G.R. No. 73928 August 31, 1987 JOSE E. GENSON, petitioner, vs. SPS.

EDUARDO ADARLE and SHERLITA MARI-ON, and INTERMEDIATE APPELLATE COURT, respondents.

While still in the hospital, the private respondent instituted the action below for damages against Arbatin, his employer; Buensalido, the payloader operator; Candelario Marcelino, the civil engineer; and petitioner, the Highway District Engineer. During the trial on the merits, the petitioner put up the defense that he had no knowledge of or participation in the accident and that, when it happened, he was not present in the government compound. Apart from the fact that it was a Saturday and a non-working day, he was in Iloilo. As part of his evidence, the petitioner presented a memorandum directed to a certain Mr. Orlando Panaguiton ordering the latter to take charge of the district until his return (Exh. 1). The trial court found that, with the exception of the petitioner, all of the defendants were present at the Highway's compound when the accident occurred. However, it still adjudged the petitioner liable for damages because the petitioner was supposed to know what his men do with their government equipment within an area under his supervision. Thus, on January 19, 1982, the trial court rendered a decision finding all the defendants liable for damages under Articles 1172 and 2176 of the New Civil Code. The dispositive portion of the decision reads: WHEREFORE, this court orders the defendants to pay to plaintiff the amounts stated in the complainant's prayer as follows: Ordering the defendants jointly and severally to pay the plaintiff the sum of 312.00 monthly from September 8, 1979 until his release from the hospital. Ordering the defendants jointly and severally to pay the plaintiff the sum of P7,410.63 for hospital expenses up to January 14, 1980 and an additional amount for further hospitalization until the release of plaintiff from the hospital; Ordering the defendants jointly and severally to pay the plaintiff the sum of at least P100,000.00 as actual and compensatory damages, considering that plaintiff Eduardo Adarle is totally incapacitated for any employment for life; Ordering the defendants jointly and severally to pay the plaintiff the sum of P20,000.00 as moral damages and another sum for exemplary damages which we leave to the sound discretion of the Honorable Court; Ordering the defendants jointly and severally to pay the plaintiff the sum of P5,000.00 as attorney's fees. (pp. 129- 130, Original Records).

GUTIERREZ, JR., J.: This is a Petition for review which seeks to set aside the decision in CA-G.R. No. 00783 on the ground that the findings of the respondent Court of Appeals are based on misapprehension of facts and conflict with those of the trial court and that the conclusions drawn therefrom are based on speculations and conjectures. Arturo Arbatin was the successful bidder in the sale at public auction of junk and other unserviceable government property located at the compound of the Highway District Engineer's Office of Roxas City. Private respondent Eduardo Adarle was hired as a laborer by Arbatin to gather and take away scrap iron from the said compound with a daily wage of P12.00 or about 312.00 a month. On September 8, 1979, at 4:00 o'clock in the morning, on a Saturday and a nonworking day, while the private respondent was tying a cable to a pile of scrap iron to be loaded on a truck inside the premises of the compound, and while the bucket of the payloader driven by Ramon Buensalido was being raised, the bucket suddenly fell and hit Adarle on the right back portion of his head just below the nape of his neck. Adarle was rushed to the St. Anthony Hospital, Roxas City. According to the medical certificate issued by the attending physician, the private respondent suffered the following injuries: 1) Comminuted fracture of the vertebral body of 13 with extreme Kyphosis of the segment by x-ray. 2) Cord compression 2nd to the injury with paralysis of the lower extremity, inability to defecate and urinate. (E Exh. A, Exhibits for the plaintiff-appellant, Original Records.) The medical certificate also reported that: The patient recovered the use of his urinary bladder and was able to defecate 2 months after surgery. He is paralyzed from the knee down to his toes. He can only sit on a wheel chair. The above residual damage is permanent 2nd to the injury incurred by Mr. Adarle, he is still confined in the Hospital. (idem)

The petitioner appealed to the Intermediate Appellate Court which affirmed the decision of the trial court and further ordered the defendants to pay P5,000.00 exemplary damages. Defendant Candelario Marcelino was, however, absolved from liability. In its decision, the appellate court ruled: That payloader owned by the Government, as found by the lower court, should not have been operated that Saturday, September 8, 1979, a Saturday, a non-working holiday. There is no official order from the proper authorities authorizing Arbatin and plaintiff to work and Buensalido to operate the payloader on that day inside the Highway compound. Thereabouts, we can logically deduce that Arbatin and plaintiff went to the compound to work with the previous knowledge and consent of Highway District Engineer Jose E. Genson. And allowed him, probably upon the request of Arbatin. We have noted that Genson testified that his office does not authorize work on Saturdays. Genson testified that he was in Iloilo from September 9 and 10, 1979. The accident occurred on September 8, in the morning. In his answer, Genson did not allege his presence in Iloilo on September 9 and 10 ... . We fully concur with the lower court's conclusions regarding the physical presence of appellants inside the compound on that fateful day, pursuant to a previous understanding with Arbatin for plaintiff to work on the scrap iron and for Buensalido to operate the payloader inside the compound. Arbatin and plaintiff would not go to the compound on that Saturday, if there was no previous understanding with Genson and Buensalido. The liability of Genson is based on fault, intentional and voluntary or negligent (Eleano v. Hill, 77 SCRA 106; Jimena v. Lincallo, 63 O.G. 11,15, 8 C. A.R. 2567). He gave permission to Arbatin, plaintiff and Buensalido to work on Saturday, a non-working day, in contravention of his office' rules and regulations outlawing work on Saturdays.. (pp. 29-30, Rollo) In this present petition, the petitioner contends that the appellate court committed a palpable error when it ruled that the petitioner was present when the accident happened and that he had given permission to the other defendants to work on a Saturday, a non-working day. The petitioner argues that considering these were the facts relied upon by the said court in holding that he was negligent and thus liable for damages, such a conclusion, is without basis.

