. Of course, there is further need that the subdivision plan he duly approved by the Land Registration Commission and the corresponding land court, but We can take judicial notice of the fact that these would be given almost as a matter of course after the NWSA formally signifies its conformity thereto, which should follow from Resolution 154-'69. And in this connection, should the signature of petitioner be necessary in the corresponding papers, it is not expected that he would refrain giving such signature, considering the thrust of this decision. In any event whether or not GSIS will accept the deeds before the final approval of the subdivision plan is something that is to be settled between the awardees and the GSIS only. 2 The designations of the corresponding lots in these deeds were based on the subdivision plan (referred to in footnote No. 1) as submitted to and approved by the Quezon City Council. 3 Villegas, et al. vs. Auditor General, et al., L-21352, Nov. 29, 1966, 18 SCRA 877, citing Hoey vs. Baldwin, 1 Phil. 551, 558; Ynchausti & Co. vs. Wright, 47 Phil. 866, 272 U.S. 640; Radiowealth, Inc. vs. Agregado, etc., et al., 86 Phil. 429, 440; Guevara vs. Gimenez, etc., et al., L-17115, Nov. 30, 1962, 6 SCRA 807. 4 Villegas vs. Auditor General, supra. Cf. Villasanta, et al. vs. Bautista, et al., L-30824, Nov. 20, 1970, 36 SCRA 160, 166-167.

G.R. No. 80130 August 19, 1991 BENJAMIN ABEJUELA, petitioner, vs. PEOPLE OF THE PHILIPPINES and COURT OF APPEALS, respondents. Vicente Y. Bayani for petitioner.

FERNAN, C.J.:p In this petition for review by certiorari, petitioner seeks a reversal of the decision of the Court of Appeals dated September 16, 1987 which affirmed in toto the decision of the Regional Trial Court, Branch VII of Palo, Leyte, dated January 11, 1984, convicting him as an accomplice in the complex crime of estafa thru falsification of a commercial document under Article 315, paragraph 2 (a) of the Revised Penal Code in relation to Article 172 thereof. 1 The facts of this case are uncontroverted. Petitioner Benjamin Abejuela, a businessman engaged in the manufacture and fabrication of hand tractors and other agricultural equipment, had a savings deposit with Banco Filipino, Tacloban Branch. Sometime in April or May 1978, petitioner was befriended by Glicerio Balo, Jr., an employee of Banco Filipino in

the same Tacloban Branch. On several occasions, petitioner Abejuela and Balo would dine together, go to nightclubs or have drinking sprees. 2 They became close friends. Balo even became the godfather of Abejuela's daughter. 3 Moreover, Balo offered Abejuela financial assistance in the latter's welding business, claiming that he was expecting a large sum of money out of the insurance policy of his late father. On August 3, 1978, Balo went to Abejuela's welding shop to borrow the latter's passbook. Abejuela was surprised and thought that it was not possible for Balo to use his passbook. Balo showed Abejuela some checks purporting to be the proceeds of his father's insurance policy. He wanted to deposit the checks in Abejuela's account with Banco Filipino. Abejuela then suggested that Balo open his own account. However, Balo explained that he was prohibited from opening an account with Banco Filipino since he was employed with that bank as a savings bookkeeper. Abejuela advised Balo to open an account instead with another bank but Balo insisted that he wanted the checks deposited with Banco Filipino so that he could facilitate their immediate encashment as well as avail himself of some privileges. Balo assured Abejuela that there was nothing wrong in allowing him to use his passbook and even reassured Abejuela that he would accompany him to the bank to make the deposit. Accepting Balo's explanations and assurances Abejuela entrusted his passbook to Balo. On August 8,1978, Balo returned Abejuela's passbook where a deposit in the amount of P20,000.00 was already reflected. Once again, Balo assured Abejuela that there was nothing wrong with the deposit, and stated that he just deposited one of his checks. On the same, day Balo requested Abejuela himself to withdraw, in the former's behalf, money from his account with Banco Filipino. Again with assurances from Balo, Abejuela reluctantly agreed. He went to Banco Filipino and withdrew the amount of P15,000.00 which he gave to Balo at a restaurant called Felisa's Cafe. Balo's practice of depositing and withdrawing money using Abejuela's passbook continued for quite some time. During the month of August 1978, the account of Abejuela with Banco Filipino reflected a total deposits of P176,145.00 and a total withdrawal of P175,607.96. In the meantime, Abejuela borrowed P20,000.00 from Balo, payable within 90 days from August 9, 1978. But feeling apprehensive over Balo's constant use of his passbook, Abejuela decided to pay his loan on August 31, 1978 by borrowing P10,000.00 from his father and taking the other P10,000.00 from his business profits. 4 Abejuela also closed his account with Banco Filipino by surrendering his passbook and withdrawing the balance of his deposit. Thereafter, the bank's accountant and interest bookkeeper discovered a discrepancy between the interest reconciliation balance and the subsidiary ledger balance. The interest bookkeeper could not locate the posting reconciliation and

the proof reconciliation. He also notice that Account No. 6701-0160 in the name of Benjamin Abejuela reflected four (4) large deposits on various dates from August 3, 1978 to August 23, 1978, totaling P176,145.25, but the deposits slips thereof could not be located. After further examination of the bank records, the manager, accountant and interest bookkeeper were convinced that the irregularities were caused by Balo who was the savings bookkeeper at that time and who had access to Abejuela savings account ledger. They concluded that Balo was able to manipulate the ledger, by posting the fictitious deposits after banking hours when the posting machine was already closed and cleared by the bank accountant. The bank officials confronted Balo, who feigned ignorance and initially denied the accusations, but later admitted having posted the false deposits. Petitioner Abejuela was also implicated because he was the owner of the passbook used by Balo in accomplishing his fraudulent scheme. On December 5,1978, an information was filed against Glicerio Balo, Jr. and Benjamin Abejuela for the crime of estafa thru falsification of commercial documents. 5 Separately arraigned, both pleaded "not guilt to the crime charged 6 Trial followed. On May 29, 1979, acting on an application by Banco Filipino, the trial court issued an order of preliminary attachment against all the properties of accused Glicerio Balo, Jr. and Benjamin Abejuela not exceeding P176,145.25 in value, the amount allegedly embezzled or misappropriated. On September 4,1979, the Deputy Sheriff of Palo, Leyte, filed a return of service and submitted an inventory of the goods taken from the two accused and which goods were placed in the custody of the National Bureau of Investigation. While the refrigerator and television set taken from the residence of Abejuela would not command a good pace on account of their poor condition, the goods seized from Balo were appraised at P62,295.00. 7 In the meantime, accused Glicerio Balo, Jr. was reportedly killed by members of the New People's Army in the mountains of Mati Balangkayan Eastern Samar, on suspicion that he was a PC informer and a collaborator. This information came from a rattan gatherer and former NPA member whose testimony before the court a quo was never impeached. Consequently, on February 25, 1981, the trial court dismissed the case against Glicerio Balo, Jr., pursuant to Article 89 of the Revised Penal Code, but without prejudice to a civil action for recovery of damages arising from the offense which may be instituted by Banco Filipino and without prejudice also to the reinstatement of the instant criminal action in the event the accused would turn out to be alive. 8 On September 7, 1981, Banco Filipino filed a motion praying for the forfeiture in its favor of the goods seized from the accused which were in the custody of the National Bureau of investigation. On November 5, 1981, the trial court, thru District Judge Auxencio C. Dacuycuy, granted the motion and ordered the National Bureau of Investigation to deliver the seized goods to Banco Filipino. In addition, the bank

