G.R. No.

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

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

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

In their answer, petitioner bank and Villadelgado maintained that the respondent’s current account was subject to
The case stemmed from the following undisputed facts:
petitioner bank’s Rules and Regulations Governing the Establishment and Operation of Regular Demand
Deposits which provide that "the Bank reserves the right to close an account if the depositor frequently draws
Respondent Pacilan opened a current account with petitioner bank’s Bacolod Branch on May 23, 1980. His checks against insufficient funds and/or uncollected deposits" and that "the Bank reserves the right at any time to
account was denominated as Current Account No. 53208 (0052-00407-4). The respondent had since then issued return checks of the depositor which are drawn against insufficient funds or for any reason."3
several postdated checks to different payees drawn against the said account. Sometime in March 1988, the
respondent issued Check No. 2434886 in the amount of ₱680.00 and the same was presented for payment to
They showed that the respondent had improperly and irregularly handled his current account. For example, in
petitioner bank on April 4, 1988.
1986, the respondent’s account was overdrawn 156 times, in 1987, 117 times and in 1988, 26 times. In all these
instances, the account was overdrawn due to the issuance of checks against insufficient funds. The respondent
Upon its presentment on the said date, Check No. 2434886 was dishonored by petitioner bank. The next day, or had also signed several checks with a different signature from the specimen on file for dubious reasons.
on April 5, 1988, the respondent deposited to his current account the amount of ₱800.00. The said amount was
accepted by petitioner bank; hence, increasing the balance of the respondent’s deposit to ₱1,051.43. When the respondent made the deposit on April 5, 1988, it was obviously to cover for issuances made the previous
day against an insufficiently funded account. When his Check No. 2434886 was presented for payment on April
Subsequently, when the respondent verified with petitioner bank about the dishonor of Check No. 2434866, he 4, 1988, he had already incurred an overdraft; hence, petitioner bank rightfully dishonored the same for
discovered that his current account was closed on the ground that it was "improperly handled." The records of insufficiency of funds.
petitioner bank disclosed that between the period of
March 30, 1988 and April 5, 1988, the respondent issued four checks, to wit: Check No. 2480416 for ₱6,000.00;
After due proceedings, the court a quo rendered judgment in favor of the respondent as it ordered the petitioner
Check No. 2480419 for ₱50.00; Check No. 2434880 for ₱680.00 and; Check No. 2434886 for ₱680.00, or a total
bank and Villadelgado, jointly and severally, to pay the respondent the amounts of ₱100,000.00 as moral damages
amount of ₱7,410.00. At the time, however, the respondent’s current account with petitioner bank only had a
and ₱50,000.00 as exemplary damages and costs of suit. In so ruling, the court a quo also cited petitioner bank’s
deposit of ₱6,981.43. Thus, the total amount of the checks presented for payment on April 4, 1988 exceeded the
rules and regulations which state that "a charge of ₱10.00 shall be levied against the depositor for any check that
balance of the respondent’s deposit in his account. For this reason, petitioner bank, through its branch accountant,
is taken up as a returned item due to ‘insufficiency of funds’ on the date of receipt from the clearing office even if
Villadelgado, closed the respondent’s current account effective the evening of April 4, 1988 as it then had an
said check is honored and/or covered by sufficient deposit the following banking day." The same rules and
overdraft of ₱428.57. As a consequence of the overdraft, Check No. 2434886 was dishonored.
regulations also provide that "a check returned for insufficiency of funds for any reason of similar import may be
subsequently recleared for one more time only, subject to the same charges."
On April 18, 1988, the respondent wrote to petitioner bank complaining that the closure of his account was
unjustified. When he did not receive a reply from petitioner bank, the respondent filed with the RTC of Negros
According to the court a quo, following these rules and regulations, the respondent, as depositor, had the right to
Occidental, Bacolod City, Branch 54, a complaint for damages against petitioner bank and Villadelgado. The case
put up sufficient funds for a check that was taken as a returned item for insufficient funds the day following the
was docketed as Civil Case No. 4908. The respondent, as complainant therein, alleged that the closure of his
receipt of said check from the clearing office. In fact, the said check could still be recleared for one more time. In
current account by petitioner bank was unjustified because on the first banking hour of April 5, 1988, he already previous instances, petitioner bank notified the respondent when he incurred an overdraft and he would then
deposited an amount sufficient to fund his checks. The respondent pointed out that Check No. 2434886, in
deposit sufficient funds the following day to cover the overdraft. Petitioner bank thus acted unjustifiably when it even after accepting a deposit sufficient to cover the said check, is contrary to its duty to handle the respondent’s
immediately closed the respondent’s account on April 4, 1988 and deprived him of the opportunity to reclear his account with utmost fidelity. The exercise of the right is not absolute and good faith, at least, is required. The
check or deposit sufficient funds therefor the following day. manner by which petitioner bank closed the account of the respondent runs afoul of Article 19 of the Civil Code
which enjoins every person, in the exercise of his rights, "to give every one his due, and observe honesty and
As a result of the closure of his current account, several of the respondent’s checks were subsequently good faith."
dishonored and because of this, the respondent was humiliated, embarrassed and lost his credit standing in the
business community. The court a quo further ratiocinated that even granting arguendo that petitioner bank had The CA concluded that petitioner bank’s precipitate and imprudent closure of the respondent’s account had caused
the right to close the respondent’s account, the manner which attended the closure him, a respected officer of several civic and banking associations, serious anxiety and humiliation. It had, likewise,
constituted an abuse of the said right. Citing Article 19 of the Civil Code of the Philippines tainted his credit standing. Consequently, the award of damages is warranted. The CA, however, reduced the
which states that "[e]very person must, in the exercise of his rights and in the performance of his duties, act with amount of damages awarded by the court a quo as it found the same to be excessive:
justice, give everyone his due, and observe honesty and good faith" and Article 20 thereof which states that
"[e]very person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter
We, however, find excessive the amount of damages awarded by the RTC. In our view the reduced amount of
for the same," the court a quo adjudged petitioner bank of acting in bad faith. It held that, under the foregoing
circumstances, the respondent is entitled to an award of moral and exemplary damages. ₱75,000.00 as moral damages and ₱25,000.00 as exemplary damages are in order. Awards for damages are not
meant to enrich the plaintiff-appellee [the respondent] at the expense of defendants-appellants [the petitioners],
but to obviate the moral suffering he has undergone. The award is aimed at the restoration, within limits possible,
The decretal portion of the court a quo’s decision reads: of the status quo ante, and should be proportionate to the suffering inflicted.5

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered: The dispositive portion of the assailed CA decision reads:

1. Ordering the defendants [petitioner bank and Villadelgado], jointly and severally, to pay plaintiff [the respondent] WHEREFORE, the decision appealed from is hereby AFFIRMED, subject to the MODIFICATION that the award
the sum of ₱100,000.00 as moral damages; of moral damages is reduced to ₱75,000.00 and the award of exemplary damages reduced to ₱25,000.00.

2. Ordering the defendants, jointly and severally, to pay plaintiff the sum of ₱50,000.00 as exemplary damages SO ORDERED.6
plus costs and expenses of the suit; and
Petitioner bank sought the reconsideration of the said decision but in the assailed Resolution dated January 17,
3. Dismissing [the] defendants’ counterclaim for lack of merit. 2003, the appellate court denied its motion. Hence, the recourse to this Court.

SO ORDERED.4 Petitioner bank maintains that, in closing the account of the respondent in the evening of April 4, 1988, it acted in
good faith and in accordance with the rules and regulations governing the operation of a
On appeal, the CA rendered the Decision dated August 30, 2002, affirming with modification the decision of the
court a quo. regular demand deposit which reserves to the bank "the right to close an account if the depositor frequently draws
checks against insufficient funds and/or uncollected deposits." The same rules and regulations also provide that
The appellate court substantially affirmed the factual findings of the court a quo as it held that petitioner bank "the depositor is not entitled, as a matter of right, to overdraw on this deposit and the bank reserves the right at
unjustifiably closed the respondent’s account notwithstanding that its own rules and regulations any time to return checks of the depositor which are drawn against insufficient funds or for any reason."

allow that a check returned for insufficiency of funds or any reason of similar import, may be subsequently It cites the numerous instances that the respondent had overdrawn his account and those instances where he
recleared for one more time, subject to standard charges. Like the court a quo, the appellate court observed that deliberately signed checks using a signature different from the specimen on file. Based on these facts, petitioner
in several instances in previous years, petitioner bank would inform the respondent when he incurred an overdraft bank was constrained to close the respondent’s account for improper and irregular handling and returned his
and allowed him to make a timely deposit to fund the checks that were initially dishonored for insufficiency of funds. Check No. 2434886 which was presented to the bank for payment on April 4, 1988.
However, on April 4, 1988, petitioner bank immediately closed the respondent’s account without even notifying
him that he had incurred an overdraft. Even when they had already closed his account on April 4, 1988, petitioner Petitioner bank further posits that there is no law or rule which gives the respondent a legal right to make good his
bank still accepted the deposit that the respondent made on April 5, 1988, supposedly to cover his checks. check or to deposit the corresponding amount to cover said check within 24 hours after the same is dishonored or
returned by the bank for having been drawn against insufficient funds. It vigorously denies having violated Article
Echoing the reasoning of the court a quo, the CA declared that even as it may be conceded that petitioner bank 19 of the Civil Code as it insists that it acted in good faith and in accordance with the pertinent banking rules and
had reserved the right to close an account for repeated overdrafts by the respondent, the exercise of that right regulations.
must never be despotic or arbitrary. That petitioner bank chose to close the account outright and return the check,
The petition is impressed with merit. It is observed that nowhere under its rules and regulations is petitioner bank required to notify the respondent, or
any depositor for that matter, of the closure of the account for frequently drawing checks against insufficient funds.
A perusal of the respective decisions of the court a quo and the appellate court show that the award of damages No malice or bad faith could be imputed on petitioner bank for so acting since the records bear out that the
in the respondent’s favor was anchored mainly on Article 19 of the Civil Code which, quoted anew below, reads: respondent had indeed been improperly and irregularly handling his account not just a few times but hundreds of
times. Under the circumstances, petitioner bank could not be faulted for exercising its right in accordance with the
express rules and regulations governing the current accounts of its depositors. Upon the opening of his account,
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give
the respondent had agreed to be bound by these terms and conditions.
everyone his due, and observe honesty and good faith.

Neither the fact that petitioner bank accepted the deposit made by the respondent the day following the closure of
The elements of abuse of rights are the following: (a) the existence of a legal right or duty; (b) which is exercised
his account constitutes bad faith or malice on the part of petitioner bank. The same could be characterized as
in bad faith; and (c) for the sole intent of prejudicing or injuring another.7 Malice or bad faith is at the core of the
simple negligence by its personnel. Said act, by itself, is not constitutive of bad faith.
said provision.8 The law always presumes good faith and any person who seeks to be awarded damages due to
acts of another has the burden of proving that the latter acted in bad faith or with ill-motive.9 Good faith refers to
the state of the mind which is manifested by the acts of the individual concerned. It consists of the intention to The respondent had thus failed to discharge his burden of proving bad faith on the part of petitioner bank or that
abstain from taking an unconscionable and unscrupulous advantage of another.10 Bad faith does not simply it was motivated by ill-will or spite in closing his account on April 4, 1988 and in inadvertently accepting his deposit
connote bad judgment or simple negligence, dishonest purpose or some moral obliquity and conscious doing of a on April 5, 1988.
wrong, a breach of known duty due to some motives or interest or ill-will that partakes of the nature of fraud.11
Malice connotes illwill or spite and speaks not in response to duty. It implies an intention to do ulterior and Further, it has not been shown that these acts were done by petitioner bank with the sole intention of prejudicing
unjustifiable harm. Malice is bad faith or bad motive.12 and injuring the respondent. It is conceded that the respondent may have suffered damages as a result of the
closure of his current account. However, there is a material distinction between damages and injury. The Court
Undoubtedly, petitioner bank has the right to close the account of the respondent based on the following provisions had the occasion to explain the distinction between damages and injury in this wise:
of its Rules and Regulations Governing the Establishment and Operation of Regular Demand Deposits:
… Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results from the injury; and
10) The Bank reserves the right to close an account if the depositor frequently draws checks against insufficient damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage
funds and/or uncollected deposits. without injury in those instances in which the loss or harm was not the result of a violation of a legal duty. In such
cases, the consequences must be borne by the injured person alone, the law affords no remedy for damages
resulting from an act which does not amount to a legal injury or wrong. These situations are often called damnum
12) … absque injuria

However, it is clearly understood that the depositor is not entitled, as a matter of right, to overdraw on this deposit In other words, in order that a plaintiff may maintain an action for the injuries of which he complains, he must
and the bank reserves the right at any time to return checks of the depositor which are drawn against insufficient establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff – a concurrence
funds or for any other reason. of injury to the plaintiff and legal responsibility by the person causing it. The underlying basis for the award of tort
damages is the premise that the individual was injured in contemplation of law. Thus, there must first be a breach
The facts, as found by the court a quo and the appellate court, do not establish that, in the exercise of this right, of some duty and the imposition of liability for that breach before damages may be awarded; and the breach of
petitioner bank committed an abuse thereof. Specifically, the second and third elements for abuse of rights are not such duty should be the proximate cause of the injury.17
attendant in the present case. The evidence presented by petitioner bank negates the existence of bad faith or
malice on its part in closing the respondent’s account on April 4, 1988 because on the said date the same was
Whatever damages the respondent may have suffered as a consequence, e.g., dishonor of his other insufficiently
already overdrawn. The respondent issued four checks, all due on April 4, 1988, amounting to ₱7,410.00 when
funded checks, would have to be borne by him alone. It was the respondent’s repeated improper and irregular
the balance of his current account deposit was only ₱6,981.43. Thus, he incurred an overdraft of ₱428.57 which
handling of his account which constrained petitioner bank to close the same in accordance with the rules and
resulted in the dishonor of his Check No. 2434886. Further, petitioner bank showed that in 1986, the current
regulations governing its depositors’ current accounts. The respondent’s case is clearly one of damnum absque
account of the respondent was overdrawn 156 times due to his issuance of checks against insufficient funds.13 In
injuria.
1987, the said account was overdrawn 117 times for the same

reason.14 Again, in 1988, 26 times.15 There were also several instances when the respondent issued checks WHEREFORE, the petition is GRANTED. The Decision dated August 30, 2002 and Resolution dated January 17,
deliberately using a signature different from his specimen signature on file with petitioner bank.16 All these 2003 of the Court of Appeals in CA-G.R. CV No. 36627 are REVERSED AND SET ASIDE.
circumstances taken together justified the petitioner bank’s closure of the respondent’s account on April 4, 1988
for "improper handling." SO ORDERED.
 Respondent filed an action for damages against petitioners in the RTC of Dumaguete City, Negros Oriental, Branch
37.9 He sought to hold the petitioners liable for the following: (1) unlawful taking of the motorcycle; (2) utterance
G.R. No. 146322 December 6, 2006 of a defamatory remark (that respondent was a thief) and (3) precipitate filing of a baseless and malicious
complaint. These acts humiliated and embarrassed the respondent and injured his reputation and integrity.
ERNESTO RAMAS UYPITCHING and RAMAS UYPITCHING SONS, INC., petitioners, vs.
ERNESTO QUIAMCO, respondent. On July 30, 1994, the trial court rendered a decision10 finding that petitioner Uypitching was motivated with malice
and ill will when he called respondent a thief, took the motorcycle in an abusive manner and filed a baseless
complaint for qualified theft and/or violation of the AntiFencing Law. Petitioners’ acts were found to be contrary to
DECISION
Articles 1911 and 2012 of the Civil Code. Hence, the trial court held petitioners liable to respondent for P500,000
moral damages, P200,000 exemplary damages and P50,000 attorney’s fees plus costs.
CORONA, J.:
Petitioners appealed the RTC decision but the CA affirmed the trial court’s decision with modification, reducing the
Honeste vivere, non alterum laedere et jus suum cuique tribuere. To live virtuously, not to injure others and to give award of moral and exemplary damages to P300,000 and P100,000, respectively.13 Petitioners sought
everyone his due. These supreme norms of justice are the underlying principles of law and order in society. We reconsideration but it was denied. Thus, this petition.
reaffirm them in this petition for review on certiorari assailing the July 26, 2000 decision1 and October 18, 2000
resolution of the Court of Appeals (CA) in CA-G.R. CV No. 47571.
In their petition and memorandum, petitioners submit that the sole (allegedly) issue to be resolved here is whether
the filing of a complaint for qualified theft and/or violation of the AntiFencing Law in the Office of the City Prosecutor
In 1982, respondent Ernesto C. Quiamco was approached by Juan Davalan,2 Josefino Gabutero and Raul warranted the award of moral damages, exemplary damages, attorney’s fees and costs in favor of respondent.
Generoso to amicably settle the civil aspect of a criminal case for robbery3 filed by Quiamco against them. They
surrendered to him a red Honda XL-100 motorcycle and a photocopy of its certificate of registration. Respondent
Petitioners’ suggestion is misleading. They were held liable for damages not only for instituting a groundless
asked for the original certificate of registration but the three accused never came to see him again. Meanwhile,
complaint against respondent but also for making a slanderous remark and for taking the motorcycle from
the motorcycle was parked in an open space inside respondent’s business establishment, AvescoAVNE
respondent’s establishment in an abusive manner.
Enterprises, where it was visible and accessible to the public.

Correctness of the Findings of the RTC and CA

It turned out that, in October 1981, the motorcycle had been sold on installment basis to Gabutero by petitioner
Ramas Uypitching Sons, Inc., a family-owned corporation managed by petitioner Atty. Ernesto Ramas Uypitching.
To secure its payment, the motorcycle was mortgaged to petitioner corporation.4 As they never questioned the findings of the RTC and CA that malice and ill will attended not only the public
imputation of a crime to respondent14 but also the taking of the motorcycle, petitioners were deemed to have
accepted the correctness of such findings. This alone was sufficient to hold petitioners liable for damages to
When Gabutero could no longer pay the installments, Davalan assumed the obligation and continued the respondent.
payments. In September 1982, however, Davalan stopped paying the remaining installments and told petitioner
corporation’s collector, Wilfredo Veraño, that the motorcycle had allegedly been "taken by respondent’s men."
Nevertheless, to address petitioners’ concern, we also find that the trial and appellate courts correctly ruled that
the filing of the complaint was tainted with malice and bad faith. Petitioners themselves in fact described their
Nine years later, on January 26, 1991, petitioner Uypitching, accompanied by policemen,5
went to Avesco-AVNE action as a "precipitate act."15 Petitioners were bent on portraying respondent as a thief. In this connection, we
Enterprises to recover the motorcycle. The leader of the police team, P/Lt. Arturo Vendiola, talked to the clerk in quote with approval the following findings of the RTC, as adopted by the CA:
charge and asked for respondent. While P/Lt. Vendiola and the clerk were talking, petitioner Uypitching paced
back and forth inside the establishment uttering "Quiamco is a thief of a motorcycle."
x x x There was malice or ill-will [in filing the complaint before the City Prosecutor’s Office] because Atty.
Ernesto Ramas Uypitching knew or ought to have known as he is a lawyer, that there was no probable
On learning that respondent was not in Avesco-AVNE Enterprises, the policemen left to look for respondent in his cause at all for filing a criminal complaint for qualified theft and fencing activity against [respondent]. Atty.
residence while petitioner Uypitching stayed in the establishment to take photographs of the motorcycle. Unable Uypitching had no personal knowledge that [respondent] stole the motorcycle in question. He was merely
to find respondent, the policemen went back to AvescoAVNE Enterprises and, on petitioner Uypitching’s instruction told by his bill collector ([i.e.] the bill collector of Ramas Uypitching Sons, Inc.)[,] Wilfredo Veraño[,] that
and over the clerk’s objection, took the motorcycle. Juan Dabalan will [no longer] pay the remaining installment(s) for the motorcycle because the motorcycle
was taken by the men of [respondent]. It must be noted that the term used by Wilfredo Veraño in informing
On February 18, 1991, petitioner Uypitching filed a criminal complaint for qualified theft and/or violation of the Anti- Atty. Ernesto Ramas Uypitching of the refusal of Juan Dabalan to pay for the remaining installment was
Fencing Law6 against respondent in the Office of the City Prosecutor of Dumaguete City.7 Respondent moved for [‘]taken[’], not [‘]unlawfully taken[’] or ‘stolen.’ Yet, despite the double hearsay, Atty. Ernesto Ramas
dismissal because the complaint did not charge an offense as he had neither stolen nor bought the motorcycle. Uypitching not only executed the [complaint-affidavit] wherein he named [respondent] as ‘the suspect’ of
The Office of the City Prosecutor dismissed the complaint8 and denied petitioner Uypitching’s subsequent motion the stolen motorcycle but also charged [respondent] of ‘qualified theft and fencing activity’ before the City
for reconsideration. [Prosecutor’s] Office of Dumaguete. The absence of probable cause necessarily signifies the presence
 of malice. What is deplorable in all these is that Juan Dabalan, the owner of the motorcycle, did not In this case, the manner by which the motorcycle was taken at petitioners’ instance was not only attended by bad
accuse [respondent] or the latter’s men of stealing the motorcycle[,] much less bother[ed] to file a case faith but also contrary to the procedure laid down by law. Considered in conjunction with the defamatory statement,
for qualified theft before the authorities. That Atty. petitioners’ exercise of the right to recover the mortgaged vehicle was utterly prejudicial and injurious to
respondent. On the other hand, the precipitate act of filing an unfounded complaint could not in any way be
Uypitching’s act in charging [respondent] with qualified theft and fencing activity is tainted with malice is considered to be in accordance with the purpose for which the right to prosecute a crime was established. Thus,
also shown by his answer to the question of Cupid Gonzaga16 [during one of their conversations] - "why the totality of petitioners’ actions showed a calculated design to embarrass, humiliate and publicly ridicule
should you still file a complaint? You have already recovered the motorcycle…"[:] "Aron motagam ang respondent. Petitioners acted in an excessively harsh fashion to the prejudice of respondent. Contrary to law,
kawatan ug motor." ("To teach a lesson to the thief of motorcycle.")17 petitioners willfully caused damage to respondent. Hence, they should indemnify him.22

Moreover, the existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact of the trial court, WHEREFORE, the petition is hereby DENIED. The July 26, 2000 decision and October 18, 2000 resolution of the
when affirmed by the appellate court, are conclusive on this Court. We see no compelling reason to reverse the Court of Appeals in CA-G.R. CV No. 47571 are AFFIRMED.
findings of the RTC and the CA.
Triple costs against petitioners, considering that petitioner Ernesto Ramas Uypitching is a lawyer and an officer of
Petitioners Abused Their Right of Recovery as Mortgagee(s) the court, for his improper behavior.

Petitioners claim that they should not be held liable for petitioner corporation’s exercise of its right as seller- SO ORDERED.
mortgagee to recover the mortgaged vehicle preliminary to the enforcement of its right to foreclose on the
mortgage in case of default. They are clearly mistaken. Puno, J., Chairperson, Sandoval-Gutierrez, Azcuna and Garcia, JJ., concur.

True, a mortgagee may take steps to recover the mortgaged property to enable it to enforce or protect its G.R. No. 160273 January 18, 2008
foreclosure right thereon. There is, however, a well-defined procedure for the recovery of possession of mortgaged
property: if a mortgagee is unable to obtain possession of a mortgaged property for its sale on foreclosure, he CEBU COUNTRY CLUB, INC., SABINO R. DAPAT, RUBEN D. ALMENDRAS, JULIUS Z.
must bring a civil action either to recover such possession as a preliminary step to the sale, or to obtain judicial NERI, DOUGLAS L. LUYM, CESAR T. LIBI, RAMONTITO* E. GARCIA and JOSE B. SALA,
foreclosure.18
petitioners, vs.
RICARDO F. ELIZAGAQUE, respondent.
Petitioner corporation failed to bring the proper civil action necessary to acquire legal possession of the motorcycle.
Instead, petitioner Uypitching descended on respondent’s establishment with his policemen and ordered the
DECISION
seizure of the motorcycle without a search warrant or court order. Worse, in the course of the illegal seizure of the
motorcycle, petitioner Uypitching even mouthed a slanderous statement.
SANDOVAL-GUTIERREZ, J.:
No doubt, petitioner corporation, acting through its co-petitioner Uypitching, blatantly disregarded the lawful
procedure for the enforcement of its right, to the prejudice of respondent. Petitioners’ acts violated the law as well For our resolution is the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure,
as public morals, and transgressed the proper norms of human relations. as amended, assailing the Decision1 dated January 31, 2003 and Resolution dated October 2, 2003 of the Court
of Appeals in CA-G.R. CV No. 71506.
The basic principle of human relations, embodied in Article 19 of the Civil Code, provides:
The facts are:
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. Cebu Country Club, Inc. (CCCI), petitioner, is a domestic corporation operating as a non-profit and non-stock
private membership club, having its principal place of business in Banilad, Cebu City. Petitioners herein are
members of its Board of Directors.
Article 19, also known as the "principle of abuse of right," prescribes that a person should not use his right unjustly
or contrary to honesty and good faith, otherwise he opens himself to liability.19 It seeks to preclude the use of, or
the tendency to use, a legal right (or duty) as a means to unjust ends. Sometime in 1987, San Miguel Corporation, a special company proprietary member of CCCI, designated
respondent Ricardo F. Elizagaque, its Senior Vice President and Operations Manager for the Visayas and
Mindanao, as a special non-proprietary member. The designation was thereafter approved by the CCCI’s Board
There is an abuse of right when it is exercised solely to prejudice or injure another.20 The exercise of a right must of Directors.
be in accordance with the purpose for which it was established and must not be excessive or unduly harsh; there
must be no intention to harm another.21 Otherwise, liability for damages to the injured party will attach.
In 1996, respondent filed with CCCI an application for proprietary membership. The application was indorsed by On appeal by petitioners, the Court of Appeals, in its Decision dated January 31, 2003, affirmed the trial court’s
CCCI’s two (2) proprietary members, namely: Edmundo T. Misa and Silvano Ludo. Decision with modification, thus:

As the price of a proprietary share was around the P5 million range, Benito Unchuan, then president of CCCI, WHEREFORE, premises considered, the assailed Decision dated February 14, 2001 of the Regional Trial
offered to sell respondent a share for only P3.5 million. Respondent, however, purchased the share of a certain Court, Branch 71, Pasig City in Civil Case No. 67190 is hereby AFFIRMED with MODIFICATION as
Dr. Butalid for only P3 million. Consequently, on September 6, 1996, CCCI issued Proprietary Ownership follows:
Certificate No. 1446 to respondent.
1. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the amount of
During the meetings dated April 4, 1997 and May 30, 1997 of the CCCI Board of Directors, action on respondent’s P2,000,000.00 as moral damages;
application for proprietary membership was deferred. In another Board meeting held on July 30, 1997,
respondent’s application was voted upon. Subsequently, or on August 1, 1997, respondent received a letter from
2. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the amount of
Julius Z. Neri, CCCI’s corporate secretary, informing him that the Board disapproved his application for proprietary
P1,000,000.00 as exemplary damages;
membership.

On August 6, 1997, Edmundo T. Misa, on behalf of respondent, wrote CCCI a letter of reconsideration. As CCCI
3. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the mount of
P500,000.00 as attorney’s fees and P50,000.00 as litigation expenses; and
did not answer, respondent, on October 7, 1997, wrote another letter of reconsideration. Still, CCCI kept silent. On
November 5, 1997, respondent again sent CCCI a letter inquiring whether any member of the Board objected to
his application. Again, CCCI did not reply. 4. Costs of the suit.

Consequently, on December 23, 1998, respondent filed with the Regional Trial Court (RTC), Branch 71, Pasig City The counterclaims are DISMISSED for lack of merit.
a complaint for damages against petitioners, docketed as Civil Case No. 67190.
SO ORDERED.3
After trial, the RTC rendered its Decision dated February 14, 2001 in favor of respondent, thus: WHEREFORE,
On March 3, 2003, petitioners filed a motion for reconsideration and motion for leave to set the motion for oral
judgment is hereby rendered in favor of plaintiff: arguments. In its Resolution4 dated October 2, 2003, the appellate court denied the motions for lack of merit.

1. Ordering defendants to pay, jointly and severally, plaintiff the amount of P2,340,000.00 as actual or Hence, the present petition.
compensatory damages.
The issue for our resolution is whether in disapproving respondent’s application for proprietary membership with
2. Ordering defendants to pay, jointly and severally, plaintiff the amount of P5,000,000.00 as moral CCCI, petitioners are liable to respondent for damages, and if so, whether their liability is joint and several.
damages.
Petitioners contend, inter alia, that the Court of Appeals erred in awarding exorbitant damages to respondent
3. Ordering defendants to pay, jointly and severally, plaintiff the amount of P1,000,000.00 as exemplary despite the lack of evidence that they acted in bad faith in disapproving the latter’s application; and in disregarding
damages. their defense of damnum absque injuria.

4. Ordering defendants to pay, jointly and severally, plaintiff the amount of P1,000,000.00 as and by way For his part, respondent maintains that the petition lacks merit, hence, should be denied.
of attorney’s fees and P80,000.00 as litigation expenses.
CCCI’s Articles of Incorporation provide in part:
5. Costs of suit.
SEVENTH: That this is a non-stock corporation and membership therein as well as the right of
Counterclaims are hereby DISMISSED for lack of merit. participation in its assets shall be limited to qualified persons who are duly accredited owners of
Proprietary Ownership Certificates issued by the corporation in accordance with its By-Laws.
SO ORDERED.2
Corollary, Section 3, Article 1 of CCCI’s Amended By-Laws provides:
 SECTION 3. HOW MEMBERS ARE ELECTED – The procedure for the admission of new members of In GF Equity, Inc. v. Valenzona,5 we expounded Article 19 and correlated it with Article 21, thus:
the Club shall be as follows:
This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain
(a) Any proprietary member, seconded by another voting proprietary member, shall submit to the standards which must be observed not only in the exercise of one's rights but also in the performance of
Secretary a written proposal for the admission of a candidate to the "Eligible-for-Membership List"; 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
(b) Such proposal shall be posted by the Secretary for a period of thirty (30) days on the Club bulletin
by itself legal because recognized or granted by law as such, may nevertheless become the
board during which time any member may interpose objections to the admission of the applicant by
source of some illegality. When a right is exercised in a manner which does not conform with the
communicating the same to the Board of Directors;
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
(c) After the expiration of the aforesaid thirty (30) days, if no objections have been filed or if there of conduct for the government of human relations and for the maintenance of social order, it does not
are, the Board considers the objections unmeritorious, the candidate shall be qualified for inclusion in the provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21
"Eligible-for-Membership List"; would be proper. (Emphasis in the original)

(d) Once included in the "Eligible-for-Membership List" and after the candidate shall have acquired In rejecting respondent’s application for proprietary membership, we find that petitioners violated the rules
in his name a valid POC duly recorded in the books of the corporation as his own, he shall become a governing human relations, the basic principles to be observed for the rightful relationship between human beings
Proprietary Member, upon a non-refundable admission fee of P1,000.00, provided that admission fees and for the stability of social order. The trial court and the Court of Appeals aptly held that petitioners committed
will only be collected once from any fraud and evident bad faith in disapproving respondent’s applications. This is contrary to morals, good custom or
public policy. Hence, petitioners are liable for damages pursuant to Article 19 in relation to Article 21 of the same
person. Code.

On March 1, 1978, Section 3(c) was amended to read as follows: It bears stressing that the amendment to Section 3(c) of CCCI’s Amended By-Laws requiring the unanimous vote
of the directors present at a special or regular meeting was not printed on the application form respondent filled
and submitted to CCCI. What was printed thereon was the original provision of Section 3(c) which was silent on
(c) After the expiration of the aforesaid thirty (30) days, the Board may, by unanimous vote of all
the required number of votes needed for admission of an applicant as a proprietary member.
directors present at a regular or special meeting, approve the inclusion of the candidate in the
"Eligible-for-Membership List".
Petitioners explained that the amendment was not printed on the application form due to economic reasons. We
find this excuse flimsy and unconvincing. Such amendment, aside from being extremely significant, was introduced
As shown by the records, the Board adopted a secret balloting known as the "black ball system" of voting wherein
way back in 1978 or almost twenty (20) years before respondent filed his application. We cannot fathom why such
each member will drop a ball in the ballot box. A white ball represents conformity to the admission of an applicant,
a prestigious and exclusive golf country club, like the CCCI, whose members are all affluent, did not have enough
while a black ball means disapproval. Pursuant to Section 3(c), as amended, cited above, a unanimous vote of
money to cause the printing of an updated application form.
the directors is required. When respondent’s application for proprietary membership was voted upon during the
Board meeting on July 30, 1997, the ballot box contained one (1) black ball. Thus, for lack of unanimity, his
application was disapproved. It is thus clear that respondent was left groping in the dark wondering why his application was disapproved. He
was not even informed that a unanimous vote of the Board members was required. When he sent a letter for
reconsideration and an inquiry whether there was an objection to his application, petitioners apparently ignored
Obviously, the CCCI Board of Directors, under its Articles of Incorporation, has the right to approve or disapprove
him. Certainly, respondent did not deserve this kind of treatment. Having been designated by San Miguel
an application for proprietary membership. But such right should not be exercised arbitrarily. Articles 19 and 21 of
Corporation as a special non-proprietary member of CCCI, he should have been treated by petitioners with
the Civil Code on the Chapter on Human Relations provide restrictions, thus:
courtesy and civility. At the very least, they should have informed him why his application was disapproved.

Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with
The exercise of a right, though legal by itself, must nonetheless be in accordance with the proper norm. When the
justice, give everyone his due, and observe honesty and good faith.
right is exercised arbitrarily, unjustly or excessively and results in damage to another, a legal wrong is committed
for which the wrongdoer must be held responsible.6 It bears reiterating that the trial court and the Court of Appeals
Article 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, held that petitioners’ disapproval of respondent’s application is characterized by bad faith.
good customs or public policy shall compensate the latter for the

damage.
As to petitioners’ reliance on the principle of damnum absque injuria or damage without injury, suffice it to state Puno, C.J., Chairperson, Corona, Azcuna, Leonardo-de Castro, JJ., concur.
that the same is misplaced. In Amonoy v. Gutierrez,7 we held that this principle does not apply when there is an
abuse of a person’s right, as in this case. G.R. No. 165443 April 16, 2009

As to the appellate court’s award to respondent of moral damages, we find the same in order. Under Article 2219
CALATAGAN GOLF CLUB, INC. Petitioner,
of the New Civil Code, moral damages may be recovered, among others, in acts and actions referred to in Article
vs.
21. We believe respondent’s testimony that he suffered mental anguish, social humiliation and wounded feelings
as a result of the arbitrary denial of his application. However, the amount of P2,000,000.00 is excessive. While SIXTO CLEMENTE, JR., Respondent.
there is no hardand-fast rule in determining what would be a fair and reasonable amount of moral damages, the
same should not be palpably and scandalously excessive. Moral damages are not intended to impose a penalty DECISION
to the wrongdoer, neither to enrich the claimant at the expense of the defendant.8 Taking into consideration the
attending circumstances here, we hold that an award to respondent of P50,000.00, instead of P2,000,000.00, as TINGA, J.:
moral damages is reasonable.
Seeking the reversal of the Decision1 dated 1 June 2004 of the Court of Appeals in CA-G.R. SP No. 62331 and
Anent the award of exemplary damages, Article 2229 allows it by way of example or correction for the public good. the reinstatement of the Decision dated 15 November 2000 of the Securities and Exchange Commission (SEC) in
Nonetheless, since exemplary damages are imposed not to enrich one party or impoverish another but to serve SEC Case No. 04-98-5954, petitioner Calatagan Golf Club, Inc. (Calatagan) filed this Rule 45 petition against
as a deterrent against or as a negative incentive to curb socially deleterious actions,9 we reduce the amount from respondent Sixto Clemente, Jr. (Clemente).
P1,000,000.00 to P25,000.00 only.
The key facts are undisputed.
On the matter of attorney’s fees and litigation expenses, Article 2208 of the same Code provides, among others,
that attorney’s fees and expenses of litigation may be recovered in cases when exemplary damages are awarded Clemente applied to purchase one share of stock of Calatagan, indicating in his application for membership his
and where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered, mailing address at "Phimco Industries, Inc. – P.O. Box 240, MCC," complete residential address, office and
as in this case. In any event, however, such award must be reasonable, just and equitable. Thus, we reduce the residence telephone numbers, as well as the company (Phimco) with which he was connected, Calatagan issued
amount of attorney’s fees (P500,000.00) and litigation expenses (P50,000.00) to P50,000.00 and P25,000.00, to him Certificate of Stock No. A-01295 on 2 May 1990 after paying ₱120,000.00 for the share.2
respectively.

Calatagan charges monthly dues on its members to meet expenses for general operations, as well as costs for
Lastly, petitioners’ argument that they could not be held jointly and severally liable for damages because only one
upkeep and improvement of the grounds and facilities. The provision on monthly dues is incorporated in
(1) voted for the disapproval of respondent’s application lacks merit.
Calatagan’s Articles of Incorporation and By-Laws. It is also reproduced at the back of each certificate of stock.3
As reproduced in the dorsal side of Certificate of Stock No. A-01295, the provision reads:
Section 31 of the Corporation Code provides:
5. The owners of shares of stock shall be subject to the payment of monthly dues in an amount as may be
SEC. 31. Liability of directors, trustees or officers. — Directors or trustees who willfully and knowingly prescribed in the by-laws or by the Board of Directors which shall in no case be less that [sic] ₱50.00 to meet the
vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad expenses for the general operations of the club, and the maintenance and improvement of its premises and
faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with facilities, in addition to such fees as may be charged for the actual use of the facilities x x x
their duty as such directors, or trustees shall be liable jointly and severally for all damages resulting
therefrom suffered by the corporation, its stockholders or members and other persons. (Emphasis ours)
When Clemente became a member the monthly charge stood at ₱400.00. He paid ₱3,000.00 for his monthly dues
on 21 March 1991 and another ₱5,400.00 on 9 December 1991. Then he ceased paying the dues. At that point,
WHEREFORE, we DENY the petition. The challenged Decision and Resolution of the Court of Appeals in CA- his balance amounted to ₱400.00.4
G.R. CV No. 71506 are AFFIRMED with modification in the sense that (a) the award of moral damages is reduced
from P2,000,000.00 to P50,000.00; (b) the award of exemplary damages is reduced from P1,000,000.00 to
P25,000.00; and (c) the award of attorney’s fees and litigation expenses is reduced from P500,000.00 and Ten (10) months later, Calatagan made the initial step to collect Clemente’s back accounts by sending a demand
P50,000.00 to P50,000.00 and P25,000.00, respectively. letter dated 21 September 1992. It was followed by a second letter dated 22 October 1992. Both letters were sent
to Clemente’s mailing address as indicated in his membership application but were sent back to sender with the
postal note that the address had been closed.5
Costs against petitioners.