The petitioner further contends that the appellate court erred in not holding that the suit against the petitioner was, in effect, a suit against the government and, therefore, should be dismissed under the principle of non-suability of the state. As regards the petitioner's second contention, we hold that the petitioner's Identification as the Highway District Engineer in the complaint filed by the private respondent did not result in the said complaint's becoming a suit against the government or state. In Belizar v. Brazas, (2 SCRA 526), we ruled that "the fact that the duties and positions of the defendants are indicated does not mean that they are being sued in their official capacities, especially as the present action is not one against the Government." Furthermore, the accident in the case at bar happened on a nonworking day and there was no showing that the work performed on that day was authorized by the government. While the equipment used belongs to the Government, the work was private in nature, for the benefit of a purchaser of junk. As we have held in the case of Republic v. Palacio (23 SCRA 899,906). xxx xxx xxx the ISU liability thus arose from tort and not from contract, and it is a well-entrenched rule in this jurisdiction, embodied in Article 2180 of the Civil Code of the Philippines, that the State is liable only for torts caused by its special agents, specially commissioned to carry out the acts complained of outside of such agent's regular duties (Merritt v. Insular Government, supra; Rosete v. Auditor General, 81 Phil. 453) There being no proof that the making of the tortious inducement was authorized, neither the State nor its funds can be made liable therefor. Therefore, the defense of the petitioner that he cannot be made liable under the principle of non-suability of the state cannot be sustained. With regard to the main contention of the petitioner that the appellate court based its conclusions on an erroneous finding of fact, we agree with him that the appellate court's finding that he was present within the premises when the accident happened is not supported by evidence indisputably showing that he was indeed there. Since the evidence fails to establish petitioner Genson's presence when the payloader's bucket fell on the head of Mr. Adarle, any liability on his part would be based only on his alleged failure to exercise proper supervision over his subordinates (See Umali v. Bacani, 69 SCRA 263, 267-268). According to the trial court, Mr. Genson authorized work on a Saturday when no work was supposed to be done. It stated that the petitioner should know what his men do with their government equipment and he should neither be lax nor lenient in his supervision over them.

The petitioner contends that: 1. No evidence on record exists that Genson gave authority to Adarle and Arbatin, either verbally or in writing, to enter the work inside the Highways Compound on September 8, 1979; 2. Genson never knew or met Arbatin until the trial of the case. This fact was never denied by Arbatin nor rebutted by Adarle. How then could Genson have ordered or allowed Arbatin to enter the Highways Compound with Adarle? 3. Adarle himself repeatedly admitted that Arbatin, his employer, gave him the instructions to enter the compound, thus: Q. Now particularly on September 8, 1979, did Arbatin ask you to go to the compound in the Highway? A. Yes sr. Q. Are you sure of that? A. Yes, sir. Q. Where did he say that to you? A. We went to the Highway compound for many times already and that was the time when I met the incident. Q. The particular day in question September 8. 1979, did you see Arturo Arbatin and he asked you to go the compound on that day? A. That date was included on the first day when "he instructed us to gather scrap ironuntil that work could be finished." (pp. 2526, tsn., October 10, 1980) (Emphasis supplied) Q. Who told you to work there?

A. "Through the instruction of Arturo Arbatin" (pp. 32, tsn., Oct. 10, 1980) (Emphasis supplied) (pp. 12-13, Rollo). Insofar as work on a Saturday is concerned, and assuming Mr. Genson verbally allowed it, we see nothing wrong in the petitioner's authorizing work on that day. As a matter of fact, it could even be required that the hauling of junk and unserviceable equipment sold at public auction must be done on non-working days. The regular work of the District Engineer's office would not be disturbed or prejudiced by a private bidder bringing in his trucks and obstructing the smooth flow of traffic and the daily routine within the compound. Obviously, it would also be safer for all concerned to effect the clearing of the junk pile when everything is peaceful and quiet. There is no showing from the records that it is against regulations to use government cranes and payloaders to load items sold at public auction on the trucks of the winning bidder. The items were formerly government property. Unless the contract specifies otherwise, it may be presumed that all the parties were in agreement regarding the use of equipment already there for that purpose. Of course, it would be different if the junk pile is in a compound where there is no equipment for loading or unloading and the cranes or payloaders have to be brought there. There is likewise no sufficient basis for the "master-servant" doctrine in tort law to apply. Buensalido was not working overtime as a government employee. It is doubtful if the district engineer can be considered an "employer" for purposes of tort liability who may be liable even if he was not there. No evidence was presented to show that an application for overtime work or a claim for overtime pay from the district engineer's office was ever filed. It is more logical to presume that Buensalido, the operator of the payloader, was trying to earn a little money on the side from the junk buyer and that his presence in the compound on that Saturday was a purely private arrangement. From the records of this case, we are not disposed to rule that a supervisor who tolerates his subordinates to moonlight on a non-working day in their office premises can be held liable for everything that happens on that day. It would have been preferable if Mr. Arbatin brought his own payloader operator and perhaps, his own equipment but we are not dealing with sound office practice in this case. The issue before us is subsidiary liability for tort comitted by a government employee who is moonlighting on a non-working day. This Court ruled in Dumlao v. Court of Appeals (114 SCRA 247, 251): Nevertheless, it is a well-settled principle of law that a public official may be liable in his personal private capacity for whatever damage he may have caused by his act done with malice and in bad faith, (Mindanao realty Corp. v. Kintanar, 6 SCRA 814) or beyond the scope of his authority or jurisdiction. (the Philippine Racing Club v. Bonifacio, G.R. No. L-11844, August 31, 1960) The question, therefore, is whether petitioner did act in any of the manner aforesaid.