was authorized to withdraw the savings deposit of Glicerio Balo, Jr. for eventual reversion to said bank. 9 Thereafter, trial continued with respect to petitioner Abejuela. On January 11, 1984, the lower court adjudged petitioner Abejuela guilty. The dispositive portion of the decision reads:
WHEREFORE, the court finds the accused Benjamin Abejuela guilty beyond reasonable doubt as accomplice of the complex crime of estafa thru falsification of a commercial document under Art. 315, par. 2(a) of the Revised Penal Code in relation to Art. 172 thereof and as the amount involved is more than P22,000 he is hereby sentenced to an indeterminate penalty of not less than fifteen (15) years, three months and 11 days to not more than sixteen (16) years, eight months and 21 days of reclusion temporal, to indemnify Banco Filipino, Tacloban Branch, in the sum of One Hundred Seventy Six Thousand One Hundred Forty Five Pesos and Twenty Five Centavos (P 176,145.25), without subsidiary imprisonment in case of insolvency, and to pay one half of the costs. On May 29, 1979, the court issued a writ of preliminary attachment of the properties of defendants Glicerio Balo, Jr. and Benjamin Abejuela. This Attachment is hereby made permanent. 10

Abejuela appealed to the Court of Appeals. On September 16, 1987, the Appellate Court affirmed the decision of the trial court. 11 A motion for reconsideration filed by petitioner was denied in a resolution dated October 7, 1987. Hence the instant appeal. Petitioner Abejuela contends that the Appellate Court erred in not acquitting him for the following reasons:
(1) Accused-petitioner has no knowledge of the criminal intent of his co-accused, Glicerio Balo, Jr., hence, there being no conspiracy, be cannot be convicted as principal, neither as accomplice, nor did he benefit from the effects of the crime, hence, he cannot be convicted even as an accessory. (2) The lending of the accused-petitioner of his passbook was made in good faith, and after he was deceived by co-accused Glicerio Balo, Jr. that it is necessary because as employee of Banco Filipino he cannot deposit in the said hank (3) The presumption of innocence and the 'equipoise rule' apply in favor of accused-petitioner. 12

Respondents, in their comment, maintain that petitioner Abejuela had knowledge of the fraudulent acts of Glicerio Balo, Jr. They asseverate that petitioner is an intelligent individual who can take care of his concerns, considering that he is a businessman who finished third (3rd) year college (commerce). 13 Respondent also point out that Abejuela should not only have been convicted as an accomplice but as a principal by indispensable cooperation, because without

the withdrawal slips which he executed allegedly in spite of his many doubts and apprehensions, Glicerio Balo, Jr. could not have succeeded in his scheme. Petitioner, on the other hand, claims that he had no knowledge at all of the fraudulent machinations of Balo, and that his act of lending his passbook was done in good faith. After carefully weighing the arguments of both parties as well as taking into consideration the evidence on record, we are inclined to believe that petitioner Abejuela was completely unaware of the malevolent scheme of Balo. From Balo's own admissions, it was he who deceived Abejuela through sweet talk, assurances, drinking sprees and parties and cajoled him into giving in to his requests. Furthermore, during that time, nobody would have questioned Balo's source of money and since he had a perfect alibi, i.e. the insurance proceeds of his later father. When Balo showed Abejuela some checks purporting to be his father's insurance proceeds, Abejuela was hoodwinked into believing that Balo indeed had money. Balo's request to borrow Abejuela's passbook in order to facilitate the encashment of the checks seemed reasonable enough, considering that they were close friends and "compadres", Abejuela's acquiescence to Balo's overtures is understandable. Furthermore, the court takes judicial notice of the practice of banks in allowing anybody to deposit in an account even without the owner's passbook, as long as the account number is known. Thus, even without Abejuela's passbook, the false deposits could still have been posted by Balo in the savings account ledger of Abejuela. After all, the ledger is the record of the bank reflecting the transactions of the depositor, while the passbook is the record of the depositor. More often than not, it is the ledger which is more accurate and up-to-date. This is the reason why depositors have their passbooks updated for unrecorded transactions like interests, checks deposited beyond clearance cut-off time and bank charges. In the instant case, the evidence of the prosecution clearly points at Balo as the one who had posted the bogus deposits in Abejuela's ledger. He was also the one who wisely manipulated petitioner Abejuela in order that the fictitious deposits could be placed at his Balo disposal, Thus, when Balo requested Abejuela to withdraw the amount he had earlier placed in the latter's account, Abejuela had no choice but to give in. He actually believed that the money was really owned by Balo and he did not want Balo to think that he was interested in it. Thus, the prosecution miserably failed to prove beyond reasonable doubt that Abejuela had knowledge of the fraudulent scheme of Balo. The most that could be attributed to Abejuela was his negligence in lending his passbook and his utter gullibility. Knowledge of the criminal intent of the principal in this case, (Glicerio Balo, Jr.) is essential in order that petitioner Abejuela can be convicted as an accomplice in

the crime of estafa thru falsification of commercial document. To be convicted as an accomplice, there must be cooperation in the execution of the offense by previous or simultaneous acts. However, the cooperation which the law punishes is the assistance rendered knowingly or intentionally, which assistance cannot be said to exist without the prior cognizance of the offense intended to be committed. In a number of cases decided by this Court, it has been held that knowledge of the criminal intention of the principal is indispensable in order to hold a person liable as an accomplice. Thus:
It appearing that the accused who drove the taxicab in which the other accused rode did not actually take part in the conspiracy to commit the crime of robbery but only furnished the means through which the robbery could be perpetrated, with knowledge of the said criminal design, he is not guilty as principal of the crime of robbery with homicide but is an accomplice therein. 14 There is no evidence that appellant had conspired with the malefactors, nor that he actually participated in the commission of the crime. He cannot, therefore, be considered as a principal. But in going with them, knowing their criminal intention and in staying outside of the house with them while the others went inside the store to rob and kill, appellant effectively supplied the criminals with material and moral aid, making him guilty as an accomplice. 15