Calatagan declared Clemente delinquent for having failed to pay his monthly dues for more than sixty (60) days,
SO ORDERED.
specifically ₱5,600.00 as of 31 October 1992. Calatagan also included Clemente’s name in the list of delinquent
members posted on the club’s bulletin board. On 1 December 1992, Calatagan’s board of directors adopted a Calatagan maintains that the action of Clemente had prescribed pursuant to Section 69 of the Corporation Code,
resolution authorizing the foreclosure of shares of delinquent members, including Clemente’s; and the public and that the requisite notices under both the law and the by-laws had been rendered to Clemente.
auction of these shares.
Section 69 of the Code provides that an action to recover delinquent stock sold must be commenced by the filing
On 7 December 1992, Calatagan sent a third and final letter to Clemente, this time signed by its Corporate of a complaint within six (6) months from the date of sale. As correctly pointed out by the Court of Appeals, Section
Secretary, Atty. Benjamin Tanedo, Jr. The letter contains a warning that unless Clemente settles his outstanding 69 is part of Title VIII of the Code entitled "Stocks and Stockholders" and refers specifically to unpaid subscriptions
dues, his share would be included among the delinquent shares to be sold at public auction on 15 January 1993. to capital stock, the sale of which is governed by the immediately preceding Section 68.
Again, this letter was sent to Clemente’s mailing address that had already been closed.6
The Court of Appeals debunked both Calatagan’s and the SEC’s reliance on Section 69 by citing another SEC
On 5 January 1993, a notice of auction sale was posted on the Club’s bulletin board, as well as on the club’s ruling in the case of Caram v. Valley Golf. In connection with Section 69, Calatagan raises a peripheral point made
premises. The auction sale took place as scheduled on 15 January 1993, and Clemente’s share sold for ₱64,000.7 in the SEC’s Caram ruling. In Caram, the SEC, using as take-off Section 6 of the Corporation Code which refers
According to the Certificate of Sale issued by Calatagan after the sale, Clemente’s share was purchased by a to "such rights, privileges or restrictions as may be stated in the articles of incorporation," pointed out that the
Nestor A. Virata.8 At the time of the sale, Clemente’s accrued monthly dues amounted to ₱5,200.00.9 A notice of Articles of Incorporation of Valley Golf does not "impose any lien, liability or restriction on the Golf Share [of
foreclosure of Clemente’s share was published in the 26 May 1993 issue of the Business World.10 Caram]," but only its (Valley Golf’s) By-Laws does. Here, Calatagan stresses that its own Articles of Incorporation
does provide that the monthly dues assessed on owners of shares of the corporation, along with all other
Clemente learned of the sale of his share only in November of 1997.11 He filed a claim with the Securities and obligations of the shareholders to the club, "shall constitute a first lien on the shares… and in the event of
Exchange Commission (SEC) seeking the restoration of his shareholding in Calatagan with damages. delinquency such shares may be ordered sold by the Board of Directors in the manner provided in the By-Laws to
satisfy said dues or other obligations of the shareholders."13 With its illative but incomprehensible logic, Calatagan
concludes that the prescriptive period under Section 69 should also apply to the sale of Clemente’s share as the
On 15 November 2000, the SEC rendered a decision dismissing Clemente’s complaint. Citing Section 69 of the lien that Calatagan perceives to be a restriction is stated in the articles of incorporation and not only in the by-
Corporation Code which provides that the sale of shares at an auction sale can only be questioned within six (6) laws.
months from the date of sale, the SEC concluded that Clemente’s claim, filed four (4) years after the sale, had
already prescribed. The SEC further held that Calatagan had complied with all the requirements for a valid sale of
the subject share, Clemente having failed to inform Calatagan that the address he had earlier supplied was no We remain unconvinced.
longer his address. Clemente, the SEC ruled, had acted in bad faith in assuming as he claimed that his non-
payment of monthly dues would merely render his share "inactive." There are fundamental differences that defy equivalence or even analogy between the sale of delinquent stock
under Section 68 and the sale that occurred in this case. At the root of the sale of delinquent stock is the non-
Clemente filed a petition for review with the Court of Appeals. On 1 June 2004, the Court of Appeals promulgated payment of the subscription price for the share of stock itself. The stockholder or subscriber has yet to fully pay
a decision reversing the SEC. The appellate court restored Clemente’s one share with a directive to Calatagan to for the value of the share or shares subscribed. In this case, Clemente had already fully paid for the share in
issue in his a new share, and awarded to Clemente a total of ₱400,000.00 in damages, less the unpaid monthly Calatagan and no longer had any outstanding obligation to deprive him of full title to his share. Perhaps the analogy
dues of ₱5,200.00. could have been made if Clemente had not yet fully paid for his share and the nonstock corporation, pursuant to
an article or by-law provision designed to address that situation, decided to sell such share as a consequence.
But that is not the case here, and there is no purpose for us to apply Section 69 to the case at bar.
In rejecting the SEC’s finding that the action had prescribed, the Court of Appeals cited the SEC’s own ruling in
SEC Case No. 4160, Caram v. Valley Golf Country Club, Inc., that Section 69 of the Corporation Code specifically
refers to unpaid subscriptions to capital stock, and not to any other debt of stockholders. With the insinuation that Calatagan argues in the alternative that Clemente’s suit is barred by Article 1146 of the Civil Code which
Section 69 does not apply to unpaid membership dues in non-stock corporations, the appellate court employed establishes four (4) years as the prescriptive period for actions based upon injury to the rights of the plaintiff on
Article 1140 of the Civil Code as the proper rule of prescription. The provision sets the prescription period of actions the hypothesis that the suit is purely for damages. As a second alternative still, Calatagan posits that Clemente’s
to recover movables at eight (8) years. action is governed by Article 1149 of the Civil Code which sets five (5) years as the period of prescription for all
other actions whose prescriptive periods are not fixed in the Civil Code or in any other law. Neither article is
applicable but Article 1140 of the Civil Code which provides that an action to recover movables shall prescribe in
The Court of Appeals also pointed out that since that Calatagan’s first two demand letters had been returned to it eight (8) years. Calatagan’s action is for the recovery of a share of stock, plus damages.
as sender with the notation about the closure of the mailing address, it very well knew that its third and final
demand letter also sent to the same mailing address would not be received by Clemente. It noted the by-law
requirement that within ten (10) days after the Board has ordered the sale at auction of a member’s share of stock Calatagan’s advertence to the fact that the constitution of a lien on the member’s share by virtue of the explicit
for indebtedness, the Corporate Secretary shall notify the owner thereof and advise the Membership Committee provisions in its Articles of Incorporation and By-Laws is relevant but ultimately of no help to its cause. Calatagan’s
of such fact. Finally, the Court of Appeals ratiocinated that "a person who is in danger of the imminent loss of his Articles of Incorporation states that the "dues, together with all other obligations of members to the club, shall
property has the right to be notified and be given the chance to prevent the loss."12 constitute a first lien on the shares, second only to any lien in favor of the national or local government, and in the
event of delinquency such shares may be ordered sold by the Board of Directors in the manner provided in the
By-Laws to satisfy said dues or other obligations of the stockholders."14 In turn, there are several provisions in the
Hence, the present appeal.
By-laws that govern the payment of dues, the lapse into delinquency of the member, and the constitution and cancellation shall be effected in the books of the Club based on a record of the proceedings. Such
execution on the lien. We quote these provisions: cancellation shall render the unsurrendered stock certificate null and void and notice to this effect shall
be duly published.
ARTICLE XII – MEMBER’S ACCOUNT
It is plain that Calatagan had endeavored to install a clear and comprehensive procedure to govern the payment
SEC. 31. (a) Billing Members, Posting of Delinquent Members – The Treasurer shall bill al members monthly. As of monthly dues, the declaration of a member as delinquent, and the constitution of a lien on the shares and its
soon as possible after the end of every month, a statement showing the account of bill of a member for said month eventual public sale to answer for the member’s debts. Under Section 91 of the Corporation Code, membership
will be prepared and sent to him. If the bill of any member remains unpaid by the 20th of the month following that in a non-stock corporation "shall be terminated in the manner and for the causes provided in the articles of
in which the bill was incurred, the Treasurer shall notify him that if his bill is not paid in full by the end of the incorporation or the by-laws." The By-law provisions are elaborate in explaining the manner and the causes for
succeeding month his name will be posted as delinquent the following day at the Clubhouse bulletin board. While the termination of membership in Calatagan, through the execution on the lien of the share. The Court is satisfied
posted, a member, the immediate members of his family, and his guests, may not avail of the facilities of the Club. that the By-Laws, as written, affords due protection to the member by assuring that the member should be notified
by the Secretary of the looming execution sale that would terminate membership in the club. In addition, the By-
Laws guarantees that after the execution sale, the proceeds of the sale would be returned to the former member
(b) Members on the delinquent list for more than 60 days shall be reported to the Board and their shares
after deducting the outstanding obligations. If followed to the letter, the termination of membership under this
or the shares of the juridical entities they represent shall thereafter be ordered sold by the Board at auction
procedure outlined in the By-Laws would accord with substantial justice.
to satisfy the claims of the Club as provided for in Section 32 hereon. A member may pay his overdue
account at any time before the auction sale.
Yet, did Calatagan actually comply with the by-law provisions when it sold Clemente’s share? The appellate court’s
finding on this point warrants our approving citation, thus:
Sec. 32. Lien on Shares; Sale of Share at Auction- The club shall have a first lien on every share of stock to secure
debts of the members to the Club. This lien shall be annotated on the certificates of stock and may be enforced
by the Club in the following manner: In accordance with this provision, Calatagan sent the third and final demand letter to Clemente on December 7,
1992. The letter states that if the amount of delinquency is not paid, the share will be included among the delinquent
shares to be sold at public auction. This letter was signed by Atty. Benjamin Tanedo, Jr., Calatagan Golf’s
(a) Within ten (10) days after the Board has ordered the sale at auction of a member’s share of Corporate Secretary. It was again sent to Clemente’s mailing address – Phimco Industries Inc., P.O. Box
stock for indebtedness under Section 31(b) hereof, the Secretary shall notify the owner thereof, and shall 240, MCC Makati. As expected, it was returned because the post office box had been closed.
advise the Membership Committee of such fact.
Under the By-Laws, the Corporate Secretary is tasked to "give or cause to be given, all notices required by law or
(b) The Membership Committee shall then notify all applicants on the Waiting List and all registered by these By-Laws. .. and … keep a record of the addresses of all stockholders. As quoted above, Sec. 32 (a) of
stockholders of the availability of a share of stock for sale at auction at a specified date, time and place, the By-Laws further provides that "within ten (10) days after the Board has ordered the sale at auction of a
and shall post a notice to that effect in the Club bulletin board for at least ten (10) days prior to the auction member’s share of stock for indebtedness under Section 31 (b) hereof, the Secretary shall notify the owner thereof
sale. and shall advise the Membership Committee of such fact.," The records do not disclose what report the Corporate
Secretary transmitted to the Membership Committee to comply with Section 32(a). Obviously, the reason for this
(c) On the date and hour fixed, the Membership Committee shall proceed with the auction by viva mandatory requirement is to give the Membership Committee the opportunity to find out, before the share is sold,
voce bidding and award the sale of the share of stock to the highest bidder. if proper notice has been made to the shareholder member.

(d) The purchase price shall be paid by the winning bidder to the Club within twentyfour (24) hours We presume that the Corporate Secretary, as a lawyer is knowledgeable on the law and on the standards of good
after the bidding. The winning bidder or the representative in the case of a juridical entity shall become a faith and fairness that the law requires. As custodian of corporate records, he should also have known that the
Regular Member upon payment of the purchase price and issuance of a new stock certificate in his name first two letters sent to Clemente were returned because the P.O. Box had been closed. Thus, we are surprised –
or in the name of the juridical entity he represents. The proceeds of the sale shall be paid by the Club to given his knowledge of the law and of corporate records – that he would send the third and final letter – Clemente’s
the selling stockholder after deducting his obligations to the Club. last chance before his share is sold and his membership lost – to the same P.O. Box that had been closed.

(e) If no bids be received or if the winning bidder fails to pay the amount of this bid within twenty- Calatagan argues that it "exercised due diligence before the foreclosure sale" and "sent several notices to
four (24) hours after the bidding, the auction procedures may be repeated from time to time at the Clemente’s specified mailing address." We do not agree; we cannot label as due diligence Calatagan’s act of
discretion of the Membership Committee until the share of stock be sold. sending the December 7, 1992 letter to Clemente’s mailing address knowing fully well that the P.O. Box had been
closed. Due diligence or good faith imposes upon the Corporate Secretary – the chief repository of all corporate
records – the obligation to check Clemente’s other address which, under the By-Laws, have to be kept on file and
(f) If the proceeds from the sale of the share of stock are not sufficient to pay in full the indebtedness
are in fact on file. One obvious purpose of giving the Corporate Secretary the duty to keep the addresses of
of the member, the member shall continue to be obligated to the Club for the unpaid balance. If the
members on file is specifically for matters of this kind, when the member cannot be reached through his or her
member whose share of stock is sold fails or refuse to surrender the stock certificate for cancellation,
mailing address. Significantly, the Corporate Secretary does not have to do the actual verification of other The Court of Appeals cited Calatagan for violation of Article 32 of the Civil Code, which allows recovery of damages
addressees on record; a mere clerk can do the very simple task of checking the files as in fact clerks actually from any private individual "who directly or indirectly obstructs, defeats, violates or in any manner impedes or
undertake these tasks. In fact, one telephone call to Clemente’s phone numbers on file would have alerted him of impairs" the right "against deprivation of property without due process of laws." The plain letter of the provision
his impending loss. squarely entitles Clemente to damages from Calatagan. Even without Article 32 itself, Calatagan will still be bound
to pay moral and exemplary damages to Clemente. The latter was able to duly prove that he had sustained mental
Ultimately, the petition must fail because Calatagan had failed to duly observe both the spirit and letter of its own anguish, serious anxiety and wounded feelings by reason of Calatagan’s acts, thereby entitling him to moral
by-laws. The by-law provisions was clearly conceived to afford due notice to the delinquent member of the damages under Article 2217 of the Civil Code. Moreover, it is evident that Calatagan’s bad faith as exhibited in the
impending sale, and not just to provide an intricate façade that would facilitate Calatagan’s sale of the share. But
then, the bad faith on Calatagan’s part is palpable. As found by the Court of Appeals, Calatagan very well knew course of its corporate actions warrants correction for the public good, thereby justifying exemplary damages under
that Clemente’s postal box to which it sent its previous letters had already been closed, yet it persisted in sending Article 2229 of the Civil Code.
that final letter to the same postal box. What for? Just for the exercise, it appears, as it had known very well that
the letter would never actually reach Clemente.1avvphi1 WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. Costs against
petitioner.
It is noteworthy that Clemente in his membership application had provided his residential address along with his
residence and office telephone numbers. Nothing in Section 32 of Calatagan’s By-Laws requires that the final SO ORDERED.
notice prior to the sale be made solely through the member’s mailing address. Clemente cites our aphorism-like
pronouncement in Rizal Commercial Banking Corporation v. Court of Appeals15 that "[a] simple telephone call and
DANTE O. TINGA
an ounce of good faith x x x could have prevented this present controversy." That memorable observation is quite
apt in this case. Associate Justice

Calatagan’s bad faith and failure to observe its own By-Laws had resulted not merely in the loss of Clemente’s
privilege to play golf at its golf course and avail of its amenities, but also in significant pecuniary damage to him. G.R. No. 161921 July 17, 2013
For that loss, the only blame that could be thrown Clemente’s way was his failure to notify Calatagan of the closure
of the P.O. Box. That lapse, if we uphold Calatagan would cost Clemente a lot. But, in the first place, does he JOYCE V. ARDIENTE, PETITIONER,
deserve answerability for failing to notify the club of the closure of the postal box? Indeed, knowing as he did that
vs.
Calatagan was in possession of his home address as well as residence and office telephone numbers, he had
SPOUSES JAVIER AND MA. THERESA PASTORFIDE, CAGAYAN DE ORO WATER DISTRICT AND GASPAR
every reason to assume that the club would not be at a loss should it need to contact him. In addition, according
GONZALEZ,* JR., RESPONDENTS.
to Clemente, he was not even aware of the closure of the postal box, the maintenance of which was not his
responsibility but his employer Phimco’s.
DECISION
The utter bad faith exhibited by Calatagan brings into operation Articles 19, 20 and 21 of the Civil Code, 16 under
the Chapter on Human Relations. These provisions, which the Court of Appeals did apply, enunciate a general PERALTA, J.:
obligation under law for every person to act fairly and in good faith towards one another. A non-stock corporation
like Calatagan is not exempt from that obligation in its treatment of its members. The obligation of a corporation to Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and
treat every person honestly and in good faith extends even to its shareholders or members, even if the latter find set aside the Decision1 and Resolution2 of the Court of Appeals (CA), dated August 28, 2003 and December 17,
themselves contractually bound to perform certain obligations to the corporation. A certificate of stock cannot be 2003, respectively, in CA-G.R. CV No. 73000. The CA Decision affirmed with modification the August 15, 2001
a charter of dehumanization. Decision3 of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 24, while the CA Resolution denied
petitioner's Motion for Reconsideration.
We turn to the matter of damages. The award of actual damages is of course warranted since Clemente has
sustained pecuniary injury by reason of Calatagan’s wrongful violation of its own By-Laws. It would not be feasible The facts, as summarized by the CA, are as follows:
to deliver Clemente’s original Certificate of Stock because it had already been cancelled and a new one issued in
its place in the name of the purchases at the auction who was not impleaded in this case. However, the Court of [Herein petitioner] Joyce V. Ardiente and her husband Dr. Roberto S. Ardiente are owners of a housing unit at
Appeals instead directed that Calatagan to issue to Clemente a new certificate of stock. That sufficiently redresses Emily Homes, Balulang, Cagayan de Oro City with a lot area of one hundred fifty-three (153) square meters and
the actual damages sustained by Clemente. After all, the certificate of stock is simply the evidence of the share. covered by Transfer Certificate of Title No. 69905.

The Court of Appeals also awarded Clemente ₱200,000.00 as moral damages, ₱100,000.00 as exemplary On June 2, 1994, Joyce Ardiente entered into a Memorandum of Agreement (Exh. "B", pp. 470473, Records)
damages, and ₱100,000.00 as attorney’s fees. We agree that the award of such damages is warranted. selling, transferring and conveying in favor of [respondent] Ma. Theresa Pastorfide all their rights and interests in
the housing unit at Emily Homes in consideration of ₱70,000.00. The Memorandum of Agreement carries a she attempted to tell plaintiffs but she did not have the patience of seeing them. She knew that it was plaintiffs
stipulation: who had been using the water four (4) years ago and not hers. She should have been very careful. x x x5

"4. That the water and power bill of the subject property shall be for the account of the Second The dispositive portion of the trial court's Decision reads, thus:
Party (Ma. Theresa Pastorfide) effective June 1, 1994." (Records, p. 47)
WHEREFORE, premises considered, judgment is hereby rendered ordering defendants [Ardiente, COWD and
vis-a-vis Ma. Theresa Pastorfide's assumption of the payment of the mortgage loan secured by Joyce Ardiente Gonzalez] to pay jointly and severally plaintiffs, the following sums:
from the National Home Mortgage (Records, Exh. "A", pp. 468-469)
(a) ₱200,000.00 for moral damages; (b) 200,000.00 for
For four (4) years, Ma. Theresa's use of the water connection in the name of Joyce Ardiente was never questioned
nor perturbed (T.S.N., October 31, 2000, pp. 7-8) until on March 12, 1999, without notice, the water connection of exemplary damages; and
Ma. Theresa was cut off. Proceeding to the office of the Cagayan de Oro Water District (COWD) to complain, a
certain Mrs. Madjos told Ma. Theresa that she was delinquent for three (3) months corresponding to the months (c) 50,000.00 for attorney's fee.
of December 1998, January 1999, and February 1999. Ma. Theresa argued that the due date of her payment was
March 18, 1999 yet (T.S.N., October 31, 2000, pp. 11-12). Mrs. Madjos later told her that it was at the instance of
Joyce Ardiente that the water line was cut off (T.S.N., February 5, 2001, p. 31). The cross-claim of Cagayan de Oro Water District and Engr. Gaspar Gonzales is hereby dismissed. The Court is
not swayed that the cutting off of the water supply of plaintiffs was because they were influenced by defendant
Joyce Ardiente. They were negligent too for which they should be liable.
On March 15, 1999, Ma. Theresa paid the delinquent bills (T.S.N., October 31, 2000, p. 12). On the same date,
through her lawyer, Ma. Theresa wrote a letter to the COWD to explain who authorized the cutting of the water
line (Records, p. 160). SO ORDERED.6

On March 18, 1999, COWD, through the general manager, [respondent] Gaspar Gonzalez, Jr., answered the letter Petitioner, COWD and Gonzalez filed an appeal with the CA.
dated March 15, 1999 and reiterated that it was at the instance of Joyce Ardiente that the water line was cut off
(Records, p. 161). On August 28, 2003, the CA promulgated its assailed Decision disposing as follows:

Aggrieved, on April 14, 1999, Ma. Theresa Pastorfide [and her husband] filed [a] complaint for damages [against IN VIEW OF ALL THE FOREGOING, the appealed decision is AFFIRMED, with the modification that the awarded
petitioner, COWD and its manager Gaspar Gonzalez] (Records, pp. 2-6). damages is reduced to ₱100,000.00 each for moral and exemplary damages, while attorney's fees is lowered to
₱25,000.00. Costs against appellants. SO ORDERED.7
In the meantime, Ma. Theresa Pastorfide's water line was only restored and reconnected when the [trial] court
issued a writ of preliminary mandatory injunction on December 14, 1999 (Records, p. 237).4
The CA ruled, with respect to petitioner, that she has a "legal duty to honor the possession and use of water line
by Ma. Theresa Pastorfide pursuant to their Memorandum of Agreement" and "that when [petitioner] applied for
After trial, the RTC rendered judgment holding as follows:
its disconnection, she acted in bad faith causing prejudice and [injury to] Ma. Theresa Pastorfide."8

xxxx
As to COWD and Gonzalez, the CA held that they "failed to give a notice of disconnection and derelicted in
reconnecting the water line despite payment of the unpaid bills by the [respondent spouses Pastorfide]."9
In the exercise of their rights and performance of their duties, defendants did not act with justice, gave plaintiffs
their due and observe honesty and good faith. Before disconnecting the water supply, defendants COWD and
Engr. Gaspar Gonzales did not even send a disconnection notice to plaintiffs as testified to by Engr. Bienvenido Petitioner, COWD and Gonzalez filed their respective Motions for Reconsideration, but these were denied by the
Batar, in-charge of the Commercial Department of defendant COWD. There was one though, but only three (3) CA in its Resolution dated December 17, 2003.
days after the actual disconnection on March 12, 1999. The due date for payment was yet on March 15. Clearly,
they did not act with justice. Neither did they observe honesty. COWD and Gonzalez filed a petition for review on certiorari with this Court, which was docketed as G.R. No.
161802. However, based on technical grounds and on the finding that the CA did not commit any reversible error
They should not have been swayed by the prodding of Joyce V. Ardiente. They should have investigated first as in its assailed Decision, the petition was denied via a Resolution10 issued by this Court on March 24, 2004. COWD
to the present ownership of the house. For doing the act because Ardiente told them, they were negligent. and Gonzalez filed a motion for reconsideration, but the same was denied with finality through this Court's
Defendant Joyce Ardiente should have requested before the cutting off of the water supply, plaintiffs to pay. While Resolution11 dated June 28, 2004.
Petitioner, on the other hand, timely filed the instant petition with the following Assignment of Errors: As to the merits of the instant petition, the Court likewise noticed that the main issues raised by petitioner are
factual and it is settled that the resolution of factual issues is the function of lower courts, whose findings on these
7.1 HONORABLE COURT OF APPEALS (ALTHOUGH IT HAS REDUCED THE LIABILITY INTO HALF) matters are received with respect and considered binding by the Supreme Court subject only to certain exceptions,
HAS STILL COMMITTED GRAVE AND SERIOUS ERROR WHEN IT UPHELD THE JOINT AND none of which is present in this instant petition.13 This is especially true when the findings of the RTC have been
SOLIDARY LIABILITY OF PETITIONER JOYCE V. ARDIENTE WITH CAGAYAN DE ORO WATER affirmed by the CA as in this case.14
DISTRICT (COWD) AND ENGR. GASPAR D. GONZALES FOR THE LATTER'S FAILURE TO SERVE
NOTICE UPON RESPONDENTS SPOUSES PASTORFIDE PRIOR TO THE ACTUAL In any case, a perusal of the records at hand would readily show that the instant petition lacks merit.
DISCONNECTION DESPITE EVIDENCE ADDUCED DURING TRIAL THAT EVEN WITHOUT
PETITIONER'S REQUEST, COWD WAS ALREADY SET TO EFFECT DISCONNECTION OF Petitioner insists that she should not be held liable for the disconnection of respondent spouses' water supply,
RESPONDENTS' WATER SUPPLY DUE TO NON-PAYMENT OF ACCOUNT FOR THREE (3) MONTHS. because she had no participation in the actual disconnection. However, she admitted in the present petition that it
was she who requested COWD to disconnect the Spouses Pastorfide's water supply. This was confirmed by
7.2 THE HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS ERROR WHEN IT COWD and Gonzalez in their crossclaim against petitioner. While it was COWD which actually discontinued
RULED TOTALLY AGAINST PETITIONER AND FAILED TO FIND THAT RESPONDENTS ARE GUILTY respondent spouses' water supply, it cannot be denied that it was through the instance of petitioner that the
OF CONTRIBUTORY NEGLIGENCE WHEN THEY FAILED TO PAY THEIR WATER BILLS FOR THREE Spouses Pastorfide's water supply was disconnected in the first place.
MONTHS AND TO MOVE FOR THE TRANSFER OF THE COWD ACCOUNT IN THEIR NAME, WHICH
WAS A VIOLATION OF THEIR MEMORANDUM OF AGREEMENT WITH PETITIONER JOYCE V. It is true that it is within petitioner's right to ask and even require the Spouses Pastorfide to cause the transfer of
ARDIENTE. RESPONDENTS LIKEWISE DELIBERATELY FAILED TO EXERCISE DILIGENCE OF A the former's account with COWD to the latter's name pursuant to their Memorandum of Agreement. However, the
GOOD FATHER OF THE FAMILY TO MINIMIZE THE DAMAGE UNDER ART. 2203 OF THE NEW CIVIL remedy to enforce such right is not to cause the disconnection of the respondent spouses' water supply. The
CODE. exercise of a right must be in accordance with the purpose for which it was established and must not be excessive
or unduly harsh; there must be no intention to harm another.15 Otherwise, liability for damages to the injured party
7.3 THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DISREGARDED THE will attach.16 In the present case, intention to harm was evident on the part of petitioner when she requested for
FACT THAT RESPONDENT SPOUSES PASTORFIDE ARE LIKEWISE BOUND TO OBSERVE ARTICLE the disconnection of respondent spouses’ water supply without warning or informing the latter of such request.
19 OF THE NEW CIVIL CODE, i.e., IN THE EXERCISE OF THEIR RIGHTS AND IN THE Petitioner claims that her request for disconnection was based on the advise of COWD personnel and that her
PERFORMANCE OF THEIR DUTIES TO ACT WITH JUSTICE, GIVE EVERYONE HIS DUE AND intention was just to compel the Spouses Pastorfide to comply with their agreement that petitioner's account with
OBSERVE HONESTY AND GOOD FAITH. COWD be transferred in respondent spouses' name. If such was petitioner's only intention, then she should have
advised respondent spouses before or immediately after submitting her request for disconnection, telling them
7.4 THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT GRANTED AN AWARD OF that her request was simply to force them to comply with their obligation under their Memorandum of Agreement.
MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES AS AGAINST PETITIONER But she did not. What made matters worse is the fact that COWD undertook the disconnection also without prior
ARDIENTE.12 notice and even failed to reconnect the Spouses Pastorfide’s water supply despite payment of their arrears. There
was clearly an abuse of right on the part of petitioner, COWD and Gonzalez. They are guilty of bad faith.
At the outset, the Court noticed that COWD and Gonzalez, who were petitioner's co-defendants before the RTC
and her co-appellants in the CA, were impleaded as respondents in the instant petition. This cannot be done. The principle of abuse of rights as enshrined in Article 19 of the Civil Code provides that every person must, in
Being her co-parties before the RTC and the CA, petitioner cannot, in the instant petition for review on certiorari, the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and
make COWD and Gonzalez, adversary parties. It is a grave mistake on the part of petitioner's counsel to treat observe honesty and good faith.
COWD and Gonzalez as respondents. There is no basis to do so, considering that, in the first place, there is no
showing that petitioner filed a cross-claim against COWD and Gonzalez. Under Section 2, Rule 9 of the Rules of In this regard, the Court's ruling in Yuchengco v. The Manila Chronicle Publishing
Court, a cross-claim which is not set up shall be barred. Thus, for failing to set up a cross-claim against COWD Corporation17 is instructive, to wit:
and Gonzalez before the RTC, petitioner is already barred from doing so in the present petition.
xxxx
More importantly, as shown above, COWD and Gonzalez's petition for review on certiorari filed with this Court was
already denied with finality on June 28, 2004, making the presently assailed CA Decision final and executory This provision of law sets standards which must be observed in the exercise of one’s rights as well as in the
insofar as COWD and Gonzalez are concerned. Thus, COWD and Gonzalez are already precluded from performance of its duties, to wit: to act with justice; give everyone his due; and observe honesty and good faith.
participating in the present petition. They cannot resurrect their lost cause by filing pleadings this time as
respondents but, nonetheless, reiterating the same prayer in their previous pleadings filed with the RTC and the
In Globe Mackay Cable and Radio Corporation v. Court of Appeals, it was elucidated that while Article 19 "lays
CA.
down a rule of conduct for the government of human relations and for the maintenance of social order, it does not
provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be
proper." The Court said:
One of the more notable innovations of the New Civil Code is the codification of "some basic principles that are to actions.22 In the instant case, the Court agrees with the CA in sustaining the award of exemplary damages,
be observed for the rightful relationship between human beings and for the stability of the social order." [REPORT although it reduced the amount granted, considering that respondent spouses were deprived of their water supply
ON THE CODE COMMISSION ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of for more than nine (9) months, and such deprivation would have continued were it not for the relief granted by the
the Code, seeking to remedy the defect of the old Code which merely stated the effects of the law, but failed to RTC.
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 With respect to the award of attorney's fees, Article 2208 of the Civil Code provides, among others, that such fees
[that] should run as golden threads through society, to the end that law may approach its supreme ideal, which is may be recovered when exemplary damages are awarded, when the defendant's act or omission has compelled
the sway and dominance of justice." (Id.) Foremost among these principles is that pronounced in Article 19 x x x. the plaintiff to litigate with third persons or to incur expenses to protect his interest, and where the defendant acted
in gross and evident bad faith in refusing to satisfy the plaintiffs’ plainly valid, just and demandable claim.
xxxx
WHEREFORE, instant petition for review on certiorari is DENIED. The Decision and Resolution of the Court of
This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain Appeals, dated August 28, 2003 and December 17, 2003, respectively, in CAG.R. CV No. 73000 are AFFIRMED.
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 SO ORDERED.
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
Velasco, Jr., (Chairperson), Abad, Mendoza, and Leonen, JJ., concur.
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. G.R. No. 89252 May 24, 1993

Corollarilly, Article 20 provides that "every person who, contrary to law, willfully or negligently causes damage to RAUL H. SESBREÑO, Petitioner,
another shall indemnify the latter for the same." It speaks of the general sanctions of all other provisions of law vs.
which do not especially provide for its own sanction. When a right is exercised in a manner which does not conform HONORABLE COURT OF APPEALS, JUAN I. COROMINA (SUBSTITUTED BY ANITA COROMINA,
to the standards set forth in the said provision and results in damage to another, a legal wrong is thereby committed ELIZABETH COROMINA and ROSIEMARIE COROMINA), VICENTE E. GARCIA (SUBSTITUTED BY EDGAR
for which the wrongdoer must be responsible. Thus, if the provision does not provide a remedy for its violation, an JOHN GARCIA), FELIPE CONSTANTINO, RONALD ARCILLA, NORBETO ABELLANA, DEMETRIO
action for damages under either Article 20 or Article 21 of the Civil Code would be proper. BALICHA, ANGELITA LHUILLIER, JOSE E. GARCIA, AND VISA YAN ELECTRIC COMPANY
(VECO), Respondents.
The question of whether or not the principle of abuse of rights has been violated resulting in damages under Article
20 or other applicable provision of law, depends on the circumstances of each case. x x x18 DECISION

To recapitulate, petitioner's acts which violated the abovementioned provisions of law is her unjustifiable act of BERSAMIN, J.:
having the respondent spouses' water supply disconnected, coupled with her failure to warn or at least notify
respondent spouses of such intention. On the part of COWD and Gonzalez, it is their failure to give prior notice of This case concerns the claim for damages of petitioner Raul H. Sesbreño founded on abuse of rights. Sesbreño
the impending disconnection and their subsequent neglect to reconnect respondent spouses' water supply despite accused the violation of contract (VOC) inspection team dispatched by the Visayan Electric Company (VECO) to
the latter's settlement of their delinquent account. check his electric meter with conducting an unreasonable search in his residential premises. But the Regional
Trial Court (RTC), Branch 13, in Cebu City rendered judgment on August 19, 1994 dismissing the claim;1 and the
On the basis of the foregoing, the Court finds no cogent reason to depart from the ruling of both the RTC and the Court of Appeals (CA) affirmed the dismissal on March 10, 2003.2
CA that petitioner, COWD and Gonzalez are solidarily liable.
Hence, this appeal by Sesbreño.
The Spouses Pastorfide are entitled to moral damages based on the provisions of Article 2219,19 in connection
with Articles 2020 and 2121 of the Civil Code. Antecedents

As for exemplary damages, Article 2229 provides that exemplary damages may be imposed by way of example At the time material to the petition, VECO was a public utility corporation organized and existing under the laws of
or correction for the public good. Nonetheless, exemplary damages are imposed not to enrich one party or the Philippines. VECO engaged in the sale and distribution of electricity within Metropolitan Cebu. Sesbreño was
impoverish another, but to serve as a deterrent against or as a negative incentive to curb socially deleterious one of VECO’s customers under the metered service contract they had entered into on March 2,
1982.3 Respondent Vicente E. Garcia was VECO’s President, General Manager and Chairman of its Board of hear the conversation between two persons six feet away from where he was seated during the simulation done
Directors. Respondent Jose E. Garcia was VECO’s Vice-President, Treasurer and a Member of its Board of in court, the same distance he supposedly had from the gate of Sesbreño’s house during the incident. It pointed
Directors. Respondent Angelita Lhuillier was another Member of VECO’s Board of Directors. Respondent Juan out that Lopez’s presence at the gate during the incident was even contradicted by his own testimony indicating
Coromina was VECO’s Assistant Treasurer, while respondent Norberto Abellana was the Head of VECO’s Billing that an elderly woman had opened the gate for the VECO personnel, because it was Baledio, a lady in her 20s,
Section whose main function was to compute back billings of customers found to have violated their contracts. who had repeatedly stated on her direct and cross examinations that she had let the VECO personnel in. It
concluded that for Lopez to do nothing at all upon seeing a person being threatened by another in the manner he
To ensure that its electric meters were properly functioning, and that none of it meters had been tampered with, described was simply contrary to human experience.
VECO employed respondents Engr. Felipe Constantino and Ronald Arcilla as violation of contract (VOC)
inspectors.4 Respondent Sgt. Demetrio Balicha, who belonged to the 341st Constabulary Company, Cebu In contrast, the RTC believed the evidence of the respondents showing that the VOC inspection team had found
Metropolitan Command, Camp Sotero Cabahug, Cebu City, accompanied and escorted the VOC inspectors the electric meter in Sesbreño’s residence turned upside down to prevent the accurate registering of the
during their inspection of the households of its customers on May 11, 1989 pursuant to a mission order issued to electricity consumption of the household, causing them to detach and replace the meter. It held as unbelievable
him.5 that the team forcibly entered the house through threats and intimidation; that they themselves turned the electric
meter upside down in order to incriminate him for theft of electricity, because the fact that the team and Sesbreño
The CA summarized the antecedent facts as follows: had not known each other before then rendered it unlikely for the team to fabricate charges against him; and that
Sesbreño’s non-presentation of Chuchie Garcia left her allegation of her being forced to sign the two documents
by the team unsubstantiated.
x x x. Reduced to its essentials, however, the facts of this case are actually simple enough, although the
voluminous records might indicate otherwise. It all has to do with an incident that occurred at around 4:00 o’clock
in the afternoon of May 11, 1989. On that day, the Violation of Contracts (VOC) Team of defendants-appellees Decision of the CA
Constantino and Arcilla and their PC escort, Balicha, conducted a routine inspection of the houses at La Paloma
Village, Labangon, Cebu City, including that of plaintiff-appellant Sesbreño, for illegal connections, meter Sesbreño appealed, but the CA affirmed the RTC on March 10, 2003,8 holding thusly:
tampering, seals, conduit pipes, jumpers, wiring connections, and meter installations. After Bebe Baledio, plaintiff-
appellant Sesbreño’s maid, unlocked the gate, they inspected the electric meter and found that it had been turned x x x. plaintiff-appellant Sesbreño’s account is simply too implausible or far-fetched to be believed. For one thing,
upside down. Defendant-appellant Arcilla took photographs of the upturned electric meter. With Chuchie Garcia, the inspection on his household was just one of many others that the VOC Team had conducted in that
Peter Sesbreño and one of the maids present, they removed said meter and replaced it with a new one. At that subdivision. Yet, none but plaintiff-appellant Sesbreño complained of the alleged acts of the VOC Team.
time, plaintiff-appellant Sesbreño was in his office and no one called to inform him of the inspection. The VOC Considering that there is no proof that they also perpetrated the same illegal acts on other customers in the guise
Team then asked for and received Chuchie Garcia’s permission to enter the house itself to examine the kind and of conducting a Violation of Contracts inspection, plaintiff-appellant Sesbreño likewise failed to show why he
number of appliances and light fixtures in the household and determine its electrical load. Afterwards, Chuchie alone was singled out. It is also difficult to believe that the VOC Team would be brazen enough to want to
Garcia signed the Inspection Division Report, which showed the condition of the electric meter on May 11, 1989 antagonize a person such as plaintiff-appellant Sesbreño. There is no evidence that the VOC Team harbored any
when the VOC Team inspected it, with notice that it would be subjected to a laboratory test. She also signed a evil motive or grudge against plaintiff-appellant Sesbreño, who is a total stranger to them. Until he came along,
Load Survey Sheet that showed the electrical load of plaintiff-appellant Sesbreño. they did not have any prior criminal records to speak of, or at least, no evidence thereof was presented. It is
equally difficult to believe that their superiors would authorize or condone their alleged illegal acts. Especially so
But according to plaintiff-appellant Sesbreño there was nothing routine or proper at all with what the VOC Team since there is no indication that prior to the incident on May 11, 1989, there was already bad blood or animosity
did on May 11, 1989 in his house. Their entry to his house and the surrounding premises was effected without his between plaintiff-appellant Sesbreño and defendant appellees to warrant such a malevolent response. In fact,
permission and over the objections of his maids. They threatened, forced or coerced their way into his house. since availing of defendant-appellee VECO’s power services, the relationship between them appears to have
They unscrewed the electric meter, turned it upside down and took photographs thereof. They then replaced it been uneventful.
with a new electric meter. They searched the house and its rooms without his permission or a search warrant.
They forced a visitor to sign two documents, making her appear to be his representative or agent. Afterwards, he It becomes all the more apparent that the charges stemming from the May 11, 1989 incident were fabricated
found that some of his personal effects were missing, apparently stolen by the VOC Team when they searched when taken together with the lower court’s evaluation of the alleged theft of plaintiff-appellant Sesbreño’s
the house.6 personal effects. It stated that on August 8, 1989, plaintiff-appellant Sesbreño wrote the barangay captain of
Punta Princesa and accused Chuchie Garcia and Victoria Villarta alias Victoria Rocamora of theft of some of his
Judgment of the RTC things that earlier he claimed had been stolen by members of the VOC Team. When he was confronted with
these facts, plaintiff-appellant Sesbreño further claimed that the items allegedly stolen by Chuchie Garcia were
On August 19, 1994, the RTC rendered judgment dismissing the complaint.7 It did not accord credence to the part of the loot taken by defendants-appellees Constantino and Arcilla. Yet not once did plaintiff-appellant
testimonies of Sesbreño’s witnesses, Bebe Baledio, his housemaid, and Roberto Lopez, a part-time salesman, Sesbreño or any of his witnesses mention that a conspiracy existed between these people. Clearly, much like his
due to inconsistencies on material points in their respective testimonies. It observed that Baledio could not make other allegations, it is nothing more than an afterthought by plaintiff-appellant Sesbreño.
up her mind as to whether Sesbreño’s children were in the house when the VOC inspection team detached and
replaced the electric meter. Likewise, it considered unbelievable that Lopez should hear the exchanges between All in all, the allegations against defendants-appellees appear to be nothing more than a put-on to save face. For
Constantino, Arcilla and Balicha, on one hand, and Baledio, on the other, considering that Lopez could not even the simple truth is that the inspection exposed plaintiff-appellant Sesbreño as a likely cheat and thief.
 xxxx imposed by paragraph 9 for an authorized entry. Firstly, their entry had the objective of conducting the routine
inspection of the meter.13 Secondly, the entry and inspection were confined to the garage where the meter was
Neither is this Court swayed by the testimonies of Baledio and Lopez.1âwphi1 The lower court rightly described installed.14 Thirdly, the entry was effected at around 4 o’clock p.m., a reasonable hour.15 And, fourthly, the
their testimonies as fraught by discrepancies and inconsistencies on material points and even called Lopez a persons who inspected the meter were duly authorized for the purpose by VECO.
perjured witness. On the other hand, it is odd that plaintiff-appellant Sesbreño chose not to present the witness
whose testimony was very crucial. But even though Chuchie Garcia never testified, her absence speaks volumes. Although Balicha was not himself an employee of VECO,16 his participation was to render police assistance to
Whereas plaintiff-appellant Sesbreño claimed that the VOC Team forced her to sign two documents that made ensure the personal security of Constantino and Arcilla during the inspection, rendering him a necessary part of
her appear to be his authorized agent or representative, the latter claimed otherwise and that she also gave them the team as an authorized representative. Under the circumstances, he was authorized to enter considering that
permission to enter and search the house. The person most qualified to refute the VOC Team’s claim is Chuchie paragraph 9 expressly extended such authority to "properly authorized employees or representatives" of VECO.
Garcia herself. It is axiomatic that he who asserts a fact or claim must prove it. He cannot transfer that burden to
the person against whom he asserts such fact or claim. When certain evidence is suppressed, the presumption is It is true, as Sesbreño urges, that paragraph 9 did not cover the entry into the main premises of the residence.
that it will adversely affect the cause of the party suppressing it, should it come to light. x x x9 Did this necessarily mean that any entry by the VOS team into the main premises required a search warrant to be
first secured?
Upon denial of his motion for reconsideration,10 Sesbreño appealed.
Sesbreño insists so, citing Section 2, Article III of the 1987 Constitution, the clause guaranteeing the right of
Issue: Was Sesbreño entitled to recover damages for abuse of rights? every individual against unreasonable searches and seizures, viz:

Ruling: The appeal has no merit. Section 2. The right of the people to be secure in their persons, houses, papers and effects against unreasonable
searches and seizures of whatever nature and for any purpose shall be inviolable, and no search warrant or
Sesbreño’s main contention is that the inspection of his residence by the VOC team was an unreasonable search warrant of arrest shall issue except upon probable cause to be determined personally by the judge after
for being carried out without a warrant and for being allegedly done with malice or bad faith. examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to be seized.
Before dealing with the contention, we have to note that two distinct portions of Sesbreño’s residence were
inspected by the VOS team – the garage where the electric meter was installed, and the main premises where He states that a violation of this constitutional guaranty rendered VECO and its VOS team liable to him for
the four bedrooms, living rooms, dining room and kitchen were located. damages by virtue of Article 32 (9) of the Civil Code, which pertinently provides:

Anent the inspection of the garage where the meter was installed, the respondents assert that the VOC team had Article 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats,
the continuing authority from Sesbreño as the consumer to enter his premises at all reasonable hours to conduct violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be
an inspection of the meter without being liable for trespass to dwelling. The authority emanated from paragraph 9 liable to the latter for damages:
of the metered service contract entered into between VECO and each of its consumers, which provided as
follows: xxxx

9. The CONSUMER agrees to allow properly authorized employees or representatives of the COMPANY to enter (9) The right to be secured in one’s person, house, papers, and effects against unreasonable searches and
his premises at all reasonable hours without being liable to trespass to dwelling for the purpose of inspecting, seizures;
installing, reading, removing, testing, replacing or otherwise disposing of its property, and/or removing the
COMPANY’S property in the event of the termination of the contract for any cause.11 x x x x.

Sesbreño contends, however, that paragraph 9 did not give Constantino, Arcilla and Balicha the blanket authority Sesbreño’s insistence has no legal and factual basis.
to enter at will because the only property VECO owned in his premises was the meter; hence, Constantino and
Arcilla should enter only the garage. He denies that they had the right to enter the main portion of the house and
inspect the various rooms and the appliances therein because those were not the properties of VECO. He posits The constitutional guaranty against unlawful searches and seizures is intended as a restraint against the
that Balicha, who was not an employee of VECO, had no authority whatsoever to enter his house and conduct a Government and its agents tasked with law enforcement. It is to be invoked only to ensure freedom from arbitrary
search. He concludes that their search was unreasonable, and entitled him to damages in light of their admission and unreasonable exercise of State power. The Court has made this clear in its pronouncements, including that
that they had entered and inspected his premises without a search warrant.12 made in People v. Marti,17 viz:

We do not accept Sesbreño’s conclusion.1avvphi1 Paragraph 9 clothed the entire VOC team with unquestioned If the search is made upon the request of law enforcers, a warrant must generally be first secured if it is to pass
authority to enter the garage to inspect the meter. The members of the team obviously met the conditions the test of constitutionality. However, if the search is made at the behest or initiative of the proprietor of a private
establishment for its own and private purposes, as in the case at bar, and without the intervention of police points; and even declared that the non-presentation of Garcia as a witness was odd if not suspect. Considering
authorities, the right against unreasonable search and seizure cannot be invoked for only the act of private that such findings related to the credibility of the witnesses and their testimonies, the Court cannot review and
individual, not the law enforcers, is involved. In sum, the protection against unreasonable searches and seizures undo them now because it is not a trier of facts, and is not also tasked to analyze or weigh evidence all over
cannot be extended to acts committed by private individuals so as to bring it within the ambit of alleged unlawful again.26 Verily, a review that may tend to supplant the findings of the trial court that had the first-hand opportunity
intrusion by the government.18 to observe the demeanor of the witnesses themselves should be undertaken by the Court with prudent hesitation.
Only when Sesbreño could make a clear showing of abuse in their appreciation of the evidence and records by
It is worth noting that the VOC inspectors decided to enter the main premises only after finding the meter of the trial and the appellate courts should the Court do the unusual review of the factual findings of the trial and
Sesbreño turned upside down, hanging and its disc not rotating. Their doing so would enable them to determine appellate courts.27 Alas, that showing was not made here.
the unbilled electricity consumed by his household. The circumstances justified their decision, and their
inspection of the main premises was a continuation of the authorized entry. There was no question then that their Nor should the Court hold that Sesbreño was denied due process by the refusal of the trial judge to inhibit from
ability to determine the unbilled electricity called for them to see for themselves the usage of electricity inside. Not the case. Although the trial judge had issued an order for his voluntary inhibition, he still rendered the judgment in
being agents of the State, they did not have to first obtain a search warrant to do so. the end in compliance with the instruction of the Executive Judge, whose exercise of her administrative authority
on the matter of the inhibition should be respected.28 In this connection, we find to be apt the following
Balicha’s presence participation in the entry did not make the inspection a search by an agent of the State within observation of the CA, to wit:
the ambit of the guaranty. As already mentioned, Balicha was part of the team by virtue of his mission order
authorizing him to assist and escort the team during its routine inspection.19 Consequently, the entry into the main x x x. Both Judge Paredes and Judge Priscila Agana serve the Regional Trial Court and are therefore of co-equal
premises of the house by the VOC team did not constitute a violation of the guaranty. rank. The latter has no authority to reverse or modify the orders of Judge Paredes. But in ordering Judge Paredes
to continue hearing the case, Judge Agana did not violate their co-equal status or unilaterally increased her
Our holding could be different had Sesbreño persuasively demonstrated the intervention of malice or bad faith on jurisdiction. It is merely part of her administrative responsibilities as Executive Judge of the Regional Trial Court
the part of Constantino and Arcilla during their inspection of the main premises, or any excessiveness committed of Cebu City, of which Judge Paredes is also a member.29
by them in the course of the inspection. But Sesbreño did not. On the other hand, the CA correctly observed that
the inspection did not zero in on Sesbreño’s residence because the other houses within the area were similarly Lastly, the Court finds nothing wrong if the writer of the decision in the CA refused to inhibit from participating in
subjected to the routine inspection.20 This, we think, eliminated any notion of malice or bad faith. the resolution of the motion for reconsideration filed by Sesbrefio. The motion for her inhibition was grounded on
suspicion of her bias and prejudice,30 but suspicion of bias and prejudice were not enough grounds for
Clearly, Sesbreño did not establish his claim for damages if the respondents were not guilty of abuse of rights. To inhibition.31
stress, the concept of abuse of rights prescribes that a person should not use his right unjustly or in bad faith;
otherwise, he may be liable to another who suffers injury. The rationale for the concept is to present some basic Suffice it to say that the records are bereft of any indication that even suggested that the Associate Justices of
principles to be followed for the rightful relationship between human beings and the stability of social the CA who participated in the promulgation of the decision were tainted with bias against him.
order.21 Moreover, according to a commentator,22 "the exercise of right ends when the right disappears, and it
disappears when it is abused, especially to the prejudice of others[;] [i]t cannot be said that a person exercises a WHEREFORE, the Court DENIES the pet1t1on for review on certiorari; AFFIRMS the decision promulgated on
right when he unnecessarily prejudices another." Article 19 of the Civil Code23 sets the standards to be observed March 10, 2003; and DIRECTS the petitioner to pay the costs of suit.
in the exercise of one’s rights and in the performance of one’s duties, namely: (a) to act with justice; (b) to give
everyone his due; and (c) to observe honesty and good faith. The law thereby recognizes the primordial limitation
on all rights – that in the exercise of the rights, the standards under Article 19 must be observed.24 SO ORDERED.