Petitioner contends that, contrary to the holding of the respondent Court of Appeals, he was not sued in his personal capacity, but in his official capacity. Neither was malice or bad faith alleged against him in the complaint, much less proven by the evidence, as the respondent court made no such finding of malice or bad faith. Examining the allegations of the complaint and reviewing the evidence it would indeed be correct to say that petitioner was sued in his official capacity, and that the most that was imputed to him is act of culpable neglect, inefficiency and gross indifference in the performance of his official duties. Verily, this is not imputation of bad faith or malice, and what is more was not convincingly proven. According to the respondent court, "Genson and Buensalido divested themselves of their public positions and privileges to accomodate an acquaintance or probably for inordinate gain." (p. 31, Rollo). There is no showing from the records that Genson received anything which could be called "inordinate gain." It is possible that he permitted work on a Saturday to accomodate an acquaintance but it is more plausible that he simply wanted to clear his compound of junk and the best time for the winning bidder to do it was on a nonworking day. At any rate, we see no malice, bad faith, or gross negligence on the part of Genson to hold him liable for the acts of Buensalido and Arbatin. WHEREFORE, the decision of the Intermediate Appellate Court is hereby REVERSED and SET ASIDE. The complaint against Jesus Genson is DISMISSED. SO ORDERED.

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.

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,

CORTES, J.: Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and Radio Corporation (GLOBE MACKAY) in a dual capacity as a purchasing agent and administrative assistant to the engineering operations manager. In 1972, GLOBE MACKAY discovered fictitious purchases and other fraudulent transactions for which it lost several thousands of pesos. According to private respondent it was he who actually discovered the anomalies and reported them on November 10, 1972 to his immediate superior Eduardo T. Ferraren and to petitioner Herbert C. Hendry who was then the Executive Vice-President and General Manager of GLOBE MACKAY. On November 11, 1972, one day after private respondent Tobias made the report, petitioner Hendry confronted him by stating that he was the number one suspect, and ordered him to take a one week forced leave, not to communicate with the office, to leave his table drawers open, and to leave the office keys. On November 20, 1972, when private respondent Tobias returned to work after the forced leave, petitioner Hendry went up to him and called him a "crook" and a "swindler." Tobias was then ordered to take a lie detector test. He was also instructed to submit specimen of his handwriting, signature, and initials for examination by the police investigators to determine his complicity in the anomalies. On December 6,1972, the Manila police investigators submitted a laboratory crime report (Exh. "A") clearing private respondent of participation in the anomalies. Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G. Fernandez, who on December 10, 1972, submitted a report (Exh. "2") finding Tobias guilty. This report however expressly stated that further investigation was still to be conducted.

1987 affirmed the RTC decision in toto. Petitioners' motion for reconsideration having been denied, the instant petition for review on certiorari was filed. The main issue in this case is whether or not petitioners are liable for damages to private respondent. Petitioners contend that they could not be made liable for damages in the lawful exercise of their right to dismiss private respondent. On the other hand, private respondent contends that because of petitioners' abusive manner in dismissing him as well as for the inhuman treatment he got from them, the Petitioners must indemnify him for the damage that he had suffered. One of the more notable innovations of the New Civil Code is the codification of "some basic principles that are to be observed for the rightful relationship between human beings and for the stability of the social order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit, incorporated certain fundamental precepts which were "designed to indicate certain norms that spring from the fountain of good conscience" and which were also meant to serve as "guides for human conduct [that] should run as golden threads through society, to the end that law may approach its supreme ideal, which is the sway and dominance of justice" ( Id.) Foremost among these principles is that pronounced in Article 19 which provides: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be observed not only in the exercise of one's rights but also in the performance of one's duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper. Article 20, which pertains to damage arising from a violation of law, provides that:

Art. 20. Every person who contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. However, in the case at bar, petitioners claim that they did not violate any provision of law since they were merely exercising their legal right to dismiss private respondent. This does not, however, leave private respondent with no relief because Article 21 of the Civil Code provides that: Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even though they have actually suffered material and moral injury" [Id.] should "vouchsafe adequate legal remedy for that untold number of moral wrongs which it is impossible for human foresight to provide for specifically in the statutes" [Id. it p. 40; See also PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247]. In determining whether or not the principle of abuse of rights may be invoked, there is no rigid test which can be applied. While the Court has not hesitated to apply Article 19 whether the legal and factual circumstances called for its application [ See for e.g., Velayo v. Shell Co. of the Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra;Grand Union Supermarket, Inc. v. Espino, Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No. L-46558, July 31,1981,106 SCRA 391; United General Industries, Inc, v. Paler G.R. No. L-30205, March 15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911, August 21, 1987, 153 SCRA 183] the question of whether or not the principle of abuse of rights has been violated resulting in damages under Article 20 or Article 21 or other applicable provision of law, depends on the circumstances of each case. And in the instant case, the Court, after examining the record and considering certain significant circumstances, finds that all petitioners have indeed abused the right that they invoke, causing damage to private respondent and for which the latter must now be indemnified. The trial court made a finding that notwithstanding the fact that it was private respondent Tobias who reported the possible existence of anomalous transactions, petitioner Hendry "showed belligerence and told plaintiff (private respondent herein) that he was the number one suspect and to take a one week vacation leave, not to communicate with the office, to leave his table drawers open, and to leave his keys to said defendant (petitioner Hendry)" [RTC Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But regardless of whether or not it was private respondent Tobias who reported the anomalies to petitioners, the latter's reaction towards the former upon uncovering the anomalies was less than civil. An employer who harbors suspicions that an employee has committed dishonesty might be justified in taking the appropriate action such as ordering an investigation and directing the employee to go on a leave. Firmness and the resolve to uncover the truth would also be expected from such employer. But the high-handed treatment accorded Tobias by petitioners was certainly uncalled for. And this reprehensible attitude of petitioners was to

continue when private respondent returned to work on November 20, 1972 after his one week forced leave. Upon reporting for work, Tobias was confronted by Hendry who said. "Tobby, you are the crook and swindler in this company." Considering that the first report made by the police investigators was submitted only on December 10, 1972 [See Exh. A] the statement made by petitioner Hendry was baseless. The imputation of guilt without basis and the pattern of harassment during the investigations of Tobias transgress the standards of human conduct set forth in Article 19 of the Civil Code. The Court has already ruled that the right of the employer to dismiss an employee should not be confused with the manner in which the right is exercised and the effects flowing therefrom. If the dismissal is done abusively, then the employer is liable for damages to the employee [Quisaba v. Sta. Ines-Melale Veneer and Plywood Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA 771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L-21871, September 27,1966, 18 SCRA 107] Under the circumstances of the instant case, the petitioners clearly failed to exercise in a legitimate manner their right to dismiss Tobias, giving the latter the right to recover damages under Article 19 in relation to Article 21 of the Civil Code. But petitioners were not content with just dismissing Tobias. Several other tortious acts were committed by petitioners against Tobias after the latter's termination from work. Towards the latter part of January, 1973, after the filing of the first of six criminal complaints against Tobias, the latter talked to Hendry to protest the actions taken against him. In response, Hendry cut short Tobias' protestations by telling him to just confess or else the company would file a hundred more cases against him until he landed in jail. Hendry added that, "You Filipinos cannot be trusted." The threat unmasked petitioner's bad faith in the various actions taken against Tobias. On the other hand, the scornful remark about Filipinos as well as Hendry's earlier statements about Tobias being a "crook" and "swindler" are clear violations of 'Tobias' personal dignity [See Article 26, Civil Code]. The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime in October 1974, stating that Tobias had been dismissed by GLOBE MACKAY due to dishonesty. Because of the letter, Tobias failed to gain employment with RETELCO and as a result of which, Tobias remained unemployed for a longer period of time. For this further damage suffered by Tobias, petitioners must likewise be held liable for damages consistent with Article 2176 of the Civil Code. Petitioners, however, contend that they have a "moral, if not legal, duty to forewarn other employers of the kind of employee the plaintiff (private respondent herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim that "it is the accepted moral and societal obligation of every man to advise or warn his fellowmen of any threat or danger to the latter's life, honor or property. And this includes warning one's brethren of the possible dangers involved in dealing with, or accepting into confidence, a man whose honesty and integrity is suspect" [Id.]. These arguments, rather than justify petitioners' act, reveal a seeming obsession to prevent Tobias from getting a job, even after almost two years from the time Tobias was dismissed. Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias. Petitioners contend that there is no case against them for malicious prosecution and that they cannot be "penalized for exercising their right and prerogative of seeking justice by filing criminal complaints against an employee who was their principal suspect in the commission of forgeries and in the perpetration of

anomalous transactions which defrauded them of substantial sums of money" [Petition, p. 10, Rollo, p. 11]. While sound principles of justice and public policy dictate that persons shall have free resort to the courts for redress of wrongs and vindication of their rights [Buenaventura v. Sto. Domingo, 103 Phil. 239 (1958)], the right to institute criminal prosecutions can not be exercised maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 5871.] Hence, in Yutuk V. Manila Electric Co., G.R. No. L13016, 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 absqueinjuria. 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. L18805, 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 Zuluetacase, 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. 132344