It is axiomatic that in criminal proceedings, proof beyond reasonable doubt is necessary before a judgment of conviction can be rendered. Not an iota of doubt must cloud the Court's mind. A conviction of a criminal offense must be based on clear and positive evidence and not on mere assumptions. 16 In the light of the facts and the evidence on record, we believe that the guilt of petitioner Abejuela has not been established beyond a reasonable doubt for which reason he must be acquitted. The question that must be resolved now is the effect of Abejuela's acquittal on his civil liability. The Rules provide: The extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist. In other cases, the person entitled to the civil action may institute it in the jurisdiction and in the manner provided by law against the person who may be liable for restitution of the thing and reparation or indemnity for the damage suffered." 17 We decree the acquittal of Abejuela because we seriously doubt whether he had knowledge of the plan of Balo to defraud Banco Filipino by means of posting false deposits and withdrawing these later. Because of this doubt, however, his exoneration will not extinguish his civil liability. Thus, the civil liability is not extinguished by acquittal where the same is based on reasonable doubt as only preponderance of evidence is required in civil cases, or where the court has

expressly declared that the liability of the accused is not criminal but only civil in nature. 18 In Banal vs. Tadeo, Jr., 19 we declared:
.1s1 While an act or omission is felonious because it is punishable by law, it gives rise to civil liability not so much because it is a crime but because it caused damage to another. Viewing things pragmatically, we can readily see that what gives rise to the civil liability is really the obligation and moral duty of everyone to repair or make whole the damage caused to another by reason of s own act or omission, done intentionally or negligently, whether or not the same be punishable by law.

It has been satisfactorily established that Banco Filipino suffered damage in the amount of P176,145.25 representing the fictitious deposits posted by Glicerio Balo, Jr. and systematically withdrawn through the passbook of petitioner Abejuela. Although Abejuela, was unaware of the criminal workings in the mind of Balo, he nevertheless unwittingly contributed to their eventual consummation by recklessly entrusting his passbook to Balo and by signing the withdrawal slips. Abejuela failed to exercise prudence and care. Therefore, he must be held civilly accountable. WHEREFORE, on reasonable doubt, Benjamin Abejuela is hereby ACQUITTED of the complex crime of estafa thru falsification of commercial documents. However, the writ of preliminary attachment issued by the Regional Trial Court of Leyte on May 29, 1979 against petitioner's properties and those of his coaccused Glicerio Balo, Jr. to satisfy their civil obligation in the amount of P176,145.25 and which was subsequently made permanent by the said court stands. No pronouncement as to costs. SO ORDERED. Gutierrez, Jr. and Davide, Jr., JJ., concur. Bidin, J., concur in the result.

Separate Opinions
FELICIANO, J., concurring and dissenting:

I quite agree with the holding of the Chief Justice's ponencia that Benjamin Abejuela must be held civilly accountable and making permanent the writ of preliminary injunction issued by the trial court against Abejuela's properties and those of his coaccused Glicerio Balo, Jr. to satisfy their civil obligation in the amount of P 176,145.25. At the same time, I submit, with respect, that Abejuela should not be completely exonerated of criminal liability. The facts in this case appear so similar as to be practically on all fours with the facts in Samson v. Court of Appeals (103 Phil. 277 [19581). In Samson, the Court held the accused guilty of "estafa through falsification of commercial documents by reckless negligence." Two (2) out of ten (10) members of the Court dissented: Reyes, J.B.L., J. and Concepcion, J. As far as I can determine, however, Samson has not been overruled, expressly or impliedly. Upon the other hand, the doctrine in Samson was explicitly followed in People v. Rodis, et al. (105 Phil. 1294 [1959]), where the Court held that the accused could be held liable for the crime of "malversation of public funds through falsification of a public document by reckless negligence." Much the same doctrine has been applied in both earlier and subsequent cases: U.S. v. Malesa et al. (14 Phil. 468 [1909]) (Falsification of documents through reckless negligence); People v. Blancas (56 Phil. 801 [19311) (Unpublished) (Falsification of public document through reckless negligence); People v. Leopando (C.A.) 36 O.G. 2937 (1938) (Falsification of public document through reckless negligence); Sarep v. Sandiganbayan (177 SCRA 440 [1989]) (Falsification of public document through reckless imprudence). Finally, it might be noted that the ponencia explicitly found Abejuela to have acted with reckless negligence:
... although Abejuela was unaware of the criminal workings in the mind of Balo, he nevertheless unwittingly contributed to their eventual consummation by recklessly entrusting his passbook to Balo and by signing the withdrawal slips. Abejuela failed to exercise prudence and care. Therefore, he must be held civilly accountable. (Emphasis supplied)

Separate Opinions FELICIANO, J., concurring and dissenting: I quite agree with the holding of the Chief Justice's ponencia that Benjamin Abejuela must be held civilly accountable and making permanent the writ of preliminary injunction issued by the trial court against Abejuela's properties and those of his coaccused Glicerio Balo, Jr. to satisfy their civil obligation in the amount of P 176,145.25.

At the same time, I submit, with respect, that Abejuela should not be completely exonerated of criminal liability. The facts in this case appear so similar as to be practically on all fours with the facts in Samson v. Court of Appeals (103 Phil. 277 [19581). In Samson, the Court held the accused guilty of "estafa through falsification of commercial documents by reckless negligence." Two (2) out of ten (10) members of the Court dissented: Reyes, J.B.L., J. and Concepcion, J. As far as I can determine, however, Samson has not been overruled, expressly or impliedly. Upon the other hand, the doctrine in Samson was explicitly followed in People v. Rodis, et al. (105 Phil. 1294 [1959]), where the Court held that the accused could be held liable for the crime of "malversation of public funds through falsification of a public document by reckless negligence." Much the same doctrine has been applied in both earlier and subsequent cases: U.S. v. Malesa et al. (14 Phil. 468 [1909]) (Falsification of documents through reckless negligence); People v. Blancas (56 Phil. 801 [19311) (Unpublished) (Falsification of public document through reckless negligence); People v. Leopando (C.A.) 36 O.G. 2937 (1938) (Falsification of public document through reckless negligence); Sarep v. Sandiganbayan (177 SCRA 440 [1989]) (Falsification of public document through reckless imprudence). Finally, it might be noted that the ponencia explicitly found Abejuela to have acted with reckless negligence:
... although Abejuela was unaware of the criminal workings in the mind of Balo, he nevertheless unwittingly contributed to their eventual consummation by recklessly entrusting his passbook to Balo and by signing the withdrawal slips. Abejuela failed to exercise prudence and care. Therefore, he must be held civilly accountable. (Emphasis supplied)

Footnotes
1 Criminal Case No. 3272. 2 TSN, p. 7, July 26, 1983. 3 TSN, p. 17, July 26, 1983; p. 5, August 17, 1983. 4 TSN, pp. 3-4, 6 and 24, July 26, 1983. 5 Original Record, pp. 1-10. 6 Ibid, pp. 94 and 106. 7 Original Record, pp. 287-288. 8 Original Record, pp. 235-236. 9 Original Record, pp. 296-302. 10 Original Record, pp. 480-481. 11 Rollo, pp. 118-125.