Although the act is not illegal, liability for damages may arise should there be an abuse of rights, like when the act
is performed without prudence or in bad faith. In order that liability may attach under the concept of abuse of
rights, the following elements must be present, to wit: (a) the existence of a legal right or duty, (b) which is
exercised in bad faith, and (c) for the sole intent of prejudicing or injuring another.25 There is no hard and fast rule A.C. No. 4697 November 25, 2014
that can be applied to ascertain whether or not the principle of abuse of rights is to be invoked. The resolution of
the issue depends on the circumstances of each case.
FLORENCIO A. SALAD AGA, Complainant,
vs.
Sesbreño asserts that he did not authorize Baledio or Chuchie Garcia to let anyone enter his residence in his
ATTY. ARTURO B. ASTORGA, Respondent.
absence; and that Baledio herself confirmed that the members of the VOC team had intimidated her into letting
them in.
x-----------------------x
The assertion of Sesbreño is improper for consideration in this appeal.1âwphi1 The RTC and the CA
unanimously found the testimonies of Sesbreño’s witnesses implausible because of inconsistencies on material A.C. No. 4728
FLORENCIO A. SALADAGA, Complainant, vs. sufficient to engender a well-founded belief that Estafa x x x has been committed and that respondent herein is
ATTY. ARTURO B. ASTORGA, Respondent. probably guilty thereof."9 Accordingly, an Information10 dated January 8,1996 was filed before the Municipal Trial
Court (MTC) of Baybay, Leyte, formally charging respondent with the crime of estafa under Article 316,
DECISION paragraphs 1 and 2 of the Revised Penal Code,11 committed as follows:

LEONARDO-DE CASTRO, J.: On March 14, 1984, accused representing himself as the owner of a parcel of land known as
Lot No. 7661 of the Baybay Cadastre, mortgaged the same to the Rural Bank of Albuera, Albuera, Leyte, within
the jurisdiction of this Honorable Court, knowing fully well that the possessor and owner at that time was private
Membership in the legal profession is a high personal privilege burdened with conditions,1 including continuing complainant Florencio Saladaga by virtue of a Pacto de Retro Sale which accused executed in favor of private
fidelity to the law and constant possession of moral fitness. Lawyers, as guardians of the law, play a vital role in complainant on 2nd December, 1981, without first redeeming/repurchasing the same. [P]rivate complainant
the preservation of society, and a consequent obligation of lawyers is to maintain the highest standards of knowing of accused[’s] unlawful act only on or about the last week of February, 1991 when the rural bank
ethical conduct.2 Failure to live by the standards of the legal profession and to discharge the burden of the dispossessed him of the property, the mortgage having been foreclosed, private complainant thereby suffered
privilege conferred on one as a member of the bar warrant the suspension or revocation of that privilege. damages and was prejudiced by accused[’s] unlawful transaction and misrepresentation.

The Factual Antecedents The aforementioned estafa case against respondent was docketed as Criminal Case No. 3112-A.

Complainant Florencio A. Saladaga and respondent Atty. Arturo B. Astorga entered into a "Deed of Sale with Complainant likewise instituted the instant administrative cases against respondent by filing before this Court an
Right to Repurchase" on December 2, 1981 where respondent sold (with rightof repurchase) to complainant a Affidavit-Complaint12 dated January 28, 1997 and Supplemental Complaint13 dated February 27, 1997, which
parcel of coconut land located at Barangay Bunga, Baybay, Leyte covered by Transfer Certificate of Title (TCT) were docketed as A.C. No. 4697 and A.C. No. 4728, respectively. In both complaints, complainant sought the
No. T-662 for ₱15,000.00. Under the said deed, respondent represented that he has "the perfect right to dispose disbarment of respondent.
as owner in fee simple" the subject property and that the said property is "free from all liens and
encumbrances."3 The deed also provided that respondent, as vendor a retro, had two years within which to
repurchase the property, and if not repurchased within the said period, "the parties shall renew [the] The administrative cases were referred to the Integrated Bar of the Philippines (IBP) for investigation, report and
instrument/agreement."4 recommendation.14

Respondent failed to exercise his right of repurchase within the period provided in the deed, and no renewal of In his Consolidated Answer15 dated August 16, 2003 filed before the IBP, respondent denied that his agreement
the contract was made even after complainant sent respondent a final demand dated May 10, 1984 for the latter with complainant was a pacto de retrosale. He claimed that it was an equitable mortgage and that, if only
to repurchase the property. Complainant remained in peaceful possession of the property until December 1989 complainant rendered an accounting of his benefits from the produce of the land, the total amount would have
when he received letters from the Rural Bank of Albuera (Leyte), Inc. (RBAI) informing him that the property was exceeded ₱15,000.00.
mortgaged by respondent to RBAI, that the bank had subsequently foreclosed on the property, and that
complainant should therefore vacate the property.5 Report and Recommendation of the Investigating Commissioner and Resolution of the IBP Board of Governors

Complainant was alarmed and made aninvestigation. He learned the following: In a Report and Recommendation16 dated April 29, 2005, the Investigating Commissioner of the IBP’s
Commission on Bar Discipline found that respondent was in bad faith when he dealt with complainant and
executed the "Deed of Sale with Right to Repurchase" but later on claimed that the agreement was one of
(1) TCT No. T-662 was already cancelled by TCT No. T-3211 in the name of Philippine National equitable mortgage. Respondent was also guilty of deceit or fraud when he represented in the "Deed of Sale with
Bank (PNB) as early as November 17, 1972 after foreclosure proceedings; Right to Repurchase" dated December 2, 1981 that the property was covered by TCT No. T-662, even giving
complainant the owner’s copy of the said certificate of title, when the said TCT had already been cancelled on
(2) TCT No. T-3211 was cancelled by TCT No. T-7235 in the names of respondent and his wife on November 17, 1972 by TCT No. T-3211 in the name of Philippine National Bank (PNB). Respondent made
January 4, 1982 pursuant to a deed of sale dated March 27,1979 between PNB and respondent; matters even worse, when he had TCT No. T-3211 cancelled with the issuance of TCT No. T-7235 under his and
his wife’s name on January 4,1982 without informing complainant. This was compounded by respondent’s
subsequent mortgage of the property to RBAI, which led to the acquisition of the property by RBAI and the
(3) Respondent mortgaged the subject property to RBAI on March 14, 1984, RBAI foreclosed on
dispossession thereof of complainant. Thus, the Investigating Commissioner recommended that respondent be
the property, and subsequently obtained TCT No. TP-10635 on March
(1) suspended from the practice of law for one year, with warning that a similar misdeed in the future shall be
27, 1991.6 Complainant was subsequently dispossessed of the property by RBAI.7
dealt with more severity, and (2) ordered to return the sum of ₱15,000.00, the amount he received as
consideration for the pacto de retrosale, with interest at the legal rate.
Aggrieved, complainant instituted a criminal complaint for estafa against respondent with the
Office of the Provincial Prosecutor of Leyte, docketed as I.S. No. 95-144. The Provincial Prosecutor of Leyte Considering respondent’s "commission of unlawful acts, especially crimes involving moral turpitude, actsof
approved the Resolution8 dated April 21, 1995 in I.S. No. 95-144 finding that "[t]he facts of [the] case are dishonesty, grossly immoral conduct and deceit," the IBP Board of
Governors adopted and approved the Investigating Commissioner’s Report and Respondent, as owner of the property, had the right to mortgage it to complainant but, as a lawyer, he should
Recommendation with modification as follows: respondent is(1) suspended from the practice of law for two have seen to it that his agreement with complainant is embodied in an instrument that clearly expresses the
years, with warning that a similar misdeed in the future shall be dealt with more severity, and (2) ordered to intent of the contracting parties. A lawyer who drafts a contract must see to it that the agreement faithfully and
return the sum of ₱15,000.00 received in consideration of the pacto de retrosale, with legal interest.17 clearly reflects the intention of the contracting parties. Otherwise, the respective rights and obligations of the
contracting parties will be uncertain, which opens the door to legal disputes between the said parties. Indeed, the
uncertainty caused by respondent’s poor formulation of the "Deed of Sale with Right to Repurchase" was a
The Court’s Ruling significant factor in the legal controversy between respondent and complainant. Such poor formulation reflects at
the very least negatively on the legal competence of respondent.
The Court agrees with the recommendation of the IBP Board of Governors to suspend respondent from the
practice of law for two years, but it refrains from ordering respondent to return the ₱15,000.00 consideration, plus Under Section 63 of the Land Registration Act,19 the law in effect at the time the PNB acquired the subject
interest. property and obtained TCT No. T-3211 in its name in 1972, where a decree in favor of a purchaser who acquires
mortgaged property in foreclosure proceedings becomes final, such purchaser becomes entitled to the issuance
Respondent does not deny executing the "Deed of Sale with Right to Repurchase" dated December 2, 1981 in of a new certificate of title in his name and a memorandum thereof shall be "indorsed upon the mortgagor’s
favor of complainant. However, respondent insists that the deed is not one of sale with pacto de retro, but one of original certificate."20 TCT No. T-662, which respondent gave complainant when they entered into the "Deed of
equitable mortgage. Thus, respondent argues that he still had the legal right to mortgage the subject property to Sale with Right to Repurchase" dated December 2, 1981, does not bearsuch memorandum but only a
other persons. Respondent additionally asserts that complainant should render an accounting of the produce the memorandum on the mortgage of the property to PNB in 1963 and the subsequent amendment of the mortgage.
latter had collected from the said property, which would already exceed the ₱15,000.00 consideration stated in
the deed. Respondent dealt with complainant with bad faith, falsehood, and deceit when he entered into the "Deed of Sale
with Right to Repurchase" dated December 2, 1981 with the latter. He made it appear that the property was
There is no merit in respondent’s defense. covered by TCT No. T-662 under his name, even giving complainant the owner’s copy of the said certificate
oftitle, when the truth is that the said TCT had already been cancelled some nine years earlier by TCT No. T-
Regardless of whether the written contract between respondent and complainant is actually one of sale with 3211 in the name of PNB. He did not evencare to correct the wrong statement in the deed when he was
pacto de retroor of equitable mortgage, respondent’s actuations in his transaction with complainant, as well as in subsequently issued a new copy of TCT No. T-7235 on January 4, 1982,21 or barely a month after the execution
the present administrative cases, clearly show a disregard for the highest standards of legal proficiency, morality, of the said deed. All told, respondent clearly committed an act of gross dishonesty and deceit against
honesty, integrity, and fair dealing required from lawyers, for which respondent should be held administratively complainant.
liable.
Canon 1 and Rule 1.01 of the Codeof Professional Responsibility provide:
When respondent was admitted to the legal profession, he took an oath where he undertook to "obey the laws,"
"do no falsehood," and "conduct [him]self as a lawyer according to the best of [his] knowledge and discretion."18 CANON 1 – A lawyer shall uphold the constitution, obey the laws of the land and promote respect for law and legal
He gravely violated his oath. processes.

The Investigating Commissioner correctly found, and the IBP Board of Governors rightly agreed, that respondent Rule 1.01 – A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct. Under Canon 1, a
caused the ambiguity or vagueness in the "Deed of Sale with Right to Repurchase" as he was the one who lawyer is not only mandated to personally obey the laws and the legal processes, he is moreover expected to
prepared or drafted the said instrument. Respondent could have simply denominated the instrument as a deed of inspire respect and obedience thereto. On the other hand, Rule 1.01 states the norm of conduct that is expected
mortgage and referred to himself and complainant as "mortgagor" and "mortgagee," respectively, rather than as of all lawyers.22
"vendor a retro" and "vendee a retro." If only respondent had been more circumspect and careful in the drafting Any act or omission that is contrary to, prohibited or unauthorized by, in defiance of, disobedient to, or disregards
and preparation of the deed, then the controversy between him and complainant could havebeen avoided or, at the law is "unlawful." "Unlawful" conduct does not necessarily imply the element of criminality although the
the very least, easily resolved. His imprecise and misleading wording of the said deed on its face betrayed lack concept is broad enough to include such element.23
oflegal competence on his part. He thereby fell short of his oath to "conduct [him]self as a lawyer according to
the best of [his] knowledge and discretion."
To be "dishonest" means the disposition to lie, cheat, deceive, defraud or betray; be untrustworthy; lacking
inintegrity, honesty, probity, integrity in principle, fairness and straightforwardness. On the other hand, conduct
More significantly, respondent transgressed the laws and the fundamental tenet of human relations asembodied that is "deceitful" means as follows:
in Article 19 of the Civil Code:
[Having] the proclivity for fraudulent and deceptive misrepresentation, artifice or device that is used upon another
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give who is ignorant of the true facts, to the prejudice and damage of the party imposed upon. In order to be deceitful,
everyone his due, and observe honesty and good faith. the person must either have knowledge of the falsity or acted in reckless and conscious ignorance thereof,
especially if the parties are not on equal terms, and was done with the intent that the aggrieved party act
thereon, and the latter indeed acted in reliance of the false statement or deed in the manner contemplated to his
injury.24 The actions of respondent in connection with the execution of the "Deed of Sale with Right to Given the foregoing, the suspension of respondent from the practice of law for two years, as recommended by the
Repurchase" clearly fall within the concept of unlawful, dishonest, and deceitful conduct. They violate Article 19 IBP Board of Governors, is proper.
of the Civil Code. They show a disregard for Section 63 of the Land Registration Act. They also reflect bad faith,
dishonesty, and deceit on respondent’s part. Thus, respondent deserves to be sanctioned. The Court, however, will not adopt the recommendation of the IBP to order respondent to return the sum of
₱15,000.00 he received from complainant under the "Deed of Sale with Right to Repurchase." This is a civil
Respondent’s breach of his oath, violation of the laws, lack of good faith, and dishonesty are compounded by his liability best determined and awarded in a civil case rather than the present administrative cases.
gross disregard of this Court’s directives, as well as the orders of the IBP’s Investigating Commissioner (who was
acting as an agent of this Court pursuant to the Court’s referral of these cases to the IBP for investigation, report In Roa v. Moreno,29 the Court pronounced that "[i]n disciplinary proceedings against lawyers, the only issue is
and recommendation), which caused delay in the resolution of these administrative cases. whether the officer of the court is still fit to be allowed to continue as a member of the Bar. Our only concern is
the determination of respondent’s administrative liability. Our findings have no material bearing on other judicial
In particular, the Court required respondent to comment on complainant’s Affidavit-Complaint in A.C. No. 4697 action which the parties may choose to file against each other."While the respondent lawyer’s wrongful
and Supplemental Complaint in A.C. No. 4728 on March 12, 1997 and June 25, 1997, respectively.25 While he actuations may give rise at the same time to criminal, civil, and administrative liabilities, each must be
requested for several extensions of time within which to submit his comment, no such comment was submitted determined in the appropriate case; and every case must be resolved in accordance with the facts and the law
prompting the Court to require him in a Resolution dated February 4,1998 to (1) show cause why he should not applicable and the quantum of proof required in each. Section 5,30 in relation to Sections 131 and 2,32 Rule 133 of
be disciplinarily dealt with or held in contempt for such failure, and (2) submit the consolidated comment.26 the Rules of Court states that in administrative cases, such as the ones atbar, only substantial evidence is
Respondent neither showed cause why he should not be disciplinarily dealt with or held in contempt for such required, not proof beyond reasonable doubt as in criminal cases, or preponderance of evidence asin civil cases.
failure, nor submitted the consolidated comment. Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion.33
When these cases were referred to the IBP and during the proceedings before the IBP’s Investigating
Commissioner, respondent was again required several times to submit his consolidated answer. He only The Court notes that based on the same factual antecedents as the present administrative cases, complainant
complied on August 28, 2003, or more than six years after this Court originally required him to do so. The instituted a criminal case for estafa against respondent, docketed as Criminal Case No. 3112-A, before the
Investigating Commissioner also directed the parties to submit their respective position papers. Despite having MTC. When a criminal action is instituted, the civil action for the recovery of civil liability arising from the offense
been given several opportunities to submit the same, respondent did not file any position paper.27 charged shall be deemed instituted with the criminal action unless the offended party waives the civil action,
Respondent’s disregard of the directives of this Court and of the Investigating Commissioner, which caused reserves the right to institute it separately or institutes the civil action prior to the criminal action.34 Unless the
undue delay in these administrative cases, contravenes the following provisions of the Code of Professional complainant waived the civil action, reserved the right to institute it separately, or instituted the civil action prior
Responsibility: to the criminal action, then his civil action for the recovery of civil liability arising from the estafa committed by
respondent is deemed instituted with Criminal Case No. 3112-A. The civil liability that complainant may recover
CANON 11 – A lawyer shall observe and maintain the respect due to the courts and to judicial officers and should in Criminal Case No. 3112-A includes restitution; reparation of the damage caused him; and/or indemnification
insist on similar conduct by others. for consequential damages,35 which may already cover the ₱15,000.00 consideration complainant had paid for
the subject property.
xxxx
WHEREFORE, respondent is hereby found GUILTY of the following: breach of the Lawyer’s Oath; unlawful,
dishonest, and deceitful conduct; and disrespect for the Court and causing undue delay of these cases, for which
CANON 12 – A lawyer shall exert every effort and consider it his duty to assist in the speedy and efficient he is SUSPENDED from the practice of law for a period of two (2) years, reckoned from receipt of this Decision,
administration of justice. with WARNING that a similar misconduct in the future shall be dealt with more severely.

xxxx Let a copy of this Decision be furnished the Office of the Bar Confidant and the Integrated Bar of the Philippines
for their information and guidance. The Court Administrator is directed to circulate this Decision to all courts in
Rule 12.03 – A lawyer shall not, after obtaining extensions of time to file pleadings, memoranda or briefs, let the the country.
period lapse without submitting the same or offering an explanation for his failure to do so.
SO ORDERED.
Rule 12.04 – A lawyer shall not unduly delay a case, impede the execution of a judgment or misuse court
processes. TERESITA J. LEONARDO-DE CASTRO
Associate Justice
Respondent’s infractions are aggravated by the fact that he has already been imposed a disciplinary sanction
before.1âwphi1 In Nuñez v. Atty. Astorga,28 respondent was held liable for conduct unbecoming an attorney for WE CONCUR:
which he was fined ₱2,000.00.
[ G.R. No. 190667. November 07, 2016 ]
Sometime in late 1998 or early 1999, before the contract expired, petitioner required respondents to submit a list
COCA-COLA BOTTLERS PHILIPPINES, INC., PETITIONER, VS. SPOUSES JOSE R. BERNARDO AND of their customers on the pretext that it would formulate a policy defining its territorial dealership in Quezon
LILIBETH R. BERNARDO, DOING BUSINESS UNDER THE NAME AND STYLE "JOLLY BEVERAGE City.[15] It assured respondents that their contract would be renewed for a longer period, provided that they would
ENTERPRISES," RESPONDENTS. submit the list.[16] However, despite their compliance, the promise did not materialize.[17]

DECISION Respondents discovered that in February 1999, petitioner started to reach out to the persons whose names were
on the list.[18] Respondents also received reports that their delivery trucks were being trailed by petitioner's
agents; and that as soon as the trucks left, the latter would approach the former's customers.[19] Further,
SERENO, C.J.: respondents found out that petitioner had employed a different pricing scheme, such that the price given to
distributors was significantly higher than that given to supermarkets.[20] It also enticed direct buyers and sari-sari
This is a Petition for Review[1] filed by Coca-Cola Bottlers Philippines, Inc. (petitioner), from the Court of Appeals store owners in the area with its "Coke Alok" promo, in which it gave away one free bottle for every case
(CA) Decision[2] and Resolution[3] in CA-GR. CV No. 91096. The CA affirmed in toto the Decision[4] of Regional purchased.[21] It further engaged a store adjacent to respondents' warehouse to sell the former's products at a
Trial Court (RTC) Branch 88 in Quezon City in Civil Case No. Q-00-42320. substantially lower price.[22]

This case originated from the claim for damages filed by respondent spouses Jose and Lilibeth Bernardo Respondents claimed that because of these schemes, they lost not only their major customers - such as Peach
(respondents) against petitioner for violation of Articles 19, 20, 21, and 28 of the Civil Code. The RTC found Blossoms, May Flower Restaurant, Saisaki Restaurant, and Kim Hong Restaurant but also small stores, such as
petitioner liable to pay respondents temperate damages in the amount of P500,000 for loss of goodwill, to be the canteen in the hospital where respondent Jose Bernardo worked.[23] They admitted that they were unable to
offset against the latter's outstanding balance for deliveries in the amount of P449,154. The trial court ordered pay deliveries worth P449,154.[24]
petitioner to pay P50,000 as moral damages, P20,000 as exemplary damages, and P100,000 as attorney's fees.
Respondents filed a Complaint[25] for damages, alleging that the acts of petitioner constituted dishonesty, bad
Petitioner asserts that the Complaint had no basis, and that the trial court had no jurisdiction to award temperate faith, gross negligence, fraud, and unfair competition in commercial enterprise.[26] The Complaint was later
damages in an amount equivalent to the outstanding obligation of respondents. It prays not only for the reversal amended[27] to implead petitioner's officers and personnel, include additional factual allegations, and increase the
of the assailed judgments, but also for an award of moral and exemplary damages, as well as attorney's fees amount of damages prayed for.
and litigation expenses. It also asks that respondents be ordered to pay P449,154 plus legal interest from the Petitioner denied the allegations.[28] It maintained that it had obtained a list of clients through surveys, and that
date of demand until full payment.[5] promotional activities or developmental strategies were implemented only after the expiration of the
Agreements.[29] It opined that the filing of the complaint was a mere ploy resorted to by respondents to evade the
We deny the Petition. payment of the deliveries.[30]

FACTS The RTC held petitioner liable for damages for abuse of rights in violation of Articles 19, 20, and 21 of the Civil
Code and for unfair competition under Article 28. It found that petitioner's agents solicited the list of clients in
Petitioner is a domestic corporation engaged in the large-scale manufacture, sale, and distribution of beverages order to penetrate the market and directly supply customers with its products.[31] Moreover, the trial court found
around the country.[6] On the other hand, respondents, doing business under the name "Jolly Beverage that petitioner had recklessly ignored the rights of respondents to have a fair chance to engage in business or
Enterprises," are wholesalers of softdrinks in Quezon City, particularly in the vicinities of Bulacan Street, V. Luna earn a living when it deliberately used oppressive methods to deprive them of their business.[32] Its officers were,
Road, Katipunan Avenue, and Timog Avenue.[7] however, absolved of liability, as there was no showing that they had acted in their individual and personal
capacities.[33]
The business relationship between the parties commenced in 1987 when petitioner designated respondents as
its distributor.[8] On 22 March 1994, the parties formally entered into an exclusive dealership contract for three In the body of its Decision, the RTC stated that petitioner should pay respondents P500,000 as temperate
years.[9] Under the Agreement,[10] petitioner would extend developmental assistance to respondents in the form damages, and that it was only just and fair that the latter offset this amount against their outstanding obligation to
of cash assistance and trade discount incentives. For their part, respondents undertook to sell petitioner's petitioner in the amount of P449,154.[34] In the fallo, the trial court awarded P50,000 as moral damages, P20,000
products exclusively, meet the sales quota of 7,000 cases per month, and assist petitioner in its marketing as exemplary damages, and P100,000 as attorney's fees.[35] It denied petitioner's counterclaim for damages for
efforts.[11] lack of factual and legal basis.[36] Petitioner moved for reconsideration, but the motion was denied.[37]

Petitioner then elevated the case to the CA, which affirmed the RTC Decision in toto. According to the appellate
On 1 March 1997, the parties executed a similar agreement tor another two years, or until 28 February 1999.[12]
court's ruling, petitioner had used its sizable resources to railroad the business of respondents:[38]
This time, petitioner gave respondents complimentary cases of its products instead of cash assistance, and
increased the latter's sales quota to 8,000 cases per month. [Petitioner] infiltrated certain areas in Quezon City at the expense of and later, in derogation of its wholesalers,
particularly [respondents]. As admitted by Allan Mercado, the Integrated Selling and Marketing Manager of
appellant, it was previously dependent on wholesalers to circulate its products around the country. x x x.
For 13 years, the parties enjoyed a good and harmonious business partnership.[13] While the contracts contained
a clause for breach, it was never enforced.[14]
xxxx
[T]owards the end of the partnership, appellant employed a different marketing scheme purportedly to obviate Petitioner ignores the nature of a petition for review as a remedy against errors of law. Instead, it raises factual
the poor dealership management from wholesalers in major areas. But as may be shown by the incidents matters that have already been passed upon by the RTC and the CA.
leading to the filing of this case, this method was designed strategically to overrun [respondents'] business and
take over the customers of its wholesalers. It insists on the following facts: 1) the "promotional activities" were implemented after the dealership agreements
expired;[39] 2) the "developmental strategies" were implemented nationwide and were not meant to destroy the
xxxx business of respondents;[40] 3) its agents did not follow the trucks of Jolly Beverages;[41] 4) the price difference
resulted because respondents could no longer avail of trade discounts and incentives under the expired
One such method was "different pricing schemes" wherein the prices given to supermarkets and grocery stores Agreement;[42] and 5) there is no causal connection between the promotional activities and the claimed losses of
were considerably lower than those imposed on wholesalers. No prior advice thereof was given to [respondents] respondents.[43]
or any of the wholesalers. In fact, they only knew of it when their customers began complaining about the
variation in prices of softdrinks sold in supermarkets and those that were sold by them. When in fact [respondent] Petitioner contends that since it did not assign any exclusive territory to respondents, the latter had no exclusive
Bernardo personally inspected the products in grocery stores, he discovered that a box of Coke-in-can is sold at right to any customer.[44] It supposedly decided to rely on its own sales personnel to push the sale of its products,
P40.00, lower than those offered by them as wholesalers. because the distributors had violated the terms of their agreements by selling competing products, failing to meet
the required sales volume, or failing to pay on time.[45] Petitioner, however, did not allege that respondents
About the same time, [petitioner] also implemented the "Area Market Cooperatives" (AMC) and the "Coke-Alok" committed any of these actions during the existence of the agreement.
promo. Under the AMC, customers of wholesalers can purchase [petitioner's] products from prominent stores in
heavily crowded areas for P76.00 per case, as opposed to [respondent's] offering of P112.00. In "Coke-Alok," We have repeatedly held that factual findings of the trial court, especially when affirmed by the appellate court,
[petitioner] directly sold Coke products to wholesale customers with incentives as free bottle of Coke for every are given great weight, even finality, by this Court.[46] Petitioner fails to make a convincing argument that this
case of softdrinks purchased. Being of limited resources, [respondents had no] means to equal the lucrative case falls under any of the exceptions to the rule. On the contrary, the Decisions of the RTC and theCA appear to
incentives given by [petitioner] to their customers. be supported by the records.

xxxx Petitioner bewails the fact that the RTC and the CA, in establishing the facts, relied heavily on the testimony of
respondent Jose Bernardo.[47]
Apart from direct selling and other promotions, [petitioner] also employed high-handed means that further shrunk
[respondents'] market coverage. In one instance, [petitioner's sales representative] advised [respondents] and Petitioner, however, forgets that trial courts are in an ideal position to observe the demeanor of the witnesses and
other wholesalers to keep away from major thoroughfares. Apparently, [petitioner] was going to supply their can therefore discern if the latter are telling the truth or not.[48] In this case, both the trial and the appellate courts
products to these stores themselves. x x x. found the testimonies of respondent Jose Bernardo and his witnesses more credible than those of the witnesses
presented by petitioners. We shall not substitute our judgment for that of the trial court, absent any compelling
xxxx reason.

x x x Furthermore, one of [petitioner's] representatives, Nelson Pabulayan, admitted that he sold products at the Petitioner is liable for damages for abuse of rights and unfair competition under the Civil Code.
canteen in V. Luna Hospital [which was then being serviced by respondents].
Both the RTC and the CA found that petitioner had employed oppressive and high-handed schemes to unjustly
As if that was not enough, petitioner engaged other stores, such as Freezel's Bakeshop that was located limit the market coverage and diminish the investment returns of respondents.[49] The CA summarized its findings
adjacent to [respondent's] warehouse, to sell Coke products at a price substantially lower than [that offered by as follows:[50]
respondents]. This [cut-throat competition] is precisely what appellant did in order to take over the market: directly sell its
ISSUES products to or deal them off to competing stores at a price substantially lower than those imposed on its
wholesalers. As a result, the wholesalers suffered losses, and in [respondents'] case, laid ofT a number of
Petitioner argues that the trial court had no jurisdiction to award temperate damages that were not prayed for in employees and alienated the patronage of its major customers including small-scale stores.
the Complaint. It further asserts that it did not violate Articles 19, 20, 21 or 28; hence, the award of damages and It must be emphasized that petitioner is not only a beverage giant, but also the manufacturer of the products;
attorney's fees was improper. hence, it sets the price. In addition, it took advantage of the infonnation provided by respondents to facilitate its
takeover of the latter's usual business area. Distributors like respondents, who had assisted petitioner in its
OUR RULING marketing efforts, suddenly found themselves with fewer customers. Other distributors were left with no choice
but to fold.[51]
Articles 19, 20, and 21 of the Civil Code provide the legal bedrock for the award of damages to a party who
The CA did not err in affirming the finding that petitioner was liable for temperate, moral and exemplary damages,
suffers damage whenever another person commits an act in violation of some legal provision; or an act which,
as well as attorney's fees, tor abuse of rights and unfair competition. though not con'itituting a transgression of positive law, nevertheless violates certain rudimentary rights of the
party aggrieved.[52] The provisions read:
The Petition raises questions of fact.
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give was justified, even if it was not specifically prayed for, because 1) respondents did pray for the grant of "other
everyone his due, and observe honesty and good faith. reliefs," and 2) the award was clearly warranted under the circumstances. Indeed, the law permits judges to
award a different kind of damages as an alternative to actual damages:
Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the Civil Code, Art. 2224. Temperate or moderate damages, which are more than nominal but less than
latter for the same. compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered
but its amount can not, from the nature of the case, be
Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good provided with certainty. (Emphasis supplied)
customs or public policy shall compensate the latter for the damage. Compensatory damages may be awarded in the concept of temperate damages for injury to business reputation
In Albenson Enterprises Corp. v. CA,[53] this Court held that under any of the above provisions of law, an act that or business standing, loss of goodwill, and loss of customers who shifted their patronage to competitors.[58]
causes injury to another may be made the basis for an award of damages.
As explained by this Court in GF Equity, Inc. v. Valenzona:[54] It is not extraordinary for courts to award temperate damages in lieu of actual damages. In Canada v. All
The exercise of a right ends when the right disappears; and it disappears when it is abused, especially to the Commodities Marketing Corporation,[59] this Court awarded temperate damages in recognition of the pecuniary
prejudice of others. The mask of a right without the spirit of justice which gives it life is repugnant to the modern loss suffered, after finding that actual damages could not be awarded for lack of proof. In Public Estates Authority
concept of social law. It cannot be said that a person exercises a right when he unnecessarily prejudices another v. Chu,[60] this Court held that temperate damages should have been awarded by the trial court considering that
or offends morals or good customs. Over and above the specific precepts of positive law are the supreme norms the plaintiff therein had suffered some pecuniary loss.
of justice which the law develops and which are expressed in three principles: honeste vivere, alterum non
laedere and jus suum quique tribuere; and he who violates them violates the law. In this case, both the RTC and the CA found that respondents had similarly suffered pecuniary loss by reason of
For this reason, it is not permissible to abuse our rights to prejudice others. Meanwhile, the use of unjust, petitioner's high-handed machinations to eliminate competition in the market.[61]
oppressive, or high-handed business methods resulting in unfair competition also gives a right of action to the
injured party. Article 28 of the Civil Code provides: We see no grave error on the part of the RTC when it ruled that the unpaid obligation of respondents shall be
Art. 28. Unfair competition in agricultural, commercial or industrial enterprises or in labor through the use of force, offset against the temperate damages due them from petitioner.[62] However, the trial court was not accurate in
intimidation, deceit, machination or any other unjust, oppressive or highhanded method shall give rise to a right considering the P500,000 temperate damages as adequate to completely extinguish the obligation of
of action by the person who thereby sutlers damage. respondents to petitioner.[63] We note that while the principal was P449,154, this amount earned legal interest
Petitioner cites Tolentino, who in turn cited Colin and Capitant. According to the latter, the act of "a merchant from the time of demand. Nonetheless, in view of the established fact that respondents incurred the losses after
[who] puts up a store near the store of another and in this way attracts some of the latter's patrons" is not an their business was systematically crippled by petitioner, it is only proper and just that the obligation, as well as
abuse of a right.[55] The scenario in the present case is vastly different: the merchant was also the producer who, the legal interest that has accrued, be deemed totally compensated by the temperate damages. Therefore,
with the use of a list provided by its distributor, knocked on the doors of the latter's customers and offered the respondents do not need to tender the amount of P449,154 plus legal interest to petitioner, while the latter does
products at a substantially lower price. Unsatisfied, the merchant even sold its products at a preferential rate to not have to tender any amount as temperate damages to the former.
another store within the vicinity. Jurisprudence holds that when a person starts an opposing place of business,
not for the sake of profit, but regardless of Joss and for the sole purpose of driving a competitor out of business, With regard to moral damages, petitioner argues that respondents failed to provide satisfactory proof that the
in order to take advantage of the effects of a malevolent purpose, that person is guilty of a wanton wrong.[56] latter had undergone any suffering or injury.[64] This is a factual question that has been resolved by the trial court
in a Decision affirmed by the CA. The award finds legal basis under Article 2219(10) of the Civil Code, which
Temperate, moral, and exemplary damages, as well as attorney's fees, were properly awarded. states that moral damages may be recovered in acts and actions referred to in Articles 21 and 28.[65]

Petitioner argues that the trial court did not have jurisdiction to grant an award of temperate damages, because Petitioner likewise questions the award of exemplary damages without "competent proof."[66] It cites Spouses
respondents did not specifically pray for it in their Amended Complaint: WHEREFORE, premises considered, it is Villafuerte v. CA[67] as basis for arguing that the CA should have based its Decision regarding the fact and the
most respectfully prayed that the Honorable Court render a judgment directing defendants to: amount of exemplary damages upon competent proof that respondents have suffered injury and upon
evidence of the actual amount thereof. We enjoin petitioner's counsel to fully and carefully read the text of our
1. Pay plaintiffs the amount of P1,000,000.00 representing loss of goodwill nurtured over the past decisions before citing them as authority.[68] The excerpt lifted pertains to compensatory damages, not
13 years as actual damages. exemplary damages. We remind counsel that exemplary damages are awarded under Article 2229 of the Civil
Code by way of example or correction for the public good. The determination of the amount is left to the
discretion of the judge; its proof is not incumbent upon the claimant.
2. Pay plaintiffs the amount of P200,000 representing moral damages.
There being no meritorious argument raised by petitioner, the award of exemplary damages must be sustained to
3. Pay plaintiffs the amount of P100,000 representing exemplary damages. caution powerful business owners against the use of oppressive and high-handed commercial strategies to
target and trample on the rights of small business owners, who are striving to make a decent living.
4. Pay plaintiffs the amount of P100,000 representing attorney's fees.
Other reliefs which are just and equitable under the premises are also prayed for. Petitioner's argument is flimsy Exemplary damages having been awarded, the grant of attorney's fees was therefore warranted.[69]
and unsupported even by the cases it has cited.[57] The CA correctly ruled that the award of temperate damages
Petitioner's counterclaims for moral and exemplary damages, as well as attorney's fees and litigation Arabia.[5] On the other hand, petitioner is an accredited member of the Gulf Cooperative Council Approved
expenses, were properly denied. Medical Centers Association (GAMCA) and as such, authorized to conduct medical examinations of prospective
applicants for overseas employment.[6]
The counterclaim for the payment of P449,154 plus legal interet was effectively granted when the trial court offset
the temperate damages awarded to respondents against the outstanding obligation of the latter to petitioner. On January 10, 2008, respondent referred prospective applicant Jonathan V. Raguindin (Raguindin) to petitioner
for a pre-deployment medical examination in accordance with the instructions from GAMCA.[7] After undergoing
The counterclaims for moral and exemplary damages, as well as attorney's fees and litigation expenses, had no the required examinations, petitioner cleared
basis and were properly denied. The fact that petitioner was compelled to engage the services of counsel in Raguindin and found him "fit for employment," as evidenced by a Medical Report[8] dated January 11, 2008
order to defend itself against the suit of respondents did not entitle it to attorney's fees. (Medical Report).[9]
According to petitioner, it is entitled to moral damages, because "respondents clearly acted in a vexatious
manner when they instituted this suit."[70] We see nothing in the record to sustain this argument. Based on the foregoing, respondent deployed Raguindin to Saudi Arabia, allegedly incurring expenses in the
amount of P84,373.41.[10] Unfortunately, when Raguindin underwent another medical examination with the
With respect to the prayer for exemplary damages, neither do we find any act of respondents that has to be General Care Dispensary of Saudi Arabia (General Care Dispensary) on March 24, 2008, he purportedly tested
positive for HCV or the hepatitis C virus. The Ministry of Health of the Kingdom of Saudi Arabia (Ministry of
deterred.
Health) required a re-examination of Raguindin, which the General Care Dispensary conducted on April 28,
2008.[11] However, the results of the re-examination remained the same, i.e., Raguindin was positive for HCV,
WHEREFORE, the Petition is DENIED. The Decision dated 23 July 2009 and Resolution dated 19 November which results were reflected in a Certification[12] dated April 28, 2008 (Certification). An undated HCV
2009 rendered by the Court of Appeals in CA-G.R. CV No. 91096, which affirmed in toto the Decision dated 28 Confirmatory Test Report[13] likewise conducted by the Ministry of Health affirmed such finding, thereby leading to
September 2007 issued by Regional Trial Court Branch
Raguindin's repatriation to the Philippines.[14]
88 Quezon City in Civil Case No. Q-00-42320, are
hereby AFFIRMED with MODIFICATION in that the damages awarded shall earn legal interest of 6% per annum
from the date of finality of this Decision until its full satisfaction. The total compensation of respondents' unpaid Claiming that petitioner was reckless in issuing its Medical Report stating that Raguindin is "fit for employment"
obligation, including legal interest that has accrued, and the temperate damages awarded to them, is hereby when a subsequent finding in Saudi Arabia revealed that he was positive for HCV, respondent filed a
upheld. Complaint[15] for sum of money and damages against petitioner before the Metropolitan Trial Court of
Mandaluyong City, Branch 60 (MeTC). Respondent essentially averred that it relied on petitioner's declaration
SO ORDERED. and incurred expenses as a consequence. Thus, respondent prayed for the award of damages in the amount of
P84,373.41 representing the expenses it incurred in deploying Raguindin abroad.[16]
Leonardo-De Castro, Bersamin, Perlas-Bernabe, and Caguioa, JJ., concur.
In its Answer with compulsory counterclaim,[17] petitioner denied liability and claimed that: first, respondent was
not a proper party in interest for lack of privity of contract between them; second, the MeTC had no jurisdiction
[ G.R. No. 217426. December 04, 2017 ] over the case as it involves the interpretation and implementation of a contract of employment; third, the action is
premature as Raguindin has yet to undergo a post-employment medical examination following his repatriation;
and fourth, the complaint failed to state a cause of action as the Medical Report issued by petitioner had already
ST. MARTIN POLYCLINIC, INC., PETITIONER, V. LWV CONSTRUCTION CORPORATION, RESPONDENT. expired on April 11, 2008, or three (3) months after its issuance on January 11, 2008.[18]

DECISION
The MeTC Ruling
PERLAS-BERNABE, J.:
In a Decision[19] dated December 17, 2010, the MeTC rendered judgment in favor of respondent and ordered
petitioner to pay the amount of P84,373.41 as actual damages, P20,000.00 as attorney's fees, and the costs of
Assailed in this petition for review on certiorari[1] are the Decision[2] dated July 11, 2014 and the Resolution[3] suit.[20]
dated February 27, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 125451, which affirmed with
modification the Decision[4] dated December 15, 2011 and the
Order dated May 25, 2012 of the Regional Trial Court of Mandaluyong City, Branch 211 (RTC) in SCA Case No. At the onset, the MeTC held that it had jurisdiction over the case, since respondent was claiming actual damages
MC11-879 (Civil Case No. 21881), and thereby ordered herein petitioner St. Martin Polyclinic, Inc. (petitioner) to incurred in the deployment of Raguindin in the amount of P84,373.41.[21] It further ruled that respondent was a
pay respondent LWV Construction Corporation (respondent) temperate damages in the amount of P50,000.00. real party in interest, as it would not have incurred expenses had petitioner not issued the Medical Report
certifying that Raguindin was fit to work.
The Facts
On the merits, the MeTC found that respondent was entitled to be informed accurately of the precise condition of
Raguindin before deploying the latter abroad and consequently, had sustained damage as a result of the
Respondent is engaged in the business of recruiting Filipino workers for deployment to Saudi
erroneous certification.[22] In this relation, it rejected petitioner's contention that Raguindin may have contracted The essential issue advanced for the Court's resolution is whether or not petitioner was negligent in issuing the
the disease after his medical examination in the Philippines up to the time of his deployment, there being no Medical Report declaring Raguindin "fit for employment" and hence, should be held liable for damages.
evidence offered to corroborate the same.[23]
The Court's Ruling The petition is
Aggrieved, petitioner appealed to the RTC, contending,[24] among others, that respondent failed to comply with
the requirements on the authentication and proof of documents under Section 24,[25] Rule 132 of the Rules of granted.
Court, considering that respondent's evidence, particularly the April 28, 2008 Certification issued by the General
Care Dispensary and the HCV Confirmatory Test Report issued by the Ministry of Health, are foreign documents I.
issued in Saudi Arabia.
At the outset, it should be pointed out that a re-examination of factual findings cannot be done acting on a
The RTC Ruling petition for review on certiorari because the Court is not a trier of facts but reviews only questions of law.[41] Thus,
in petitions for review on certiorari, only questions of law may generally be put into issue. This rule, however,
In a Decision[26] dated December 15, 2011, the RTC dismissed petitioner's appeal and affirmed the MeTC admits of certain exceptions, such as "when the inference made is manifestly mistaken, absurd or impossible"; or
Decision in its entirety.[27] Additionally, the RTC pointed out that petitioner can no longer change the theory of the "when the findings are conclusions without citation of specific evidence on which they are based."[42] Finding a
case or raise new issues on appeal, referring to the latter's argument on the authentication of respondent's confluence of certain exceptions in this case, the general rule that only legal issues may be raised in a petition
documentary evidence.[28] for review on certiorari under Rule 45 of the Rules of Court would not apply, and the Court retains the authority to
pass upon the evidence presented and draw conclusions therefrom.[43]
Petitioner's motion for reconsideration[29] was denied in an Order[30] dated May 25, 2012.
Dissatisfied, petitioner elevated the case to the CA.[31] II.