February 17, 2000

the University Bulletin and as approved of the Department of Education, Culture and Sports (Exhibit "B-7-A"). The plaintiff attended the investiture ceremonies at F. dela Cruz Quadrangle, U.E., Recto Campus, during the program of which he went up the stage when his name was called, escorted by her (sic) mother and his eldest brother who assisted in placing the Hood, and his Tassel was turned from left to right, and he was thereafter handed by Dean Celedonio a rolled white sheet of paper symbolical of the Law Diploma. His relatives took pictures of the occasion (Exhibits "C" to "C-6", "D-3" to "D-11"). He tendered a blow-out that evening which was attended by neighbors, friends and relatives who wished him good luck in the forthcoming bar examination. There were pictures taken too during the blow-out (Exhibits "D" to "D-1"). He thereafter prepared himself for the bar examination. He took a leave of absence without pay from his job from April 20, 1988 to September 30, 1988 (Exhibit "G") and enrolled at the pre-bar review class in Far Eastern University. (Exhibits "F" to "F-2"). Having learned of the deficiency he dropped his review class and was not able to take the bar examination. 2 Consequently, respondent sued petitioner for damages alleging that he suffered moral shock, mental anguish, serious anxiety, besmirched reputation, wounded feelings and sleepless nights when he was not able to take the 1988 bar examinations arising from the latter's negligence. He prayed for an award of moral and exemplary damages, unrealized income, attorney's fees, and costs of suit. In its answer with counterclaim, petitioner denied liability arguing mainly that it never led respondent to believe that he completed the requirements for a Bachelor of Laws degree when his name was included in the tentative list of graduating students. After trial, the lower court rendered judgment as follows: WHEREFORE, in view of the foregoing judgment is hereby rendered in favor of the plaintiff and against the defendant ordering the latter to pay plaintiff the sum of THIRTY FIVE THOUSAND FOUR HUNDRED SEVENTY PESOS (P35,470.00) with legal rate of interest from the filing of the complaint until fully paid, the amount of FIVE THOUSAND PESOS (P5,000.00) as attorney's fees and the cost of suit. Defendant's counterclaim is, for lack of merit, hereby dismissed. SO ORDERED.3 which on appeal by both parties was affirmed by the Court of Appeals (CA) with modification. The dispositive portion of the CA decision reads:

UNIVERSITY OF THE EAST, petitioner, vs. ROMEO A. JADER, respondent. YNARES-SANTIAGO, J.: May an educational institution be held liable for damages for misleading a student into believing that the latter had satisfied all the requirements for graduation when such is not the case? This is the issue in the instant petition for review premised on the following undisputed facts as summarized by the trial court and adopted by the Court of Appeals (CA),1 to wit: Plaintiff was enrolled in the defendants' College of Law from 1984 up to 1988. In the first semester of his last year (School year 1987-1988), he failed to take the regular final examination in Practice Court I for which he was given an incomplete grade (Exhibits "2", also Exhibit "H"). He enrolled for the second semester as fourth year law student (Exhibit "A") and on February 1, 1988 he filed an application for the removal of the incomplete grade given him by Professor Carlos Ortega (Exhibits "H-2", also Exhibit "2") which was approved by Dean Celedonio Tiongson after payment of the required fee. He took the examination on March 28, 1988. On May 30, 1988, Professor Carlos Ortega submitted his grade. It was a grade of five (5). (Exhibits "H-4", also Exhibits "2-L", "2-N").1wphi1.nt In the meantime, the Dean and the Faculty Members of the College of Law met to deliberate on who among the fourth year students should be allowed to graduate. The plaintiff's name appeared in the Tentative List of Candidates for graduation for the Degree of Bachelor of Laws (LL.B) as of Second Semester (1987-1988) with the following annotation: JADER ROMEO A. Def. Conflict of Laws x-1-87-88, Practice Court I Inc., 1-87-88 C-1 to submit transcript with S.O. (Exhibits "3", "3-C-1", "3-C-2"). The 35th Investitures & Commencement Ceremonies for the candidates of Bachelor of Laws was scheduled on the 16th of April 1988 at 3:00 o'clock in the afternoon, and in the invitation for that occasion the name of the plaintiff appeared as one of the candidates. (Exhibits "B", "B-6", "B-6-A"). At the foot of the list of the names of the candidates there appeared however the following annotation: This is a tentative list Degrees will be conferred upon these candidates who satisfactorily complete requirements as stated in

WHEREFORE, in the light of the foregoing, the lower Court's Decision is hereby AFFIRMED with the MODIFICATION that defendant-appellee, in addition to the sum adjudged by the lower court in favor of plaintiffappellant, is also ORDERED to pay plaintiff-appellant the amount of FIFTY THOUSAND (P50,000.00) PESOS for moral damages. Costs against defendant-appellee. SO ORDERED.4 Upon the denial of its motion for reconsideration, petitioner UE elevated the case to this Court on a petition for review under Rule 45 of the Rules of Court, arguing that it has no liability to respondent Romeo A. Jader, considering that the proximate and immediate cause of the alleged damages incurred by the latter arose out of his own negligence in not verifying from the professor concerned the result of his removal exam. The petition lacks merit. When a student is enrolled in any educational or learning institution, a contract of education is entered into between said institution and the student. The professors, teachers or instructors hired by the school are considered merely as agents and administrators tasked to perform the school's commitment under the contract. Since the contracting parties are the school and the student, the latter is not duty-bound to deal with the former's agents, such as the professors with respect to the status or result of his grades, although nothing prevents either professors or students from sharing with each other such information. The Court takes judicial notice of the traditional practice in educational institutions wherein the professor directly furnishes his/her students their grades. It is the contractual obligation of the school to timely inform and furnish sufficient notice and information to each and every student as to whether he or she had already complied with all the requirements for the conferment of a degree or whether they would be included among those who will graduate. Although commencement exercises are but a formal ceremony, it nonetheless is not an ordinary occasion, since such ceremony is the educational institution's way of announcing to the whole world that the students included in the list of those who will be conferred a degree during the baccalaureate ceremony have satisfied all the requirements for such degree. Prior or subsequent to the ceremony, the school has the obligation to promptly inform the student of any problem involving the latter's grades and performance and also most importantly, of the procedures for remedying the same. Petitioner, in belatedly informing respondent of the result of the removal examination, particularly at a time when he had already commenced preparing for the bar exams, cannot be said to have acted in good faith. Absence of good faith must be sufficiently established for a successful prosecution by the aggrieved party in a suit for abuse of right under Article 19 of the Civil Code. Good faith connotes an honest intention to abstain from taking undue advantage of another, even though the forms and technicalities of the law, together with the absence of all information or belief of facts, would render the transaction unconscientious.5 It is the school that has access to those information and it is only the school that can compel its professors to act and