12 Rollo, p. 178. 13 Rollo, p. 134. 14 People vs. Lingad, 51 O.G. p. 6191; Emphasis supplied. 15 People vs. Balili, No. L-14044, August 5,1966,17 SCRA 892, 898; Emphasis supplied. 16 Gaerlan vs, Court of Appeals, et al. G.R. No. 57876, November 6, 1989, 179 SCRA 20. 17 Rule 111, Sec. 2 (c) 18 Padilla vs. Court of Appeals, No. L-39999, May 31, 1984, 129 SCRA 558, citing PNB vs. Catipon, 98 Phil. 286 and De Guzman vs. Alvia, 96 Phil. 558. 19 G.R. Nos. 78911-25. December 11, 1987, 156 SCRA 325, 330.

G.R. No. L-34906 January 27, 1983 THE REPUBLIC OF THE PHILIPPINES (CAPIZ AGRICULTURAL AND FISHERY SCHOOL), petitioner, vs. HON. SILVESTRE BR. BELLO, Presiding Judge of Branch II, Court of First Instance of Capiz and ROMEO A. ARCEO, respondents. The Solicitor General for petitioner. Rolindo Beldia, Jr., for private respondent Arceo.

VASQUEZ, J.: The Republic of the Philippines, in behalf of the Capiz Agricultural and Fishery School, takes his appeal from an order of the respondent Court of First Instance of Capiz dismissing Civil Case No. V-3339 which it filed against private respondent Romeo A. Arceo for the recovery of the amount representing his alleged liability to the government in connection with his employment as Cashier and Disbursing Officer of the said school.

Private respondent Arceo in his aforementioned capacity, was charged in Criminal Case No. CCC-XI-39 for malversation of public funds in the amount of P6,619.34 which he supposedly failed to produce or to make proper accounting thereof after repeated demands. After due trial, the respondent court rendered a decision acquitting Arceo a portion of which reads as follows:
To briefly summarizethe undisputed facts spread before the court clearly and unmistakably show lack of criminal intent on accused's part in not issuing official receipts for his collections and disbursements; absence of proof that the accused benefited personally from his disbursements nor has it been shown that he was inexcusably negligent in the administration of public funds and properties entrusted to his care; nor has it been shown and proven that the government suffered damage or prejudice as the accused's disbursements were for the benefit of the Capiz Agricultural and Fishery School; that the funds claimed to be missing in the amount of P6,619.34 is not really missing for the accused demonstrated that said amounts were spent for and in the interest of the Capiz Agricultural and Fishery School as shown by the numerous chits, vouchers, vales, etc., presented in Court. WHEREFORE, finding the evidence of the prosecution not sufficient to establish the guilt of the accused beyond reasonable doubt, the court hereby acquits Romeo Arceo from the charge of malversation on grounds of Reasonable Doubt, with costs de officio and the cancellation of the bail bond posted by him for his provisional liberty. SO ORDERED. (pp. 119-120, Rollo; pp. 2-3, Appellant's Brief, p. 239, Rollo.)

After the acquittal of Arceo the Provincial Fiscal filed Civil Case No. V-3339 for the recovery of the total sum of P13,790.71 which represented the accountability of Arceo due to his failure to issue official receipts and to immediately deposit said funds with the National Treasury, and instead spent the said funds or disbursed them without complying with the requirements applicable to disbursements of public funds, with intent to defraud the government. Arceo through counsel, filed a motion to dismiss the complaint in the said civil case alleging, among others, that the petitioner, as plaintiff therein, had no cause of action against him inasmuch as "the cause of action had been decided in a prior judgment." a The opposition filed by the Provincial Fiscal to the motion to dismiss was not adhered to by the respondent court which issued an order dated June 10, 1971 dismissing the complaint in Civil Case No. V-3339. A motion for reconsideration from the dismissal was denied. Hence, this appeal. The only issue raised in this appeal is whether or not the acquittal of Arceo in the criminal case bars the filing of the civil action against him. Arceo relies on the provision of Section 3(c) of Rule 111 of the Rules of Court, which reads as follows:
(c) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist. In other cases, the person entitled to the civil action may institute it in the jurisdiction and in the manner provided by

law against the person who may be liable for restitution of the thing and reparation or indemnity for the damage suffered. (Emphasis supplied)

The petitioner, on the other hand, disputes the contention of Arceo and maintains that the decision in the criminal case does not contain any declaration that the facts from which the civil liability might arise did not exist. We uphold the stand of the petitioner. An examination of the decision in the criminal case reveals these findings of the respondent court:
All the foregoing expenses and disbursements were never overthrown by the prosecution. All that the government prosecutor tried to show was this the whole of what the accused did in disbursing the funds covered by the vales, chits, cash invoices, etc., etc., were not in accordance with auditing rules and regulations. There is no doubt about this. The accused practically brushed aside and ignored all guidelines enunciated by the General Auditing Office regarding disbursement of government funds. In Exhibit 'Q' (prosecution) Regional Supervising Auditor Brodit in a report to the Director of the Bureau of Vocational Education, Manila, mentioned the illegality of the accused's disbursements as contrary to section 17 of Republic Act 992. This Republic Act, Exhibit 'S' was presented by the prosecuting Provincial Fiscal, perhaps to bolster Exhibit-'Q'. The Court, as it has already intimated anteriorly, believes that the accused's acts offended the Republic Act above-mentioned and every other auditing rule or regulation in the country, ... (pp. 104-105, Rollo.) From what has been shown by the accused, his failure to record his collections, was for a good purpose and not to defraud the government. He kept the cash collections in his possession in order that he may have the ready amount to spend for emergency needs of the school This might be against the instructions to him or offensive to rules and regulations of the General Auditing Office but it is patent that criminal intent cannot be inferred from such actuation. (pp. 110-111, Rollo.) ... As the prosecution evidence stands, same considered void all the acts of the accused but the vales, chits, cash slips, vouchers, travel expenses showing that funds represented by them have been expended for the use, operation,' improvement, maintenance of the school's projects, like the fishpond, piggery, sugar cane plantation, school construction materials, spare parts for the school's machines, representation expenses for visiting bureau officials, etc., etc., makes open to doubt the contention that simply because they were not covered with official receipts they are illegal and cannot be validated. The Court doubts that that contention closes all avenues to validate and legalize the questioned private documents presented by the accused. As the Court looks at the matter before it, the evidence of the prosecution is not enough to establish the guilt of the accused as it opens an avenue leading to a belief that the accused might be innocent. The evidence presented by the State did not remove the possibility that Romeo Arceo might not be guilty of the offense charged. ... (pp. 117-118, Rollo; pp. 9-11, Appellant's Brief, p. 239, Rollo.)