The CA Ruling An action for damages due to the negligence of another may be instituted on the basis of Article 2176 of the Civil
Code, which defines a quasi-delict:
In a Decision[32] dated July 11, 2014, the CA affirmed the RTC Decision, with the modification deleting the award
of actual damages and instead, awarding temperate damages in the amount of P50,000.00.[33] Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this Chapter.
The CA held that petitioner failed to perform its duty to accurately diagnose Raguindin when it issued its Medical
Report declaring the latter "fit for employment", considering that he was subsequently found positive for HCV in
Saudi Arabia.[34] Further, the CA opined that the Certification issued by the General Care Dispensary is not a The elements of a quasi-delict are: (1) an act or omission; (2) the presence of fault or negligence in the
public document and in such regard, rejected petitioner's argument that the same is inadmissible in evidence for performance or non-performance of the act; (3) injury; (4) a causal connection between the negligent act
not having been authenticated. Moreover, it remarked that petitioner's own Medical Report does not enjoy the and the injury; and (5) no pre-existing contractual relation.[44]
presumption of regularity as petitioner is merely an accredited clinic.[35] Finally, the CA ruled that petitioner could
not disclaim liability on the ground that Raguindin tested positive for HCV in Saudi Arabia after the expiration of As a general rule, any act or omission coming under the purview of Article 2176 gives rise to a cause of action
the Medical Report on April 11, 2008, noting that the General Care Dispensary issued its Certification on April 28, under quasi-delict. This, in turn, gives the basis for a claim of damages.[45] Notably, quasi-delict is one among
2008, or a mere seventeen (17) days from the expiration of petitioner's Medical Report.[36] Hence, the CA several sources of obligation. Article 1157 of the Civil Code states:
concluded that "it is contrary to human experience that a newly-deployed overseas worker, such as Raguindin,
would immediately contract a serious virus at the very beginning of a deployment."[37]
Article 1157. Obligations arise from:

However, as the records are bereft of evidence to show that respondent actually incurred the amount of
P84,373.41 as expenses for Raguindin's deployment, the CA deleted the award of actual damages and instead, (1) Law;
awarded temperate damages in the amount of P50,000.00.[38] (2) Contracts;
(3) Quasi-contracts;
Aggrieved, petitioner filed a motion for partial reconsideration,[39] which the CA denied in a Resolution[40] dated (4) Acts or omissions punished by law; and
February 27, 2015; hence, this petition. (5) Quasi-delicts.

The Issue Before the Court However, as explained by Associate Justice Marvic M.V.F. Leonen (Justice Leonen) in his opinion in Alano v.
Magud-Logmao[46] (Alano), "Article 2176 is not an all-encompassing enumeration of all actionable wrongs
which can give rise to the liability for damages. Under the Civil Code, acts done in violation of Articles Thus, with respect to negligent acts or omissions, it should therefore be discerned that Article 20 of the Civil
19, 20, and 21 will also give rise to damages."[47] These provisions - which were cited as bases by the MTC, Code concerns "violations of existing law as basis for an injury", whereas Article 2176 applies when
RTC and CA in their respective rulings in this case - read as follows: the negligent act causing damage to another does not constitute "a breach of an existing law or a pre-
existing contractual obligation."
Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith. In this case, the courts a quo erroneously anchored their respective rulings on the provisions of Articles 19, 20,
and 21 of the Civil Code. This is because respondent did not proffer (nor have these courts mentioned) any law
Article 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify as basis for which damages may be recovered due to petitioner's alleged negligent act. In its amended
the latter for the same. complaint, respondent mainly avers that had petitioner not issue a "fit for employment" Medical Report to
Raguindin, respondent would not have processed his documents, deployed him to Saudi Arabia, and later on - in
view of the subsequent findings that Raguindin was positive for HCV and hence, unfit to work - suffered actual
Article 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good damages in the amount of P84,373.41.[52] Thus, as the claimed negligent act of petitioner was not premised on
customs, or public policy shall compensate the latter for the damage. the breach of any law, and not to mention the incontestable fact that no pre-existing contractual relation was
averred to exist between the parties, Article 2176 - instead of Articles 19, 20 and 21 - of the Civil Code should
"[Article 19], known to contain what is commonly referred to as the principle of abuse of rights, sets certain govern.
standards which must be observed not only in the exercise of one's rights, but also in the performance of one's
duties."[48] Case law states that "[w]hen a right is exercised in a manner which does not conform with the norms III.
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, Negligence is defined as the failure to observe for the protection of the interests of another person, that degree of
an action for damages under either Article 20 or Article 21 would [then] be proper."[49] Between these two care, precaution and vigilance which the circumstances justly demand, whereby such other person suffers
provisions as worded, it is Article 20 which applies to both willful and negligent acts that are done contrary to injury.[53]
law. On the other hand, Article 21 applies only to willful acts done contra bonos mores.[50] As early as the case of Picart v. Smith,[54] the Court elucidated that "the test by which to determine the existence
of negligence in a particular case is: Did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent person would have used in the same situation?
In the Alano case, Justice Leonen aptly elaborated on the distinctive applications of Articles 19, 20 and 21, which If not, then he is guilty of negligence."[55] Corollary thereto, the Court stated that "[t]he question as to what would
are general provisions on human relations, vis-a-vis Article 2176, which particularly governs quasi-delicts: constitute the conduct of a prudent man in a given situation must of course be always determined in the light of
human experience and in view of the facts involved in the particular case. Abstract speculation cannot here
Article 19 is the general rule which governs the conduct of human relations. By itself, it is not the basis of an be of much value x x x: Reasonable men govern their conduct by the circumstances which are before them or
actionable tort. Article 19 describes the degree of care required so that an actionable tort may arise when it is known to them. They are not, and are not supposed to be, omniscient of the future. Hence[,] they can be
alleged together with Article 20 or Article 21. expected to take care only when there is something before them to suggest or warn of danger."[56]
Article 20 concerns violations of existing law as basis for an injury. It allows recovery should the act have
been willful or negligent. Willful may refer to the intention to do the act and the desire to achieve the outcome Under our Rules of Evidence, it is disputably presumed that a person takes ordinary care of his concerns and
which is considered by the plaintiff in tort action as injurious. Negligence may refer to a situation where the act that private transactions have been fair and regular.[57] In effect, negligence cannot be presumed, and thus,
was consciously done but without intending the result which the plaintiff considers as injurious. must be proven by him who alleges
it.[58] In Huang v. Philippine Hoteliers, Inc.:[59]
Article 21, on the other hand, concerns injuries that may be caused by acts which are not necessarily proscribed
by law. This article requires that the act be willful, that is, that there was an intention to do the act and a desire to [T]he negligence or fault should be clearly established as it is the basis of her action. The burden of proof is upon
achieve the outcome. In cases under Article 21, the legal issues revolve around whether such outcome should [the plaintiff]. Section 1, Rule 131 of the Rules of Court provides that "burden of proof is the duty of a party to
be considered a legal injury on the part of the plaintiff or whether the commission of the act was done in violation present evidence on the facts in issue necessary to establish his claim or defense by the amount of evidence
of the standards of care required in Article 19. required by law." It is then up for the plaintiff to establish his cause of action or the defendant to establish his
defense. Therefore, if the plaintiff alleged in his complaint that he was damaged because of the negligent
Article 2176 covers situations where an injury happens through an act or omission of the defendant. When it acts of the defendant, he has the burden of proving such negligence. It is even presumed that a person
involves a positive act, the intention to commit the outcome is irrelevant. The act itself must not be a breach takes ordinary care of his concerns. The quantum of proof required is preponderance of evidence.[60]
of an existing law or a pre-existing contractual obligation. What will be considered is whether there is "fault (Emphasis and underscoring supplied)
or negligence” attending the commission of the act which necessarily leads to the outcome considered as
injurious by the plaintiff. The required degree of diligence will then be assessed in relation to the circumstances The records of this case show that the pieces of evidence mainly relied upon by respondent to establish
of each and every case.[51] (Emphases and underscoring supplied) petitioner's negligence are: (a) the Certification[61] dated April 28, 2008; and (b) the HCV Confirmatory Test
Report.[62] However, these issuances only indicate the results of the General Care Dispensary and Ministry of
Health's own medical examination of Raguindin finding him to be positive for HCV. Notably, the examination interruption of proceedings, parties or their attorneys are directed to have such translation prepared before
conducted by the General Care Dispensary, which was later affirmed by the Ministry of Health, was conducted trial.[67]
only on A cursory examination of the subject document would reveal that while it contains English words, the majority of
March 24, 2008, or at least two (2) months after petitioner issued its Medical Report on January 11, 2008. it is in an unofficial language. Sans any translation in English or Filipino provided by respondent, the same
Hence, even assuming that Raguindin's diagnosis for HCV was correct, the fact that he later tested positive for should not have been admitted in evidence; thus their contents could not be given probative value, and deemed
the same does not convincingly prove that he was already under the same medical state at the time petitioner to constitute proof of the facts stated therein.
issued the Medical Report on January 11, 2008. In this regard, it was therefore incumbent upon respondent to
show that there was already negligence at the time the Medical Report was issued, may it be through Moreover, the due execution and authenticity of the said certification were not proven in accordance with Section
evidence that show that standard medical procedures were not carefully observed or that there were already 20, Rule 132 of the Rules of Court:
palpable signs that exhibited Raguindin's unfitness for deployment at that time. This is hardly the case when
respondent only proffered evidence which demonstrate that months after petitioner's Medical Report was
issued, Raguindin, who had already been deployed to Saudi Arabia, tested positive for HCV and as such, was Section 20. Proof of private document. - Before any private document offered as authentic is received in evidence,
no longer "fit for employment". its due execution and authenticity must be proved either:
In fact, there is a reasonable possibility that Raguindin became exposed to the HCV only after his medical
examination with petitioner on January 11, 2008. Based on published reports from the World Health (a) By anyone who saw the document executed or written; or
Organization, HCV or the hepatitis C virus causes both acute and chronic infection. Acute HCV infection is
usually asymptomatic,[63] and is only very rarely associated with life-threatening diseases. The incubation (b) By evidence of the genuineness of the signature or handwriting of the maker.
period[64] for HCV is two (2) weeks to six (6) months, and following initial infection, approximately 80% of (c) Any other private document need only be identified as that which it is claimed to be.
people do not exhibit any symptoms.[65] Indisputably, Raguindin was not deployed to Saudi Arabia immediately
after petitioner's medical examination and hence, could have possibly contracted the same only when he arrived Notably, the foregoing provision applies since the Certification does not fall within the classes of public
thereat. In light of the foregoing, the CA therefore erred in holding that "[h]ad petitioner more thoroughly and documents under Section 19, Rule 132 of the Rules of Court[68] - and hence, must be considered as private. It
diligently examined Raguindin, it would likely have discovered the existence of the HCV because it was contrary has been settled that an unverified and unidentified private document cannot be accorded probative
to human experience that a newly-deployed overseas worker, such as Raguindin, would immediately have value.[69] In addition, case law states that "since a medical certificate involves an opinion of one who must
contracted the disease at the beginning of his deployment"[66] first be established as an expert witness, it cannot be given weight or credit unless the doctor who
issued it is presented in court to show his qualifications. It is precluded because the party against whom it is
While petitioner's Medical Report indicates an expiration of April 11, 2008, the Court finds it fitting to clarify that presented is deprived of the right and opportunity to cross-examine the person to whom the statements or
the same could not be construed as a certified guarantee coming from petitioner that Raguindin's medical status writings are attributed. Its executor or author should be presented as a witness to provide the other party to the
at the time the report was issued on January 11, 2008 (i.e., that he was fit for employment) would remain the litigation the opportunity to question its contents. Being mere hearsay evidence, failure to present the author of
same up until that date (i.e., April 11, 2008). As earlier intimated, the intervening period could very well account the medical certificate renders its contents suspect and of no probative value,"[70] as in this case.
for a number of variables that could have led to a change in Raguindin's condition, such as his deployment to a
different environment in Saudi Arabia. If at all, the expiration date only means that the Medical Report is valid - Similarly, the HCV Confirmatory Test Report issued by the Ministry of Health of Saudi Arabia should have also
and as such, could be submitted - as a formal requirement for overseas employment up until April 11, 2008; it been excluded as evidence. Although the same may be considered a public document, being an alleged written
does not, by any means, create legal basis to hold the issuer accountable for any intervening change of official act of an official body of a foreign country,[71] the same was not duly authenticated in accordance with
condition from the time of issuance up until expiration. Truly, petitioner could not be reasonably expected to Section 24,[72] Rule 132 of the Rules of Court. While respondent provided a translation[73] thereof from the
predict, much less assure, that Raguindin's medical status of being fit for employment would remain unchanged. National Commission on Muslim Filipinos, Bureau of External Relations, Office of the President, the same was
Thus, the fact that the Medical Report's expiration date of April 11, 2008 was only seventeen not accompanied by a certificate of the secretary of the embassy or legation, consul-general, consul, vice-consul,
(17) days away from the issuance of the General Care Dispensary's April 28, 2008 Certification finding Raguindin or consular agent or any officer in the foreign service of the Philippines stationed in Saudi Arabia, where the
positive for HCV should not - as it does not - establish petitioner's negligence. record is kept, and authenticated by the seal of his
office.[74]
IV.
To be sure, petitioner - contrary to respondent's contention[75] - has not changed its theory of the case by
At any rate, the fact that Raguindin tested positive for HCV could not have been properly established since the questioning the foregoing documents. As petitioner correctly argued, it merely amplified its defense[76] that it is
courts a quo, in the first place, erred in admitting and giving probative weight to the Certification of the General not liable for negligence when it further questioned the validity of the issuances of the General Care Dispensary
Care Dispensary, which was written in an unofficial language. Section 33, Rule 132 ofthe Rules of Court states and Ministry of Health. In Limpangco Sons v. Yangco[77], the Court explained that "[t]here is a difference x x x
that: between a change in the theory of the case and a shifting of the incidence of the emphasis placed during the trial
or in the briefs." "Where x x x the theory of the case as set out in the pleadings remains the theory throughout
Section 33. Documentary evidence in an unofficial language. - Documents written in an unofficial language shall the progress of the cause, the change of emphasis from one phase of the case as presented by one set of facts
not be admitted as evidence, unless accompanied with a translation into English or Filipino. To avoid to another phase made prominent by another set of facts x x x does not result in a change of theory x x x".[78] In
any case, petitioner had already questioned the validity of these documents in its Position Paper[79] before the
MeTC.[80] Hence, there is no change of theory that would preclude petitioner's arguments on this score.
All told, there being no negligence proven by respondent through credible and admissible evidence, petitioner documents, told them that he would conduct an ocular inspection of their farmhouse. The next day, respondent,
cannot be held liable for damages under Article 2176 of the Civil Code as above-discussed. together with his farmhand, went looking for Raso and confronted her about the latter's threat of disconnection.
To appease them, Raso guaranteed not to order the disconnection of respondent's electricity; nevertheless, she
WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated July 11, 2014 and the Resolution still refused to issue the certification on the premise that respondent's farmhouse already had electricity. In the
dated February 27, 2015 of the Court of Appeals in CA-G.R. SP No. 125451 are REVERSED and SET ASIDE, course of their conversation, Raso uttered, "Sabut sabuton lang ni nato," which translates to "let us just settle
and a NEW ONE is entered, DISMISSING the complaint of respondent LWV Construction Corporation for lack of this."9
merit.
On November 5, 2006, respondent and his wife once more went to Raso to follow up on the issuance of such
certification. They met at the purok center, where Raso was conducting a meeting with several purok members.
SO ORDERED. Thereat, Raso asked why respondent's electricity has not yet been installed. Respondent took this to be a
sarcastic and rhetorical remark because Raso was, in fact, the one withholding the issuance of the BAPA
Carpio (Chairperson), Peralta, Caguioa, and Reyes, Jr., JJ., concur. certification which was
precisely the cause of the delay of the aforesaid installation.10
G.R. No. 246012, June 17, 2020
In another confrontation, Raso explained that she was about to issue the certification but was prevented by
Lomarda, who allegedly apprised her of a pending complaint for premature tapping against respondent. To settle
ISMAEL G. LOMARDA AND CRISPINA RASO, PETITIONERS, V. ENGR. ELMER T.
the misunderstanding, Raso directed respondent to discuss the matter with Lomarda at his house, and again
FUDALAN, RESPONDENT, BOHOL I ELECTRIC COOPERATIVE, INC., DEFENDANT. uttered "Sabut sabuton lang ni nato." During their conversation, Lomarda told respondent that he earlier received
a disconnection order issued a long time ago but misplaced the document, and that an ocular inspection of
DECISION respondent's farmhouse will be conducted on November 6, 2006. When respondent informed Raso of the date of
inspection, the latter once again remarked, "Sabut sabuton lang ni nato."11
PERLAS-BERNABE, J.:
On the day of inspection, or on November 6, 2006, respondent was assured that his electricity will not be
certiorari1
Assailed in this petition for review on are the Decision 2
dated February 9, 2017 and the Resolution3 disconnected and that Raso will issue the certification, provided he would pay the amount of P1,750.00 or sign a
dated May 19, 2017 of the Court of Appeals (CA) in CA-G.R. CV No. 04480, which affirmed the Decision4 dated promissory note. Respondent, however, refused to comply with the said conditions, reasoning that there was no
May 15, 2012 of the Regional Trial Court of Tagbilaran City, Bohol, Branch 49 (RTC) in Civil Case No. 7476, official order from the concerned office. After respondent refused to pay, Lomarda allegedly posed in front of a
granting the complaint for damages filed by respondent Engr. Elmer T. Fudalan (respondent) against petitioners camera and while pointing at the slot provided for the electric meter, shouted, "This is an illegal tapping."
Ismael D. Lomarda (Lomarda) and Crispina Raso (Raso; collectively, petitioners). Thereafter, Lomarda, in the presence of policemen, the barangay treasurer, and other several passersby,
ordered his linemen to cut off respondent's electricity.12
The Facts
On November 9, 2006, respondent communicated with BOHECO I, through phone, and inquired about his
electric dues. He was informed that there was no system loss or excess billed to the cooperative, and that his
On September 27, 2006, respondent, through his wife, Alma Fudalan, applied for electrical service from
electric usage amounted only to P20.00.
BOHECO I Electric Cooperative Inc. (BOHECO I) to illuminate their farmhouse located in Cambanac, Baclayon,
Bohol. At the pre-membership seminar, respondent paid the amount of P48.12 as membership fee and was
Claiming that petitioners' acts tarnished his image, besmirched his reputation, and defamed his honor and
advised to employ the services of an authorized electrician from BOHECO I.5 Accordingly, on October 7, 2006,
dignity, respondent filed a complaint for damages before the RTC. Respondent alleged that petitioners
respondent employed the services of Sabino Albelda Sr. (Albelda), a BOHECO I authorized electrician, who
confederated with one another to purposely delay the approval of his application for electric connection by: (a)
informed him that the electrical connection could only be installed in his farmhouse if he procures a certification
withholding the issuance of the BAPA certification; (b) falsely accusing him of premature tapping and pilferage of
from Raso, the Barangay Power Association (BAPA)6 Chairperson. Respondent then instructed his farmhand to
electricity; and (c) demanding
get a certification from Raso but despite efforts to reach Raso, the latter was unavailable. Thus, respondent
consented to the tapping of his electrical line to that of BAPA upon the assurance of Albelda that he would not be the payment of P1,750.00, when what was due him was only P20.00.13
charged with pilferage of electricity because his electric usage shall be determined by the check meter of
BOHECO I at the base of the drop line and shall be billed accordingly.7 For their part, petitioners contended that respondent committed premature tapping of electricity, when the latter
consented to the tapping of his line to the service line of BAPA without a "turn-on" order from BOHECO I.
Moreover, they claim that they cannot be faulted for the disconnection, since they gave respondent the option to
In the morning of October 8, 2006, respondent still tried again to obtain Raso's certification. However, during their
meeting, Raso allegedly got mad, vowed to never issue the said certification, and eventually then reported the pay the penalty or sign a promissory note, which the latter refused.14cralawred
matter to BOHECO I for disconnection.8
The RTC Ruling
Feeling aggrieved, respondent and his wife went to BOHECO I on October 17, 2006 to complain about Raso's
malicious actuations. They were attended to by the receiving clerk, petitioner Lomarda, who, after reviewing their In a Decision15 dated May 15, 2012, the RTC found petitioners liable for damages under Article 21 of the Civil
Code,16 and accordingly, ordered them to jointly and severally pay respondent the following amounts: (a)
P451.65 as actual damages; (b) P200,000.00 as moral damages; (c) P100,000.00 as exemplary damages; (d)
P50,000.00 as attorney's fees; and (e) In this case, petitioners were found liable by both the RTC and CA for abuse of rights under Article 19, in relation
P20,000.00 as litigation expenses.17 to Article 21, of the Civil Code.

In so ruling, the RTC held that respondent could not have committed premature electrical connection or electric "Article 19, known to contain what is commonly referred to as the principle of abuse of rights, sets certain
pilferage in violation of the existing rules and regulations of BOHECO I, considering that the installation of standards which may be observed not only in the exercise of one's rights but also in the performance of one's
respondent's electrical connection was only done upon the advice of Albelda, who is an authorized electrician of duties." In this regard, case law states that "[a] right, though by itself legal because [it is] recognized or granted
BOHECO I. Moreover, the RTC pointed out that respondent was in good faith and exerted all his efforts to by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner
comply with the requirements of BOHECO I, while petitioners performed acts that are malicious, dishonest, and which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is
in gross bad faith. In particular, petitioners intentionally withheld the issuance of the required BAPA certification thereby committed for which the wrongdoer must be held responsible."24
and worse, demanded the payment of P1,750.00, when what was due from respondent was only P20.00.
Consequently, the RTC ruled that petitioners are "Article 19 is the general rule which governs the conduct of human relations. By itself, it is not the basis of an
liable under Article 21 of the Civil Code.18 actionable tort. Article 19 describes the degree of care required so that an actionable tort may arise when it is
alleged together with Article 20 or Article 21."25 In Saudi
Aggrieved, petitioners appealed to the Court of Appeals (CA). Arabian Airlines v. CA,26 the Court explained the relation of Article 19 and Article 21 of the
Civil Code: ChanRoblesVirtualawlibrary
The CA Ruling On one hand, Article 19 of the New Civil Code provides:

In a Decision19 dated February 9, 2017, the CA affirmed the RTC Decision.20 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.
At the onset, the CA observed that respondent exerted all efforts to comply with the prescribed requirements in
good faith. Moreover, it pointed out that respondent was not caught in flagrante delicto of premature tapping On the other hand, Article 21 of the New Civil Code provides:
because he was the one who reported to Raso the fact of tapping, which was only done under the context that
the approving authority was then unavailable to issue the certification despite respondent's efforts.21 On the other Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good
hand, the CA ruled that petitioners acted with malice and bad faith, as exhibited by their conduct before, during, customs or public policy shall compensate the latter for damages.
and after the disconnection, which is contrary to morals, good customs, or public policy.
Thus, in Philippine National Bank vs. CA, this Court held that:
Undaunted, petitioners moved for reconsideration but was denied in a Resolution22 dated May 19, 2017; hence,
this petition. The aforecited provisions on human relations were intended to expand the concept of torts in this jurisdiction by
granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight
The Issue Before the Court to specifically provide in the statutes.

The issue for the Court's resolution is whether or not the CA correctly upheld the award of damages under Article Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions. Thus, we agree
21 of the Civil Code. with private respondent's assertion that violations of Articles 19 and 21 are actionable, with judicially
enforceable remedies in the municipal forum.27cralawlawlibrary
The Court's Ruling In Mata v. Agravante,28 the Court pointed out that Article 21 of the Civil Code "refers to acts contra bonos mores
and has the following elements: (1) an act which is legal; (2) but which is contrary to morals, good customs,
At the outset, it bears stressing that factual findings of the trial court, especially when affirmed by the CA, public order or public policy; and (3) is done with intent to injure."29
deserve great weight and respect, unless there are facts of weight and substance that were overlooked or
misinterpreted and that would materially affect the disposition of the case.23 Hence, finding no cogent reason to In this case, records show that respondent had consistently pursued all reasonable efforts to comply with the
the contrary, their factual findings in this case are sustained. prescribed requirements for the installation of electrical connection at his farmhouse. As part of his application for
electrical service with BOHECO I, he attended a pre�membership seminar wherein he duly paid the amount of
Petitioners mainly argue that they should not be held liable for damages, considering that respondent made a P48.12 as membership fee. At the seminar, he was advised to employ the services of a BOHECO I authorized
premature and unauthorized tapping of his electrical connection. In this regard, they invoke the principle that he electrician, which he did by employing Albelda. As the CA pointed out, there were certain advantages to this
who comes to court must come with clean hands. Moreover, petitioners allege that respondent is not entitled to course of action, considering that: (a) the said electrician is familiar with the rules and regulations of BOHECO I;
moral damages in the absence of evidence to show that the acts imputed against them caused respondent moral (b) an inspection fee will not be charged if the wiring is done by him; and (c) BOHECO I shall provide a 30-meter
suffering. service drop wire, and electric meter, free of charge, upon payment of the bill deposit.30

The arguments of petitioners are untenable.

Eventually, Albelda informed respondent that he could only install the electrical connection in respondent's
farmhouse if the latter becomes a BAPA member and if he can obtain a certification as such from BAPA To further exacerbate the situation, petitioner Lomarda even caused a scene in the public's view which made it
Chairperson Raso. Again, respondent took no time in obtaining this certification by instructing his farmhand to appear that respondent was an unscrupulous violator and thereupon, proceeded to disconnect his electricity
reach the aforesaid chairperson. Unfortunately, Raso was unavailable despite the farmhand's diligent efforts. that caused him embarrassment and humiliation. As the testimony of respondent during trial shows:
Respondent, who was then put into a precarious situation, sought the advice of Albelda, the cooperative's ChanRoblesVirtualawlibrary Q. Now, Mr. witness to refresh your memory according to you on November 6,
authorized electrician, on how to deal with the matter. Albelda then assured him that if he will proceed with the 2006 Mr.
tapping of his electrical line to that of BAPA, he would not be charged with pilferage of electricity and would be Ismale (sic) Lomarda went to your house at Cambanac, Baclayon, Bohol what did Mr.
billed accordingly. Relying in good faith on the authorized electrician's advice on the matter, respondent then Lomardo do when he reached at (sic) your house?
consented to the tapping but nonetheless, still instructed his farmhand to secure the certification from Raso to
ensure compliance with the requirements for proper installation. Upon meeting with Raso, respondent, by his own A. It was in the afternoon of November 6 Mr. Lomarda bringing with him 2 Policemen (sic) they were also
volition, candidly brought to her attention the tapping of BAPA's line and duly explained to her the situation. This bringing with them camera taking pictures on the post where the electrical line was connected and there were
notwithstanding, Raso was quick to impute malicious actuations against respondent for proceeding with the many people around.
tapping and reported the matter to BOHECO I for disconnection.
Q. Then after that what did Mr. Lomarda do?
Faced with this predicament, respondent and his wife went to the cooperative to report Raso's actions. They
were then attended by the receiving clerk, Lomarda, who told them that he would conduct an ocular inspection A. Mr. Lomarda in hearing the window (sic) with all the people shouted that "kita mo ha" "kita mo ha" in
of the farmhouse. In the course of trying to comply with the requirements, both Raso and Lomarda gave our vernacular, "kita mo ha" at the same time pointing to the post where the electrical connection is
respondent the roundabout by consistently assuring him that they were settling the matter ("Sabut sabuton lang made "kita mo ha" witness "ka ha" witness "ka ha" at the same time taking pictures.
ni nato"). The following excerpt of respondent's testimony during trial is instructive on this score:
ChanRoblesVirtualawlibrary Q. So, after that what did Mr. Lomarda do?
Q. Now, did Mrs. Raso tell you while that controversy was between you during that time that rather Mrs. Raso told
you in visayan vernacular "Sabut saboton lang ni nato"? (sic) A. Mr. Lomarda demanded to (sic) me an amount of One Thousand Pesos (P1,750.00) (sic) according to him as
payment of an allege penalty so that I will not be disconnected.
A. Oh! Ye[s] (sic) she mentioned that p[hrase] (sic) which disturb me so much for 3 three (3) times (sic), 1.) when
I went together with my farm help I went to her house on October 18 her parting words (sic) was don't worry you
Q. Did you give that amount?
will not be disconnected "Sabut sa boton lang ni nato" and the other two (2) was on November 5 when I again
look (sic) her which I found her at the purok center to ask for my certification again and her parting words is (sic)
"Sabut saboton lang ni nato" and then she told me to go (sic) Mr. Lomarda because Mr. Lomarda has the final A. No.
say whether she will give me my certification or not. And the 3rd, was again on the same date November 5
already night time when Mr. Lomarda told me that he is going to inspect the house on Monday so that I went Q. Then considering that you did not give that amount One Thousand (P1,750.00) (sic) what did Mr. Lomarda do?
back to Mrs. Raso to inform her that Mr. Lomarda is going to inspect the house on Monday and again Mrs. Raso
told me that "Sabut saboton lang ni nato." A. Mr. Lomarda demanded or insisting (sic) that he is going to inspect the house and when I let him in inside the
house he refuse (sic) and told me to sign first his report before he will enter the house.
Q. Now, after hearing that statement "Sabut saboton lang ni nato", what did you ask Mrs.
Raso what (sic) was that meaning of "Sabut saboton lang ni nato"? Q. Did you sign the report?

A. I did not bother to ask her but in my mind it means money that Mrs. Raso together with Mr. Lomarda is out to A. I did not sign the report.
victimize me to please me (sic) "[pangkwartahan] ko" (sic) because of that premature connection.31
In this regard, the CA aptly observed that "[c]onfronted with the crisis presented by [respondent], it is only proper Q. Now considering that you did not sign the report, what did Mr. Lomarda do?
for [petitioners] to tell him what corrective or remedial measures must be done to avoid the commission of any
further infraction. Instead of doing so, x x x Raso made herself unavailable, which delayed the issuance of the A. Mr. Lomarda instructed his line men because he was also bringing linemen to finally cut (sic). Days after I ask
certification. For his part, x x x Lomarda failed to immediately disclose the notice of disconnection to Mrs. Raso whether she will allow the disconnection which Mrs. Raso answered in the affirmative and after that
[respondent], under the pretext that he is yet to conduct an ocular inspection on the subject farmhouse."32 Mr. Lomarda instructed his line man to finally cut (sic).

Worse than their inaction and lack of forthrightness, petitioners even tried to extort from respondent the amount Q. And that was on November 6, 2006?
of P1,792.00 in exchange for the issuance of a certification and for the continued availment of their electrical
services. However, respondent refused to accede to this condition since there was no official issuance coming A. November 6, in the afternoon.
from BOHECO I itself. In fact, upon reporting the matter to the cooperative, respondent, to his dismay,
discovered that his electric usage amounted to only P20.00. Indeed, as the CA ruled, "[b]y setting these Q. Will (sic) Mrs. Raso present during the time when the line man of Mr. Lomarda cut your electrical connection?
conditions, it is evident that [petitioners] were induced by an ill motive."
 exemplary damages is allowed by law as a warning to the public and as a deterrent against the repetition
A. Yes. Mrs. Raso was also present because she wanted me to sign a promissory note that if I have no of socially deleterious actions." In this case, the Court finds the award of exemplary damages in the amount of
cash to pay that P1,750.00 allege (sic) penalty then I should sign her promissory note so that I will not also be P50,000.00 reasonable in order to serve as a reminder against unscrupulous persons - as herein petitioners -
disconnected.33 (Emphases supplied) Under the foregoing circumstances, it is clear that petitioners should be who take undue advantage of their positions to the detriment of the consuming public.
held liable for damages under Article 19, in relation to Article 21, of the Civil Code. While it appears that
petitioners were engaged in a legal act, i.e., exacting compliance with the requirements for the installation of As regards attorney's fees and litigation costs, "Article 2208 of the New Civil Code of the
respondent's electricity in his farmhouse, the circumstances of this case show that the same was conducted Philippines states the policy that should guide the courts when awarding attorney's fees to a litigant. As a general
contrary to morals and good customs, and were in fact done with the intent to cause injury to respondent. rule, the parties may stipulate the recovery of attorney's fees. In the absence of such stipulation, this article
Petitioners did not only fail to apprise respondent of the proper procedure to expedite compliance with the restrictively enumerates the instances when these fees may be recovered," to wit:
requirements, they also misled him to believe that everything can be settled, extorted money from him when Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot
only a meager amount was due, and worse, publicly humiliated him in front of many people which ended up in be recovered, except:
the disconnection of his electricity altogether. To be sure, the clean hands doctrine - which was invoked by
petitioners herein - should not apply in their favor, considering that while respondent may have technically failed (1) When exemplary damages are awarded; x x x
to procure the required BAPA certification and proceeded with the tapping, the same was not due to his lack of In view of the award of exemplary damages, the Court finds it proper to award attorney's fees and litigation costs
effort or intention in complying with the rules in good faith. As exhibited above, it was, in fact, petitioners' own
but in the reduced amount of P25,000.00.
acts which made compliance with the rules impossible. Hence, respondent was actually free from fault,
negating the application of the clean hands doctrine, to wit:34 Parties who do not come to court with clean
In fine, the Court holds that petitioners, as joint tortfeasors under Article 21 of the Civil Code, are jointly and
hands cannot be allowed to profit from their own wrongdoing. The action (or inaction) of the party seeking
severally liable to pay respondent the following amounts: (a) P451.65 as actual damages; (b) P50,000.00 as
equity must be "free from fault, and he must have done nothing to lull his adversary into repose, thereby
moral damages; (c) P50,000.00 as exemplary damages; and (d) attorney's fees and litigation expenses in the
obstructing and preventing vigilance on the part of the latter."35
amount of P25,000.00.
That being said, the awards of damages in favor of respondent are therefore warranted. In this case, both the
RTC and the CA awarded actual, moral, and exemplary damages, including attorney's fees and litigation WHEREFORE, the petition is DENIED. The Decision dated February 9, 2017 and the Resolution dated May 19,
expenses.
2017 of the Court of Appeals in CA-G.R. CV No. 04480 are hereby AFFIRMED WITH MODIFICATION in that
petitioners Ismael G. Lomarda and Crispina Raso are ordered to jointly and severally pay respondent Elmer
Actual damages are such compensation or damages for an injury that will put the injured party in the position in Fudalan the following amounts: (a) P451.65 as actual damages; (b) P50,000.00 as moral damages; (c)
which he had been before he was injured. They pertain to such injuries or losses that are actually sustained and P50,000.00 as exemplary damages; and (d) attorney's fees and litigation expenses in the amount of
susceptible of measurement. To justify an award of actual damages, there must be competent proof of the actual P25,000.00.
amount of loss.36 In this case, the award of actual damages in the amount of P451.65 was based on the
evidence presented as found by both the RTC and CA. Hence, finding no cogent reason to the contrary, and
SO ORDERED.
given that the same was supported by receipts,37 the said award is sustained.
Hernando, Inting, Delos Santos, and Gaerlan,*JJ., concur.chanRoblesvirtualLawlibrary
However, the Court finds otherwise with respect to the awards of moral and exemplary damages, as well as
attorney's fees and litigation expenses (in the amounts of P200,000.00, P100,000.00, P50,000.00, and
P20,000.00, respectively) which appear to be excessive considering the circumstances of this case. Notably, the
amounts of moral and exemplary damages may be discretionary upon the court depending on the attendant [ G.R. No. 217806, July 28, 2020 ]
circumstances of the case.38
DIVISION ADELAIDA C. NAVARRO-BANARIA, PETITIONER, VS. ERNESTO A.
Under Article 221939 of the Civil Code, moral damages may be recovered, among others, in acts and actions BANARIA, PANFILO A. BANARIA, GRACIA SEVERA BANARIA-ESPIRITU, REINA
referred to in Article 21 of the same Code. "[A]n award of moral damages must be anchored on a clear showing CLARA BANARIA- MAGTOTO, MARCELINO S. BANARIA, PAULINA BANARIA-GELIDO,
that the party claiming the same actually experienced mental anguish, besmirched reputation, sleepless nights, MARIA LOURDES DIVINE BANARIA-DURAN, GRACIA ISABELITA BANARIA-ESPIRITU, GEOFFREY
wounded feelings, or similar injury."40 In this case, the aforementioned malicious acts, as proven through the BANARIA-ESPIRITU, ANNE MARIE ESPIRITU-PAPPANIA, JUSTIN BANARIA-ESPIRITU, RESPONDENTS.
evidence presented by respondent, clearly caused moral suffering to the latter, for which petitioners should be
made liable. As intimated in one case,41 although mental anguish and emotional sufferings of a person are not
quantifiable with mathematical precision, the Court must nonetheless strive to set an amount that would restore DECISION
respondent to his moral status quo ante.42 In this regard, the Court finds it reasonable to award the amount of
P50,000.00 as moral damages, considering the meager amount of actual damages awarded despite the public REYES, J. JR., J.:
humiliation and distress suffered by respondent throughout his ordeal.
This resolves the petition for review on certiorari1 filed under Rule 45 of the Rules of Civil Procedure seeking to
Meanwhile, case law states that "exemplary or corrective damages are imposed by way of example or correction review the Decision2 dated October 15, 2014 of the Honorable Court of Appeals (Special First Division) in CA-
for the public good, in addition to moral, temperate, liquidated, or compensatory damages. The award of G.R. No. 97264, denying the appeal of herein petitioner by affirming with modification the Judgment3 dated May
23, 2011 rendered by the Regional Trial Court (RTC), Branch 216 (Quezon City) in Civil Case No. Q-0452212, Respondents called and went to the Securities and Exchange Commission (SEC), where Adelaida works but they
and its Resolution4 dated April 14, 2015, denying petitioner's motion for reconsideration. failed to see her there. Afterwards, respondent Paulina was able to talk to one of Adelaida's maids named Kit. Kit
told Paulina that she went to Tarlac with Pascasio and Adelaida in the morning of February 21, 2004 but went their
The Antecedents separate ways upon reaching said province. However, when asked about the whereabouts of Pascasio and
Adelaida, she said that she did not know where they were.11
The instant petition arose from the Complaint filed by respondents for Damages with the RTC of Quezon City
against petitioner. In the evening of February 23, 2004, Marcelino, Pascasio's brother, told the other respondents that Pascasio and
Adelaida were at their residence then at 7-B Sigma Drive, Alpha village, Quezon City. Respondents went to the
said place to ask Adelaida her reason why Pascasio was not able to attend the birthday celebration. Adelaida
As borne by the records of the case, respondents are brother (Marcelino S. Banaria), sister (Paulina Banaria-
reasoned that Pascasio did not want to go to the party. When asked why Adelaida broke her commitment to bring
Gelido), sons (Ernesto A. Banaria and Panfilo A. Banaria), daughters (Gracia Severa Banaria-Espiritu and Reina
Pascasio to the party, Adelaida uttered the words, "I am the wife."12
Clara Banaria-Magtoto), granddaughters (Gracia Isabelita Banaria-Espiritu, Anne Marie Espiritu-Pappania, Maria
Lourdes Divine Banaria-Duran), and grandsons (Geoffrey Banaria-Espiritu and Justin Banaria-Espiritu) of the late
Pasacasio S. Banaria, Sr. (Pascasio), while petitioner Adelaida C. Navarro-Banaria (Adelaida) is the legal wife of Thus, the Complaint for Damages filed by respondents against Adelaida.
Pascasio and stepmother of the Banaria siblings.5
In response, Adelaida rebutted the allegations of the respondents by saying that she was not privy to the
Pascasio, the family patriarch, at the time of the filing of the complaint, was already frail and suffering from physical respondents' planned birthday celebration for Pascasio. She also said that she deemed it wise to spare Pascasio
and mental infirmity incapacitating him to fully functioning on his own without any assistance.6 of the embarrassment and humiliation of defecating and urinating without regard to the people around him brought
about by his advanced age.13
The action for damages of respondents stemmed from the alleged bad faith, malice, and deliberate failure of
Adelaida to keep her word and honor her promise to bring Pascasio to his 90th birthday celebration held on Eventually, the RTC rendered its May 23, 2011 Decision, which ordered petitioner to pay the respondents' travel
February 22, 2004. Such special event was prepared by the respondents and the non-appearance of Pascasio expenses, actual damages, moral damages, exemplary damages, and attorney's fees. The fallo14 of the decision
during the event allegedly caused loss and injury to the respondents.7 reads:

Respondents alleged that the planning of the event started as early as February 2003 or a year before the planned WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered in favor of plaintiffs and
90th birthday celebration to be held on February 22, 2004. Between November 2003 and January 2004, against the defendant Adelaida C. Navarro-Banaria ordering said defendant to pay unto the plaintiffs the following:
respondents were in continuous contact with Adelaida to remind her of the upcoming event. Adelaida, for her part,
confirmed Pascasio's attendance during the event although it coincides with the death anniversary of Adelaida's 1. the total amount of $3,619.00 (US Dollars) which may be paid in Philippine Currency computed
mother. The plan was to bring Pascasio to the venue in the early morning of February 22, 2004 before proceeding at the exchange rate at the time of payment, representing the total sum for their (plaintiffs) travel
to her hometown in Tarlac. Adelaida promised respondents that she will try her best to attend the birthday expenses;
celebration in the evening after going to Tarlac.8
2. the amount of P61,200.00, Philippine currency, for the food and refreshments spent during the
On February 13, 2004, Reina and Gracia Severa, who are both residing in the United States, arrived in the country birthday of Pascasio S. Banana, Sr., which the latter was not able to attend; the amount of P3,000.00 for
to attend the birthday celebration of their father. They were able to visit their father and Adelaida in their home on the birthday cake; and the amount of P3,275.00 for the balloon arrangements;
February 14 and 15, 2004. Adelaida promised them during their visit that Pascasio would be present in his
scheduled 90n birthday celebration.9
3. the amount of P60,000.00, Philippine Currency, for each and every plaintiff, as and by way of
moral damages;
However, much to the dismay of the Banaria siblings as well as their guests, Pascasio was nowhere to be found
in his 90th birthday celebration. Respondents continuously called Adelaida but they were not able to contact her.
Almost 200 guests were at the venue waiting for Pascasio to come. The siblings deemed it proper to continue the 4. the amount of P50,000.00, Philippine Currency, for the herein plaintiffs, as and by way of
celebration even without the birthday celebrant himself. Worried that there might be something untoward that exemplary damages;
happened to their father, respondents went to the nearest police station to report Pascasio as a missing person.
However, they were advised by the police officers that before a person can be considered missing, there should 5. the amount of P60,000.00, Philippine Currency, as and by way of attorney's fees; and the costs
be a 24-hour waiting period. Thus, respondents just entered their concern in the police blotter. The next day, the of suit.
missing person report was officially made after Pascasio and Adelaida have not been seen or heard for more than
24 hours.10 SO ORDERED.
Aggrieved, petitioner elevated the case to the Court of Appeals, which, through the assailed October 15, 2014 violate this fundamental provision is found in Articles 20 and 21 of the Civil Code. The correlation between the two
Decision, affirmed with modification the Decision of the RTC. The fallo15 of the decision of the appellate court provisions are showed in the case of GF EQUITY, Inc. v. Valenzona, to wit:
reads:
[Article 19, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards
WHEREFORE, premises considered, the appeal is hereby DENIED. The Judgment dated 23 May 2011 of the which must be observed not only in the exercise of one's rights but also in the performance of one's duties. These
Regional Trial Court-Branch 216 (Quezon City) is AFFIRMED with the following MODIFICATIONS: a) the amount standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith.
of $3,619.00 (US Dollars) awarded as actual damages in favor of the plaintiffs-appellees is DELETED for lack of The law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of human
factual and legal basis; b) the amount of moral damages awarded for ALL the plaintiffs-appellees is REDUCED to conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted by
a fixed amount of Php300,000.00; c) the amount of exemplary damages awarded in favor of the plaintiffs-appellees law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which
is REDUCED to Php30,000.00; and d) the amount of attorney's fees awarded to plaintiffs-appellees is likewise does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby
REDUCED to php50,000.00. 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
The rest of the challenged Judgment stands. violation. Generally, an action for damages under either Article 20 or Article 21 would be proper.16 (Emphasis
supplied)
SO ORDERED.
While Article 19 of the New Civil Code may have been intended as a mere declaration of principle, the "cardinal
law on human conduct" expressed in said article has given rise to certain rules, e.g., that where a person exercises
Despite petitioner's motion for reconsideration, the CA affirmed its October 15, 2014 Decision via the April 14,
his rights but does so arbitrarily or unjustly or performs his duties in a manner that is not in keeping with honesty
2015 Resolution.
and good faith, he opens himself to liability. The elements of an abuse of rights under Article 19 are: (1) there is a
legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another.17
Hence, this petition.
Consequently, when Article 19 is violated, an action for damages is proper under Article 20 and 21 of the New Civil
The Issues Code. Article 20 pertains to damages arising from a violation of law.18

The petitioner anchors her prayer for the reversal of the October 15, 2014 Decision and the April 14, 2015 For starters, there is no question that as legal wife and guardian of Pascasio, who is physically and mentally infirm,
Resolution based on the following issues: Adelaida has the principal and overriding decision when it comes to the affairs of her husband including the
celebration of the latter's 90th birthday.
A. Whether the Hon. Court of Appeals erred in ruling that petitioner violated Articles 19 and 21 of the Civil Code
regarding Human Relations; and However, it must be noted Adelaida's right, as with any rights, cannot be exercised without limitation. The exercise
of this right must conform to the exacting standards of conduct enunciated in Article 19. Adelaida was clearly
B. Whether the Hon. Court of Appeals erred in granting damages to the respondents. remiss in this aspect.