comply with its rules, regulations and policies with respect to the computation and the prompt submission of grades. Students do not exercise control, much less influence, over the way an educational institution should run its affairs, particularly in disciplining its professors and teachers and ensuring their compliance with the school's rules and orders. Being the party that hired them, it is the school that exercises general supervision and exclusive control over the professors with respect to the submission of reports involving the students' standing. Exclusive control means that no other person or entity had any control over the instrumentality which caused the damage or injury.6 The college dean is the senior officer responsible for the operation of an academic program, enforcement of rules and regulations, and the supervision of faculty and student services.7 He must see to it that his own professors and teachers, regardless of their status or position outside of the university, must comply with the rules set by the latter. The negligent act of a professor who fails to observe the rules of the school, for instance by not promptly submitting a student's grade, is not only imputable to the professor but is an act of the school, being his employer. Considering further, that the institution of learning involved herein is a university which is engaged in legal education, it should have practiced what it inculcates in its students, more specifically the principle of good dealings enshrined in Articles 19 and 20 of the Civil Code which states: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. Art. 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.8 In civilized society, men must be able to assume that others will do them no intended injury that others will commit no internal aggressions upon them; that their fellowmen, when they act affirmatively will do so with due care which the ordinary understanding and moral sense of the community exacts and that those with whom they deal in the general course of society will act in good faith. The ultimate thing in the theory of liability is justifiable reliance under conditions of civilized society.9 Schools and professors cannot just take students for granted and be indifferent to them, for without the latter, the former are useless. Educational institutions are duty-bound to inform the students of their academic status and not wait for the latter to inquire from the former. The conscious indifference of a person to the rights or welfare of the person/persons who may be affected by his act or omission can support a claim for damages.10 Want of care to the conscious disregard of civil obligations coupled with a conscious knowledge of the cause naturally calculated to produce them would make the erring party liable. 11 Petitioner ought to have known that time was of the essence in the performance of its obligation

10

to inform respondent of his grade. It cannot feign ignorance that respondent will not prepare himself for the bar exams since that is precisely the immediate concern after graduation of an LL.B. graduate. It failed to act seasonably. Petitioner cannot just give out its student's grades at any time because a student has to comply with certain deadlines set by the Supreme Court on the submission of requirements for taking the bar. Petitioner's liability arose from its failure to promptly inform respondent of the result of an examination and in misleading the latter into believing that he had satisfied all requirements for the course. Worth quoting is the following disquisition of the respondent court: It is apparent from the testimony of Dean Tiongson that defendant-appellee University had been informed during the deliberation that the professor in Practice Court I gave plaintiff-appellant a failing grade. Yet, defendantappellee still did not inform plaintiff-appellant of his failure to complete the requirements for the degree nor did they remove his name from the tentative list of candidates for graduation. Worse, defendant-appellee university, despite the knowledge that plaintiff-appellant failed in Practice Court I, again included plaintiff-appellant's name in the "tentative list of candidates for graduation which was prepared after the deliberation and which became the basis for the commencement rites program. Dean Tiongson reasons out that plaintiff-appellant's name was allowed to remain in the tentative list of candidates for graduation in the hope that the latter would still be able to remedy the situation in the remaining few days before graduation day. Dean Tiongson, however, did not explain how plaintiff appellant Jader could have done something to complete his deficiency if defendant-appellee university did not exert any effort to inform plaintiffappellant of his failing grade in Practice Court I.12 Petitioner cannot pass on its blame to the professors to justify its own negligence that led to the delayed relay of information to respondent. When one of two innocent parties must suffer, he through whose agency the loss occurred must bear it. 13 The modern tendency is to grant indemnity for damages in cases where there is abuse of right, even when the act is not illicit.14 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. A person should be protected only when he acts in the legitimate exercise of his right, that is, when he acts with prudence and in good faith, but not when he acts with negligence or abuse.15 However, while petitioner was guilty of negligence and thus liable to respondent for the latter's actual damages, we hold that respondent should not have been awarded moral damages. We do not agree with the Court of Appeals' findings that respondent suffered shock, trauma and pain when he was informed that he could not graduate and will not be allowed to take the bar examinations. At the very least, it behooved on respondent to verify for himself whether he has completed all necessary requirements to be eligible for the bar examinations. As a senior law student, respondent should have been responsible enough to ensure that all his affairs, specifically those pertaining to his academic achievement, are in order. Given these considerations, we fail to see how respondent could have suffered untold embarrassment in attending the graduation rites, enrolling in the bar review classes and not being able to take the bar exams. If respondent was indeed humiliated by his failure to take the bar, he brought

this upon himself by not verifying if he has satisfied all the requirements including his school records, before preparing himself for the bar examination. Certainly, taking the bar examinations does not only entail a mental preparation on the subjects thereof; there are also prerequisites of documentation and submission of requirements which the prospective examinee must meet. WHEREFORE, the assailed decision of the Court of Appeals is AFFIRMED with MODIFICATION. Petitioner is ORDERED to PAY respondent the sum of Thirty-five Thousand Four Hundred Seventy Pesos (P35,470.00), with legal interest of 6% per annum computed from the date of filing of the complaint until fully paid; the amount of Five Thousand Pesos (P5,000.00) as attorney's fees; and the costs of the suit. The award of moral damages is DELEIED.1wphi1.nt SO ORDERED.