According to the respondent court itself, it was admitted by Arceo that he did not post his collections in his books of account nor deposited them with the National Treasury as required by the rules and regulations. Worse, he disbursed them

without prior approval of the Auditor. The decision did not absolve Arceo or free him from responsibility insofar as his accountability as Cashier and Disbursing Officer is concerned. The acquittal, in the words of the trial court, was because "The evidence of the prosecution is not enough to establish the guilt of the accused as it opens an avenue leading to a belief that the accused might be innocent." Indeed, the dispositive portion of the decision in the criminal case did not state that the facts upon which his responsibility as an accountable officer is based were non-existent. Instead it expressly and categorically declares that his acquittal was upon the finding that "the evidence of the prosecution was not sufficient to establish the guilt of the accused beyond reasonable doubt. It is also to be noted that while the subject-matter of the malversation case was the amount of P6,619.34, the sum sought to be recovered in the civil action totalled P13,790.70. The latter amount included the five items involved in the criminal action, as well as the additional sum of P7,170.31 representing the income of the school from its various projects for which the accused failed to issue official receipts, (pp. 4647, Rollo.) At least insofar as the recovery of the aforesaid amount is concerned, therefore, the private respondent cannot place in defense his acquittal in the criminal action which did not involve said amount. Even insofar as the amount of P6,619.34 which constituted the subject-matter of the criminal charge of malversation is concerned, the acquittal of the private respondent in the criminal case would not constitute an obstacle to the filing of Civil Case No. V-3339. The finding by the respondent court that he spent said sum for and in the interest of the Capiz Agricultural and Fishery School and not for his personal benefit is not a declaration that the fact upon which Civil Case No. V-3339 is based does not exist. The civil action barred by such a declaration is the civil liability arising from the offense charged, which is the one impliedly instituted with the criminal action. (Section 1, Rule 111, Rules of Court.) Such a declaration would not bar a civil action filed against an accused who had been acquitted in the criminal case if the criminal action is predicated on factual or legal considerations other than the commission of the offense charged. A person may be acquitted of malversation where, as in the case at bar, he could show that he did not misappropriate the public funds in his possession, but he could be rendered liable to restore said funds or at least to make a proper accounting thereof if he shall spend the same for purposes which are not authorized nor intended, and in a manner not permitted by applicable rules and regulations. WHEREFORE, the order of the respondent court dismissing Civil Case No.V3339 is hereby REVERSED and SET ASIDE. The motion to dismiss filed by the private respondent shall be deemed DENIED. Costs against the private respondent, SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Relova and Gutierrez, Jr., JJ., concur. Plana, J., is on leave.

G.R. No. L-14745

March 30, 1962

OTILIO R. GOROSPE, petitioner, vs. RAMON O. NOLASCO, ETC., ET AL., respondents. Tirona and Tirona for petitioner. Honorato S. Reyes for respondent Pastor Romero. Ramon O. Nolasco for and in his own behalf as respondent. DIZON, J.: This is a petition to review by certiorari the decision of the Court of Appeals in CA-G.R. No. 22760-R. On June 7, 1956, Pastor Romero filed a complaint in the Court of First Instance of Manila against Otilio R. Gorospe (Civil Case No. 30378) to recover the ownership of Lot No. 19, Block No. 58 of the Rita Legarda Subdivision, or the sum of P3,000.00, plus damages and attorney's fees, alleging therein that on or about March 1947, Romero, desirous of owning a lot in Manila, gave Gorospe the sum of P3,000.00 for the purchase of a lot in the Rita Legarda Subdivision of which the latter was an agent; that thereafter, Gorospe informed Romero that he had contracted to purchase Lot No. 19, Block No. 58 of said subdivision in the name of Romero's daughter named Sofronia, with an alleged area of

232.20 sq. meters and at the supposed price of P20.00 per square meter; that several months thereafter, upon learning that all he had was a contract to purchase said lot instead of a clear title thereto, Romero called Gorospe's attention to said fact; that thereupon the latter assured Romero that the area given in said contract to purchase was only tentative; that the sum of P3,000.00 which he already paid to the Rita Legarda, Inc., was sufficient and no further payments need be made, and that, as soon as the true and correct area was computed, the contract would be adjusted and a Torrens' title issued; that in view of these assurances, Romero constructed a house on the lot at a cost of P10,000.00; that in May, 1956, Gorospe informed Romero that unless he paid P4,000.00 in cash, aside from the P3,000.00 he had already paid, he would lose his rights over the lot in question; that, upon making inquiries at the Rita Legarda, Inc., Romero learned that Gorospe had acquired title over the lot on May 10, 1956, for the sum of P4,000.00. Transfer Certificate of Title No. 43504 of the Register of Deeds of Manila having been issued in his name. In his answer to the complaint, Gorospe denied the material allegations thereof and averred that he was the owner of the property in question, having acquired the same from its previous owner in exchange for a lot he owned; and, as a counterclaim, sought to recover moral damages and attorney's fees. Before the trial of the case, Romero filed a criminal complaint for estafa against Gorospe with the office of the City Fiscal of Manila based upon the facts above narrated. On December 17, 1956, Romero moved for the postponement of the trial of the civil case pending the outcome of the preliminary investigation of his criminal complaint for estafa, which motion was granted by the court. After two similar motions for postponement, the Court, on September 10, 1957, issued the following order:. When this case was called for hearing, nobody appeared for the plaintiff. Instead the clerk called the attention of the Court to a motion dated September 9, 1957 asking for the postponement of the hearing. The Court considers the motion to be without merit and, is, therefore, denied. 1wph1.t In view of the failure of plaintiff to appear, the Court hereby considers the complaint abandoned. Considering that the Defendant has counterclaim, the Court hereby authorized the defendant to present his evidence in support of his counterclaim before the Clerk of Court, who is hereby delegated to receive the same. After receiving Gorospe's evidence in support of his counterclaim, the Court, on September 12, 1957, rendered judgment dismissing the complaint, and, on the counterclaim, sentencing Romero to pay Gorospe the sum of P200.00 as attorney's fees, without costs. Neither party appealed. On October 23, 1957, the Office of the City Fiscal of Manila filed an information charging Otilio R. Gorospe with the crime of estafa (Criminal Case No. 41992 of the Court of First Instance of Manila).