The Court's Ruling Glaring is the fact that long before the scheduled date of Pascasio's 90th birthday celebration, Adelaida was
already informed about the event. As early as February 2003 or a year before the scheduled event, Adelaida was
already reminded of the event by the respondents to which she confirmed Pascasio's attendance. Even though
After a careful perusal of the arguments presented and the evidence submitted, the Court finds no merit in the
Adelaida alleges that she was not privy to any birthday celebration for Pascasio, the fact remains that she was
petition.
continuously informed and reminded about the scheduled event. She even contributed P5,000.00 for the costs.

Petitioner contends that she did not commit any violation under Article 19 of the Civil Code by alleging that the
Following Adelaida's testimony that Pascasio had already decided not to attend his birthday celebration a day
testimonies of the respondents were pure surmises and conjectures. Aside from that, petitioner avers that
before such event, she should have contacted the respondents immediately for the respondents to be able to take
respondents failed to prove bad faith, malice and ill motive on her part. Because of this, petitioner posits that there
appropriate action. Adelaida knew fully well that the respondents already spent a considerable amount of money
can be no award of actual, moral and exemplary damages under the principle of damnum absque injuria or
and earnest efforts were already made to ensure the success of the event. The least that Adelaida could have
damage without injury since her legal right was not exercised in bad faith and with no intention to injure another.
done was to inform the respondents immediately of any unforeseen circumstance that would hinder its success
and to avert any further damage or injury to the respondents. Moreover, considering that numerous guests were
Article 19 of the Civil Code provides that every person in the exercise of his rights and in the performance of his invited and have confirmed their attendance, she placed the respondents in a very embarrassing situation.
duties must act with justice, give everyone his due, and observe honesty and good faith. The principle embodied
in this provision is more commonly known as the "abuse of right principle." The legal consequence should anyone
Instead of making good on her prior commitment, Adelaida allegedly followed Pascasio's wish of going to Tarlac By the same token, the CA correctly awarded attorney's fees in the amount of P50,000.00 in favor of the
and arrived thereat in the afternoon of February 21, 2004. At that time, Adelaida still had the opportunity to contact respondents considering that they were constrained to file a case because of petitioner's acts characterized by
the respondents and inform them that they will not be able to come, but she did not. Her excuse, that Pascasio bad faith, malice and wanton attitude which were intentional to inflict damage upon the former.
grabbed her cellular phone and caused damage to it, is feeble and unrealistic. We find incredulous that Pascasio,
who was allegedly infirm, would be able to grab the cellphone from Adelaida and throw it away, when he cannot WHEREFORE, the Petition is DENIED. The October 15, 2014 of the Court of Appeals is AFFIRMED.
even move on his own without any assistance. And even if true, there are certainly other means of communication
aside from her cellphone if she really wanted to call the respondents.
SO ORDERED.

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

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

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

As for moral damages, the CA is correct in granting a lump sum of P300,000.00. Moral damages are not punitive
Antecedents
in nature but are designed to compensate and alleviate in some way the physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury
unjustly caused to a person.20 In the instant case, the respondents clearly suffered serious anxiety, humiliation Petitioners spouses Nestor Cabasal (Nestor) and Ma. Belen Cabasal (Belen) (collectively, petitioners) were
and embarrassment in front of all guests who expected that Pascasio would be present in the event. granted by BPI Family Savings Bank (BPI) a credit line for their build and sell business. Sometime in 1997,
petitioners purchased two (2) real properties with improvements using said credit line as source of payment.
Consequently, petitioners executed (2) Mortgage Loan Agreements6 in favor of BPI under the following loan
The award of exemplary damages of P30,000.00 is likewise affirmed. Exemplary damages, which are awarded by
accounts: 1) Account No. 0211112476 for Php5,000,000.00; and 2) Account No. 0211291311 for
way of example or correction for the public good, may be recovered if a person acted in a wanton, fraudulent,
Php3,360,000.00.7
reckless, oppressive, or malevolent manner towards another party, as in this case.21 The aim of awarding
exemplary damages is to deter serious wrongdoings.22
While looking for prospective buyers for the properties, petitioners religiously paid their amortizations. However, it In addition, BPI clarified that the previous sale transaction of petitioners was allowed by BPI only because
took them three (3) years to find a willing buyer in the person of Eloisa Guevarra Co (Eloisa) who agreed to buy petitioners' buyer did not assume the mortgage. Instead, the buyer took out a personal loan with BPI which he
their properties by way of sale with assumption of mortgage. Accordingly, the parties prepared a Deed of Sale with then used to pay off petitioners' loan, and thus cleared the latter's account. In the present transaction, however,
Assumption of Mortgage.8 Eloisa undertook to give a down payment of Php7,850,000.00, and assume the balance Nestor wanted Eloisa to assume their mortgage liabilities, which BPI prohibits to prevent third parties, who are not
of petitioners with BPI in the amount of Php4,462,226.00.9 At that time, petitioners' accounts with BPI were already qualified for a loan, from incurring a financial obligation to BPI.24
past due. Hence, Nestor asked for an updated statement of account from respondent Alma De Leon (respondent).
Finally, BPI claimed that because petitioners' loan account remained delinquent despite several demands, it
On 06 July 2000, Nestor and Eloisa went to BPI to obtain a copy of petitioners' statement of account, and to instituted a petition for extra-judicial foreclosure of real estate mortgage. Consequently, the sheriff prepared a
effectuate the transfer of mortgage to Eloisa. However, respondent informed them that their transfer agreement notice of sheriff's sale, and caused the posting and publication of the same. The public auction transpired on 27
would riot be recognized by BPI since Eloisa was not a client of the bank. Nestor pleaded with respondent to September 2000, with BPI emerging as the highest bidder. Subsequently, the sheriff issued to BPI a certificate of
accommodate Eloisa, citing a similar transaction he had in the past, which was authorized by BPI. Respondent, sale, which the latter registered. For failure of petitioners to redeem the property within the redemption period, BPI
however, insisted that the transaction was not allowed by BPI, being in the form of assumption of mortgage.10 executed an Affidavit of Consolidation of Ownership, leading to the issuance of a new certificate of title in its name,
in lieu of petitioners' certificate of title. BPI then demanded the petitioners to vacate the property, but they refused.
Petitioners claimed that Eloisa was a sure buyer, given that she already had three (3) air conditioning units Hence, BPI filed an exparte petition for issuance of writ of possession.25
delivered to the properties.11 However, their deal with her fell through because of respondent's irresponsible
handling on the incident. Petitioners assert that they failed to realize an expected profit of Php3,387,773.96. Ruling of the RTC
Consequently, Nestor sent a letter12 of complaint dated 27 July 2000 to BPI. His lawyer likewise sent a letter13
dated 08 December 2000, informing BPI that petitioners would not pay their amortization due to the grossly On 01 December 2011, the RTC rendered its Decision, the dispositive portion of which reads: WHEREFORE, all
negligent act of respondent. In addition, petitioners requested the waiver of all interests and charges on their
loan.14 He did not receive any response from BPI. the foregoing duly considered, judgment is hereby rendered as follows:

Meanwhile, petitioners continued to default on their loan obligation under Account No. 0211291311, eventually (1) For Civil Case no. 01-0014, partly in favor of the plaintiffs, ordering the defendants to jointly and
leading to the foreclosure of the mortgage by BPI. The subject property was then sold at public auction, where BPI severally pay the plaintiffs the sum of P3,387,773.96 with legal interest of 12% per annum until fully paid;
was declared the highest bidder.15 the sum of P100,000.00 and P2,000.00 per court appearance and for attorney's fees; the sum of
P200,000.00 as moral damage; the sum of P100,000.00 as exemplary damage; and cost of suit.;
Consequently, petitioners instituted Civil Case No. 01-0014, for Damages with Annulment of Extra-Judicial
Foreclosure of TCT No. (35660) 141767 and Injunction, against respondent and BPI.16 Later, BPI filed Land
(2) For Land Registration Case No. 02-0068, in favor of defendant bank, allowing the issuance of
Registration Case No. 02-0068, an Ex-Parte Petition for the Issuance of Writ of Possession.17 It was ordered
writ of possession for the lot covered by Transfer Certificate of Title No. 150985, formerly Transfer
consolidated with Civil Case No. 01-0014 upon motion of petitioners.18 Certificate of Title No. 141767.

During trial on the merits, respondent and BPI denied petitioners' allegations. SO ORDERED.26

Respondent averred that on 05 July 2000, she talked to Nestor over the phone, and he requested for a statement The RTC dismissed the case for annulment of extra-judicial foreclosure of mortgage, and granted the application
of account for his overdue loan accounts. Nestor also informed her about the impending sale of his property to for the issuance of a writ of possession. It found the mortgage to be in order, and the foreclosure proceedings to
Eloisa, the proceeds of which would be used to pay off his loan. Respondent dissuaded him from doing so,
have duly complied with all the requisites of the law.27
explaining that this type of agreement was against the bank's policy and Section 35 of the Mortgage Loan
Agreement. She also told Nestor that she would not entertain any query from his buyer.19 Nestor was nevertheless
adamant, and brought Eloisa to their office the following day. She gave Nestor a copy of the statement of account, Nonetheless, the RTC found respondent and BPI liable to petitioners for damages on account of their bad faith.
but refused to talk to Eloisa.20 When Nestor pleaded, she relented. Respondent similarly informed Eloisa that the According to the RTC, respondent violated Articles 19 and 20 of the New Civil Code because she failed to exercise
agreement between her and Nestor would not get BPI's approval. In the vernacular, she said, "kung tutuusin po good faith and honesty in dealing with Nestor and Eloisa. She blatantly and thoughtlessly branded the transaction
kasi para pong illegal itong ginagawa niyo dahil against po sa bank policy, yong loan po nakapangalan pa kay Mr. between Nestor and Eloisa illegal even if the same was not yet consummated, and though she was aware that
Cabasal so hindi po namin talaga kayo irerecognize as client."21 Respondent claimed that her statement was another office or division – not the collection department to which she belonged – was better equipped to handle
uttered in good faith and with reference only to Section 35 of the loan agreement signed by petitioners.22 She matters relating to assumption of mortgages. The RTC opined that what respondent should have done was to help
maintained that BPI prohibits an assumption of mortgage, and recommended that the interested buyer should a valued client by referring him to the appropriate office.28
instead take out a separate loan to extinguish the obligation of the first borrower.23
For respondent's acts, the RTC found BPI equally liable for damages, in accordance with Article 2180 of the New Petitioners filed a Motion for Reconsideration,39 but the same was denied. Hence, they filed the present petition,
Civil Code.29 The RTC ascribed fault on BPI for failing to prove that it exercised diligence in the selection and submitting the following grounds for the allowance thereof:
supervision of its employees like respondent.
A. THE INSTANT PETITION FOR REVIEW UNDER RULE 45 OF THE 1997 RULES OF CIVIL
Finally, the RTC held that neither respondent nor BPI can claim good faith as paragraph 35 of the Mortgage Loan PROCEDURE CAN BE TAKEN COGNIZANCE BY THIS HONORABLE COURT DUE TO THE FINDINGS
Agreement was a circumvention of Article 2130 of the Civil Code. In support thereof, the RTC cited Litonjua v. L&R OF THE HONORABLE COURT OF APPEALS BEING CONTRARY TO THAT OF THE HONORABLE
Corporation,30 where the Court held that a stipulation forbidding the owner from alienating the immovable TRIAL COURT
mortgage shall be void.31
B. THE HONORABLE COURT OF APPEALS ERRED IN REVERSING THE HONORABLE TRIAL
Both parties appealed the decision. Whereas petitioners filed a Notice of Partial Appeal32 against the RTC's ruling COURT'S AWARD OF DAMAGES TO PETITIONERS IN THE INSTANT CASE, BY FAILING TO APPLY
in Land Registration Case No. 02-0068, respondent and ARTICLE 20 OF THE CIVIL CODE TO THE DULY PROVEN NEGLIGENCE COMMITTED BY
BPI assailed the RTC's judgment in Civil Case No. 01-0014.33 RESPONDENT ALMA DE LEON WHICH RESPONDENT BANK IS VICARIOUSLY LIABLE [SIC]

Ruling of the CA C. THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE HONORABLE TRIAL
COURT'S GRANTING OF THE SUBJECT WRIT OF POSSESSION CONSIDERING THAT
In the now assailed Decision, the CA affirmed the RTC's ruling in Land Registration Case No. 02-0068, but RESPONDENTS COMMITTED BREACH OF CONTRACT WHICH GIVES PETITIONERS THE RIGHT
reversed the RTC's decision in Civil Case No. 01-0014. The decretal portion of said decision reads: TO SUSPEND PAYMENT OF THEIR MORTGAGE LOAN UNDER ARTICLES 1169 AND 1191 OF THE
CIVIL CODE THEREBY MAKING THE FORECLOSURE OF THE [PARAÑAQUE] PROPERTY VOID40
WHEREFORE, premises considered, judgment is hereby rendered as follows:
Ruling of the Court
(1.) For Civil Case no. 01-0014, the Appeal filed by appellants BPI and De Leon is GRANTED. The
appealed Decision dated December 1, 2011 of the RTC, Branch 274 of Parañaque City awarding The petition lacks merit.
damages and attorney's fees to spouses Cabasal is REVERSED and SET ASIDE. Accordingly, spouses
Cabasal's Complaint for Damages docketed as Civil Case No. 01-0014 is DISMISSED for lack of merit. Prefatorily, it should be pointed out that the present petition conspicuously contains the same factual issues and
arguments already fully passed upon by the CA. As a rule, questions of fact, which would require a re-evaluation
(2) For Land Registration Case No. 02-0068, the Appeal filed by appellants spouses Cabasal is of the evidence, are inappropriate for a Rule 45 petition. Under Section 1 of Rule 45, the Court's jurisdiction is
DISMISSED. The appealed Decision dated December 1, 2011 of the RTC, Branch 274 of Parañaque City limited only to errors of law since it is not a trier of facts.41 Although jurisprudence has provided several exceptions
is AFFIRMED. to these rules, exceptions must be alleged, substantiated, and proved by the parties so this court may evaluate
and review the facts of the case. In any event, even in such cases, this court retains full discretion on whether to
SO ORDERED. review the factual findings of the Court of Appeals.42

Anent Land Registration Case No. 02-0068, the CA agreed that the writ of possession should issue as a matter of In the instant case, the RTC and the CA were unanimous that based on the established facts, BPI is entitled to a
course in view of the established facts.34 writ of possession. However, they differed on their findings as to the liability of respondent and BPI under the
circumstances.
With respect to Civil Case No. 01-0014, the CA emphasized that the absence of good faith is essential to abuse
of right under Article 19 of the New Civil Code. In this case, however, respondent's utterances cannot be equated The Court sustains the CA's decision.
to bad faith, as she adequately explained that the transaction between Nestor and Eloisa violated paragraph 35
of the Mortgage Loan Agreement.35 While respondent admitted that she was not competent to ultimately rule on It has long been settled that once title to the property has been consolidated in the buyer's name upon failure of
the matter, being merely a collection assistant, her statement was based on BPI's policy proscribing such the mortgagor to redeem the property within the one-year redemption period, the writ of possession becomes a
arrangement.36 matter of right belonging to the buyer. Consequently, the buyer can demand possession of the property at any
time. Its right of possession has then ripened into the right of a confirmed absolute owner and the issuance of the
Finally, the CA held that although BPI's policy may appear to be unreasonably restrictive to some, the same cannot writ becomes a ministerial function that does not admit of the exercise of the court's discretion. The court, acting
be characterized as suffused with bad faith.37 On the contrary, BPI acted appropriately in keeping with its duty as on an application for its issuance, should issue the writ as a matter of course and without any delay.43
a banking institution to exercise extra-ordinary care and prudence. The stipulation was in strict adherence of its
own rules, which petitioners, as borrowers, may freely accept or reject.38 It is thus befuddling that the proceeding for the issuance of writ of possession was even consolidated with Civil
Case No. 01-0014. To be sure, no hearing is necessary prior to the issuance of a writ of possession, as it is a
proceeding wherein relief is granted without giving the person against whom the relief is sought an opportunity to Like the CA, the Court sees no intention on the part of respondent to cause harm to the petitioners. She forewarned
be heard.44 By its very nature, an ex-parte petition for issuance of a writ of possession is a non-litigious Nestor that the BPI would not acquiesce to the agreement between him and Eloisa because the bank does not
proceeding. It is a judicial proceeding for the enforcement of one's right of possession as purchaser in a foreclosure allow assumption of mortgage. Despite that, Nestor insisted, and even brought Eloisa to her. Respondent may
sale. It is not an ordinary suit filed in court, by which one party sues another for the enforcement of a wrong or have been blunt in her response, but it was Nestor who prodded her to explain, even if she already told him that
protection of a right, or the prevention or redress of a wrong.45 Petitioners contend that because of the negligent she would not entertain any queries from Eloisa.
act of respondent, BPI must be considered guilty of breaching its obligation to observe the highest degree of
diligence in the selection and supervision of their employees.46 For such breach, petitioners additionally contend Respondent's remark may have ultimately put Eloisa off only because it was not what she expected to hear. But it
that they were justified to suspend payment; hence, they cannot be said to be in default of their obligation. was not respondent's fault. It was Nestor who put her in that awkward position, and the latter answered only based
on what she understood of the situation.
The argument deserves scant consideration.
Further, it cannot even be established from petitioners' evidence whether Eloisa backed out of the agreement
Not even any question regarding the validity of the mortgage or its foreclosure is a legal ground for refusing the because of the very words spoken by respondent.ℒαwρhi৷ Eloisa was not presented in court; hence, petitioners'
issuance of a writ of execution/writ of possession.47 Furthermore, it should be pointed out that even prior to the asseveration is merely self-serving, unsubstantiated, and conjectural. It is a fundamental rule that bare allegations,
incident, petitioners were already in default of their obligations to BPI, precisely why Nestor dealt with respondent, unsubstantiated by evidence, are not equivalent to proof.56 Charges based on mere suspicion and speculation
instead of other BPI employees. cannot be given credence. When the complainant relies on mere conjectures and suppositions, and fails to
substantiate his allegations, the complaint must be dismissed for lack of merit.57
In any case, the Court agrees with the CA that respondents and BPI are not liable in this case.
It may be true that Eloisa was a willing buyer, and she actually bought another property afterwards. However, there
The principle of abuse of rights, as enshrined in Article 19 of the Civil Code, provides that every person must, in can be a myriad of reasons which may have prompted her to cancel the deal with Nestor. Perhaps, it could have
the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe been because Eloisa could not be able to pay for petitioners' properties without a bank loan. Perhaps, too, Eloisa
honesty and good faith.48 In Arco Pulp and Paper, Inc. v. Dan T. Lim,49 the Court emphasized that Article 19 is would not qualify for a bank loan; hence, she only agreed for an assumption of mortgage. It is also possible that
the general rule which governs the conduct of human relations. By itself, it is not the basis of an actionable tort. she was poached by another seller or broker who gave her a better or more affordable deal. As petitioners' own
Article 19 describes the degree of care required so that an actionable tort may arise when it is alleged together evidence shows, Eloisa bought a different house and lot, also within Parañaque, for only Php3,800,000.00, which
with Article 20 or Article 21. was evidently much lower than the purchase price for petitioners' properties, but within the amount she was willing
to shell out as down payment therefor. What is more, Eloisa was able to conveniently purchase the property on
Whether the principle of abuse of rights has been violated resulting in damages under Article 20 or other applicable installment basis, which did not require Eloisa to obtain a bank loan or assume any mortgage.58
provision of law depends on the circumstances of each case.50 Article 20 covers violations of existing law as basis
for an injury. It allows recovery should the act have been willful or negligent "Willful" may refer to the intention to Petitioners and the RTC are actually unreasonably passing the blame for the dissolution of the sale with Eloisa to
do the act and the desire to achieve the outcome that the plaintiff in tort action considers as injurious. "Negligence" respondent As the CA aptly pointed out, respondent was only being honest and, in fact, right when she told Nestor
may refer to a situation where the act was consciously done but without intending the injurious result Article 21, and Eloisa that BPI would not permit their arrangement. If petitioners were bent on being able to sell their properties
on the other hand, concerns injuries that may be caused by acts which are not necessarily proscribed by law. This to Eloisa, they could have instead assisted her in taking out a loan in her own name, whether with BPI or a different
article requires that the act be willful, that is, that there was an intention to do the act and a desire to achieve the bank. They did not. If, at all, it was petitioners who were negligent under the circumstances by insisting on a
outcome. In cases under Article 21, the legal issues revolve around whether such outcome should be considered payment term which may have been favorable for them and their buyer, but was clearly not viable.
a legal injury on the part of the plaintiff or whether the commission of the act was done in violation of the standards
of care required in Article 19.51 Similarly, petitioners cannot also fault respondent for not being able to direct them to the proper loan division of
BPI. Respondent was under no obligation to do that. She could have done so as a courtesy to Nestor, the latter
After a perusal of the facts and evidence on hand, the Court holds that contrary to the RTC's findings, petitioners being a client of BPI, but her failure to extend such assistance at that time is not tantamount to negligence or bad
failed to prove that respondent and BPI acted in bad faith or negligence so as to be liable under Article 20 and 21 faith on her part, much less be the proximate cause why the transaction between Nestor and Eloisa failed to
of the New Civil Code. materialize. Nestor, being an engineer and a businessman of experience, should have known what to do under
the circumstances and where to go after, considering that he already had a previous real estate transaction
Bad faith does not simply connote bad judgment or negligence. It imports a dishonest purpose or some moral presented to BPI for loan approval. And even assuming for the nonce that he did not know specific BPI division or
obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that office to inquire from, he should have exerted earnest effort to obtain such information from other BPI employees,
partakes of the nature of fraud. It is, therefore, a question of intention, which can be inferred from one's conduct not necessarily from respondent.
and/or contemporaneous statements.52 The settled rule is bad faith should be established by clear and convincing
evidence since the law always presumes good faith.53 Bad faith, like fraud, is never presumed since it is a serious Verily, a responsible and diligent businessman would go to great lengths to ensure the consummation of any
accusation that can be so conveniently and casually invoked.54 Hence, for anyone who claims that someone is transaction. Under the circumstances, however, Nestor clearly failed in this respect. He should thus not be allowed
in bad faith, the former has the duty to convincingly prove the existence of the same.55
to pass the blame to other people for his shortcomings. And since respondent cannot be considered to have acted On the other hand, Mercado argued that their marriage was valid under Article 26 of the Family Code and not
negligently or in bad faith, BPI is not vicariously liable. prohibited by Article 35(4), because she was a United States citizen at the time.[9] Further, she claimed that the
petition was Ongpin's scheme to evade liability in a separate civil case for separation of property she filed in 2002
WHEREFORE, all the foregoing considered, the instant Petition is hereby DENIED. Accordingly, the Decision over the properties acquired during their marriage that Ongpin was allegedly concealing or disposing with intent
dated 15 February 2017 and Resolution dated 05 September 2017 promulgated by the Court of Appeals in CA to deprive her of her share. She also claimed moral and exemplary damages, and costs of suit.[10]
G.R. CV No. 98642 are AFFIRMED.
On November 12, 2009, the Regional Trial Court issued a Decision[11] declaring Ongin and Mercado's marriage
SO ORDERED. void. The dispositive portion of the Decision stated:

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

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

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

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

Ongpin claimed that, after he married Mercado, he found that Mantaring was still a Filipino citizen when she
SO ORDERED.[23]
obtained the divorce decree, and as such, his marriage to her was still valid and subsisting at the time of his
second marriage.[8]
According to the Court of Appeals, Ongpin did not deliberately contract a second marriage despite knowing that On September 26, 2013, Ongpin filed his Comment[36] where he argues that the Court of Appeals correctly held
his first marriage subsisted. It found that Ongpin believed in good faith that the divorce decree secured by that Mercado failed to prove that he deliberately contracted a second marriage knowing that that his first was still
Mantaring was valid and binding, as he thought she was already a United States citizen. It was only after his valid and subsisting. He claims that it was only after he and Mercado separated that Mantaring disclosed her
marriage to Mercado that Ongpin consulted a lawyer and learned that the divorce was ineffectual. The Court of Filipino citizenship at the time she obtained the divorce decree.[37] He points out that Mercado admitted during trial
Appeals pointed out that Ongpin would not have married Mercado under pain of indictment for bigamy.[24] that, at the time she married Ongpin, she knew that both he and Mantaring were Filipino citizens, and that it was
Mercado who advised him to get a declaration of nullity of his marriage to Mantaring in 1992.[38]
As such, the Court of Appeals held that Ongpin could not be liable for moral damages, which required a showing
of bad faith, or a conscious and intentional design to do a wrongful act. It found that Mercado failed to prove In her Reply,[39] Mercado claims that Ongpin had known about the invalidity of the divorce decree even before
Ongpin's bad faith by clear and convincing evidence.[25] Mantaring told him.[40] She reiterates her claim that she did not know that Ongpin was incapacitated to marry her
at the start of their marriage.[41]
Further, the Court of Appeals found that Ongpin did not file the petition to evade liability in the separation of property
case, since the case was still pending and there was no liability to evade. It pointed out that the declaration of Ongpin filed a rejoinder to her reply on January 24, 2014.[42]
nullity of marriage would include a ruling on Ongpin and Mercado's property relations, notwithstanding the other
case, preventing Ongpin from evading In its November 19, 2014 Resolution,[43] this Court resolved to give due course to the Petition for Review and
a settlement of his property relations with Mercado.[26] ordered the parties to submit their memoranda, which they complied with.[44]

In deleting the award of exemplary damages, the Court of Appeals held that Ongpin did not act in a wanton, While the case was pending, Ongpin filed three successive motions praying that this Court direct the Regional
fraudulent, reckless, oppressive, or malevolent manner, in merely seeking a judicial declaration of nullity of his Trial Court to issue a partial entry of judgment and certificate of finality concerning the declaration of nullity of his
marriage to Mercado. Similarly, it held that the award of attorney's fees should be deleted, as both parties had and Mercado's marriage, as the only matter to be resolved by this Court is Mercado's entitlement to damages.[45]
incurred costs to protect their interests.[27]
The issues to be resolved in this case are: first, whether or not the Petition for Review raises questions of fact not
The Court of Appeals denied Mercado's motion for reconsideration in its May 22, 2013 Resolution.[28] reviewable in a Rule 45 petition; and second, whether or not Mary Elizabeth Mercado is entitled to moral and
exemplary damages, and attorney's fees.
On June 17, 2013, Mercado filed with this Court a Motion to Admit,[29] and with it, her Petition for Review on
Certiorari[30] under Rule 45 of the Rules of Court, assailing the Decision and Resolution of the Court of Appeals. I

In her Petition for Review, Mercado argues that the Court of Appeals committed grave abuse of discretion when it Generally, this Court does not review questions of fact in a petition for review under Rule 45 of the Rules of
reversed the findings of the Regional Trial Court.[31] She argues that the Court of Appeals ignored that Ongpin filed Court.[46] Whether or not a party acted in bad faith is a question of fact.[47] Entitlement to damages likewise requires
two petitions to have his marriage to Mantaring declared void, withdrawing the first one, and filing the second one examination of the factual circumstances of a case.[48] However, when the factual findings of the Regional Trial
only after Mercado filed the case for separation of property with the Regional Trial Court. She alleges that Ongpin Court and Court of Appeals are conflicting, then this Court may resolve these issues.[49]
only attempted to remedy the issue of his seemingly bigamous second marriage when it was expedient for him to
do so.[32]
In its November 18, 2016 Decision, the Regional Trial Court held that respondent's act of marrying petitioner even
though he had an existing first marriage constituted bad faith. The Court of Appeals ruled otherwise because it
Mercado points out that, unlike Ongpin, she did not do anything wrong. She had the capacity to marry, was a found that, at the time respondent married petitioner, he believed in good faith that he was validly divorced from
United States citizen at the time of her marriage, and lived with Ongpin for more than 10 years until she finally left his first wife. Further, it found that respondent did not seek to have his second marriage declared null and void
him in 2000. As such, she was entitled to moral damages.[33] only so that he could evade liability in the civil case filed by petitioner.

Moreover, she argues that Ongpin should be made to pay exemplary damages for his blatant disrespect for the Considering these conflicting conclusions, this Court must now examine the factual findings to resolve whether or
institution of marriage, and to serve as an example for the public. She claims that she should be awarded attorney's not respondent acted in bad faith when he married petitioner despite the subsistence of his first marriage.
fees for being compelled to litigate after Ongpin initiated the suit against her.[34]
II
This Court granted the Motion to Admit and ordered Ongpin to comment on the Petition for Review in its August 5,
2013 Resolution.[35] Moral damages are a form of compensation for the "physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury"[50] unjustly sustained
by a person.[51] They are awarded when: (1) there is a physical, mental or psychological injury clearly sustained
by the claimant; (2) a wrongful act or omission is factually established; (3) the act or omission is the proximate
cause of the injury; and (4) the award of damages is based on any of the cases stated in Article 2219 [52] of the Thus, the private complainant was an innocent victim of the petitioner's chicanery and heartless deception, the
Civil Code.[53] fraud consisting not of a single act alone, but a continuous series of acts. Day by day, he maintained the
appearance of being a lawful husband to the private complainant, who changed her status from a single woman
to a married woman, lost the consortium, attributes and support of a single man she could have married lawfully
This Court has sanctioned the award of moral damages m cases of bigamy based on Articles 19, 20 and 21 of the
and endured mental pain and humiliation, being bound to a man who it turned out was not her lawful husband.[61]
Civil Code.[54]

There, this Court found that the bigamous spouse's continuous and collective acts of fraud before, during, and
Article 19 of the Civil Code sets the standards for the exercise of one's rights and performance of duties: after his marriage were willful, deliberate, and malicious, causing injury to the innocent spouse. It was the
bigamous spouse's continuing bad faith that disregarded public policy, undermined and subverted the family as a
ARTICLE 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, social institution, and went against good morals, and the interest and general welfare of society.[62]
give everyone his due, and observe honesty and good faith.
Thus, the Regional Trial Court was in error when it held that the mere contracting of a second marriage despite
This provision recognizes that even the exercise of a right may be the source of some illegal act, when done in a the existence of a first marriage is, by itself, a ground for damages under Article 19 in relation to Article 20 or Article
manner contrary to the standards it sets, and results in damage to another.[55] Meanwhile, Articles 20 and 21 21. As correctly stressed by the Court of Appeals, the bad faith, or deliberate intent to do a wrongful act, of the
provide for the legal remedy for a violation of Article 19:[56] bigamous spouse must be established:

ARTICLE 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify Here, it was not convincingly shown that appellant deliberately contracted a second marriage despite knowledge
the latter for the same. of the subsistence of his first marriage. He believed in good faith that the divorce decree given to his first wife was
valid and binding in the Philippines because he thought all along that [his] first wife at that time was already an
ARTICLE 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good [American] citizen. Thus, he and Mercado, both consenting adults, freely married each other, both believing that
customs or public policy shall compensate the latter for the damage. the final divorce decree was valid and binding in the Philippines. Indeed, both appellant and Mercado would not
have married each other under pain of indictment for bigamy had they known that appellant's first marriage was
still in existence, because it later turned out that Mercado was still a Filipino when the divorce decree was issued.
For there to be a finding of an abuse of rights under Article 19, the following elements must concur: (1) there is a So how could appellant be held liable for damages when he was not shown to have acted in bad faith when he
legal right or duty; (2) the right is exercised or the duty is performed in bad faith; and (3) the sole intent of the married appellee? It has been consistently held that bad faith does not simply mean negligence or bad judgment.
exercise or performance is to prejudice or injure another.[57] It must be shown that the exercise of the right or It involves a state of mind dominated by ill-will or motive. It implies a conscious and intentional design to do a
performance of the duty was done with bad faith. In Dart Philippines, Inc. v. Spouses Calogcog: [58] wrongful act for a dishonest purpose or some moral obliquity. The person claiming moral damages must prove the
existence of bad faith by clear and convincing evidence for the law always presumes good faith. Here, appellee
Malice or bad faith is at the core of Article 19 of the Civil Code. Good faith refers to the state of mind which is failed to overcome the legal presumption of good faith. Thus, the award of moral damages must be deleted.[63]
manifested by the acts of the individual concerned. It consists of the intention to abstain from taking an
unconscionable and unscrupulous advantage of another. It is presumed. Thus, he who alleges bad faith has the Petitioner has not been able to prove that, at the time she and respondent married, respondent knew that his
duty to prove the same. Bad faith does not simply connote bad judgment or simple negligence; it involves a divorce from his first spouse was invalid. There is no proof that, upon the first spouse's confirmation of her
dishonest purpose or some moral obloquy and conscious doing of a wrong, a breach of known duty due to some Philippine citizenship at the time she obtained the divorce decree, respondent concealed this knowledge from
motives or interest or ill will that partakes of the nature of fraud. Malice connotes ill will or spite and speaks not in petitioner or allowed her to continue believing that their marriage was valid. The malice or bad faith necessary to
response to duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad faith or bad motive.[59] sustain an action based on Article 19 of the Civil Code has not been shown in this case.

In Manuel v. People,[60] this Court awarded moral damages to the innocent spouse upon a finding that the Moreover, petitioner has not established that she has sustained an injury in law due to respondent's acts.
bigamous spouse acted deceitfully and fraudulently when he contracted his second marriage:
A review of the records shows that petitioner had known that there was some sort of anomaly in the dissolution of
In the present case, the petitioner courted the private complainant and proposed to marry her. He assured her that respondent's first marriage as early as 1992. As the Regional Trial Court found, within four years of petitioner and
he was single. He even brought his parents to the house of the private complainant where he and his parents respondent's marriage, they found out that the divorce decree between respondent and Mantaring may not be
made the same assurance—that he was single. Thus, the private complainant agreed to marry the petitioner, who valid because of their citizenship.[64] Both petitioner and respondent consulted with a lawyer, who advised them to
even stated in the certificate of marriage that he was single. She lived with the petitioner and dutifully performed have the first marriage annulled on the ground of psychological incapacity.[65] When respondent withdrew his
her duties as his wife, believing all the while that he was her lawful husband. For two years or so until the petitioner petition for annulment, petitioner pleaded with him to continue the case.[66]
heartlessly abandoned her, the private complainant had no inkling that he was already married to another before
they were married.
Petitioner does not dispute any of these findings made by the trial court.[67] She knew, or should have known, that
there existed some issue regarding respondent's first marriage which might adversely affect the validity of her
marriage to him. Yet, she did not initiate any actions of her own to protect her civil status, and appeared complacent interest of justice requires, irrespective of whether the defendant will be favored or prejudiced. The public interest
with the uncertainty that hovered over the validity of her marriage with respondent. demands no less. As the Spanish proverb goes, justice is "no mas pero no menos".[73]

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

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

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

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

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

. . . What is important is that once the finality of the questioned judgment has been arrested by a motion for
On July 31, 1995, the Regional Trial Court promulgated a Decision, the dispositive portion of which reads:
reconsideration, the reviewing officer should be given full opportunity to restudy the records and satisfy himself
whether justice has been done; and if convinced that it was not done, to revise and correct the judgment as the
WHEREFORE, judgment is hereby rendered as follows:
 1) Declaring and decreeing the marriage entered into between plaintiff Noel A. Buenaventura and In the Petition for Review on Certiorari petitioner claims that the Court of Appeals decided the case not in accord
defendant Isabel Lucia Singh Buenaventura on July 4, 1979, null and void ab initio; with law and jurisprudence, thus:

2) Ordering the plaintiff to pay defendant moral damages in the amount of 2.5 million pesos and 1. WHEN IT AWARDED DEFENDANT-APPELLEE MORAL DAMAGES IN THE AMOUNT OF P2.5
exemplary damages of 1 million pesos with 6% interest from the date of this decision plus attorney’s fees MILLION AND EXEMPLARY DAMAGES OF P1 MILLION, WITH 6% INTEREST FROM THE DATE
of P100,000.00; OF ITS DECISION, WITHOUT ANY LEGAL AND MORAL BASIS;

3) Ordering the plaintiff to pay the defendant expenses of litigation of P50,000.00, plus costs; 2. WHEN IT AWARDED P100,000.00 ATTORNEY’S FEES AND P50,000.00
EXPENSES OF LITIGATION, PLUS COSTS, TO DEFENDANT-APPELLEE, WITHOUT FACTUAL AND
4) Ordering the liquidation of the assets of the conjugal partnership property[,] particularly the LEGAL BASIS;
plaintiff’s separation/retirement benefits received from the Far East Bank [and] Trust Company[,] by
ceding, giving and paying to her fifty percent (50%) of the net amount of P3,675,335.79 or P1,837,667.89 3. WHEN IT ORDERED PLAINTIFF-APPELLANT NOEL TO PAY DEFENDANTAPPELLEE ONE-HALF
together with 12% interest per annum from the date of this decision and one-half (1/2) of his outstanding OR P1,837,667.89 OUT OF HIS RETIREMENT BENEFITS RECEIVED FROM THE FAR EAST
shares of stock with Manila Memorial Park and Provident Group of Companies; BANK AND TRUST CO., WITH 12% INTEREST THEREON FROM THE DATE OF ITS DECISION,
NOTWITHSTANDING THAT SAID RETIREMENT BENEFITS ARE GRATUITOUS AND EXCLUSIVE
5) Ordering him to give a regular support in favor of his son Javy Singh Buenaventura in the amount PROPERTY OF NOEL, AND ALSO TO DELIVER TO DEFENDANT-APPELLEE ONE-HALF OF HIS
SHARES OF STOCK WITH THE MANILA MEMORIAL PARK AND THE PROVIDENT GROUP OF
of P15,000.00 monthly, subject to modification as the necessity arises;
COMPANIES, ALTHOUGH SAID SHARES OF STOCK WERE ACQUIRED BY NOEL BEFORE HIS
MARRIAGE TO RESPONDENT ISABEL AND ARE, THEREFORE, AGAIN HIS EXCLUSIVE
6) Awarding the care and custody of the minor Javy Singh Buenaventura to his mother, the herein PROPERTIES; AND
defendant; and
4. WHEN IT AWARDED EXCLUSIVE CARE AND CUSTODY OVER THE PARTIES’ MINOR CHILD TO
7) Hereby authorizing the defendant to revert back to the use of her maiden family name Singh. DEFENDANT-APPELLEE WITHOUT ASKING THE CHILD (WHO WAS ALREADY 13 YEARS OLD
AT THAT TIME) HIS CHOICE AS TO WHOM, BETWEEN HIS TWO PARENTS, HE WOULD LIKE
Let copies of this decision be furnished the appropriate civil registry and registries of properties. TO HAVE CUSTODY OVER HIS PERSON.11

SO ORDERED.2 In the Petition for Certiorari, petitioner advances the following contentions:

Petitioner appealed the above decision to the Court of Appeals. While the case was pending in the appellate court, THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION WHEN IT REFUSED TO SET
respondent filed a motion to increase the P15,000 monthly support pendente lite of their son Javy Singh RESPONDENT’S MOTION FOR INCREASED SUPPORT FOR THE PARTIES’ SON FOR HEARING.12
Buenaventura. Petitioner filed an opposition thereto, praying that it be denied or that such incident be set for oral
argument.3 THERE WAS NO NEED FOR THE COURT OF APPEALS TO INCREASE JAVY’S MONTHLY SUPPORT
OF P15,000.00 BEING GIVEN BY PETITIONER EVEN AT PRESENT PRICES.13
On September 2, 1996, the Court of Appeals issued a Resolution increasing the support pendente lite to P20,000. 4
Petitioner filed a motion for reconsideration questioning the said Resolution.5
IN RESOLVING RESPONDENT’S MOTION FOR THE INCREASE OF JAVY’S SUPPORT, THE COURT
OF APPEALS SHOULD HAVE EXAMINED THE LIST OF EXPENSES SUBMITTED BY RESPONDENT
On October 8, 1996, the appellate court promulgated a Decision dismissing petitioner’s appeal for lack of merit IN THE LIGHT OF PETITIONER’S OBJECTIONS THERETO, INSTEAD OF MERELY ASSUMING THAT
and affirming in toto the trial court’s decision.6 Petitioner filed a motion for reconsideration which was denied. From JAVY IS ENTITLED TO A P5,000 INCREASE IN SUPPORT AS SAID AMOUNT IS "TOO MINIMAL."14
the abovementioned Decision, petitioner filed the instant Petition for Review on Certiorari.
LIKEWISE, THE COURT OF APPEALS SHOULD HAVE GIVEN PETITIONER AN OPPORTUNITY TO
On November 13, 1996, through another Resolution, the Court of Appeals denied petitioner’s motion for PROVE HIS PRESENT INCOME TO SHOW THAT HE CANNOT AFFORD TO INCREASE JAVY’S
reconsideration of the September 2, 1996 Resolution, which increased the monthly support for the son.7 Petitioner SUPPORT.15
filed a Petition for Certiorari to question these two Resolutions.

With regard to the first issue in the main case, the Court of Appeals articulated:
On July 9, 1997, the Petition for Review on Certiorari8 and the Petition for Certiorari9 were ordered consolidated
by this Court.10
 On Assignment of Error C, the trial court, after findings of fact ascertained from the testimonies not only A marriage contracted by any party who, at the time of the celebration, was psychologically incapacitated
of the parties particularly the defendant-appellee but likewise, those of the two psychologists, awarded to comply with the essential marital obligations of marriage, shall likewise be void even if such incapacity
damages on the basis of Articles 21, 2217 and 2229 of the Civil Code of the Philippines. becomes manifest only after its solemnization.