11

G.R. No. L-50911 August 21, 1987 MIGUEL PEREZ RUBIO, petitioner, vs. COURT OF APPEALS, ROBERTO O. PHILLIPS & SONS, INC., MAGDALENA YSMAEL PHILLIPS, MANUFACTURERS BANK & TRUST CO., INC., HACIENDA BENITO, INC., ET AL., respondents. Daniel M. Malabonga for petitioner. Argel-Guevarra & Associates for respondent Hacienda Benito, Inc. Meer, Meer & Meer Law Office for respondent Victoria Valley. Magtanggol C. Gunigundo for respondents Robert O. Phillips & Sons, Inc., Magdalena Ysmael Phillips and Heirs of Robert Phillips. Ambrosia Padilla, Mempin & Reyes Law Office for respondent Manufacturers Bank & Trust Co Inc.

The petitioner restates his position that the respondents conspired amongst themselves to put the properties of Hacienda Benito beyond his reach and thus make it impossible for him to collect the sum of P4,250,000.00 still unpaid on the purchase price of his shares of stock in Hacienda Benito. It may be recalled that on June 5, 1965, respondent Hacienda Benito, Inc., represented by Robert O. Phillips, president and Victoria Valley Development Corporation which was in the process of incorporation and represented by Alfonso Yuchengco with the conformity of Manufacturers Bank and Trust Company represented by Galicano Calapatia executed a "MEMORANDUM AGREEMENT. (Exhibit "31" Miguel Perez Rubio). The thrust of the agreement is that respondent VVDC will acquire under conditions stated therein 134.1668 hectares of land including account receivables belonging to respondent HBI Moreover, it was specifically provided in the agreement that " ... HB warrants that the properties to be acquired by VVDC are not subject to any other obligations, liens, encumbrances, charges or claims of whatever nature than those mentioned herein, including real estate taxes up to the first semester of 1965." (Memorandum Agreement, supra, pp. 3-4). Included in this 134.1668 hectares are the 78 hectares mortgaged to MBTC. These parcels of land were mortgaged to MBTC to secure obligation and liabilities incurred by HBI and other affiliate companies owned by the Phillips. Of the P7,419,130.19 amount due from these companies, only P1,456,276.48 was the liability of HBI. Under this agreement, MBTC will institute judicial foreclosure of mortgage after which all the companies would confess judgment and enter into a compromise agreement in full satisfaction of the claim of MBTC under the several deeds of mortgage. It was further provided that HBI will convey all the 78 hectares in favor of MBTC after which VVDC will purchase from MBTC the same parcels of land together with the receivables. A final proviso was to the effect that VVDC and HBI will enter into a separate agreement whereby HBI will expressly assign in favor of VVDC its right to redeem the properties foreclosed by MBTC. The consideration of the agreement amounted to Pl1,621,889.11 which VVDC agreed to assume in order to settle the obligations of HBI and the other Phillips companies. The Memorandum Agreement was executed under the following factual background: (1) Respondent ROPSI had still to pay its outstanding P4,250.000.00 debt to the petitioner as the result of the latter's sale of his shares of stock of HBI; (2) Negotiations had broken down between the Phillips spouses, ROPSI and Alfonso Yuchengco as regards the sale of the shares of stock of Hacienda Benito, Inc.; and (3) Petitioner had threatened to rescind the contract of sale of his shares of stock of Hacienda Benito. Obviously, Hacienda Benito through Robert O. Phillips, and VVDC through Alfonso Yuchengco were fully aware of the petitioner's still being unpaid the P4,250,000.00 balance on his shares of stocks of Hacienda Benito sold to ROPSI. MBTC, too,

GUTIERREZ, JR., J.: Before us for reconsideration are the various motions for reconsideration of the March 12, 1986 decision, the dispositive portion of which reads: WHEREFORE, the petition is GRANTED. The decision of the former Court of Appeals is hereby REVERSED and SET ASIDE. The respondents Phillips and Sons and the Phillips spouses are declared to be jointly and severally liable to the petitioner for the outstanding debt of Phillips and Sons in the amount of FOUR MILLION TWO HUNDRED FIFTY THOUSAND PESOS (P4,250,000.00) with interest at the rate of eight (8%) percent per annum from April 30, 1964 until fully paid as provided for in the parties' agreement dated August 13, 1963. Costs against the respondents. (p. 869, rollo) The petitioner asks that the decision be reconsidered insofar as it makes no finding against respondent Phillips for moral and exemplary damages as well as attorney's fees and to the extent that the same decision absolves from joint and solidary liability respondents Manufacturers Bank and Trust Company (hereinafter called MBTC), Hacienda Benito (hereinafter called HB, and Victoria Valley Development Corporation (hereinafter called VVDC).