A motion to quash the information was filed by the accused on January 15, 1958 on the ground that the dismissal of Civil Case No. 30378 for failure of the therein plaintiff to prosecute was an adjudication of the case on the merits and, therefore, constituted a bar to the filing and prosecution of Criminal Case No. 41992 as the issues involved in the former constituted a prejudicial question in the latter. The Court denied this motion on February 8, 1958 and set the case for the arraignment of the defendant. The latter's motion for reconsideration was likewise denied by the Court. On March 13, 1958 Otilio R. Gorospe filed a petition for certiorari, prohibition and mandamus, with preliminary injunction, with the Court of Appeals (CA-G.R. No. 22760R) against the Hon. Ramon O. Nolasco, Judge of the Court of First Instance of Manila, Branch XI, and Pastor Romero, to declare the decision of the Court of First Instance in Civil Case No. 30376 a prejudicial question, thereby barring the prosecution of the petitioner for estafa in Criminal Case No. 41992; to restrain the respondent judge from proceeding with the trial of said criminal case and to order him to dismiss the same. On March 20, 1958, the Court of Appeals gave due course to the petition and ordered the respondent judge to refrain from proceeding with the trial of Criminal Case No. 41992 until further orders. On October 31, 1958, the Court of Appeals rendered judgement dismissing the petition and dissolving the writ of preliminary injunction previously issued, from which Gorospe took the present appeal by certiorari. The issue to be determined is whether or not the decision in Civil Case No. 30378 constitutes a bar to the filing and prosecution of the criminal case for estafa against petitioner Gorospe. On this question, the Court of Appeals held the following: An analysis of the averments of the civil complaint and those of the criminal information is in order. The complaint in the civil case was planted upon the claim that the sum of three thousand pesos (P3,000.00) obtained by petitioner from respondent Romero was used by the former to acquire Lot No. 19, Block No. 58 of the Rita Legarda Subdivision, the title to which was placed in petitioner's name. That is why, the complaint prayed that defendant be ordered to deliver to plaintiff the absolute ownership of that Lot or, in the alternative, to return to said plaintiff the sum of three thousand pesos (P3,000.00). During the pendency of the civil case, the matter was referred by respondent Romero to the city fiscal's office for criminal prosecution of petitioner for estafa. Further investigation was made by the fiscal. It was then that allegedly the complaining witness came to know that the sum of three thousand pesos (P3,000.00) received by petitioner from said respondent for the purchase of a lot in Rita Legarda Subdivision, was never paid to or acknowledged by the said subdivision; and that the alleged contract to purchase, delivered by petitioner to respondent Romero, was not genuine for the reason that 'the money therein mentioned was not acknowledged by the said subdivision in payment of the lot mentioned therein'. Thus, it is, that in the criminal information, petitioner was charged with having

feloniously misappropriated, misapplied and converted the said sum to his own personal use and benefit, to the damage and prejudice of respondent Pastor Romero and his daughter Sofrania Romero. The situation is this: The civil complaint was upon the theory that the money was used for the purchase of a lot; the criminal information, in turn, alleges that the money was never used for the purchase of any lot at all but, on the contrary, was embezzled by petitioner. ... Fraud is not an essential element of the civil suit; petitioner could well have been held civilly liable for breach of contract with respondent Romero. Upon the other hand, the action for estafa is predicated upon deceit without which there can be no estafa. So that, the one is entirely distinct and may be litigated independently from the other. Sy vs. Malate Taxicab and Garage, Inc., G.R. No. L-8937, November 28, 1957. We find the above considerations to be correct and in accord with the provisions of Article 31 of the New Civil Code to the effect that "When the civil action is based on an obligation not arising from the act or omission complained of as a felony, such civil action may proceed independently of the criminal proceedings and regardless of the result of the latter.". Moreover, under the provisions of Section 1, paragraph (e) Rule 107 of the Rules of Court, a final judgment rendered in a civil action absolving the defendant from civil liability, is no bar to a criminal action. As the civil action instituted by Romero against Gorospe was dismissed without the presentation of any evidence upon the issues arising from the complaint and the answer filed in said case, it is manifest that the court did not and could not have made any finding of fact that made it impossible thereafter to hold Gorospe liable for estafa. Consequently, the dismissal of the civil action cannot in any legal sense constitute a bar to the filing and prosecution of the criminal action for estafa against herein petitioner. WHEREFORE, the present petition for review by certiorari is denied with costs. Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera and De Leon, JJ., concur.

G.R. No. L-34529 January 27, 1983 MAXIMO MARCIA, AMALIA MOJICA, TIRSO YAP, DAMIANA MARCIA, EDGAR MARCIA, and RENATO YAP, petitioners, vs. COURT OF APPEALS, FELARDO PAJE, and VICTORY LINER, INC., respondents. Ricardo J. Francisco, for petitioners. Flors, Macapagal, Ocampo & Dizon for private respondents.

RELOVA, J.: Appeal by certiorari from the decision of the Court of Appeals affirming the judgment of the Court of First Instance of Rizal, which dismissed the complaint filed by tile petitioners against private respondents in the concept of an independent civil action for damages for physical injuries resulting from reckless imprudence. On December 23, 1956, in the municipality of Lubao, Pampanga, a passenger bus operated by private respondent Victory Liner, Inc. and driven by its employee. private respondent Felardo Paje, collided with a jeep driven by Clemente Marcia, resulting in the latter's death and in physical injuries to herein

petitioners, Edgar Marcia and Renato Yap. Thereupon, an information for homicide and serious physical injuries thru reckless imprudence was filed against Felardo Paje in the Court of First Instance of Pampanga (Criminal Case No. 2745). On January 23, 1957, an action for damages (Civil Case No. 4425) was filed in the Court of First Instance of Rizal by Edgar Marcia and Renato Yap, together with their respective parents. against the Victory Liner, Inc. and Felardo Paje, alleging that, the mishap was due to the reckless imprudence and negligence of the latter in driving the passenger bus. While said Civil Case No. 4425 was in progress in the Court of First Instance of Rizal, the criminal action proceeded in the Court of First Instance of Pampanga (Criminal Case No. 2745). The accused Felardo Paje was convicted of the offense charged. However, on appeal to the Court of Appeals, he was acquitted in a decision promulgated on November 3, 1982, based on the findings, to wit:
1 That the Victory Liner bus left its post, kilometer post no. 156, in San Marcelino, Zambales, at about 2:00 AM 2 That on the highway at Lubao, Pampanga, between Posts Nos. 83 and 84, the appellant driver thereof, saw a cargo truck parked in the middle of the right lane of the road to Manila, without 3 That appellant slackened the speed of his truck from 60 km. p.h. to 35 or 40 km. p. h. in order to pass said truck; 4 That the appellant did not see the oncoming jeep until it swerved to the left. 5 That the jeep was still far so appellant attempted to pass the truck but before he could do so, the jeep came very fast at the center of the road and out of its lane. 6 That the passengers of the bus shouted at the appellant to bring the bus to the side so as to avoid a frontal collision with he jeep, and appellant brought his bus to the right shoulder of the road going to Bataan; 7 That the jeep driven by the deceased Clemente Marcia was running at a fast pace for which reason the driver lost control and veered sharply to the right shoulder of the road and crashed into the bus, parked thereat a few seconds before. 8 That appellant was not speeding, was diligent, and hence, not liable for the collision which at the least, was a fortuitous event for which no one was responsible.

and the conclusion that "CRIMINAL NEGLIGENCE is WANTING in this case, and that appellant was NOT even guilty of CIVIL NEGLIGENCE, Insofar as appellant was concerned, it was a case of PURE ACCIDENT."