Thus, the lower court found that plaintiff-appellant deceived the defendant-appellee into marrying him by Psychological incapacity has been defined, thus:
professing true love instead of revealing to her that he was under heavy parental pressure to marry and
that because of pride he married defendantappellee; that he was not ready to enter into marriage as in . . . no less than a mental (not physical) incapacity that causes a party to be truly incognitive of the
fact his career was and always would be his first priority; that he was unable to relate not only to basic marital covenants that concomitantly must be assumed and discharged by the parties to
defendantappellee as a husband but also to his son, Javy, as a father; that he had no inclination to make the marriage which, as so expressed by Article 68 of the Family Code, include their mutual obligations
the marriage work such that in times of trouble, he chose the easiest way out, that of leaving defendant– to live together, observe love, respect and fidelity and render help and support. There is hardly any doubt
appellee and their son; that he had no desire to keep defendant-appellee and their son as proved by his that the intendment of the law has been to confine the meaning of "psychological incapacity" to the most
reluctance and later, refusal to reconcile after their separation; that the aforementioned caused serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give
defendant-appellee to suffer mental anguish, anxiety, besmirched reputation, sleepless nights not only in meaning and significance to the marriage. . . .18
those years the parties were together but also after and throughout their separation.
The Court of Appeals and the trial court considered the acts of the petitioner after the marriage as proof of his
Plaintiff-appellant assails the trial court’s decision on the ground that unlike those arising from a breach psychological incapacity, and therefore a product of his incapacity or inability to comply with the essential
in ordinary contracts, damages arising as a consequence of marriage may not be awarded. While it is obligations of marriage. Nevertheless, said courts considered these acts as willful and hence as grounds for
correct that there is, as yet, no decided case by the Supreme Court where damages by reason of the granting moral damages. It is contradictory to characterize acts as a product of psychological incapacity, and
performance or nonperformance of marital obligations were awarded, it does not follow that no such hence beyond the control of the party because of an innate inability, while at the same time considering the same
award for damages may be made. set of acts as willful. By declaring the petitioner as psychologically incapacitated, the possibility of awarding moral
damages on the same set of facts was negated. The award of moral damages should be predicated, not on the
Defendant-appellee, in her amended answer, specifically prayed for moral and exemplary damages in mere act of entering into the marriage, but on specific evidence that it was done deliberately and with malice by a
the total amount of 7 million pesos. The lower court, in the exercise of its discretion, found full justification party who had knowledge of his or her disability and yet willfully concealed the same. No such evidence appears
of awarding at least half of what was originally prayed for. We find no reason to disturb the ruling of the to have been adduced in this case.
trial court.16
For the same reason, since psychological incapacity means that one is truly incognitive of the basic marital
The award by the trial court of moral damages is based on Articles 2217 and 21 of the Civil Code, which read as covenants that one must assume and discharge as a consequence of marriage, it removes the basis for the
follows: contention that the petitioner purposely deceived the private respondent. If the private respondent was deceived,
it was not due to a willful act on the part of the petitioner. Therefore, the award of moral damages was without
ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched basis in law and in fact.
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the Since the grant of moral damages was not proper, it follows that the grant of exemplary damages cannot stand
defendant’s wrongful act or omission. since the Civil Code provides that exemplary damages are imposed in addition to moral, temperate, liquidated or
compensatory damages.19
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. With respect to the grant of attorney’s fees and expenses of litigation the trial court explained, thus:

The trial court referred to Article 21 because Article 221917 of the Civil Code enumerates the cases in which moral Regarding Attorney’s fees, Art. 2208 of the Civil Code authorizes an award of attorney’s fees and
damages may be recovered and it mentions Article 21 as one of the instances. It must be noted that Article 21 expenses of litigation, other than judicial costs, when as in this case the plaintiff’s act or omission has
states that the individual must willfully cause loss or injury to another. There is a need that the act is willful and compelled the defendant to litigate and to incur expenses of litigation to protect her interest (par. 2), and
hence done in complete freedom. In granting moral damages, therefore, the trial court and the Court of Appeals where the Court deems it just and equitable that attorney’s fees and expenses of litigation should be
could not but have assumed that the acts on which the moral damages were based were done willfully and freely, recovered. (par. 11)20
otherwise the grant of moral damages would have no leg to stand on.
The Court of Appeals reasoned as follows:
On the other hand, the trial court declared the marriage of the parties null and void based on Article 36 of the
Family Code, due to psychological incapacity of the petitioner, Noel Buenaventura. Article 36 of the Family Code
states:
 On Assignment of Error D, as the award of moral and exemplary damages is fully justified, the award of waiver or forfeiture of such share as provided in this Code." In this particular case, however, there had been no
attorney’s fees and costs of litigation by the trial court is likewise fully justified.21 marriage settlement between the parties, nor had there been any voluntary waiver or valid forfeiture of the
defendant wife’s share in the conjugal partnership properties. The previous cession and transfer by the plaintiff of
his one-half (1/2) share in their residential house and lot covered by T.C.T. No. S35680 of the Registry of Deeds
The acts or omissions of petitioner which led the lower court to deduce his psychological incapacity, and his act in
of Parañaque, Metro Manila, in favor of the defendant as stipulated in their Compromise Agreement dated July
filing the complaint for the annulment of his marriage cannot be considered as unduly compelling the private
12, 1993, and approved by the Court in its Partial Decision dated August 6, 1993, was actually intended to be in
respondent to litigate, since both are grounded on petitioner’s psychological incapacity, which as explained above
full settlement of any and all demands for past support. In reality, the defendant wife had allowed some concession
is a mental incapacity causing an utter inability to comply with the obligations of marriage. Hence, neither can be
in favor of the plaintiff husband, for were the law strictly to be followed, in the process of liquidation of the conjugal
a ground for attorney’s fees and litigation expenses. Furthermore, since the award of moral and exemplary
assets, the conjugal dwelling and the lot on which it is situated shall, unless otherwise agreed upon by the parties,
damages is no longer justified, the award of attorney’s fees and expenses of litigation is left without basis.
be adjudicated to the spouse with whom their only child has chosen to remain (Art. 129, par. 9). Here, what was
done was one-half (1/2) portion of the house was ceded to defendant so that she will not claim anymore for past
Anent the retirement benefits received from the Far East Bank and Trust Co. and the shares of stock in the Manila unpaid support, while the other half was transferred to their only child as his presumptive legitime.
Memorial Park and the Provident Group of Companies, the trial court said:
Consequently, nothing yet has been given to the defendant wife by way of her share in the conjugal
The third issue that must be resolved by the Court is what to do with the assets of the conjugal partnership in the properties, and it is but just, lawful and fair, that she be given one-half (1/2) share of the
event of declaration of annulment of the marriage. The Honorable Supreme Court has held that the declaration of separation/retirement benefits received by the plaintiff the same being part of their conjugal partnership
nullity of marriage carries ipso facto a judgment for the liquidation of property (Domingo v. Court of Appeals, et al., properties having been obtained or derived from the labor, industry, work or profession of said defendant
G.R. No. 104818, Sept. 17, 1993, 226 SCRA, pp. 572 – 573, 586). Thus, speaking through Justice Flerida Ruth husband in accordance with Art. 117, par. 2 of the Family Code. For the same reason, she is entitled to
P. Romero, it was ruled in this case: onehalf (1/2) of the outstanding shares of stock of the plaintiff husband with the Manila Memorial Park
and the Provident Group of Companies.22
When a marriage is declared void ab initio, the law states that the final judgment therein shall provide for
the liquidation, partition and distribution of the properties of the spouses, the custody and support of the
The Court of Appeals articulated on this matter as follows:
common children and the delivery of their presumptive legitimes, unless such matters had been
adjudicated in the previous proceedings.
On Assignment of Error E, plaintiff-appellant assails the order of the trial court for him to give one-half of
his separation/retirement benefits from Far East Bank & Trust Company and half of his outstanding shares
The parties here were legally married on July 4, 1979, and therefore, all property acquired during the marriage,
in Manila Memorial Park and Provident Group of Companies to the defendant-appellee as the latter’s
whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, share in the conjugal partnership.
is presumed to be conjugal unless the contrary is proved (Art. 116, New Family Code; Art. 160, Civil Code). Art.
117 of the Family Code enumerates what are conjugal partnership properties. Among others they are the following:
On August 6, 1993, the trial court rendered a Partial Decision approving the Compromise Agreement
entered into by the parties. In the same Compromise Agreement, the parties had agreed that henceforth,
1) Those acquired by onerous title during the marriage at the expense of the common fund, whether their conjugal partnership is dissolved. Thereafter, no steps were taken for the liquidation of the conjugal
the acquisition be for the partnership, or for only one of the spouses; partnership.

2) Those obtained from the labor, industry, work or profession of either or both of the spouses; Finding that defendant-appellee is entitled to at least half of the separation/retirement benefits which
plaintiff-appellant received from Far East Bank & Trust Company upon his retirement as Vice-President
3) The fruits, natural, industrial, or civil, due or received during the marriage from the common of said company for the reason that the benefits accrued from plaintiff–appellant’s service for the bank
property, as well as the net fruits from the exclusive property of each spouse. . . . for a number of years, most of which while he was married to defendant-appellee, the trial court
adjudicated the same.
Applying the foregoing legal provisions, and without prejudice to requiring an inventory of what are the parties’
conjugal properties and what are the exclusive properties of each spouse, it was disclosed during the proceedings The same is true with the outstanding shares of plaintiff-appellant in Manila Memorial Park and Provident
in this case that the plaintiff who worked first as Branch Manager and later as Vice-President of Far East Bank & Group of Companies. As these were acquired by the plaintiffappellant at the time he was married to
Trust Co. received separation/retirement package from the said bank in the amount of P3,701,500.00 which after defendant-appellee, the latter is entitled to onehalf thereof as her share in the conjugal partnership. We
certain deductions amounting to P26,164.21 gave him a net amount of P3,675,335.79 and actually paid to him on find no reason to disturb the ruling of the trial court.23
January 9, 1995 (Exhs. 6, 7, 8, 9, 10, 11). Not having shown debts or obligations other than those deducted from
the said retirement/separation pay, under Art. 129 of the Family Code "The net remainder of the conjugal Since the present case does not involve the annulment of a bigamous marriage, the provisions of Article 50 in
partnership properties shall constitute the profits, which shall be divided equally between husband and wife, unless relation to Articles 41, 42 and 43 of the Family Code, providing for the dissolution of the absolute community or
a different proportion or division was agreed upon in the marriage settlement or unless there has been a voluntary conjugal partnership of gains, as the case may be, do not apply. Rather, the general rule applies, which is that in
case a marriage is declared void ab initio, the property regime applicable and to be liquidated, partitioned and Article 147 of the Family Code, in substance and to the above extent, has clarified Article 144 of the Civil
distributed is that of equal coownership. Code; in addition, the law now expressly provides that —

In Valdes v. Regional Trial Court, Branch 102, Quezon City,24 this Court expounded on the consequences of a void (a) Neither party can dispose or encumber by act[s] inter vivos [of] his or her share in co-ownership
marriage on the property relations of the spouses and specified the applicable provisions of law: property, without the consent of the other, during the period of cohabitation; and

The trial court correctly applied the law. In a void marriage, regardless of the cause thereof, the property (b) In the case of a void marriage, any party in bad faith shall forfeit his or her share in the co-
relations of the parties during the period of cohabitation is governed by the provisions of Article 147 or ownership in favor of their common children; in default thereof or waiver by any or all of the common
Article 148, such as the case may be, of the Family Code. Article 147 is a remake of Article 144 of the children, each vacant share shall belong to the respective surviving descendants, or still in default thereof,
Civil Code as interpreted and so applied in previous cases; it provides: to the innocent party. The forfeiture shall take place upon the termination of the cohabitation or declaration
of nullity of the marriage.
ART. 147. When a man and a woman who are capacitated to marry each other, live exclusively
with each other as husband and wife without the benefit of marriage or under a void marriage, In deciding to take further cognizance of the issue on the settlement of the parties' common property, the
their wages and salaries shall be owned by them in equal shares and the property acquired by trial court acted neither imprudently nor precipitately; a court which had jurisdiction to declare the marriage
both of them through their work or industry shall be governed by the rules on co-ownership. a nullity must be deemed likewise clothed with authority to resolve incidental and consequential matters.
Nor did it commit a reversible error in ruling that petitioner and private respondent own the "family home"
In the absence of proof to the contrary, properties acquired while they lived together shall be and all their common property in equal shares, as well as in concluding that, in the liquidation and partition
presumed to have been obtained by their joint efforts, work or industry, and shall be owned by of the property owned in common by them, the provisions on co-ownership under the Civil Code, not
them in equal shares. For purposes of this Article, a party who did not participate in the Articles 50, 51 and 52, in relation to Articles 102 and 129, of the Family Code, should aptly prevail. The
acquisition by the other party of any property shall be deemed to have contributed jointly in the rules set up to govern the liquidation of either the absolute community or the conjugal partnership of
acquisition thereof if the former's efforts consisted in the care and maintenance of the family and gains, the property regimes recognized for valid and voidable marriages (in the latter case until the
of the household. contract is annulled), are irrelevant to the liquidation of the co-ownership that exists between common-
law spouses. The first paragraph of Article 50 of the Family Code, applying paragraphs (2), (3), (4) and
Neither party can encumber or dispose by acts inter vivos of his or her share in the property (5) of Article 43, relates only, by its explicit terms, to voidable marriages and, exceptionally, to void
acquired during cohabitation and owned in common, without the consent of the other, until after marriages under Article 40 of the Code, i.e., the declaration of nullity of a subsequent marriage contracted
the termination of their cohabitation. by a spouse of a prior void marriage before the latter is judicially declared void. The latter is a special rule
that somehow recognizes the philosophy and an old doctrine that void marriages are inexistent from the
very beginning and no judicial decree is necessary to establish their nullity. In now requiring for purposes
When only one of the parties to a void marriage is in good faith, the share of the party in bad of remarriage, the declaration of nullity by final judgment of the previously contracted void marriage, the
faith in the co-ownership shall be forfeited in favor of their common children. In case of default present law aims to do away with any continuing uncertainty on the status of the second marriage. It is
of or waiver by any or all of the common children or their descendants, each vacant share shall not then illogical for the provisions of Article 43, in relation to Articles 41 and 42, of the Family Code, on
belong to the respective surviving descendants. In the absence of descendants, such share the effects of the termination of a subsequent marriage contracted during the subsistence of a previous
shall belong to the innocent party. In all cases, the forfeiture shall take place upon termination marriage to be made applicable pro hac vice. In all other cases, it is not to be assumed that the law has
of the cohabitation. also meant to have coincident property relations, on the one hand, between spouses in valid and voidable
marriages (before annulment) and, on the other, between common-law spouses or spouses of void
This peculiar kind of co-ownership applies when a man and a woman, suffering no legal impediment to marriages, leaving to ordain, in the latter case, the ordinary rules on co-ownership subject to the provision
marry each other, so exclusively live together as husband and wife under a void marriage or without the of Article 147 and Article 148 of the Family Code. It must be stressed, nevertheless, even as it may merely
benefit of marriage. The term "capacitated" in the provision (in the first paragraph of the law) refers to the state the obvious, that the provisions of the Family Code on the "family home," i.e., the provisions found
legal capacity of a party to contract marriage, i.e., any "male or female of the age of eighteen years or in Title V, Chapter 2, of the Family Code, remain in force and effect regardless of the property regime of
upwards not under any of the impediments mentioned in Articles 37 and 38" of the Code. the spouses.25

Under this property regime, property acquired by both spouses through their work and industry shall be Since the properties ordered to be distributed by the court a quo were found, both by the trial court and the Court
governed by the rules on equal co-ownership. Any property acquired during the union is prima facie of Appeals, to have been acquired during the union of the parties, the same would be covered by the co-ownership.
presumed to have been obtained through their joint efforts. A party who did not participate in the No fruits of a separate property of one of the parties appear to have been included or involved in said distribution.
acquisition of the property shall still be considered as having contributed thereto jointly if said party's The liquidation, partition and distribution of the properties owned in common by the parties herein as ordered by
"efforts consisted in the care and maintenance of the family household." Unlike the conjugal partnership the court a quo should, therefore, be sustained, but on the basis of co-ownership and not of the regime of conjugal
of gains, the fruits of the couple's separate property are not included in the co-ownership. partnership of gains.
As to the issue on custody of the parties over their only child, Javy Singh Buenaventura, it is now moot since he What Banach did not tell Guevarra, however, was that he had still been married to his third wife then. Instead, he
is about to turn twenty-five years of age on May 27, 200526 and has, therefore, attained the age of majority. told her that he was a divorced man. He also concealed his true identity and made Guevarra and her family believe
that his name was Roger Brawner.9
With regard to the issues on support raised in the Petition for Certiorari, these would also now be moot, owing to
the fact that the son, Javy Singh Buenaventura, as previously stated, has attained the age of majority. Guevarra, who would confide in Banach her family problems, even including the chances of their family being
evicted from their home,10 eventually submitted to Banach's wooing as he offered her a better life. The two agreed
WHEREFORE, the Decision of the Court of Appeals dated October 8, 1996 and its Resolution dated December to get married, and Banach sent Guevarra P500,000.00 to buy a lot for their conjugal home.11
10, 1996 which are contested in the Petition for Review (G.R. No. 127449), are hereby MODIFIED, in that the
award of moral and exemplary damages, attorney’s fees, expenses of litigation and costs are deleted. The order Yet, when Guevarra found out about Banach's lies and deception, she broke up with him.12
giving respondent one-half of the retirement benefits of petitioner from Far East Bank and Trust Co. and one-half
of petitioner’s shares of stock in Manila Memorial Park and in the Provident Group of Companies is sustained but The breakup prompted Banach to sue Guevarra and her parents for damages before the Regional Trial Court.13
on the basis of the liquidation, partition and distribution of the co-ownership and not of the regime of Banach anchored his cause of action on the human relations provisions in the Civil Code, particularly Articles 20,
conjugal partnership of gains. The rest of said Decision and Resolution are AFFIRMED. 21, and 22.14 He alleged that Guevarra had repeatedly expressed her love and willingness to marry him so that
he would send her money, only to break up with him after he had done so.15 He claimed that these acts amounted
The Petition for Review on Certiorari (G.R. No. 127358) contesting the Court of Appeals’ Resolutions of September to fraud, or at the very least, unjust enrichment.16
2, 1996 and November 13, 1996 which increased the support pendente lite in favor of the parties’ son, Javy Singh
Buenaventura, is now MOOT and ACADEMIC and is, accordingly, DISMISSED. Banach likewise claimed moral damages for the alleged "moral suffering, anguish, anxiety[,] and sleepless nights"
he suffered from Guevarra.17 He also prayed for attorney's fees for having been constrained to litigate to protect
No costs. his rights.18

SO ORDERED. On the other hand, Guevarra argued that the money Banach sent her "was a gift, the return of which [was] not
actionable."19
Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Carpio, JJ., concur.
[ G.R. No. 214016. November 24, 2021 ] The Regional Trial Court found Guevarra and her parents liable to Banach for actual damages. It also awarded
moral damages and attorney's fees.20

JHONNA GUEVARRA ET AL., PETITIONER, VS. JAN BANACH, RESPONDENT.

On appeal, the Court of Appeals, in its January 29, 2007 Decision, similarly ordered Guevarra and her parents to
return the P500,000.00 to Banach under the principle of unjust enrichment. However, it deleted the awards of
DECISION moral damages and attorney's fees,21 ruling that Banach's actions were tainted with fraud and deceit, and that he
did not have the purest intentions in expressing his desire to marry Guevarra.22
LEONEN, J.:
The parties sought reconsideration of the Decision.
A mere breach of a promise to marry is not an actionable wrong, as long as it is not of such extent as would
palpably and unjustifiably contradict good customs.1 In any case, the party seeking to recover damages must Banach claimed that he was entitled to moral damages and attorney's fees.23 On the other hand, Guevarra, along
have acted in good faith. with her parents, prayed that the Regional Trial Court's Decision be totally reversed in their favor. She maintained
that the P500,000.00 was a gift given to her and, applying the law on natural obligations under Article 1423 of the
This Court resolves a Petition for Review on Certiorari2 assailing both the Decision3 and Civil Code, the return of the money was not actionable.24 She also faulted the Court of Appeals for not applying
Resolution4 of the Court of Appeals, which reversed the Regional Trial Court Decision5 finding Jhonna Guevarra the doctrine on breach of promise to marry, which states that no such cause of action is recognized in our
(Guevarra) liable to Jan Banach (Banach) for damages arising from a breach of promise to marry. jurisdiction.25

Based on the Court of Appeals Resolution and other available records, Banach, a German citizen,6 met Guevarra In the July 14, 2014 Resolution,26 the Court of Appeals denied the Motions for Reconsideration. It refused to
through a certain Pastor Jun Millamina.7 He went on to court Guevarra, visiting her almost every day, giving her award moral damages because Banach failed to prove that Guevarra acted with fraud or deceit; the timing of the
gifts, and eventually telling her that he intended to marry her.8 breakup was understandable since it happened around the time that Guevarra learned of Banach's
misrepresentation.27 Accordingly, the Court of Appeals found no basis in the claim for attorney's fees.28
However, the Court of Appeals rejected Guevarra and her parents' theory that the law on natural obligations should The crux of the matter is whether there is legal basis to order the return of the P500,000.00 that respondent gave
apply. It found that since Banach sent Guevarra money for their plan to get married, it was only proper to order petitioner for their supposed conjugal home.
the reimbursement under the principle of unjust enrichment because no marriage ever materialized.29
Under our laws, a breach of promise to marry is not actionable. This doctrine was first pronounced in Hermosisima
Thus, Guevarra filed a Petition for Review on Certiorari30 against Banach. Petitioner insists that either the law on v. Court of Appeals,43 where this Court observed that the New Civil Code omitted the provisions in the Spanish
natural obligations or the doctrine on breach of promise to marry is applicable.31 Anchoring her claims on laws Civil Code of 1889 that allowed actions for breach of promise to marry. Hermosisima treated the omission to mean
and doctrines that supposedly bar the return of the money, she insists that the P500,000.00 was a gift, the return that such breach is no longer recognized as an actionable wrong. This doctrine was reiterated in Estopa v.
of which is not actionable.32 Piansay44 and Baksh v. Court of Appeals.45

For his part, respondent prefaces his Comment33 by pointing out the Petition's technical deficiencies. He argues Nevertheless, in Wassmer v. Velez,46 this Court allowed the recovery of damages as a result of a canceled
that the Petition fails to state the full names of the parties, as well as the material dates showing when the notice marriage. In Wassmer, preparations for the wedding had already been made-a marriage license had been secured;
of judgment, final order, or resolution was received; when a motion for new trial or reconsideration, if any, was wedding invitations printed and distributed; dresses for the bride, maid of honor, and flower girl purchased; bridal
filed; and when a notice of denial was received. He also insists that the Petition did not contain a concise statement showers given and gifts received; the matrimonial bed bought, complete with accessories-only to have the wedding
of the issues involved and her arguments supporting her Petition.34 He claims that noncompliance with the canceled just two days before its intended date.
requirements found under Rule 45 renders the Petition dismissible.35
Wassmer did not depart from the doctrine that a mere breach of promise to many is not an actionable wrong. The
On the substantive grounds, respondent maintains that there was no element of seduction, fraud, or deceit when award in Wassmer was not based on the breach of promise to marry, but on Article 21 of the New Civil Code.47
he sent the money to petitioner, as respondent was in Germany and not in the Philippines at that time. Respondent Wassmer ruled that, while a breach of promise to marry was not actionable, walking out of a wedding two days
claims that this even shows his sincere desire to marry petitioner, which would have materialized had it not been prior, after all had been prepared, was quite different. The defendant's act was deemed "palpably and unjustifiably
for petitioner's sudden change of heart.36 contrary to good customs," for which the award of damages was proper.48 Indeed, "the extent to which acts not
contrary to law may be perpetrated with impunit[y] is not limitless[,]" as these acts are still subject to the human
Respondent further refutes petitioner's allegation of ill intentions. He says that he openly courted petitioner in their relations provisions of the New Civil Code.49
home and in the presence of her parents; and that only after he had been accepted in the family did he have
sexual intercourse with petitioner. Hence, he says that there could not have been moral seduction.37 Now, respondent proposes the same theory in his attempt to recover the P500,000.00 he had given petitioner. He
argues that petitioner's conduct was actionable, not because of her breach of promise to many, but because of
Lastly, respondent repeats that while there can be no action for breach of promise to marry, his claim is anchored the law on unjust enrichment in the New Civil Code.
on the violation of the human relations provisions of the Civil Code on unjust enrichment.38 Thus, he maintains
that the order to return the P500,000.00 was proper.39 What respondent fails to consider, however, is that the human relations provisions in the New Civil Code
presuppose that the party seeking damages must have acted in good faith. In Wassmer, this Court awarded
In her Reply,40 petitioner, along with her parents, reiterates the argument that the P500,000.00 was given in damages because the party who sought damages-the brideto-be-did not perpetrate lies, fraud, or deception, which
consideration of the promise to marry, and the breach of such promise cannot give rise to a cause of action.41 would have barred recovery. This is the reason why the groom-to-be's conduct in Wassmer was considered unjust
and contrary to good customs. Had the bride-to-be been in bad faith, the human relations provisions would not
have applied.
The main issue in this case is whether or not the order to return the P500,000.00 is proper.

This case is different. Here, petitioner called off the engagement after she had discovered respondent's lies and
The Petition is granted.
deception. As the Court of Appeals found, respondent's actions were tainted with fraud and deceit; he did not have
the purest intentions in marrying petitioner. He lied about his marital status, and even hid his true name from
First, a word on the procedural issue. The Rule 45 requirements on the contents of a petition for review on certiorari petitioner. These acts suffice to justify the wedding's cancellation. Finding out that one's betrothed is still married
are not empty, technical niceties. The allegations are required primarily to aid this Court in rendering an intelligent to another person, and that they are not who they say they are, are reasons enough to conclude bad faith.
decision on how the law applies to the facts of the case as established by the records. After all, our main duty
when exercising judicial review is to resolve controversies and settle the rights of litigants.
Since respondent himself did not act in good faith, he cannot claim damages under the New Civil Code. The unjust
enrichment principle under Article 2250 only applies if the property is acquired without legal grounds. Here,
That said, "what should guide judicial action is that a party is given the fullest opportunity to establish the merits of respondent gave petitioner P500,000.00 as a gift to help her and her family with their possible eviction from their
[their] action or defense rather than for [them] to lose life, honor, or property on mere technicalities."42 In the end, home. The money being a gift, petitioner is correct to say that she cannot be compelled to return the P500,000.00
a Rule 45 review lies within this Court's discretion. In the exercise of this discretion, we find that the allegations in given to her.
the Petition, together with other available records, are sufficient, and we deem it best to settle this case on its
merits.
Reversing the doctrines in Hermosisima and Wassmer would have far-reaching implications on the fundamental SO ORDERED.
rights enshrined in the Constitution. Hermosisima explains the public policy behind the doctrine on breaches of
promise to marry: Carandang, Zalameda, Rosario, and Marquez, JJ., concur.

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

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

The Constitution directs the State to "[value] the dignity of every human person and [guarantee] full respect for
human rights."54 Freedom of choice to associate or to identify forms part of one's dignity.55 As much as the Family OCT No. Area (sq. m.) Grantee Date Granted
Code provides that the "nature, consequences, and incidents [of marriage] are governed by law and not subject P-5204 38,328 Abdul Backy Ngilay November 11, 1986
to stipulation,"56 one's choice of intimate relations is also protected by the liberty57 and human dignity58 clauses P-5205 49,996 Hadji Gulam Ngilay November 11, 1986
of the Constitution. P-5206 49,875 Edris A. Ngilay November 11, 1986
P-5207 44,797 Robayca A. Ngilay November 11, 1986
P-5209 20,000 Omar Ngilay November 11, 1986
An individual has the autonomy to choose whom to marry, or whether to marry at all. They must be free to make
P-5211 29,990 Tayba Ngilay November 11, 1986
that choice without any fear of legal retribution or liability. The decision on whether to marry is one that should be
P-5212 48,055 Kiram Ngilay November 11, 1986
freely chosen, without the pressures of a possible civil suit should a person realize that their intended partner is
P-5578 20,408 Nadjer Esquevel November 24, 1991
not right for them. We recognize instances when the breach of one's commitment in an intimate relationship is a
P-5579 35,093 Unos Bantangan November 24, 1991
consequence of their realization that marriage may not be the wisest path they could take given their P-5580 39,507 Moner Ngilay November 24, 1991
circumstances. P-5582 44,809 Baiya Ngilay November 24, 1991
P-5583 10,050 Jamela Ngilay November 24, 1991
For this reason, litigation to the sorrows caused by a broken heart and a broken promise must be discouraged. P-5584 49,993 Ramir Ngilay November 24, 1991
P-5586 40,703 Satar Ngilay November 24, 1991
WHEREFORE, the Petition is GRANTED. The award of actual damages worth P500,000.00 is DELETED. P-5590 20,000 Abehara Ngilay November 24, 1991
P-5592 41,645 Lucaya Ngilay November 24, 1991
 P-5595 13,168 Edmer Andong November 24, 1991 corresponding grant of right of way for the same lots, it nullified the disposition of those properties granted through
Negotiations were made by petitioner, represented by Lina de Guzman-Ferrer with the patriarch of the Ngilays, patents in 1991 and the right of way on the same properties. As to the "1991 Patents," the CA ruled that the
Hadji Gulam Ngilay sometime in 1995. Eventually, a Deed of Conditional Sale of the above- enumerated properties contract of sale between the parties was a perfected contract, hence, the parties entered into a prohibited
in favor of petitioner Filinvest Land, Inc. was executed. Upon its execution, respondents were asked to deliver to conveyance of a homestead within the prohibitive period of five years from the issuance of the patent. The CA
petitioner the original owner's duplicate copy of the certificates of title of their respective properties. Respondents Decision dated March 30, 2006 disposed the case as follows:
received the downpayment for the properties on October 28, 1995.
WHEREFORE, the assailed Decision dated October 1, 2003 is MODIFIED:
A few days after the execution of the aforestated deeds and the delivery of the corresponding documents to
petitioner, respondents came to know that the sale of their properties was null and void, because it was done a) The Deed of Conditional Sale and Deed of Absolute Sale for the properties covered by the "1991
within the period that they were not allowed to do so and that the sale did not have the approval of the Secretary Patents", as well as the Right of Way Agreement thereto, are declared null and void. The Register of
of the Department of Environment and Natural Resources (DENR) prompting them to file a case for the declaration Deeds of General Santos City is consequently directed to cancel the certificates of title covered by the
of nullity of the deeds of conditional and absolute sale of the questioned properties and the grant of right of way "1991 Patents" issued in favor of appellee Filinvest and to issue new titles in favor of herein appellants.
with the RTC, Las Piñas, Branch 253.

b) The sale of the properties covered by the "1986 Patents", including the corresponding grant of
On the other hand, petitioner claims that sometime in 1995, the representative of Hadji Ngilay approached
way for said lots, are declared valid.
petitioner to propose the sale of a portion of his properties. Thereafter, representatives of petitioner flew to General
Santos City from Manila to conduct an ocular inspection of the subject properties. Petitioner was willing to purchase
the properties but seeing that some of the properties were registered as land grants through homestead patents, SO ORDERED.5
representatives of petitioner informed Ngilay that they would return to General Santos City in a few months to
finalize the sale as ten (10) certificates of title were issued on November 24, 1991. Petitioners filed a Motion for Partial Reconsideration, but it was denied by the CA.

According to petitioner, Ngilay and his children prevailed upon the representatives of petitioner to make an advance Hence, the present petition.
payment. To accommodate the Ngilays, petitioner acceded to making an advance with the understanding that
petitioner could demand anytime the return of the advance payment should Ngilay not be able to comply with the The grounds relied upon are:
conditions of the sale. The Ngilays likewise undertook to secure the necessary approvals of the DENR before the
consummation of the sale.
1. A CONDITIONAL SALE INVOLVING THE 1991 PATENTS DID NOT VIOLATE THE PROHIBITION AGAINST
ALIENATION OF HOMESTEADS UNDER THE PUBLIC LAND ACT SINCE NO ACTUAL TRANSFER OR
The RTC ruled in favor of Filinvest Land, Inc. and upheld the sale of all the properties in litigation. It found that the DISPOSITION WAS PERFECTED UNTIL ALL THE CONDITIONS OF THE DEED ARE FULFILLED.
sale of those properties whose original certificates of title were issued by virtue of the 1986 Patents was valid,
considering that the prohibitory period ended in 1991, or way before the transaction took place. As to those patents
awarded in 1991, the same court opined that since those properties were the subject of a deed of conditional sale, 2. REGISTRATION IS THE OPERATIVE ACT THAT CONVEYS OR DISPOSES RIGHTS IN REAL PROPERTY.
compliance with those conditions is necessary for there to be a perfected contract between the parties. The RTC BEING UNREGISTERED, THE DEED OF CONDITIONAL SALE DID NOT CONVEY OR DISPOSE OF THE 1991
also upheld the grant of right of way as it adjudged that the right of way agreement showed that the right of way HOMESTEADS OR ANY RIGHTS THEREIN IN VIOLATION OF THE PUBLIC LAND ACT.
was granted to provide access from the highway to the properties to be purchased. The dispositive portion of the
Decision dated October 1, 2003 reads: 3. ASSUMING THE NULLITY OF THE SALE OF THE 1991 PATENTS, THE HONORABLE COURT OF APPEALS
SHOULD HAVE ORDERED RESPONDENTS AS A MATTER OF LAW TO RETURN TO PETITIONERS WHAT
WHEREFORE, premises considered, the Court upholds the sale of all the properties in litigation. It likewise upholds THEY HAVE RECEIVED.6
the grant of right of way in favor of the respondent. Consequently, the petition is DISMISSED.
In their Comment7 dated March 5, 2007, respondents stated the following counter-arguments:
No pronouncement as to damages for failure to prove the same.
(1) The Honorable Court of Appeals did not err in holding that the Deed of Conditional Sale and
Costs against the petitioners. Deed of Absolute Sale for the properties covered by the 1991 Patents, as well as the Right of Way
Agreement thereto is null and void for the simplest reason that the said transactions were volatile of the
SO ORDERED.4 Public Land Act.

Respondents elevated the case to the CA in which the latter modified the judgment of the RTC.1âwphi1 While the (2) The questions raised by the Petitioner, Filinvest Land Inc. (FLI) are unsubstantial to require
consideration.8
CA upheld the validity of the sale of the properties the patents of which were awarded in 1986, including the
In its Reply9 dated July 30, 2007, petitioner insists that the prohibition against alienation and disposition of land Nevertheless, petitioner does not err in seeking the return of the down payment as a consequence of the sale
covered by Homestead Patents is a prohibition against the actual loss of the homestead within the five-year having been declared void. The rule is settled that the declaration of nullity of a contract which is void ab initio
prohibitory period, not against all contracts including those that do not result in such an actual loss of ownership operates to restore things to the state and condition in which they were found before the execution thereof. 17
or possession. It also points out that respondents themselves admit that the transfer certificates of title covering Petitioner is correct in its argument that allowing respondents to keep the amount received from petitioner is
the ten parcels of land are all dated 1998, which confirms its declaration that the lands covered by 1991 Homestead tantamount to judicial acquiescence to unjust enrichment. Unjust enrichment exists "when a person unjustly retains
Patents were not conveyed to Filinvest until after the five-year prohibitory period. a benefit to the loss of another, or when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience." 18 There is unjust enrichment under Article 22 of the Civil Code
The petition is unmeritorious. when (1) a person is unjustly benefited, and (2) such benefit is derived at the expense of or with damages to
another.19 Thus, the sale which created the obligation of petitioner to pay the agreed amount having been declared
void, respondents have the duty to return the down payment as they no longer have the right to keep it. The
The five-year prohibitory period following the issuance of the homestead patent is provided under Section 118 of
principle of unjust enrichment essentially contemplates payment when there is no duty to pay, and the person who
Commonwealth Act No. 141, as amended by Commonwealth Act No. 456, otherwise known as the Public Land
receives the payment has no right to receive it. 20 As found by the CA and undisputed by the parties, the amount
Act.10 It bears stressing that the law was enacted to give the homesteader or patentee every chance to preserve
or the down payment made is P14,000,000.00 which shall also be the amount to be returned by respondents.
for himself and his family the land that the State had gratuitously given to him as a reward for his labour in cleaning
and cultivating it.11 Its basic objective, as the Court had occasion to stress, is to promote public policy that is to
provide home and decent living for destitute, aimed at providing a class of independent small landholders which WHEREFORE, the Petition for Review on Certiorari dated November 9, 2006 or petitioner Filinvest Land, Inc. is
is the bulwark of peace and order. 12 Hence, any act which would have the effect of removing the property subject hereby DENIED. Consequently, the Decision dated March 30, 2006 and Resolution dated September 18, 2006 or
of the patent from the hands of a grantee will be struck down for being violative of the law.13 the Court of Appeals are hereby AFFIRMED with the MODIFICATION that respondents return the amount of
P14,000,000.00 given by petitioner as down payment for the sale which is ruled to be void ab initio.
In the present case, the negotiations for the purchase of the properties covered by the patents issued in 1991 were
made in 1995 and, eventually, an undated Deed of Conditional Sale was executed. On October 28, 1995, SO ORDERED.
respondents received the downpayment of P14,000.000.00 for the properties covered by the patents issued in
1991. Applying the five-year prohibition, the properties covered by the patent issued on November 24, 1991 could
only be alienated after November 24, 1996. Therefore, the sale, having been consummated on October 28, 1995, [G.R. No. 172027, July 29 : 2010]
or within the five-year prohibition, is as ruled by the CA, void.
GONZALO S. GO, JR., PETITIONER, VS. COURT OF APPEALS AND OFFICE OF THE PRESIDENT,
Petitioner argues that the correct formulation of the issue is not whether there was a perfected contract between RESPONDENTS.
the parties during the period of prohibition, but whether by such deed of conditional sale there was "alienation or
encumbrance" within the contemplation of the law. This is wrong. The prohibition does not distinguish between DECISION
consummated and executory sale. The conditional sale entered into by the parties is still a conveyance of the
homestead patent. As correctly ruled by the CA, citing Ortega v. Tan:14
VELASCO JR., J.:
And, even assuming that the disputed sale was not yet perfected or consummated, still, the transaction cannot be
validated. The prohibition of the law on the sale or encumbrance of the homestead within five years after the grant Assailed in this Petition for Certiorari[1] under Rule 65 are the Resolutions dated August 17, 2005[2] and January
is MANDATORY. The purpose of the law is to promote a definite policy, i.e., "to preserve and keep in the family of 31, 2006[3] of the Court of Appeals (CA) in CA-G.R. SP No. 90665.
the homesteader that portion of the public land which the State has gratuitously given to him." Thus, the law does
not distinguish between executory and consummated sales. Where the sale of a homestead was perfected within The facts are undisputed.
the prohibitory period of five years, the fact that the formal deed of sale was executed after the expiration of the
staid period DID NOT and COULD NOT legalize a contract that was void from its inception. To hold valid such Petitioner Gonzalo S. Go, Jr. (Go) was appointed in 1980 as Hearing Officer III of the Board of Transportation
arrangement would be to throw the door open to all possible fraudulent subterfuges and schemes which persons (BOT), then the government's land transportation franchising and regulating agency, with a salary rate of PhP
interested in the land given to a homesteader may devise in circumventing and defeating the legal provisions 16,860 per annum.[4] On June 19, 1987, Executive Order No. (EO) 202[5] was issued creating, within the
prohibiting their alienation within five years from the issuance of the patent.15 Department of Transportation and
Communications (DOTC), the Land Transportation Franchising and Regulatory Board (LTFRB) to replace the
To repeat, the conveyance of a homestead before the expiration of the five-year prohibitory period following the BOT. The issuance placed the LTFRB under the administrative control and supervision of the DOTC Secretary.[6]
issuance of the homestead patent is null and void and cannot be enforced, for it is not within the competence of
any citizen to barter away what public policy by law seeks to preserve.16 On February 1, 1990, the DOTC Secretary extended Go a promotional appointment as Chief
Hearing Officer (Chief, Legal Division), with a salary rate of PhP 151,800 per annum.[7] The Civil Service
Commission (CSC) later approved this permanent appointment.[8] In her
Certification[9] dated October 27, 2005, LTFRB Administrative Division Chief Cynthia G. Angulo stated that the Ruling of the Court of Appeals
promotion was to the position of Attorney VI, Salary Grade (SG)-26, obviously following budgetary circulars
allocating SG-26 to division chief positions. By Resolution dated August 17, 2005, the appellate court dismissed the petition on the following procedural
grounds: (a) Go resorted to the wrong mode of appeal, Rule 43 being available only to assail the decision of a
The instant controversy started when the Department of Budget and Management (DBM), by letter[10] of March quasi-judicial agency issued in the exercise of its quasi-judicial functions, as DBM is not a quasi-judicial body; (b)
13, 1991, informed the then DOTC Secretary of the erroneous classification in the Position Allocation List (PAL) his petition violated Sec. 6 (a) of Rule 43; and (c) his counsel violated Bar Matter Nos. 287 and 1132.
of the DBM of two positions in his department, one in the LTFRB and, the other, in the Civil Aeronautics Board
(CAB). The error, according to the DBM, stemmed from the fact that division chief positions in quasi-judicial or Through the equally assailed January 31, 2006 Resolution, the CA rejected Go's motion for reconsideration.
regulatory agencies, whose decisions are immediately appealable to the department secretary instead of to the
court, are entitled only to Attorney V, SG-25 allocation. Pertinently, the DBM letter reads: Hence, the instant petition for certiorari.