12

because of the unrebutted evidence that its top officers are also the top officers of VVDC is conclusively presumed to know the petitioner's predicament. These same personalities figures prominently in the negotiations involving the shares of stock of Hacienda Benito including the unpaid P4,250,000.00 collectibles of the petitioner from the ROPSI as full payment for the sale of his shares of stock in Hacienda Benito. Hence, the scheme provided for in the Memorandum Agreement wherein all the properties of Hacienda Benito will be ultimately transferred to VVDC without any mention at all and completely ignoring the petitioner's interest in said Hacienda placed the petitioner's rightful claim to the payment of his shares of stock in clear jeopardy. The fact that the Memorandum Agreement was not fully implemented is immaterial. The intent to defraud the petitioner and the damage which led to the filing of this case was present in the execution of the Memorandum Agreement. Therefore, an award for damages in favor of the petitioner is in order against respondents Hacienda Benito, VVDC and MBTC. Article 19 of the New Civil Code provides that: Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. while Article 20 thereof provides that: Every person who, contrary to law, wilfully or negligently causes damage to another shall indemnify the latter for the same. Parenthetically, these respondents did not observe honesty and good faith in dealing with the rightful claim of the petitioner to the still unpaid P4,250,000.00 collectibles from ROPSI. The respondents' acts are tortious pursuant to Articles 19 and 20 of the New Civil Code. Hence, these respondents are obliged to pay for the damage done to the petitioner. (See Article 2176, New Civil Code). In the case at bar, the tortious and fraudulent scheme of the private respondents made it impossible for the petitioner to collect the P4,250,000.00 still unpaid purchase price of his shares of stock in Hacienda Benito. All the respondents are, therefore, solidarity liable for these actual damages suffered by the petitioner. (See Article 2194 of the New Civil Code). Consequently, we rule that Hacienda Benito, VVDC and MBTC together with ROPSI and the Phillips spouses are solidarity liable to the petitioner for the outstanding debt of ROPSI in the amount of P14,250,000.00 with interest at the rate of eight (8 % per cent per annum from April 30, 1964 until fully paid as provided for in the parties' agreement dated August 13,1963.

Also, an award for moral damages in favor of the petitioner is in order against respondents Hacienda Benito, VVDC and MBTC. The planned transfer of all the assets of Hacienda Benito to VVDC which the respondents sought to accomplish through the Memorandum Agreement created further anguish and anxiety on the part of the petitioner who at that time was still trying to collect the P4,250,000.00 full payment of his shares of stock in Hacienda Benito. Considering the circumstances under which the respondents executed the Memorandum Agreement and the social status of the parties herein, the amount of P100,000.00 as moral damages in favor of the petitioner is awarded. However, we find no reasonable ground to set aside our findings in the March 12, 1986 decision that respondents Phillips spouses are not liable for moral and exemplary damages and attorney's fees. Juan Miguel Phillips also filed a motion to intervene in the instant case stating therein that Robert O. Phillips had died leaving as heirs respondent Magdalena Ysmael Phillips and four legitimate children; that he is one of the four (4) children; that as such legal heir, he has a legal interest in the subject matter of the instant case and will be favored or prejudiced in his interest depending on the final outcome of the instant case. He cites Rule 12, Section 2, Rules of Court. The right of the movant-intervenor proceeds only from the fact of heirship. Hence his interest to specific portions of the property of the deceased is, if not conjectural, stin contingent and expectant. At this point, he cannot specify any property nor segregate any as his own before the liquidation of the estate is completed. This is in accordance with Article 657 of the Civil Code (Article 777, Civil Code) which provides that the rights to succession of a person are transmitted from the moment of death. Thus, the heir has the right to impugn the validity of the decedent's transaction only when he is made answerable or when his specific right or property would be affected thereby. The instant case is a personal action against Robert O. Phillips, filed while he was still alive. It is Robert O. Phillips and his estate which are sought to be made liable, not the movant-intervenor or any of his legal heirs. WHEREFORE, the petitioners motion for reconsideration is GRANTED in that respondent's Hacienda Benito, Victoria Valley Development Corporation and Manufacturers Bank and Trust Company (now Filipinas Bank) together with respondents Robert 0. Phillips & Sons and the Phillips spouses are declared to be jointly and severally liable to the petitioner for the outstanding debt of Phillips and Sons in the amount of FOUR MILLION TWO HUNDRED FIFTY THOUSAND PESOS (P4,250,000.00) with interest at the rate of eight (8%) per cent per annum from April 30, 1964 until fully paid as provided for in the parties' agreement dated August 13, 1963; that respondents Hacienda Benito, Inc., Victoria Valley Development Corporation and Manufacturers Bank and Trust Company (now Filipinas Bank) are jointly and severally liable to the petitioner in the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00) as moral damages. Juan Miguel Phillips' motion for reconsideration is DENIED for lack of merit. The motions for reconsideration filed

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by Robert O. Phillips and Sons, Magdalena Ysmael Phillips and the heirs of Robert O. Phillips, Hacienda Benito, Inc., and Manufacturers Bank and Trust Company are DENIED it appearing that no new substantial reasons have been invoked to warrant reconsideration of the said decision as far as these parties' motions are concerned, and this DENIAL is FINAL. SO ORDERED.

14