As a consequence, herein private respondents, defendants in Civil Case No. 4425 of the Court of First Instance of Rizal, moved for the dismissal of the complaint invoking the decision of the Court of Appeals acquitting Felardo Paje and citing Section I (d), Rule 107 of the Rules of Court now Section 3 (c), Rule I I I of the New Rules of Court), which reads:
SECTION 1. Rules governing civil actions arising from offenses. Except as otherwise provided by law, the following rules shall be observed: xxx xxx xxx (d) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist. In the other cases, the persons entitled to the civil action may institute it in the jurisdiction and in the manner provided by law against the person who may be liable for restitution of the thing and reparation or indemnity for the damages suffered.

The trial court denied the motion to dismiss and, thereafter, continued to hear defendants' (herein private respondents) evidence. The following were presented as defendants' evidence in chief:
(a) the whole record of Criminal Case No. 2745 of the Court of First Instance of Pampanga in which defendant Felardo Paje was by reason of the occurrence prosecuted criminally and convicted of homicide with serious physical injuries thru reckless imprudence; (b) the decision of the Court of Appeals in CA-G.R. No. 01691 Cr, acquitting the accused; and (c) copy of the brief of the said defendant as accused-appellant in the said Court of Appeals case.

On August 10, 1966, the Court of First Instance of Rizal rendered a decision dismissing plaintiffs' complaint against the defendants Victory Liner, Inc. and Felardo Paje, without pronouncement as to costs. Petitioners appealed the case to the (Court of Appeals CA-G.R. No. 38964-R) alleging that the acquittal of Paje in the criminal action for homicide and serious physical injuries thru reckless imprudence "is not a ground for dismissing the complaint in the instant civil action; that the instant civil action is entirely separate and distinct from the criminal action and shall proceed independently of the criminal prosecution, so that whatever may have been the result of the criminal action is irrelevant to this civil action; that Section 2 of Rule 111 of the Rules of Court and not Section 3, paragraph (c) of the said rule applies; that the statement in the decision of the Court of Appeals in the criminal action that defendant Paje as accused therein was not guilty of civil negligence is without the jurisdiction of the said Court to make and is to be completely disregarded as an extraneous, officious and void statement which cannot affect in any way the instant civil

action; that the records of the criminal action against defendant Paje are inadmissible evidence; that it has been established in the case at bar, not only by preponderance of evidence but by uncontradicted, conclusive evidence that petitioners suffered damages as a proximate result of the negligence of respondent Paje and that it has been established, not only by preponderance of evidence but by uncontradicted, conclusive evidence, that the damages suffered by petitioners as a result of the negligence of private respondents is in the amount of P250,817.96, and that the latter should be sentenced, jointly and severally, to pay the same to petitioner. In the meantime, the heirs of Clemente Marcia who, as aforesaid, died as a result of the collision, instituted a separate civil action in the Court of First Instance of Rizal (Civil Case No. 6880) for damages based on the alleged reckless imprudence of bus driver Felardo Paje, praying that the driver and the Victory Liner, Inc. be ordered to pay jointly and severally the amount of damages claimed. The complaint of the heirs of Clemente Marcia was dismissed by the trial court. Appeal on questions of law was taken to this Court (Laura Corpus et al vs. Felardo Paje at al, 28 SCRA 1062) which, however, affirmed the order for the reason, among others, that "(1) The acquittal of the defendant Felardo Paje by the Court of Appeals in the criminal action on the ground that the reckless imprudence or criminal negligence charged against him did not exist and that the collision was a case of pure accident, was a bar to the civil action for damages for the death of Clemente Marcia, which action was based upon the same criminal negligence of which the defendant Felardo Paje was acquitted in the criminal action." Following the ruling of this Court in the Corpus vs. Paje decision, respondent Court of Appeals held that the private respondents Cannot be held civilly liable after it had ruled in the criminal action that negligence was wanting and that the collision was a case of pure accident. Dissatisfied with the decision, petitioners have come to US alleging that the Court of Appeals erred:
I. IN NOT HOLDING THAT PETITIONERS INSTANT CIVIL ACTION FOR DAMAGES AGAINST PRIVATE RESPONDENTS FOR PHYSICAL INJURIES RESULTING FROM NEGLIGENCE IS AN INDEPENDENT ONE, ENTIRELY SEPARATE AND DISTINCT FROM THE CRIMINAL ACTION, UNDER THE PROVISIONS OF ARTICLES 33, 2176 AND 2177 OF THE NEW (CIVIL CODE AND SECTION 2 OF RULE 111 OF THE RULES OF COURT. AND IN INSTEAD HOLDING THAT THE INSTANT ACTION IS NOT AMONG THE INDEPENDENT CIVIL ACTIONS AUTHORIZED BY THE SAID PROVISIONS. II.