Under existing allocation criteria division Chief positions in x x x department level agencies performing quasi- The Issues
judicial/regulatory functions where decisions are appealable to higher courts shall be allocated to Attorney VI,
SG-26. Division chief positions in quasi-judicial/regulatory agencies lower than departments such as the Civil
I
Aeronautics Board (CAB) and the Land Transportation Franchising and Regulatory Board (LTFRB) where
decisions are appealable to the Secretary of the DOTC and then the Office of the President shall, however be DID RESPONDENT [CA] COMMIT GRAVE ABUSE OF DISCRETION x x x WHEN IT
allocated to Attorney V, SG-25.[11] (Emphasis supplied.) DISMISSED OUTRIGHT THE PETITION ON THE GROUND OF ALLEGED WRONG MODE
OF APPEAL THROUGH RULE 43 OF THE RULES OF COURT -
After an exchange of communications between the DBM and the DOTC, the corresponding changes in position
classification with all its wage implications were implemented, effective as of April 8, 1991.[12] - BY CLAIMING THAT WHEN RESPONDENT OP, WHOSE DECISION IN THE EXERCISE
OF ITS QUASI-JUDICIAL POWERS IS APPEALABLE TO THE [CA] UNDER RULE 43,
Unable to accept this new development where his position was allocated the rank of Attorney V, SG-25, Go AFFIRMED THE DECISION OF THE DBM, IT WAS NOT IN THE EXERCISE OF ITS
wrote the DBM to question the "summary demotion or downgrading [of his salary grade]" from SG-26 to SG-25. QUASI-JUDICIAL POWERS BUT IN THE EXERCISE OF ADMINISTRATIVE SUPERVISION
In his protest-letter,[13] Go excepted from the main reason proferred by the DBM that the decisions or rulings of AND CONTROL OVER THE DBM AND THEREFORE APPEAL UNDER RULE 43 CANNOT BE AVAILED OF, --
the LTFRB are only appealable to the DOTC Secretary under Sec. 6 of EO 202 and not to the CA. As Go FOR UNWARRANTEDLY READING WHAT IS NOT IN THE LAW AND NOT BORNE OUT BY THE FACTS OF
argued, the aforecited proviso cannot prevail over Sec. 9 (3) of Batas Pambansa Blg. (BP) 129, or the Judiciary THE CASE?
Reorganization Act of 1980, under which appeals from decisions of quasijudicial bodies are to be made to the
CA. II
DID RESPONDENT [CA] COMMIT GRAVE ABUSE OF DISCRETION x x x WHEN IT
Ruling of the DBM Secretary & Office of the President DISMISSED OUTRIGHT THE PETITION ON THE GROUND OF FAILURE TO IMPLEAD A PRIVATE
RESPONDENT -
On September 14, 1998, the DBM Secretary denied Go's protest, holding that decisions, orders or resolutions of
the LTFRB are appealable to the DOTC Secretary.[14] The DBM reminded Go that based on the department's - BY CLAIMING THAT "NO PRIVATE RESPONDENT IS IMPLEADED IN THE PETITION
standards and criteria formulated pursuant to Presidential Decree No. (PD) 985 and Republic Act No. (RA) WHILE IMPLEADING THE [DBM] AND THE [OP], IN VIOLATION OF SECTION 6 (A) RULE 43 OF THE RULES
6758,[15] the division chief of bureau-level agencies, like the LTFRB, is allocable to Attorney V, SG-25. OF COURT, -- WHEN SAID PROVISION COULD NOT BE CONSTRUED AS TO HAVE REQUIRED
IMPLEADING A PRIVATE RESPONDENT IN THE PETITION, IF THERE WAS NONE AT ALL?
In time, Go sought reconsideration, with the following additional argument: LTFRB is similarly situated as
another bureau-level agency under DOTC, the CAB, which is listed under Rule 43 of the Rules of Court as III
among the quasi-judicial agencies whose decisions or resolutions are directly appealable to the CA. DID THE [CA] COMMIT GRAVE ABUSE OF DISCRETION x x x WHEN IT DISMISSED
OUTRIGHT THE PETITION ON THE GROUND OF FAILURE OF PETITIONER'S COUNSEL TO INDICATE
Following the denial of his motion for reconsideration, Go appealed to the Office of the President (OP). CURRENT IBP AND PTR RECEIPT NOS. AND DATES OF ISSUE -

On January 7, 2005, in OP Case No. 99-8880, the OP, agreeing with the ruling of the DBM and the premises - BY CLAIMING THAT "PETITIONER'S COUNSEL HAS NOT INDICATED HIS CURRENT
holding it together, rendered a Decision dismissing Go's appeal. IBP AND PTR RECEIPT NUMBERS AND DATES OF ISSUE" -- EVEN AS IN THE MOTION
FOR RECONSIDERATION, PETITIONER GO EXPLAINED THAT IT WAS AN HONEST INADVERTENCE AND
The OP would subsequently deny Gonzalo's motion for reconsideration. HE EVEN ATTACHED THERETO COPIES OF COPIES THEMSELVES OF THE CURRENT IBP AND PTR
RECEIPTS?
Undaunted, Go interposed before the CA a petition for review under Rule 43, his recourse docketed as CA-G.R.
SP No. 90665. IV
 resulting inequity arising from the outright denial of the recourse. Here, the dismissal of the instant petition would
DID RESPONDENT [CA] COMMIT GRAVE ABUSE OF DISCRETION AMOUNTING TO be a virtual affirmance, on technicalities, of the DBM's assailed action, however iniquitous it may be.
LACK OR EXCESS OF JURISDICTION WHEN IT DISMISSED OUTRIGHT THE PETITION ON TECHNICAL AND
FLIMSY GROUNDS - Bearing these postulates in mind, the Court, in the greater interest of justice, hereby disregards the procedural
lapses obtaining in this case and shall proceed to resolve Go's petition on its substantial merits without further
- THUS SHIRKING FROM ITS BOUNDEN TASK TO ADDRESS A VERY PRESSINIG delay. The fact that Go's protest was rejected more than a decade ago, and considering that only legal
questions are presented in this petition, warrants the immediate exercise by the Court of its jurisdiction.
LEGAL ISSUE OF WHETHER EO 202 SEC. 6, A MERE EXECUTIVE ORDER, DIRECTING
APPEAL TO THE DOTC SECRETARY SHOULD PREVAIL OVER A LAW, BP BLG. 129,
Core Issue: Summary Reallocation Improper
SEC, 9 (C) AND RULE 43, SEC. 1 DIRECTING APPEAL TO THE COURT OF APPEALS?[16]
Contrary to the DBM's posture, Go maintains that the LTFRB decisions are appealable to the CA pursuant to
The Court's Ruling
Sec. 9 (3) of BP 129 and Rule 43 of the Rules of Court. He argues that the grievance mechanism set forth in
Sec. 6 of EO 202 cannot prevail over the appeal provisos of a statute and remedial law. Go thus asserts that the
There is merit in the petition. summary reallocation of his position and the corresponding salary grade reassignment, i.e., from Attorney VI,
SG-26 to Attorney V, SG-25, resulting in his demotion and the downgrading of the classification of his position,
The core issues may be reduced into two, to wit: first, the propriety of the dismissal by the CA of Go's Rule 43 are without legal basis.
petition for review on the stated procedural grounds; and second, the validity of the reallocation of rank resulting
in the downgrading of position and diminution of salary. EO 202 governs appeals from LTFRB Rulings

Procedural Issue: Proper Mode of Appeal We understand where Go was coming from since the DBM letter to the DOTC Secretary implementing the
summary reallocation of the classification of the position of LTFRB Chief of the Legal Division gave the following
As the CA held, Rule 43 is unavailing to Go, the remedy therein being proper only to seek a review of decisions to justify the reclassification: the forum, i.e, the department secretary or the CA, where the appeal of a decision
of quasi-judicial agencies in the exercise of their quasi-judicial powers. It added that the primarily assailed action of division chief or head of the quasi-judicial agency may be taken. The DBM, joined by the OP, held that LTFRB
is that of the DBM, which is not a quasi-judicial body. In turn, thus, the affirmatory OP decision was made in the decisions are appealable to the DOTC Secretary pursuant to Sec. 6 of EO 202. Therefrom, one may go to the
exercise of its administrative supervision and control over the DBM, not in the exercise of its quasi-judicial OP before appealing to the CA.
powers.
On this count, we agree with the DBM and the OP. Sec. 6 of EO 202 clearly provides:
The appellate court is correct in ruling that the remedy availed of by Go is improper but not for the reason it
proffered. Both Go and the appellate court overlooked the fact that the instant case involves personnel action in Sec. 6. Decision of the Board [LTFRB]; Appeals therefrom and/or Review thereof. The Board, in the exercise of
the government, i.e., Go is questioning the reallocation and demotion directed by the DBM which resulted in the its powers and functions, shall sit and render its decisions en banc. x x x
diminution of his benefits. Thus, the proper remedy available to Go is to question the DBM denial of his protest
before the Civil Service Commission (CSC) which has exclusive jurisdiction over cases involving personnel
The decision, order or resolution of the Board shall be appealable to the [DOTC]
actions, and not before the OP. This was our ruling involving personnel actions in Mantala v. Salvador,[17] cited in
Secretary within thirty (30) days from receipt of the decision: Provided, That the Secretary may motu proprio
Corsiga v. Defensor[18] and as reiterated in Olanda v. Bugayong.[19] In turn, the resolution of the CSC may be
review any decision or action of the Board before the same becomes final. (Emphasis supplied.)
elevated to the CA under Rule 43 and, finally, before this Court. Consequently, Go availed himself of the wrong
remedy when he went directly to the CA under Rule 43 without repairing first to the CSC.
As may be deduced from the above provisos, the DOTC, within the period fixed therein, may, on appeal or motu
proprio, review the LTFRB's rulings. While not expressly stated in Sec. 6 of EO 202, the DOTC Secretary's
Ordinarily, a dismissal on the ground that the action taken or petition filed is not the proper remedy under the
decision may, in turn, be further appealed to the OP. The "plain meaning" or verba legis rule dictates that if the
circumstances dispenses with the need to address the other issues raised in the case. But this is not a hard and
statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without
fast rule, more so when the dismissal triggered by the pursuit of a wrong course of action does not go into the
interpretation.[21] Thus, the LTFRB rulings are not directly appealable to the CA under Rule 43.
merits of the case. Where such technical dismissal otherwise leads to inequitable results, the appropriate
recourse is to resolve the issue concerned on the merits or resort to the principles of equity. This is as it should
be as rules of procedure ought not operate at all times in a strict, technical sense, adopted as they were to help Go further contends that EO 202, a mere executive issuance, cannot be made to prevail over BP 129, Sec. 9 (3),
secure, not override substantial justice.[20] In clearly meritorious cases, the higher demands of substantial justice which provides for the appeal of the decisions and rulings of quasi-judicial agencies to the CA. Moreover, he
must transcend rigid observance of procedural rules. points to the 1997 revision of the Rules of Civil Procedure which now provides under Rule 43 the appeals before
the CA of decisions and rulings of quasi-judicial agencies.
Overlooking lapses on procedure on the part of litigants in the interest of strict justice or equity and the full
adjudication of the merits of his cause or appeal are, in our jurisdiction, matters of judicial policy. And cases Go is mistaken for the ensuing reasons: First, EO 202 was issued on June 19, 1987 by then President Corazon
materially similar to the one at bench should invite the Court's attention to the merits if only to obviate the C. Aquino pursuant to her legislative powers under the then revolutionary government. The legislative power of
President Aquino ended on July 27, 1987 when the first Congress under the 1987 Constitution convened.[22] For
all intents and purposes, therefore, EO 202 has the force and effect of any legislation passed by Congress. xxxx

Second, EO 202, creating the LTRFB, is a special law, thus enjoying primacy over a conflicting general, anterior The [DBM] is hereby authorized to determine the officials who are of equivalent rank to the foregoing
law, such as BP 129. In Vinzons-Chato v. Fortune Tobacco Corporation,[23] the Court elucidated on this issue in Officials, where applicable, and may be assigned the same Salary Grades based on the following guidelines:
this wise:
xxxx
A general law and a special law on the same subject are statutes in pari materia and should, accordingly, be read
together and harmonized, if possible, with a view to giving effect to both. The rule is that where there are two Sec. 9. Salary Grade Assignments for Other Positions. -- For positions below the Officials mentioned under
acts, one of which is special and particular and the other general which, if standing alone, would include the Section 8 hereof and their equivalent, whether in the National Government, local government units, government-
same matter and thus conflict with the special act, the special law must prevail since it evinces the owned or controlled corporations or financial institutions, the [DBM] is hereby directed to prepare the Index of
legislative intent more clearly than that of a general statute and must not be taken as intended to affect the Occupational Services to be guided by the Benchmark Position Schedule prescribed hereunder and the
more particular and specific provisions of the earlier act, unless it is absolutely necessary so to construe it in following factors: (1) the education and experience required x x x; (2) the nature and complexity of the work to be
order to give its words any meaning at all. (Emphasis supplied.) performed; (3) the kind of supervision received; (4) mental and/or physical strain required x x x; (5) nature and
extent of internal and external relationships; (6) kind of supervision exercised; (7) decision-making responsibility
Given the foregoing premises, BP 129 must, on matters of appeals from LTFRB rulings, yield to the provision of x x x. (Emphasis supplied.)
EO 202, the subsequent special law being regarded as an exception to, or a qualification of, the prior general
act.[24] And while the Office of Compensation and Position Classification, now Compensation and Position Classification
Board (CPCB), is vested, under Sec. 8[25] of PD 985, the sole authority to allocate the classification of positions,
DBM has authority to allocate classifications its determinations relative to the allocations require the approval of the DBM Secretary to be binding.
of different positions in the Government service
This brings us to the validity of the reallocation.
There is no dispute that the DBM is vested the authority to enforce and implement PD 985, as amended, which
mandates the establishment of a unified compensation and position classification system for the government. Summary reallocation illegal
Sec. 17 (a) of PD 985, as amended by Sec. 14 (a) of RA 6758, and the original Sec. 17 (b) of PD 985 pertinently
provide, thus: Go argues that the summary reallocation of the classification of his position as Chief, LTFRB Legal Division to a
lower grade substantially reduced his salary and other benefits, veritably depriving him of property, hence,
Section 17. Powers and Functions. - The Budget Commission (now DBM), principally through the OCPC (now illegal.
CPCB, Compensation and Position Classification Board) shall, in addition to those provided under other Sections
of this Decree, have the following powers and functions: We agree with Go on this count. The summary reallocation of his position to a lower degree resulting in the
corresponding downgrading of his salary infringed the policy of non-diminution of pay which the Court recognized
a. Administer the compensation and position classification system established herein and revise it as and applied in Philippine Ports Authority v. Commission on Audit,[26] as well as in the subsequent sister cases[27]
necessary; involving benefits of government employees. Running through the gamut of these cases is the holding that the
affected government employees shall continue to receive benefits they were enjoying as incumbents upon the
b. Define each grade in the salary or wage schedule which shall be used as a guide in placing positions to effectivity of RA 6758.
their appropriate classes and grades;
Relevant to the critical issue at hand is Sec. 15 (b) of PD 985 which, as amended by Sec. 13 (a) of RA 6758,
Moreover, Secs. 2, 7 and 9 of RA 6758 respectively provide: pertinently reads:

Sec. 2. Statement of Policy. -- It is hereby declared the policy of the State to provide equal pay for substantially SEC. 13. Pay Adjustments.- x x x
equal work and to base differences in pay upon substantive differences in duties and responsibilities, and
qualification requirements of the positions. x x x For this purpose, the x x x (DBM) is hereby directed to (b) Pay Reduction -- If an employee is moved from a higher to a lower class, he shall not suffer a reduction
establish and administer a unified Compensation and Position Classification System, hereinafter referred in salary: Provided, That such movement is not the result of a disciplinary action or voluntary demotion.
to as the System, as provided for in [PD] No. 985, as amended, that shall be applied for all government (Emphasis supplied.)
entities, as mandated by the Constitution.
Prior to its amendment, Sec. 15 (b) of PD 985 reads:
xxxx

Sec.7. Salary Schedule. -- The [DBM] is hereby directed to implement the Salary Schedule prescribed below:
(b) Pay Reduction -- If an employee is moved from a higher to a lower class, he shall not suffer a reduction in LTFRB, the investiture could not have plausibly included unchecked discretion to implement a reallocation system
salary except where his current salary is higher than the maximum step of the new class in which case offensive to the due process guarantee.
he shall be paid the maximum: Provided, That such
movement is not the result of a disciplinary action. (Emphasis supplied.) It is recognized that one's employment is a property right within the purview of the due process clause. So it was
that in Crespo v. Provincial Board of Nueva Ecija[29] the Court categorically held that "one's employment,
As may be noted, the legislature dropped from the original proviso on pay reduction the clause: "except where profession, trade or calling is a `property right,' and the wrongful interference therewith is an actionable
his current salary is higher than the maximum step of the new class in which case he shall be paid the wrong. The right is considered to be property within the protection of a constitutional guaranty of due process of
maximum." The deletion doubtless indicates the legislative intent of maintaining, in line with the non-diminution law."[30]
principle, the level or grade of salary enjoyed by an incumbent before the reallocation to a lower grade or
classification is effected. It must be made absolutely clear at this juncture that Go received his position Per our count, from his promotional appointment as Chief, LTFRB Legal Division to the time (April 8, 1991) the
classification of Attorney VI and assigned SG-26 upon his promotional appointment as Chief, LTFRB Legal summary reallocation was implemented, Go had occupied the position and enjoyed the corresponding salary
Division on February 1, 1990, or after the effectivity of RA 6758. Following the clear mandate of the aforequoted and emoluments therefor for one year, two months and eight days. In this length of time, Go's entitlement to the
Sec. 15(b) of PD 985, as amended, Go must not suffer a reduction in his salary even if there was a reallocation benefits appurtenant to the position has well nigh ripened into a vested right.
of his position to a lower grade.
As the records show, Go, as Attorney VI, SG-26, was receiving an annual salary of PhP
Lest it be overlooked, the transition provisos of RA 6758 provide additional justification for Go's entitlement to 151,800. Consequent to the enforcement of the summary reallocation of his position to
continue receiving the compensation and emoluments previously granted him upon his promotion as Chief, Attorney V, SG-25, this was effectively reduced, reckoned from April 8, 1991, to PhP 136,620,[31] or a salary
LTFRB Legal Division. Go, as an incumbent of said position before the assailed reallocation was effected reduction of PhP 15,180 a year. These figures of course have yet to factor in supervening pay adjustments
ostensibly through the implementation of RA 6758, the statute's transition provisions should apply mutatis occurring through the years.
mutandis to him. The pertinent provisions are Secs. 12 and 17 of RA 6758, to wit:
A vested right is one whose existence, effectivity and extent do not depend upon events foreign to the will of the
Section 12. Consolidation of Allowances and Compensation.--All allowances, except for representation and holder, or to the exercise of which no obstacle exists, and which is immediate and perfect in itself and not
transportation allowances, clothing and laundry allowances; x x x and such other additional compensation not dependent upon a contingency.[32] The term "vested right" expresses the concept of present fixed interest
otherwise specified herein as may determined by the [DBM], shall be deemed included in the standardized which, in right reason and natural justice, should be protected against arbitrary State action, or an innately just
salary rates herein prescribed. Such other additional compensation, whether in cash or in kind, being received by and imperative right which enlightened free society, sensitive to inherent and irrefragable individual rights, cannot
incumbents only as of July 1, 1989 not integrated into the standardized salary rates shall continue to be deny.[33]
authorized.
To be vested, a right must have become a title--legal or equitable--to the present or future enjoyment of property.[34]
xxxx

Section 17. Salaries of Incumbents.--Incumbents of positions presently receiving salaries and additional To us, Go has established a clear, equitable vested right to the emoluments of his position as Attorney VI, SG-26.
compensation/fringe benefits including those absorbed from local government units and other emoluments, the He continues to occupy--at least up to April 11, 2006 when he filed this petition--the position of Chief, LTFRB
aggregate of which exceeds the standardized salary rate as herein prescribed, shall continue to receive such Legal Division. His title to Attorney VI, SG-26 is without question, having been legally appointed to the position
excess compensation, which shall be referred to as transition allowance. The transition allowance shall be on February 1, 1990. And being an incumbent to that position, he has, at the very least, an equitable right to
reduced by the amount of salary adjustment that the incumbent shall receive in the future. receive the corresponding salary and emoluments attached thereto. The summary demotion to a lower salary
grade, with the corresponding decrease in salary and emoluments after he has occupied his current rank and
position, goes against his right to continue enjoying the benefits accorded the position and which his
Pursuant to the principle of non-diminution and consistent with the rule on the prospective application of laws in
predecessors must have been receiving. His right thereto has ripened into a vested right, of which he could be
the spirit of justice and fair play,[28] the above provisions are, indeed, meant to protect incumbents who are
deprived only by due process of law, but which we believe he was denied through the summary reallocation.
receiving salaries and allowances beyond what may be allowable under RA 6758. It may be that Go was not the
With the view we take of this case, Go was neither apprised nor given the opportunity to contest the reallocation
occupant of his present position as of July 1, 1989. Still the positions in the plantilla of the LTFRB were properly
before its summary implementation.
subjected to the standardization under RA 6758. In fact, the matter of excess of salary and benefits in the
application of RA 6758 and PD 985 is a non-issue. What is at issue is the reallocation of the position from
Attorney VI, SG-26 to Attorney V, SG-25. Obviously, the question of who was sitting as Chief of the Legal Lest this Decision is taken out of context, the Court wishes to emphasize that it is not its intention to disturb the
Division as of July 1, 1989 is of no moment. Of particular significance is the issue of whether the reallocation to reallocation of the position Chief, LTFRB Legal Division to Attorney V, SG-25. Accordingly, it behooves the DBM
a lower degree is proper given that Go was already enjoying the salary and emoluments as Attorney VI, SG-26 and the LTFRB to enforce the classification of position of Attorney V, SG-25 to those who will succeed Go in the
upon his appointment on February 1, 1990 as Chief, LTFRB Legal Division. said position.

While the DBM is statutorily vested with the authority to reclassify or allocate positions to their appropriate classes, It bears to stress nonetheless that this pro hac vice case disposition is predicated on the following key
considerations: (1) Go was duly appointed to an office previously classified as a division chief position with an
with the concomitant authority to formulate allocating policies and criteria for bureau-level agencies, like the
Attorney VI, SG 26 assignment; (2) under DBM circulars then obtaining, it would appear that division chief
positions carried a SG-26 classification without the qualification set forth in the DBM's letter of March 31, 1991.
In a real sense, therefore, the present controversy is attributable to the DBM's failure to incorporate, at the On May 7, 1991, a certain Rodolfo Nacua (Nacua) sent a letter to BDC, saying that Sps. Melgazo transferred to
outset, the necessary clarificatory qualifications/ distinctions in its position and salary allocation rules/circulars; him their rights over the property. He further expressed willingness to pay the outstanding obligations of Sps.
(3) Go's receipt for some time of the salary and other emoluments attached to the position was cut short by the Melgazo to BDC. Before the property was fully paid, however, Nacua sold his rights to Olivia Garcia (Garcia),
reallocation of the position, resulting in his demotion and downgrading of salary; and (4) the reallocation was through a Deed of Transfer of Rights. Later, Garcia transferred her rights to Elizabeth Reyes (Reyes). Reyes
effected by the DBM in a summary manner. then transferred her rights to Domingo Tapay (Tapay), who then later sold his rights to herein respondent
Montano Diaz (Diaz) for Six Hundred Thousand Pesos (P600,000.00). Diaz then paid BDC the amortizations due
WHEREFORE, the instant petition is GRANTED. The Resolutions dated August 17, 2005 and January 31, on the property, amounting to P406,915.15, and BDC issued a permit to occupy the property in favor of Diaz.
2006 of the Court of Appeals in CA-G.R. SP No. 90665 are hereby REVERSED and SET ASIDE. The Diaz then introduced improvements on the property, amounting to P700,000.00.
January 7, 2005 Decision and June 28, 2005 Order of the Office of the President in OP Case No. 99-8880
are On April 14, 1992, BDC executed a Contract to Sell in favor of Diaz.[3] On April 15, 1994, however, BDC informed
likewise REVERSED and SET ASIDE. Accordingly, the summary reallocation enforced and implemented on April Diaz that respondent Edgar Arreza (Arreza) was claiming that the heirs of Sps. Melgazo sold to him the rights
8, 1991 is declared NULL and VOID. The Department of Transportation and Communications is hereby over the property.[4] BDC then placed Diaz’s account in “inactive status.” To resolve the conflicting claims of
ORDERED to reinstate Gonzalo S. Go, Jr. to the position of Attorney VI, SG-26 as the Chief of the Legal Division Arreza and Diaz, BDC filed a complaint for Interpleader against them, before the RTC, Makati City, Branch 146.
of the Land Transportation Franchising and Regulatory Board, with the corresponding release to him of the On March 27, 1996, the Makati City RTC Branch 146 ruled that the signatures of Sps. Melgazo transferring their
differential of all emoluments reckoned from April 8, 1991. rights to Nacua were mere forgeries. Thus, it ruled that Arreza had a better right over the property. This decision
became final and executory.[5]
No pronouncement as to costs.
On August 27, 1996, Diaz filed the present complaint for sum of money against BDC before the RTC, Makati
SO ORDERED. City, Branch 59.[6] This was later amended to include Arreza and Tapay as defendants. Diaz argued that BDC
and Tapay’s representations led him to believe that he had a good title over the property, but due to the court’s
Corona, C.J., Carpio, Carpio Morales, Nachura, Leonardo-De Castro, Brion, Peralta, Bersamin, Del ruling in the interpleader case, he was constrained to transfer the property to Arreza. Thus, he prayed for the
Castillo, Abad, Villarama, Jr., Perez, and Mendoza, JJ., concur. following:
(1) For BDC and Arreza to pay him P1,106,915.58, plus interest, representing the amount he paid for the
[ G.R. No. 213233. August 05, 2015 ] assumption of Tapay’s rights;

BLISS DEVELOPMENT CORP./HOME GUARANTY CORPORATION, PETITIONER, VS. (2) For Tapay to pay him P600,000.00, plus interests, representing the amount he paid
MONTANO DIAZ, DOMINGO TAPAY, AND EDGAR H. ARREZA, RESPONDENTS. Tapay;

DECISION (3) For BDC and Tapay to pay him P500,000.00 as moral damages;

VELASCO JR., J.: (4) For BDC to pay him P500,000 as exemplary damages; and

The Case (5) For BDC, Tapay, and Arreza to pay him ?100,000 as attorney’s fees and costs of suit.[7]

This is a Petition for Review on Certiorari assailing the Decision[1] of the Court of Appeals (CA), promulgated on Both BDC and Tapay argued that their respective acts were lawful and done in good faith.Arreza filed a Motion to
January 21, 2014, and its subsequent Resolution dated June 27, 2014, both in CA-G.R. CV No. 99179. The Dismiss, citing res judicata, arguing that the claim of Diaz is a compulsory counterclaim that should have been
assailed Decision reversed and set aside the Decision of the Regional Trial Court (RTC), Makati City, Branch 59, pleaded in the Interpleader case. The RTC denied the Motion to Dismiss, which the CA, on certiorari, affirmed.
dated November 21, 2011, in Civil Case No. 96-1372. The assailed Resolution, meanwhile, denied petitioner’s When the issue reached this Court in G.R. No. 133113,[8] this Court ruled that the claim as against Arreza is
Motion for Reconsideration. barred by res judicata. The Court upheld the argument that the claim is in the nature of a compulsory
counterclaim. Thus, the case against Arreza was dismissed.
The Facts
The Decision of the RTC
Petitioner Bliss Development Corporation (BDC) (subsequently reorganized as Home
After trial, the RTC rendered its Decision on November 21, 2011, finding that Diaz failed to prove that he is an
Guaranty Corporation) is the registered owner of Lot No. 27, Block 30, New Capitol Estates I,
assignee in good faith, and thus dismissed the complaint for lack of merit in this wise:
Brgy. Matandang Balara, Diliman, Quezon City, and covered by Transfer Certificate of Title (TCT) No. 331582.
On October 19, 1984, it entered into and executed a Deed of Sale over the said property in favor of Spouses
Emiliano and Leonila Melgazo (Sps. Melgazo), both of whom are now deceased.[2]
Plaintiff must show that he inquired not only into the title of the assignor but also into the assignor’s capacity to Thus, the CA dispositively held:
convey. The failure of plaintiff to diligently inquire as such, indicated that he is not an assignee in good faith.
Plaintiff Diaz downplays the need to extend his examination to intervening transferor farther than Domingo Tapay FOR THESE REASONS, the November 21, 2011 Decision of the Regional Trial Court of
from whom he acquired the subject property. Such attitude, however, is not in accord with what a reasonably Makati City, Branch 59, is SET ASIDE. The Court hereby DIRECTS: (1) Defendant-appellee Bliss Development
prudent person would do under the circumstances. Corporation/Home Guaranty Corporation to PAY plaintiff-apellant Montano Diaz P1,106,915.58 for the
amortizations paid and amount spent on improvements on the property, P100,000.00 as moral damages,
xxxx P50,000.00 as exemplary damages, and P25,000.00 as attorney’s fee; and (2) defendant-appellee Domingo
Tapay to PAY plaintiffappellant Montano M. Diaz P600,000.00, the amount he paid for the transfer of rights.
WHEREFORE, premises considered, plaintiff’s Complaint is hereby DISMISSED for lack of merit. Defendant
Domingo Tapay’s [counterclaim] is likewise dismissed. No costs. [9] Petitioner BDC moved for reconsideration, insisting that Diaz cannot be declared a buyer in good faith, in light of
the March 27, 1996 Decision of the Makati City RTC, Branch 146 in the Interpleader case, which had long been
Aggrieved, Diaz appealed to the CA. final and executory. Tapay also moved for reconsideration, arguing that he was not aware of the defect in the title
sold to Diaz, and, hence, he should not be made liable for the P600,000.00 that Diaz paid to him. In the CA’s
The Decision of the CA assailed Resolution dated June 27, 2014,[12] the CA denied both motions for reconsideration.

In its presently assailed Decision promulgated on January 21, 2014, the CA reversed the ruling of the RTC and, Hence, the present Petition for Review on Certiorari filed by BDC, raising the following issues:
instead, ruled that Diaz is entitled to be paid reimbursement and damages. The CA anchored its ruling on its
finding that Diaz is both a buyer in good faith and a builder in good faith, thus: I.
WHETHER THE CA ERRED IN NOT DISMISSING THE APPEAL, IN VIEW OF THE
A careful examination of the records convinces Us that Diaz is both a buyer and builder in good faith. We note APPLICATION OF THE DOCTRINE OF IMMUTABILITY OF JUDGMENT IN THE DECISION OF THE COURT IN
that while Bliss executed a Deed of Sale with Mortgage in favor of the spouses Emiliano and Leonila Melgazo, G.R. NO. 133113
title over the property was in Bliss’ name. The title remained in Bliss’ name when Tapay offered to transfer his
rights over the property to Diaz. Considering that the property involved is registered land, Diaz need not go II.
beyond the title to be considered a buyer in good faith. Indeed, after Diaz accepted Tapay’s offer, he dealt
directly with Bliss which received the monthly amortizations due on the property. For almost three years, from WHETHER THE CA ERRED IN DECLARING BDC IN BAD FAITH
1991 to 1994, Bliss accepted Diaz’s payment without informing Diaz of Arreza’s conflicting claim over the
property. Bliss even issued Diaz a permit to occupy the property in 1992; thus, allowing Diaz to introduce
III.
improvements on the property. In other words, at the time when Diaz purchased the property from Tapay and
WHETHER THE CA ERRED IN DECLARING THAT THERE WAS UNJUST ENRICHMENT ON THE PART OF
when he introduced the improvements, he had no notice that some other person has a right over the property.
He also had a well-founded belief that the property he was building on was his. Accordingly, Diaz is a buyer and BDC
builder in good faith.[10]
IV.
In ruling that Diaz is a buyer in good faith, the CA noted that Diaz need not go beyond the title to be considered a
buyer in good faith, because what is involved is a registered land. WHETHER DIAZ CAN STILL CLAIM REIMBURSEMENT EVEN IF UNDER THE CONTRACT, HIS POSSESSION
IS IN THE NATURE OF A LESSOR
With regard to the liability of BDC, the CA ruled that the provision in the Contract to Sell excusing it from
reimbursing the monthly amortizations to Diaz cannot exempt it from liability, because it acted in bad faith. The V.
CA said:
WHETHER BDC IS LIABLE TO REIMBURSE DIAZ OF THE AMOUNT OF P1,106,915.58
Next, Bliss’ argument that the Additional Provision in the Contract to Sell excuses it from reimbursing the monthly
amortizations paid by Diaz cannot be given credence. Any stipulation exempting the vendor from the obligation In fine, petitioner argues that it is not liable to respondent Diaz, both for the amortizations that Diaz paid to it, and
to answer for eviction shall be void, if he acted in bad faith. The vendor’s bad faith consists in his knowledge the value of the improvements that Diaz introduced to the property.
beforehand at the time of the sale, of the presence of the fact giving rise to eviction, and its possible
consequence. It is undisputed that Bliss knew about Arreza’s claim in 1991. It even received amortization Meanwhile, Tapay failed to elevate before this Court the CA’s ruling against him.
payments from Arreza. Yet, Bliss is aware that should Arreza pursue his claim in court, Diaz may be evicted from
the property. Yet, Bliss only informed Diaz about Arreza’s claim in 1994 when Arreza followed up his claim.
Indubitably, Bliss acted in bad faith in dealing with Diaz and should not be absolved from liability by the Additional The Court’s Ruling
Provision in the Contract to Sell.[11]
The petition is partially granted. The CA committed reversible error in ruling that Diaz was a buyer in good faith from Arreza. Despite this, BDC also later acknowledged the transfer to Diaz, and also accepted amortizations
and for value. Nevertheless, BDC is liable to Diaz because it acted in bad faith, as discussed below. from him.[16] This uncontroverted sequence of events led the CA to correctly rule that BDC, indeed, acted in bad
faith.
The claim is not barred by the doctrine of immutability of judgment
When Diaz came forward and presented the deeds of transfer, including the deed of transfer executed by Tapay
First, We dispose of the issue of the applicability of the doctrine of immutability of judgment, in view of the ruling in his favor, BDC was already well aware of a conflicting claim by Arreza. Instead of waiting for the resolution on
of this Court in G.R. No. 133113. We find that the present claim is not barred by the court’s ruling in G.R. No. the matter, BDC immediately accepted the deed of transfer presented by Diaz, as well as the amortizations he
133113––to the effect that Diaz can no longer claim reimbursement from Arreza because of res judicata––for his paid over the property. It was only in 1994 that BDC filed the Interpleader case to resolve the conflicting case.
failure to allege the claim in the interpleader case between them. This is nothing short of evident bad faith.

In G.R. No. 133113, We ruled that the claim against Arreza is barred by res judicata, because of a prior Respondent Diaz is not a purchaser for value and in good faith
Interpleader case between Arreza and Diaz. We ruled that the claim for reimbursement should have been
alleged and proved in the prior case, and failure to do so bars any future action on such claims. We reiterated the We, however, fail to find sufficient basis for the CA’s ruling that Diaz is a purchaser for value and in good faith. In
rule on res judicata, thus: a long line of cases, this Court had ruled that a purchaser in good faith and for value is one who buys property of
another without notice that some other person has a right to, or interest in, such property and pays full and fair
In cases involving res adjudicata, the parties and the causes of action are identical or substantially the same in price for the same at the time of such purchase or before he or she has notice of the claim or interest of some
the prior as well as the subsequent action. The judgment in the first action is conclusive as to every matter other person in the property.[17]For one to be considered a purchaser in good faith, the following requisites must
offered and received therein and as to any other matter admissible therein and which might have been offered concur: (1) that the purchaser buys the property of another without notice that some other person has a right to
for that purpose, hence said judgment is an absolute bar to a subsequent action for the same cause.The bar or interest in such property; and (2) that the purchaser pays a full and fair price for the property at the time of
extends to questions necessarily involved in an issue, and necessarily adjudicated, or necessarily implied in the such purchase or before he or she has notice of the claim of another.[18] We find that in the case at bar, the first
final judgment, although no specific finding may have been made in reference thereto, and although such element is lacking.
matters were directly referred to in the pleadings and were not actually or formally presented. Said prior
judgment is conclusive in a subsequent suit between the same parties on the same subject matter, and The CA, in disposing the issue of Diaz’s good faith, merely said that “considering that the property involved is
on the same cause of action, not only as to matters which were decided in the first action, but also as to every registered land, Diaz need not go beyond the title to be considered a buyer in good faith.”[19]We find this to be a
other matter which the parties could have properly set up in the prior suit.[13] (emphasis added) serious and reversible error on the part of the CA. In the first place, while it is true that the subject lot is
registered lot, the doctrine of not going beyond the face of the title does not apply in the case here, because
In the case at bar, We find that the essential elements of res judicata are not present. First, the interpleader what was subjected to a series of sales was not the lot itself but the right to purchase the lot from BDC. The CA
case was between Arreza and Diaz. While it was BDC that initiated the interpleader case, the opposing itself observed: “while [BDC] executed a Deed of Sale with Mortgage in favor of the spouses Emiliano and
parties in that prior case is, in fact, Arreza and Diaz. Second, the issues resolved in the interpleader case Leonila Melgazo, title over the property was in [BDC’s] name. The title remained in [BDC’s] name when Tapay
revolved around the conflicting claims of Arreza and Diaz, and not whatever claim either of them may have offered to transfer his rights over the property to Diaz.”[20]Notably, the several transfers themselves did not
against BDC. Thus, there is no identity of parties, nor identity of subject matter, between the interpleader case purport to be Deeds of Absolute Sale, but merely deeds of assignment of rights. The subject of those deeds of
and the one at bar. assignment was never the real right over the subject property, but merely the personal right to purchase
it. Therefore, the mirror doctrine finds no application in the case at bar.
Petitioner BDC acted in bad faithin dealing with respondent Diaz
A careful review of the records of this case reveals that Diaz, in fact, failed to diligently inquire into the title of his
On the second issue, We find that the CA committed no reversible error in finding that BDC acted in bad faith, predecessor before entering into the contract of sale. As such, he cannot be considered a buyer in good faith.
when it allowed Diaz to take over the payment of the amortizations over the subject property. As the CA correctly There is no issue that despite the several transfers of rights from Nacua to Garcia to Reyes to Tapay to Diaz, title
noted, “It is undisputed that Bliss knew about Arreza’s claim in 1991. It even received amortization payments over the property remained in BDC’s name.When Diaz transacted with Tapay, it was also clear that what was
from Arreza. Yet, Bliss acknowledged the transfer to Diaz and received the monthly amortizations paid by Diaz. being transferred was merely rights to purchase the property, and not title over the lot itself; if it were, the sale
Also, Bliss is aware that should Arreza pursue his claim in court, Diaz may be evicted from the property.”[14] would have been void because Tapay never had ownership over the subject property. As the buyer in such a
transaction, it was incumbent upon Diaz not only to inquire as to the right of Tapay to transfer his rights, but also
to trace the source of that right to purchase the property. Had he discharged this duty diligently, he would have
BDC anchors its claim of good faith on the fact that it did not act as seller to Diaz. Rather, BDC claims, it was found out that Nacua’s right was without basis, because it was founded on a forged deed. For his failure to
Diaz who came forward and presented himself to BDC as the lawful successor-in-interest of Emiliano and inquire diligently and trace the source of the right to purchase the property, Diaz cannot claim to be a purchaser
Leonila Melgazo, by virtue of the several deeds of transfer of rights, all of which he presented to BDC. It was on in good faith and for value.
the basis of this claim that BDC allowed Diaz to occupy the property and pay amortizations accruing over the
property.[15]
Petitioner BDC is liable to return the amortizations paid by respondent Diaz under the doctrine of unjust
enrichment
Nevertheless, BDC does not dispute that as early as 1991, even before respondent came forward presenting the
deeds of transfer to BDC, BDC was already aware of the claim of Arreza. In fact, it even received amortizations
Notwithstanding the fact that Diaz is not an innocent purchaser in good faith and for value, BDC is nevertheless Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the
liable to return to him the amortizations which he already paid on the property, applying the rule on unjust person who has defeated him in the possession having the option of refunding the amount of the expenses or of
enrichment. paying the increase in value which the thing may have acquired by reason thereof.

Unjust enrichment exists when a person unjustly retains a benefit to the loss of another, or when a person retains Art. 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he
money or property of another against the fundamental principles of justice, equity and good conscience. Under may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if
Article 22 of the Civil Code,[21] there is unjust enrichment when (1) a person is unjustly benefited and (2) such his successor in the possession does not prefer to refund the amount expended.
benefit is derived at the expense of or with damages to another.[22]
The CA may have made the erroneous conclusion that Diaz acted in good faith, but because BDC equally acted
Allowing BDC to keep the amortizations paid by Diaz is tantamount to unjust enrichment. It would result in BDC in bad faith, Art. 453 of the Civil Code commands that the rights of one and the other shall be the same as
receiving amortizations twice the amount it should have received, that is, the amortizations paid by Diaz and though both had acted in good faith. The CA made the correct observation then, when it said:
Arreza. While BDC claims that it did not receive amortizations from both Diaz and Arreza covering the same Under Article 448, the landowner is given the option, either to appropriate the improvement as his own upon
period, such a claim is selfserving, and is not amply supported by any documentary evidence. payment of the proper amount of indemnity or to sell the land to the possessor in good faith. Relatedly Article
546 provides that a builder in good faith is entitled to full reimbursement for all the necessary and useful
Even if BDC can prove that there was no overlap between the payments made by Diaz and those made by expenses incurred. In this case, however, the option of selling the land to the builder in good faith is no longer
Arreza, allowing it to keep the amortizations paid by Diaz still amounts to unjust enrichment. As a direct result of viable in light of the ruling in the interpleader case. Hence, there is only one thing left for [BDC] to do:
the final and executory ruling that Arreza is the rightful buyer of the subject property, the buyer-seller relationship indemnify Diaz for the improvements introduced on the property. [23]
between Diaz and BDC is rendered null and void. Consequently, there remains no valid consideration
whatsoever for the payments made by Diaz to BDC. There being no indication of intent to donate, because such Nevertheless, because the law treats both parties as if they acted in good faith, the CA committed reversible
payments were made under the impression that Diaz is the rightful buyer of the property, it is only but just that error in awarding moral and exemplary damages, there being no basis therefor. We find it proper to delete the
Diaz be allowed to claim back what he has paid. This is only a natural consequence of the final and executory award of P100,000.00 as moral damages, P50,000.00 as exemplary damages, and P25,000.00 as attorney’s
ruling that Diaz is not the rightful buyer of the subject property. Allowing BDC to keep such payments, at the fees.
expense of and to the damage of Diaz, still amounts to unjust enrichment.
In sum, the CA correctly reversed the ruling of the RTC, and ordered BDC to pay Diaz the amount he paid as
Both parties being in bad faith, BDC is liable to Diaz for the valueof the improvements he introduced on amortizations, as well as the value of the improvements that he introduced on the subject property. However,
the subject property because both parties acted in bad faith, there is no basis for the award of moral and exemplary damages, as well
as attorney’s fees.
Next, We resolve the issue of whether BDC is liable to Diaz for the value of the improvements that Diaz
introduced to the property. Arts. 448, 453, 546, and 548 of the Civil Code are material in resolving the issue: WHEREFORE, in view of the foregoing, the January 21, 2014 Decision of the Court of
Appeals in CA-G.R. CV No. 99179 is hereby MODIFIED to read as follows: (1) petitioner Bliss Development
Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the Corporation/Home Guaranty Corporation is ordered to pay respondent Montano M. Diaz the amount of
right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in P1,106,915.58 for the amortizations paid and the amount spent on improvements on the property; and (2)
Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who Domingo Tapay is ordered to pay respondent Montano M. Diaz the amount of P600,000.00, the amount he paid
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is for the transfer of rights.
considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of
the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon SO ORDERED.
the terms of the lease and in case of disagreement, the court shall fix the terms thereof.
Peralta, Villarama, Jr., Perez,* and Jardeleza, JJ., concur.
Art. 453. If there was bad faith, not only on the part of the person who built, planted or sowed on the land of
another, but also on the part of the owner of such land, the rights of one and the other shall be the same as
though both had acted in good faith.