IN NOT HOLDING THAT THE ACQUITTAL OF RESPONDENT FELARDO PAJE, DRIVER OF RESPONDENT VICTORY LINER, INC., IN THE CRIMINAL ACTION BASED ON THE SAID PHYSICAL INJURIES AND NEGLIGENCE IS ENTIRELY IRRELEVANT TO THE INSTANT CIVIL ACTION FOR DAMAGES BY VIRTUE OF THE AFORECITED PROVISIONS OF THE NEW CIVIL CODE AND THE RULES OF COURT, AND IN INSTEAD HOLDING THAT THE SAID ACQUITTAL IS A BAR TO THE INSTANT CIVIL ACTION UNDER SECTION 3 (c) OF RULE I I I AND SECTION 49 (c) OF RULE 39 OF THE RULES OF COURT. III. IN NOT HOLDING THAT THE EVIDENCE ADDUCED BY PRIVATE RESPONDENTS IN THE INSTANT CIVIL ACTION FOR DAMAGES, CONSISTING OF THE RECORDS OF THE CRIMINAL ACTION IN THE TRIAL COURT, THE DECISION OF THE COURT OF APPEALS ACQUITTING RESPONDENT PAJE AND THE COPY OF THE BRIEF OF THE SAID RESPONDENT AS ACCUSED-APPELLANT, ARE INADMISSIBLE IN THE INSTANT CIVIL ACTION FOR DAMAGES. IV. IN NOT HOLDING THAT IT HAS BEEN ESTABLISHED IN THE CASE AT BAR, NOT ONLY BY PREPONDERANCE OF EVIDENCE BUT BY UNCONTRADICTED, CONCLUSIVE EVIDENCE, THAT PETITIONERS SUFFERED DAMAGES AS A PROXIMATE RESULT OF THE NEGLIGENCE OF RESPONDENT PAJE. V. IN NOT HOLDING THAT IT HAS BEEN ESTABLISHED, NOT ONLY BY PREPONDERANCE OF EVIDENCE BUT BY UNCONTRADICTED, CONCLUSIVE EVIDENCE, THAT THE DAMAGES SUFFERED BY PETITIONERS AS A RESULT OF THE NEGLIGENCE OF DEFENDANTS IS IN THE AMOUNT OF P250,817.96, AND IN NOT SENTENCING PRIVATE RESPONDENTS JOINTLY AND SEVERALLY TO PAY THE SAME TO PETITIONERS.

It is the stand of herein petitioners that Section 2, Rule 111 of the Rules of Court, not Section 3 (c) thereof, should apply in the case at bar.
Sec. 2. Independent civil action. In the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines, an independent civil action entirely separate and distinct from the criminal action, may be brought by the injured party during the pendency of the criminal case, provided the right is reserved as required in the preceding section. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence.

We do not agree, Section 2 of Rule 111 merely refers to the institution of an independent civil action without waiting for the filing or termination of the criminal action and requires only preponderance of evidence to prosper and not proof beyond reasonable doubt as required for conviction in criminal cases. However,

an acquittal based on the finding that the facts upon which civil liability did not exist, bars the filing of an independent civil action if it is based on the crime. As early as 1952, We have held in the case of Tan vs. Standard Vacuum Oil Company 91 Phil. 672, that "the acquittal of the accused from the criminal charge will not necessarily extinguish the civil liability unless the court declares in the judgment that the fact from which the civil liability might arise did not exist. Where the court states 'that the evidence throws no light on the cause of fire and that it was an unfortunate accident for which the accused cannot be held responsible,' this declaration fits well into the exception of the rule which exempts the accused, from civil liability. " Likewise, in Albornoz vs. Albornoz, 98 Phil. 785, it was the ruling that "where the judgment in a criminal action contains an express declaration that the basis of claimant's action did not exist, the latter's action for civil liability is barred under section 1 (d) Rule 107 of the Rules of Court." And, in De Mesa vs. Priela 24 SCRA 582, this Court, speaking through then Chief Justice Roberto Concepcion, ruled that extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist. In other cases, the person entitled to the civil action may institute it in the jurisdiction and in the manner provided by law against the person who may be liable for restitution of the thing and reparation or indemnity for the damage suffered (Sec. 3 [c], Rule 111, Rules of Court.)" As held in Corpus vs. Paje, supra, reckless imprudence or criminal negligence is not one of the three crimes mentioned in Article 33 of the Civil Code, which provides:
ART. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence.

The above article speaks only of defamation, fraud and physical injuries. The injuries suffered by herein petitioners were alleged to be the result of criminal negligence; they were not inflicted with malice. Hence, no independent civil action for damages may be instituted in connection therewith. Further, Section 3 (c), Rule 111 of the Rules of Court states that "(c) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist." Otherwise stated, unless the act from which the civil liability arises is declared to be nonexistent in the final judgment, the extinction of the criminal liability will not carry with it the extinction of the civil liability. Thus, if a person is charged with homicide and successfully pleaded self-defense, his acquittal by reason thereof will extinguish his civil liability. He has not incurred any criminal liability. On the other hand, if his acquittal is, for instance, due to the fact that he was not sufficiently Identified to be the assailant, a civil action for damages may be maintained. His acquittal is not due to non-existence of the crime from which

civil liability might arise, but because he was not, in the eyes of the court, sufficiently Identified as the perpetrator of the crime. In People vs. Buan, 22 SCRA 1383, this Court, speaking through Mr. Justice J.B.L. Reyes, said that "the essence of the quasi offense of criminal negligence under Article 365 of the Revised Penal Code lies in the execution of an imprudent or negligent act that, if intentionally done, would be punishable as a felony. The law penalizes the negligent or careless act, not the result thereof. The gravity of the consequence is only taken into account to determine the penalty; it does not qualify the substance of the offense. The charge against Felardo Paje was not for homicide and physical injuries but for reckless imprudence or criminal negligence resulting in homicide (death of Clemente Marcia) and physical injuries suffered by Edgar Marcia and Renato Yap. They are not one of the three (3) crimes mentioned in Article 33 of the Civil Code and, therefore, no civil action shall proceed independently of the criminal prosecution. The case of Laura Corpus vs. Felardo Paje (supra) is the same as the case at bar, the only difference being the party-plaintiffs or petitioners. Clemente Marcia died, while Edgar Marcia and Renato Yap suffered physical injuries in the same accident. The heirs of Clemente Marcia filed Civil Case No. 6880 in the Court of First Instance of Rizal against herein respondents. The case was dismissed and appealed directly to this Court.1wph1.t The order appealed from was affirmed, as recorded in Laura Corpus vs. Felardo Paje, 28 SCRA 1062. The case at bar (Civil Case No. 4425) was filed by Edgar Marcia and Renato Yap against the same defendants in the Court of First Instance of Rizal. After trial, the case was dismissed and affirmed by the Court of Appeals. It is now before Us on appeal by certiorari from the said decision. Relative to the admissibility of the documents, to wit; (a) the records of the criminal case against Paje, (b) the decision of the Court of Appeals acquitting the latter; and (c) copy of the brief of the respondent Paje as accused-appellant, suffice it to say that since petitioners' cause of action is based on the alleged recklessness and imprudence of respondent Paje it necessarily follows that his acquittal by the Court of Appeals and its declaration that the mishap was "pure accident" are relevant and material evidence. In fact, the lower court may even take judicial notice of the decision of the Court of Appeals in said criminal case. Finally, with respect to the findings of fact of the Court of Appeals, well settled is the rule that the same are final and cannot be disturbed by Us, particularly where they are based, as they are in the case at bar, upon substantial evidence. WHEREFORE, the decision appealed from is hereby AFFIRMED in toto. With costs against the petitioners.

SO ORDERED. Teehankee (Chairman), Melencio-Herrera, Plana, Vasquez and Gutierrez, Jr., JJ., concur.