It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge
and without opposition on his part.
[ G.R. No. 225538, October 14, 2020 ]
Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may
retain the thing until he has been reimbursed therefor. YON MITORI INTERNATIONAL INDUSTRIES,* PETITIONER, VS. UNION BANK OF THE PHILIPPINES,
RESPONDENT.
D E C I S I O N CAGUIOA, J: for Sum of Money (Complaint)] before the RTC, for the recovery of [the remaining balance amounting to]
P385,299.40 plus consequential damages.14 RTC Proceedings
The Case
In its Complaint, Union Bank alleged that the value of the BPI Check had been inadvertently credited to Tan's
This is a Petition for Review on Certiorari1 (Petition) filed under Rule 45 of the Rules of Court assailing the February account due to a technical error in its system.15
3, 2016 Decision2 (assailed Decision) and July 5, 2016 Resolution3 (assailed Resolution) rendered by the Court
of Appeals (CA), Eleventh Division in CA-G.R. CV No. 102802. For his part, Tan alleged that the BPI Check had been given to him for value in the course of business. Tan claimed
that he should not be faulted for withdrawing the value of said check from his account since Union Bank made the
The assailed Decision and Resolution affirmed, with modification, the February 24, 2014 Decision4 and May 19, corresponding funds available by updating his account to reflect his new balance. After ascertaining that the value
2014 Order5 issued by the Regional Trial Court (RTC) of Pasig City, Branch 166, in Civil Case No. 71670. of the BPI Check had been credited, Tan withdrew P480,000.00 from his account to pay one of his suppliers.16

The RTC granted the Complaint for Sum of Money filed by Union Bank of the Philippines (Union Bank) against Tan further argued that Union Bank wrongfully and unlawfully deducted the amount of P34,700.60 from his
Rodriguez Ong Tan (Tan), the registered owner and operator of Yon Mitori account.17
International Industries (Yon Mitori).6
On February 24, 2014, the RTC ruled in favor of Union Bank. The dispositive portion of the RTC Decision reads:
The Facts
WHEREFORE, premises considered, judgment is hereby rendered in favor of [Union Bank] and against [Yon Mitori
The CA summarized the facts as follows: and Tan] by ordering the latter:

[Tan], doing business under the name and style of [Yon Mitori], is a depositor, maintaining Current Account No. 1. To pay [Union Bank] the amount of P385,299.40 representing the withdrawal mistakenly given
027-03-000181-8, [with] the Commonwealth, Quezon City branch of [Union Bank]. to x x x Tan;

On November 12, 2007, Tan deposited in said Union Bank account, the amount of P420,000.00 through Bank of 2. To pay [Union Bank] 12% per annum legal interest computed from the time judicial demand was
the Philippine Islands (BPI) Check No. 0180724 [(BPI Check)]. x x x made on June 13, 2008 until the same is fully paid; 3. To pay [Union Bank] the amount of P100,000.00

[The BPI Check was drawn against the account of Angli Lumber & Hardware, Inc.7 (Angli Lumber), one of Tan's as attorney's fees; and
alleged clients.]8
4. To pay the duly receipted cost of suit in the amount of P14,954.20.
[The BPI Check was entered in Tan's bank record thereby increasing his balance to P513,700.60 from his previous
deposit of P93,700.60.9 In the morning of November 14, 2007, Tan withdrew from the said account the amount of SO ORDERED.18
P480,000.00. Later that day, the BPI Check was returned to Union Bank as the account against which it was drawn
had been closed. It was then that Union Bank discovered that Tan's account had been mistakenly credited. Thus, The RTC found all the requisites for the application of solutio indebiti under Article 2154 of the Civil Code present.
the branch manager of Union Bank's Commonwealth, Quezon City branch immediately called Tan to recover the It held that since Union Bank mistakenly released the amount of P480,000.00 in favor of Tan without being
funds mistakenly released. However, Tan refused to return the funds, claiming that the BPI Check proceeded from obligated to do so, Tan must be ordered to return said amount to preclude unjust enrichment at Union Bank's
a valid transaction between Angli Lumber and Yon Mitori.10 expense.19

During the course of its investigation, Union Bank discovered that Tan previously deposited five BPI checks drawn Further, the RTC ruled that under Article 1980 of the Civil Code, "fixed, savings, and current deposits of money in
by Angli Lumber against the same BPI account, and that these five checks were all previously dishonored.11 banks and similar institutions shall be governed by the provisions concerning [simple] loan." By reason of the
erroneous payment made in Tan's favor, Tan and Union Bank became mutual debtors and creditors of each other.
Thereafter, on November 20, 2007, Union Bank [through the bank manager of its Commonwealth branch,12 sent This gave rise to Union Bank's right to set-off the erroneous payment made against Tan's remaining deposit,
Tan a letter demanding reimbursement of the amount of P420,000.00, by reason of the fact that [the] "(f)unds consistent with the principle of legal compensation under the Civil Code.20
against said deposit was inadvertently allowed due to technical error on the system prior to actual return of your
check deposit which was not yet clear on withdrawal date," it appearing that [the BPI Check] was dishonored by Finally, the RTC held that Union Bank should be awarded attorney's fees and cost of suit since it was compelled
BPI for being drawn against a closed account. Tan refused to return the said amount. Union Bank then debited to litigate due to Tan's unjustified refusal to return the funds mistakenly released to him.21
the available balance reflected in [Tan's] account amounting to P34,700.6013 and thereafter instituted [a Complaint
Aggrieved, Tan filed a motion for reconsideration which the RTC denied in its Order dated May 19, 2014.22 The Subsequently, Tan's counsel filed a "Motion for Additional Time to File Appeal"38 (Motion for Time) before the
RTC held that "[although [Union Bank may have been] negligent when it paid to [Tan] the face value of the check Court, praying for an additional period of thirty (30) days from July 26, 2016, or until August 25, 2016 to file a
as alleged by [Tan],"23 Tan is still liable to return the funds mistakenly released to him since Union Bank was under petition for review.39
no obligation to release these funds in his favor.24
On August 25, 2016, Tan's counsel filed this Petition. Notably, the Petition names Yon Mitori as sole petitioner even
CA Proceedings as it describes Yon Mitori as "a single proprietorship duly registered under Philippine law, owned and operated by
[Tan]."40
Tan filed an appeal via Rule 41 and named Yon Mitori as co-appellant.25 Therein, Tan maintained that the
proximate cause of Union Bank's loss is its own gross negligence.26 On November 9, 2016, the Court issued a Resolution41 granting the Motion for Time and directing Union Bank to
file its comment on the Petition within ten (10) days from notice.
Following an exchange of pleadings, the CA issued the assailed Decision, the dispositive portion of which reads:
In compliance with the Court's Resolution, Union Bank filed its Comment42 on April 17, 2017, to which a Reply43
WHEREFORE, in light of all the foregoing, the [D]ecision dated February 24, 2014 of Branch had been filed.
166 of the [RTC] of Pasig City in Civil Case No. 71670 is hereby AFFIRMED with MODIFICATION in that the
award of attorney's fees and cost of suit in favor of [Union Bank] are hereby deleted, and the rate of legal interest The Petition maintains that the proximate cause of Union Bank's loss is its own gross negligence. Thus, it is barred
imposed on the awarded sum, reduced to six percent (6%) per annum. from recovering damages under Article 2179 of the Civil Code.44

SO ORDERED. 27 In addition, the Petition reiterates that Union Bank's gross negligence also precludes the application of solutio
indebiti in this case45 as there can be no reimbursement under this principle if payment is made as a result of
Foremost, the CA stressed that the fact of dishonor of the BPI Check for the reason "Account Closed" is one's negligence.46 The Petition relies on the Court's ruling in Philippine National Bank v. Cheah Chee Chong47
undisputed. On this basis, the CA affirmed the RTC's findings and held that Tan would be unjustly enriched at (PNB v. Cheah) where the Court held that under the principle of solutio indebiti, no recovery is due "if the mistake
Union Bank's expense if he were permitted to derive benefit from the funds erroneously credited to his account.28 done is one of gross negligence."48
As well, the CA upheld the application of legal compensation in the case.29
Finally, the Petition contends that as collecting agent, Union Bank is responsible for losses arising from its own
Nevertheless, the CA found the award of attorney's fees and cost of suit in favor of Union Bank improper. Since negligence pursuant to Article 1909 of the Civil Code. Thus, the Petition argues that Article 1909 should be applied
the banking industry is impressed with public interest, all bank personnel are burdened with a high level of to hold Union Bank solely liable for its own loss, based on the Court's ruling in Metropolitan Bank and Trust
responsibility insofar as care and diligence in the custody and management of funds are concerned.30 Here, the Company v. Court of Appeals49 (Metrobank v. CA).50
evidence shows that the proximate cause of the unwarranted crediting of the value of the BPI Check was Union
Bank's technical error. Thus, while Union Bank was compelled to litigate to protect its rights, such fact alone does Issue
not justify an award of attorney's fees and cost of suit there being no showing that Tan acted in bad faith in refusing
to reimburse the amount so credited.31 The sole issue for the Court's resolution is whether the CA erred when it affirmed the RTC Decision directing Tan
to return the value of the BPI Check with legal interest.
Finally, the CA modified the legal interest rate applied on the awarded sum from 12% to 6% per annum, in
accordance with the Court's ruling in Nacar v. Gallery Frames.32 The Court's Ruling

Subsequently, Tan filed a Motion for Reconsideration,33 still with Yon Mitori as co-appellant. Tan argued that the The Petition is denied for lack of merit.
uniform findings of the RTC and CA with respect to Union Bank's negligence serves as sufficient basis to hold the
latter solely liable for its loss.34 Tan also averred that the principle of solutio indebiti applies only in cases where
Yon Mitori has no separate juridical personality.
the claimant unduly delivers something because of mistake, and not when such delivery results from the claimant's
negligence, as in this case.35
Before delving into the substantive issues, the Court must emphasize that as a general rule, every civil action must
be prosecuted, or defended in the name of the real party in interest, that is, the party who stands to be benefited
On July 5, 2016, the CA issued the assailed Resolution denying said Motion for
or injured by the judgment in the suit, or the party entitled to the avails of the suit.51
Reconsideration for lack of merit.36 Tan received a copy of the assailed Resolution on July 11, 2016.37
In turn, Section 1, Rule 3 of the 1997 Rules of Court provides that only natural and juridical persons or entities As correctly observed by the CA, the dishonor of the BPI Check is not disputed. Evidently, Union Bank was under
authorized by law may be parties in a civil action. A single proprietorship is not considered a separate juridical no obligation to effect payment in favor of Tan precisely because the BPI Check which Tan deposited for collection
person under the Civil Code.52 had been dishonored. Allowing Tan to retain the proceeds of the dishonored BPI Check despite not being entitled
thereto would therefore permit unjust enrichment at Union Bank's expense.
The Petition was filed solely in the name of Yon Mitori. As a single proprietorship, Yon Mitori has no juridical
personality separate and distinct from its owner and operator Tan. Accordingly, the Petition should have been filed The principle of unjust enrichment is codified under Article 22 of the Civil Code. It states:
in Tan's name, the latter being the real party in interest who possesses the legal standing to file this Petition.
ART. 22. Every person who through an act of performance by another, or any other means, acquires or comes into
Nevertheless, the Court permits the substitution of Tan as petitioner herein in the interest of justice, pursuant to possession of something at the expense of the latter without just or legal ground, shall return the same to him.
Section 4, Rule 10 of the 1997 Rules of Court:
There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains
SEC. 4. Formal Amendments. — A defect in the designation of the parties and other clearly clerical or typographical money or property of another against the fundamental principles of justice, equity, and good conscience.59
errors may be summarily corrected by the court at any stage of the action, at its initiative or on motion, provided
no prejudice is caused thereby to the adverse party. (Emphasis supplied) For the principle to apply, the following requisites must concur: (i) a person is unjustly benefited; and (ii) such
benefit is derived at the expense of or with damages to another.60 Expounding on these requisites, the Court, in
In Juasing Hardware v. Mendoza53 (Juasing), the Court held that the filing of a civil action in the name of a single University of the Philippines v. Philab Industries, Inc.,61 held:
proprietorship is merely a formal, and not a substantial defect. Substitution of the party in such cases would not
constitute a change in the identity of the parties, and would not cause any prejudice on the adverse party, thus: Unjust enrichment claims do not lie simply because one party benefits from the efforts or obligations of others, but
instead it must be shown that a party was unjustly enriched in the sense that the term unjustly could mean illegally
Contrary to the ruling of respondent Judge, the defect of the complaint in the instant case is merely formal, not or unlawfully.
substantial. Substitution of the party plaintiff would not constitute a change in the identity of the parties. No
unfairness or surprise to private respondent Dolla, defendant in the court a quo, would result by allowing the Moreover, to substantiate a claim for unjust enrichment, the claimant must unequivocally prove that another party
amendment, the purpose of which is merely to conform to procedural rules or to correct a technical error.54 knowingly received something of value to which he was not entitled and that the state of affairs are such that it
would be unjust for the person to keep the benefit. Unjust enrichment is a term used to depict result or effect of
In Juasing, the Court ruled that the lower court erred in not allowing the amendment of the complaint filed therein failure to make remuneration of or for property or benefits received under circumstances that give rise to legal or
to correct the designation of the party plaintiff, for while the complaint named the sole proprietorship "Juasing equitable obligation to account for them; to be entitled to remuneration, one must confer benefit by mistake, fraud,
Hardware" as plaintiff, the allegations therein show that said complaint was actually brought by its owner.55 coercion, or request. Unjust enrichment is not itself a theory of reconvey. Rather, it is a prerequisite for the
enforcement of the doctrine of restitution.62 (Emphasis and underscoring supplied; italics omitted)
This Petition warrants the same course of action. As in Juasing, no prejudice will result from Yon Mitori's
substitution in this case. Tan has been consistently named as owner and operator of Yon Mitori throughout the The requisites for the application of the principle of unjust enrichment are clearly present in this case. Here, it was
proceedings below. Moreover, the fact that this Petition was filed in furtherance of Tan's interests is apparent from unequivocally established that Tan withdrew and utilized the proceeds of the BPI Check fully knowing that he was
the allegations in the pleadings filed before the Court and accordingly furnished to Union Bank. not entitled thereto.

Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive issues. To note, Tan's transaction records show that prior to the deposit of the BPI Check subject of the present case, Tan
had deposited five other checks drawn against the same account.63 During Tan's cross-examination before the
Tan is bound to return the proceeds of the dishonored BPI Check based on the principle of unjust enrichment. RTC, Tan admitted that Union Bank notified him that all five checks he had previously deposited had all been
dishonored for the reason "Account Closed" — which notification was made before he deposited the BPI Check
subject of the present case, thus:
Jurisprudence defines a collecting bank as "any bank handling an item for collection except the bank on which the
check is drawn."56 Upon receipt of a check for deposit, the collecting bank binds itself to "credit the amount in [the
depositor's] account or infuse value thereon only after the drawee bank shall have paid the amount of the check "Q: Mr. Witness, it appears that you had previously deposited BPI Checks also issued or also made by [Angli
or [after] the check [is] cleared for deposit."57 Lumber]. I think these x x x BPI Checks were also deposited in your bank, Union Bank, is that correct Mr. Witness?

In this case, Tan deposited the BPI Check in his account with Union Bank for collection. Clearly, Union Bank stands A: That is correct, sir.
as the collecting bank in this case. By receiving the BPI Check from Tan, Union Bank obliged itself, as collecting
bank, to credit Tan's account only after BPI, as drawee, shall have paid the amount of the said check or after the Q: In fact on five (5) occasions you had deposited BPI Checks [i]ssued by [Angli Lumber] drawn against its BPI
check is cleared for deposit.58 [a]ccount and you deposited the same to your bank, x x x Union Bank in this case, is that correct, Mr. Witness?
A: Yes, sir. withdrew the proceeds of the BPI Check soon after discovering that the corresponding funds had been credited to
his account despite his knowledge that the account from which the BPI Check was issued had been closed for
Q: In those five (5) occasions, Mr. witness, do you confirm that all of these checks were returned to you because some time smacks of bad faith if not fraud. Tan's refusal to return the funds despite Union Bank's repeated
the account of [Angli Lumber] was closed, is that correct? demands is reprehensible.

A: Yes, sir. x x x On this score, reference to the Court's ruling in Equitable Banking Corporation v. Special Steel Products, Inc.65
(Equitable Banking) is proper. In said case, a certain Jose Isidoro Uy (Uy), purchasing officer of International Copra
Export Corporation (Interco), presented three crossed checks to Equitable Banking Corporation (Equitable) for
Q: Mr. Witness, I have here a return Check Advise dated November 5, 2007. This is before the subject transaction.
Can you please tell this [court] if you recognize this written Check Advise? collection. These crossed checks were made payable to the order of Special Steel Products, Inc. (SSPI), Interco's
supplier.
A: Yes, sir.
The crossed checks bore the notation "account payee only". Despite this notation, Equitable deposited the
proceeds of the three checks to Uy's personal account upon the latter's instructions. Equitable claimed that it did
Q: You also pointed to a signature. Are you confirming that, that is your signature, Mr. Witness? A: Yes, sir. so believing that Uy was acting upon Interco's instructions. Due to the incident, SSPI and its President Augusto
Q: Also, this refers to Check No. 0206925, BPI San Fernando Highway, drawee bank. It was deposited on October Pardo (Pardo) filed an action for damages against Equitable and Uy.
30, 2007?
The Court adjudged Equitable and Uy jointly and severally liable to pay SSPI and Pardo actual, moral, and
A: Yes, sir.
exemplary damages, as well as costs of suit. Nevertheless, to preclude unjust enrichment, the Court directed Uy
to reimburse Equitable whatever amount it may be required to pay SSPI and Pardo, thus:
Q: Mr. Witness, I also have here a return check advise dated November 7, 2007, can you please tell the court if
you recognize this document?
Equitable then insists on the allowance of [its] cross-claim against Uy. The bank argues that it was Uy who was
enriched by the entire scheme and should reimburse Equitable for whatever amounts the Court might order it to
A: Yes, sir. x x x x pay in damages to SSPI.
Q: Whose signature is that, Mr. Witness? Equitable is correct. There is unjust enrichment when (1) a person is unjustly benefited, and (2) such benefit is
derived at the expense of or with damages to another. In the instant case, the fraudulent scheme concocted by
A: My signature, sir. Uy allowed him to improperly receive the proceeds of the three crossed checks and enjoy the profits from these
proceeds during the entire time that it was withheld from SSPI. Equitable, through its gross negligence and mislaid
Q: This return check advise refers to Check No. 0206927 and also Check No. 0206926 and Check No. 0180723. trust on Uy, became an unwitting instrument in Uy's scheme. Equitable's fault renders it solidarity liable with Uy,
The drawee bank of these checks are all BPI San Fernando Highway and the date[s] of the deposits are as follows: insofar as respondents are concerned. Nevertheless, as between Equitable and Uy, Equitable should be allowed
November 5, 2007 for Check No. 0206926 and November 3, 2007 for Check No. 0180723 all of these return check to recover from Uy whatever amounts Equitable may be made to pay under the judgment. It is clear that Equitable
advise, Mr. Witness [state] that the reason for the return is account closed, do you confirm that, Mr. Witness? did not profit in Uy's scheme. Disallowing Equitable's cross-claim against Uy is tantamount to allowing Uy to
unjustly enrich himself at the expense of Equitable. For this reason, the Court allows Equitable's cross-claim
against Uy.66 (Emphasis supplied)
A: Yes, sir. x x x x
[Q]: So as early as October, Mr. Witness, you have been given [c]hecks by this [Angli Lumber] and you have been
depositing the same in your bank account and all of these checks were returned to you because you were informed The circumstances which impelled the Court to apply the principle of unjust enrichment in Equitable Banking are
that the account had been closed, is that correct? present in this case.

xxxx As stated, Union Bank's obligation to credit Tan's account is contingent upon actual receipt of the value of the BPI
Check or notice of its clearance. Due to the dishonor of the BPI Check, Union Bank's obligation to credit Tan's
account with its proceeds did not attach. Conversely, Tan's right to receive the proceeds of said check did not
Q: So these checks were all returned to you for being Account closed?
arise. Nevertheless, Tan withdrew the proceeds of the BPI Check with full and established knowledge that the
account against which it was drawn had been closed. As in Equitable Banking, Tan, the depositor herein, was
A: Yes, sir." x x x64 (Emphasis and underscoring supplied) unjustly benefited by reason of the erroneous credit made in his favor. Such benefit, in turn, was derived at the
expense of Union Bank as the collecting bank.
Tan's testimony confirms that he was fully aware that Angli Lumber's account with BPI had been closed. So he
could not have expected that the BPI Check in question would be honored. Stated differently, he was cognizant of Thus, based on the principle of unjust enrichment, Tan is bound to return the proceeds of the BPI Check which he
the BPI Check's impending dishonor at the time he withdrew its proceeds from his Union Bank account. That Tan had no right to receive.
PNB v. Cheah is inapplicable. It is worthy of notice that the 15-day clearing period alluded to is construed as 15 banking days. As declared by
Josephine Estella, the Administrative Service Officer who was the bank's Remittance Examiner, what was unusual
Tan argues that Union Bank should not be allowed to recover the amount erroneously deposited in his account, in the processing of the check was that the "lapse of 15 banking days was not observed." Even PNB's agreement
with Philadelphia National Bank regarding the rules on the collection of the proceeds of US dollar checks refers to
since said payment was made not because of any mistake of fact or law, but because of Union Bank's own gross
"business/banking days." Ofelia deposited the subject check on November 4, 1992. Hence, the 15th banking day
negligence. According to Tan, such negligence on the part of Union Bank precludes recovery, pursuant to the from the date of said deposit should fall on November 25, 1992. However, what happened was that PNB Buendia
Court's ruling in PNB v. Cheah. The Court disagrees. Branch, upon calling up Ofelia that the check had been cleared, allowed the proceeds thereof to be withdrawn on
November 17 and 18, 1992, a week before the lapse of the standard 15-day clearing period.
In PNB v. Cheah, petitioner Ofelia Cheah (Ofelia) agreed to accommodate Filipina Tuazon's (Filipina) request to
have the latter's Bank of America (BOA) Check cleared and encashed for a service fee of 2.5%. Filipina was a This Court already held that the payment of the amounts of checks without previously clearing them with the
mere acquaintance introduced to Ofelia by her friend Adelina Guarin (Adelina). Filipina enlisted Ofelia's assistance drawee bank especially so where the drawee bank is a foreign bank and the amounts involved were large is
since she did not have a dollar account necessary to encash the BOA Check which was drawn for the amount of contrary to normal or ordinary banking practice. Also, in Associated Bank v. Tan, wherein the bank allowed the
$300,000.00. withdrawal of the value of a check prior to its clearing, we said that "[b]efore the check shall have been cleared for
deposit, the collecting bank can only 'assume' at its own risk x x x that the check would be cleared and paid out."
On November 4, 1992, Ofelia deposited the BOA Check to her joint PNB dollar savings account (DSA) with her The delay in the receipt by PNB Buendia Branch of the November 13, 1992 SWIFT message notifying it of the
Malaysian husband Cheah Chee Chong. Five days later, PNB received a credit advice from Philadelphia National dishonor of the subject check is of no moment, because had PNB Buendia Branch waited for the expiration of the
Bank in the United States, stating that the proceeds of the BOA Check had been temporarily credited to PNB's clearing period and had never released during that time the proceeds of the check, it would have already been
account as of November 6, 1992. duly notified of its dishonor. Clearly, PNB's disregard of its preventive and protective measure against the possibility
of being victimized by bad checks had brought upon itself the injury of losing a significant amount of money.
On November 16, 1992, PNB Division Chief Alberto Garin called Ofelia to inform her that the BOA Check had been
cleared and that her joint DSA with Cheah Chee Chong had been credited the amount of $299,248.37 It bears stressing that "the diligence required of banks is more than that of a Roman pater familias or a good father
(representing the face value of the BOA Check sans bank charges). Hence, the proceeds of the BOA Check were of a family. The highest degree of diligence is expected." PNB miserably failed to do its duty of exercising
withdrawn and delivered to Filipina. extraordinary diligence and reasonable business prudence. The disregard of its own banking policy amounts to
gross negligence, which the law defines as "negligence characterized by the want of even slight care, acting or
omitting to act in a situation where there is duty to act, not inadvertently but wilfully and intentionally with a
On November 20, 1992, PNB received notice that the BOA Check bounced for being drawn against insufficient conscious indifference to consequences in so far as other persons may be affected." x x x
funds. PNB demanded that Ofelia and Cheah Chee Chong return the funds withdrawn. In turn, Ofelia attempted
to retrieve the funds from Filipina, but Filipina claimed that the funds had already been distributed to several other
individuals. Thus, Ofelia and Cheah Chee Chong (Spouses Cheah) requested the assistance of the National Incidentally, PNB obliges the [S]pouses Cheah to return the withdrawn money under the principle of solutio indebiti,
Bureau of Investigation (NBI) to apprehend the beneficiaries of the BOA Check. Meanwhile, Spouses Cheah and which is laid down in Article 2154 of the Civil Code[.] x x x x
PNB negotiated the terms of reimbursement pending NBI's investigation.
"[T]he indispensable requisites of the juridical relation known as solutio indebiti, are, (a) that he who paid was not
After negotiations between Spouses Cheah and PNB fell through, PNB filed a complaint for sum of money before under obligation to do so; and (b) that the payment was made by reason of an essential mistake of fact.
the RTC. As their main defense, Spouses Cheah claimed that the proximate cause of PNB's injury was its own
negligence in paying the BOA Check without waiting for the expiration of its own 15-day clearing period. In the case at bench, PNB cannot recover the proceeds of the check under the principle it invokes. In the first
place, the gross negligence of PNB, as earlier discussed, can never be equated with a mere mistake of fact, which
The RTC ruled in favor of PNB. However, the CA reversed on appeal, finding that PNB exhibited negligence in must be something excusable and which requires the exercise of prudence. No recovery is due if the mistake
allowing the premature withdrawal of the proceeds of the BOA Check. However, the CA also found Ofelia guilty of done is one of gross negligence.
contributory negligence. Thus, the CA ruled that Spouses Cheah and PNB should be made equally responsible
for the resulting loss.
The [S]pouses Cheah are guilty of contributory negligence and are bound to share the loss with the bank

Unsatisfied, the parties filed their respective petitions for review before the Court. Affirming the CA's Decision, the
"Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he
Court ruled:
has suffered, which falls below the standard to which he is required to conform for his own protection."

Here, while PNB highlights Ofelia's fault in accommodating a stranger's check and depositing it to the bank, it
The CA found Ofelia's credulousness blameworthy. We agree. Indeed, Ofelia failed to observe caution in giving
remains mum in its release of the proceeds thereof without exhausting the 15day clearing period, an act which her full trust in accommodating a complete stranger and this led her and her husband to be swindled. Considering
contravened established banking rules and practice.
that Filipina was not personally known to her and the amount of the foreign check to be encashed was
$300,000.00, a higher degree of care is expected of Ofelia which she, however, failed to exercise under the In an attempt to evade liability, Tan also argues that, as his collecting agent, Union Bank should be held solely
circumstances. Another circumstance which should have goaded Ofelia to be more circumspect in her dealings responsible for losses arising from its own negligence, pursuant to Article 1909 of the Civil Code. Tan invokes the
was when a bank officer called her up to inform that the [BOA C]heck has already been cleared way earlier than Court's ruling in Metrobank v. CA as basis.
the 15-day clearing period. The fact that the check was cleared after only eight banking days from the time it was
deposited or contrary to what [PNB Division Chief Alfredo Garin] told her that clearing takes 15 days should have Tan's reliance on Metrobank v. CA is misplaced.
already put Ofelia on guard. She should have first verified the regularity of such hasty clearance considering that
if something goes wrong with the transaction, it is she and her husband who would be put at risk and not the
In said case, a certain Eduardo Gomez (Eduardo) deposited 38 treasury warrants with a total amount of
accommodated party. However, Ofelia chose to ignore the same and instead actively participated in immediately
P1,755,228.37 to his account with Golden Savings and Loan Association (Golden Savings). Since Golden Savings
withdrawing the proceeds of the check. Thus, we are one with the CA in ruling that Ofelia's prior consultation with
did not have its own clearing facilities, its cashier Gloria Castillo endorsed said warrants and deposited them in
PNB officers is not enough to totally absolve her of any liability. In the first place, she should have shunned any
Golden Savings' account with petitioner Metropolitan Bank and Trust Company (Metrobank).
participation in that palpably shady transaction.67 (Emphasis supplied; citations omitted)

Gloria went to Metrobank several times to confirm whether the warrants had been cleared. While Gloria was initially
In PNB v. Cheah, the Court ruled that PNB was guilty of gross negligence as its own bank officer permitted Ofelia
told to wait, Metrobank eventually allowed her to withdraw the proceeds of the warrants on behalf of Golden
to prematurely withdraw the proceeds of the BOA Check by advising her of the funds' availability before the
Savings due to "exasperation" over her repeated inquiries, and as a form of accommodation to Golden Savings
expiration of the 15-day clearing period mandated by its own internal rules (i.e., PNB General Circular No. 52-
as a valued Client. Thereafter, Eduardo was allowed to withdraw from his deposit account with Golden Savings.
101/88). Despite PNB's gross negligence, the Court nevertheless tempered PNB's liability due to Ofelia's
contributory negligence. Thus, in PNB v. Cheah, the parties were made to suffer the resulting loss equally.
Five days after Eduardo's last withdrawal, Metrobank informed Golden Savings that 32 out of the 38 treasury
warrants were dishonored by the Bureau of Treasury. Thus, Metrobank demanded that Golden Savings refund the
A juxtaposition of the circumstances attendant in PNB v. Cheah and the present case shows that Tan's reliance
proceeds previously withdrawn to make up for the deficit in its account. Golden Savings rejected the demand,
on PNB v. Cheah does not support his cause. In fact, reliance on PNB v. Cheah actually weakens Tan's claim.
causing Metrobank to file a complaint for collection of sum of money with the RTC.

It is well established that whoever alleges a fact has the burden of proving it because mere allegation is not
The RTC ruled in favor of Golden Savings. The CA affirmed on appeal. Aggrieved, Metrobank filed a petition for
evidence.68 The records show that while Tan harped on Union Bank's alleged gross negligence, he failed to cite
review before the Court, alleging, among others, that "[it] cannot be held liable for its failure to collect on the
the specific provision of law, banking regulation, or internal rule which had been violated by Union Bank. What is
warrants" since it merely acted as a collecting agent.72
clear from the evidence on record is that due to a technical error in Union Bank's system, the funds corresponding
to the value of the BPI Check were credited to Tan's account before actual return and clearance. Because of this
error, said funds were inadvertently made available for Tan's withdrawal upon Union Bank's mistaken belief that In its Decision, the Court applied Article 1909 to hold Metrobank liable for the losses suffered by Golden Savings
the check had already been cleared. Upon notice of the BPI Check's dishonor, Union Bank's officer immediately as a result of Metrobank's negligence.ℒαwρhi৷ The Court held:
notified Tan of such fact.69 However, despite repeated demands, Tan refused to return the amount he had
withdrawn insisting that the BPI From the above undisputed facts, it would appear to the Court that Metrobank was indeed negligent in giving
Check was given to him for value and in the course of business.70 Golden Savings the impression that the treasury warrants had been cleared and that, consequently, it was safe to
allow [Eduardo] to withdraw the proceeds thereof from his account with it. Without such assurance, Golden
Clearly, Tan failed to substantiate his imputation of gross negligence. While Union Bank concedes that a technical Savings would not have allowed the withdrawals; with such assurance, there was no reason not to allow the
error in its own system allowed Tan to withdraw the proceeds of the BPI Check before clearance, this error cannot withdrawal. Indeed, Golden Savings might even have incurred liability for its refusal to return the money that to all
be likened to the blatant violation of internal procedure committed by PNB's Division Chief in PNB v. Cheah. appearances belonged to the depositor, who could therefore withdraw it any time and for any reason he saw fit.

More importantly, in PNB v. Cheah, respondent Ofelia did not benefit from the proceeds of the dishonored BOA It was, in fact, to secure the clearance of the treasury warrants that Golden Savings deposited them to its account
Check. While Ofelia deposited said check to facilitate encashment, she subsequently delivered the proceeds to with Metrobank. Golden Savings had no clearing facilities of its own. It relied on Metrobank to determine the validity
Filipina. In this case, it is established that the funds in dispute had been withdrawn by Tan himself. In fact, Tan of the warrants through its own services. The proceeds of the warrants were withheld from [Eduardo] until
acknowledged that he used said funds to pay one of his suppliers.71 Allowing Tan to benefit from the erroneous Metrobank allowed Golden Savings itself to withdraw them from its own deposit. It was only when Metrobank gave
payment would undoubtedly permit unjust enrichment at Union Bank's expense particularly in light of the go-signal that [Eduardo] was finally allowed by Golden Savings to withdraw them from his own account.73
circumstances which indicate that Tan withdrew in bad faith the mistakenly released funds. (Emphasis supplied)

Article 1909 does not preclude recovery on the part of Union Bank. By invoking Article 1909 as applied in Metrobank v. CA, Tan appears to assert that he, as principal-depositor,
suffered losses because of the technical error in Union Bank's system. This assertion is clearly false.
As stated, Tan had no right to receive the proceeds of the BPI Check. Evidently, Tan did not suffer any loss as a Petitioner Rodriguez Ong Tan, doing business under the name and style Yon Mitori International Industries, is
result of Union Bank's technical error. On the contrary, Tan unduly gained from the technical error, as it allowed ORDERED to pay respondent Union Bank of the Philippines the amount of P385,299.40 with legal interest at the
him to withdraw and utilize funds which he had no right to receive. rate of 6% per annum, computed from the time of extrajudicial demand on November 20, 2007 until full payment.

The fact that Tan received the BPI Check for value in the ordinary course of business does not negate his obligation SO ORDERED.
to return the funds erroneously credited in his favor. Tan's remedy, if any, lies not against Union Bank, but against
the drawer of the BPI Check Angli Lumber. All told, Tan's obligation to return the erroneously credited funds to Peralta, C.J., (Peralta), Lazaro-Javier, Lopez, and Rosario,** JJ., concur.
Union Bank stands.

Amount due
[G.R. NO. 180832 : July 23, 2008]
The records show that Tan had a balance amounting to P93,700.60 before the value of the BPI Check was
erroneously credited to his Union Bank account.74 Due to Union Bank's system error, Tan's account was credited
with the amount of P420,000.00, thereby increasing his balance to P513,700.60. Subsequently, Tan's account was JEROME CASTRO, Petitioner,
credited an additional amount of P1,000.00 as a result of a separate encashment. vs.
PEOPLE OF THE PHILIPPINES, Respondent.

Later still, Tan withdrew the amount of P480,000.00. This left Tan's account with the balance of P34,700.60. To
illustrate: CORONA, J.:

Account balance prior to deposit P 93,700.60 This petition for review on certiorari1 emanated from the complaint for grave oral defamation2 filed by Albert P.
Tan against petitioner Jerome Castro.
Amount credited due to system error 420,000.00
The facts follow.
Separate encashment 1,000.00

Account balance prior to withdrawal 514,700.60 On November 11, 2002, Reedley International School (RIS) dismissed Tan’s son, Justin Albert (then a Grade 12
student), for violating the terms of his disciplinary probation.3 Upon Tan’s request, RIS reconsidered its decision
but imposed "non-appealable" conditions such as excluding Justin Albert from participating in the graduation
Amount withdrawn (480,000.00)
ceremonies.
Account balance after withdrawal P 34,700.60
Since Tan refused to return the mistakenly credited amount of P420,000.00, Union Bank applied Tan's remaining Aggrieved, Tan filed a complaint in the Department of Education (Dep-Ed) for violation of the Manual of
balance of P34,700.60 to set off his debt before it filed its Complaint before the RTC. Regulation of Private Schools, Education Act of 1982 and Article 19 of the Civil Code4 against RIS. He alleged
that the dismissal of his son was undertaken with malice, bad faith and evident premeditation. After investigation,
the Dep-Ed found that RIS’ code violation point system allowed the summary imposition of unreasonable
Thus, the sum due to Union Bank is P385,299.40, as stated in the RTC Decision. This awarded sum, not being a sanctions (which had no basis in fact and in law). The system therefore violated due process. Hence, the Dep-Ed
loan or forbearance of money, is subject to 6% interest per annum. In turn, such interest should be computed from nullified it. 5
the time when the amount due had been established with reasonable certainty, which, in this case, was the date
of Union
Bank's extrajudicial demand on November 20, 2007. Meanwhile, on November 20, 2002, the Dep-Ed ordered RIS to readmit Justin Albert without any
condition.6 Thus, he was able to graduate from RIS and participate in the commencement ceremonies held on
March 30, 2003.
The deletion of damages, attorney's fees and costs of suit was not assailed.
After the graduation ceremonies, Tan met Bernice C. Ching, a fellow parent at RIS. In the course of their
Finally, the Court shall not delve into the issue of damages, attorney's fees, and cost of suit in this Decision conversation, Tan intimated that he was contemplating a suit against the officers of RIS in their personal
considering that Union Bank no longer assailed the deletion of these awards before this Court. capacities, including petitioner who was the assistant headmaster.

WHEREFORE, the Petition is DENIED. The Decision dated February 3, 2016 and Resolution dated July 5, 2016 Ching telephoned petitioner sometime the first week of April and told him that Tan was planning to sue the
rendered by the Court of Appeals, Eleventh Division in CA-G.R. CV No. 102802 are AFFIRMED. officers of RIS in their personal capacities. Before they hung up, petitioner told Ching:
Okay, you too, take care and be careful talking to [Tan], that’s dangerous. Penal Code and applying the Indeterminate Sentence Law to suffer the penalty of imprisonment of 1 month and 1
day of arresto mayor as minimum to 4 months and 1 day of arresto mayor as maximum.
Ching then called Tan and informed him that petitioner said "talking to him was dangerous."
On appeal, the Regional Trial Court (RTC) affirmed the factual findings of the MeTC. However, in view of the
Insulted, Tan filed a complaint for grave oral defamation in the Office of the City Prosecutor of Mandaluyong City animosity between the parties, it found petitioner guilty only of slight oral defamation. But because Tan filed his
against petitioner on August 21, 2003. complaint in the Office of the City Prosecutor of Mandaluyong City only on August 21, 2003 (or almost five
months from discovery), the RTC ruled that prescription had already set in; it therefore acquitted petitioner on that
ground. 9
On November 3, 2003, petitioner was charged with grave oral defamation in the Metropolitan Trial Court (MeTC)
of Mandaluyong City, Branch 607 under the following Information:
On April 19, 2007, the Office of the Solicitor General (OSG) filed a petition for certiorari in the Court of Appeals
(CA) assailing the decision of the RTC.10 It contended that the RTC acted with grave abuse of discretion when it
That on or about the 13th day of March, 2003 in the City of Mandaluyong, Philippines, a place within the downgraded petitioner’s offense to slight oral defamation. The RTC allegedly misappreciated the antecedents
jurisdiction of this Honorable Court, the above-named [petitioner], with deliberate intent of bringing ATTY. which provoked petitioner to utter the allegedly defamatory statement against Tan.
ALBERT P. TAN, into discredit, dishonor, disrepute and contempt, did then and there, willfully, unlawfully and
feloniously speak and utter the following words to Ms. Bernice C. Ching:
The CA found that the RTC committed grave abuse of discretion when it misapprehended the totality of the
circumstances and found petitioner guilty only of slight oral defamation. Thus, the CA reinstated the MeTC
"OK, YOU TOO, YOU TAKE CARE AND BE CAREFUL TALKING TO [TAN], THAT’S DANGEROUS." decision.11

and other words of similar import of a serious and insulting nature. Petitioner moved for reconsideration but it was denied.12 Hence, this recourse.

CONTRARY TO LAW. Petitioner basically contends that the CA erred in taking cognizance of the petition for certiorari inasmuch as the
OSG raised errors of judgment (i.e., that the RTC misappreciated the evidence presented by the parties) but
Petitioner pleaded not guilty during arraignment. failed to prove that the RTC committed grave abuse of discretion. Thus, double jeopardy attached when the RTC
acquitted him.
The prosecution essentially tried to establish that petitioner depicted Tan as a "dangerous person." Ching testified
that petitioner warned her that talking to Tan was dangerous. Tan, on the other hand, testified that petitioner’s We grant the petition.
statement shocked him as it portrayed him as "someone capable of committing undesirable acts." He added that
petitioner probably took offense because of the complaint he filed against RIS in the Dep-Ed. No person shall be twice put in jeopardy of punishment for the same offense.13 This constitutional mandate is
echoed in Section 7 of Rule 117 of the Rules of Court which provides:
For his defense, petitioner denied harboring ill-feelings against Tan despite the latter’s complaint against RIS in
the Dep-Ed. Although he admitted conversing with Ching (whom he considered as a close acquaintance) on the Section 7. Former conviction or acquittal; double jeopardy. – When an accused has been convicted or acquitted
telephone a few days after RIS’ 2003 commencement exercises, petitioner asserted that he never said or or the case against him dismissed or otherwise terminated without his express consent by a court of competent
insinuated that Tan or talking to Tan was dangerous. On cross-examination, however, he did not categorically jurisdiction, upon a valid complaint or in information or other formal charge sufficient in form and substance to
deny the veracity of Ching’s statement. sustain a conviction and after the accused had pleaded to the charge, the conviction or acquittal of the accused
or the dismissal of the case shall be a bar to another prosecution for the offense charged or for any attempt to
The MeTC found that Ching’s statements in her affidavit and in open court were consistent and that she did not commit the same or frustration thereof, or for any offense which necessarily includes or is necessarily included in
have any motive to fabricate a false statement. Petitioner, on the other hand, harbored personal resentment, the offense charged in the former complaint or information.
aversion and ill-will against Tan since the Dep-Ed compelled RIS to readmit his son. Thus, the MeTC was
convinced that petitioner told Ching talking to Tan was dangerous and that he uttered the statement with the Under this provision, double jeopardy occurs upon (1) a valid indictment (2) before a competent court (3) after
intention to insult Tan and tarnish his social and professional reputation. arraignment (4) when a valid plea has been entered and (5) when the accused was acquitted or convicted or the
case was dismissed or otherwise terminated without the express consent of the accused.14 Thus, an acquittal,
In a decision dated December 27, 2005, the MeTC found petitioner guilty beyond reasonable doubt of grave oral whether ordered by the trial or appellate court, is final and unappealable on the ground of double jeopardy.15
defamation:8
The only exception is when the trial court acted with grave abuse of discretion or, as we held in Galman v.
WHEREFORE, judgment is hereby rendered finding accused, Jerome Castro GUILTY beyond reasonable doubt Sandiganbayan,16 when there was mistrial. In such instances, the OSG can assail the said judgment in a petition
of the crime of Grave Oral Defamation, sentencing him therefore, in accordance to Article 358(1) of the Revised for certiorari establishing that the State was deprived of a fair opportunity to prosecute and prove its case.17
The rationale behind this exception is that a judgment rendered by the trial court with grave abuse of discretion A.C. No. 8261, March 11, 2015
was issued without jurisdiction. It is, for this reason, void. Consequently, there is no double jeopardy.
JESSIE T. CAMPUGAN AND ROBERT C. TORRES, Complainants, v. ATTY. FEDERICO S. TOLENTINO, JR.,
In this case, the OSG merely assailed the RTC’s finding on the nature of petitioner’s statement, that is, whether it ATTY. RENATO G. CUNANAN, ATTY. DANIEL F. VICTORIO, JR., AND
constituted grave or slight oral defamation. The OSG premised its allegation of grave abuse of discretion on the ATTY. ELBERT T. QUILALA, Respondents.
RTC’s "erroneous" evaluation and assessment of the evidence presented by the parties.1awph!1
A.C. No. 8725
What the OSG therefore questioned were errors of judgment (or those involving misappreciation of evidence or
errors of law). However, a court, in a petition for certiorari, cannot review the public respondent’s evaluation of the JESSIE T. CAMPUGAN AND ROBERT C. TORRES, Complainants, v. ATTY. CONSTANTE P. CALUYA, JR., AND
evidence and factual findings.18 Errors of judgment cannot be raised in a Rule 65 petition as a writ of certiorari ATTY. ELBERT T. QUILALA, Respondent.
can only correct errors of jurisdiction (or those involving the commission of grave abuse of discretion).19
DECISION
Because the OSG did not raise errors of jurisdiction, the CA erred in taking cognizance of its petition and, worse,
in reviewing the factual findings of the RTC.20 We therefore reinstate the RTC decision so as not to offend the BERSAMIN, J.:
constitutional prohibition against double jeopardy.
In this consolidated administrative case, complainants Jessie T. Campugan and Robert C. Torres seek the
At most, petitioner could have been liable for damages under Article 26 of the Civil Code21 : disbarment of respondents Atty. Federico S. Tolentino, Jr., Atty. Daniel F. Victorio, Jr., Atty. Renato G. Cunanan,
Atty. Elbert T. Quilala and Atty. Constante P. Caluya, Jr. for allegedly falsifying a court order that became the basis
Article 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and for the cancellation of their annotation of the notice of adverse claim and the notice of lis pendens in the Registry
other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a of Deeds in Quezon City.chanRoblesvirtualLawlibrary
cause of action for damages, prevention and other relief:
Antecedents
xxx xxx xxx
Atty. Victorio, Jr. had replaced Atty. Edgardo Abad as counsel of the complainants in a civil action they brought to
(3) Intriguing to cause another to be alienated from his friends; seek the annulment of Transfer Certificate of Title (TCT) No. N-290546 of the Registry of Deeds of Quezon City in
the first week of January 2007 in the Regional Trial Court (RTC) in Quezon City (Civil Case No. Q-07-59598). They
xxx xxx xxx impleaded as defendants Ramon and Josefina Ricafort, Juliet Vargas and the Register of Deeds of Quezon City.
They caused to be annotated on TCT No. N-290546 their affidavit of adverse claim, as well as the notice of lis
pendens.1 Atty. Tolentino, Jr. was the counsel of defendant Ramon and Josefina Ricafort.
Petitioner is reminded that, as an educator, he is supposed to be a role model for the youth. As such, he should
always act with justice, give everyone his due and observe honesty and good faith.22 In their sworn complaint for disbarment dated April 23, 2009 (later docketed as A.C. No. 8261),2 the complainants
narrated that as the surviving children of the late Spouses Antonio and Nemesia Torres, they inherited upon the
WHEREFORE, the petition is hereby GRANTED. The August 29, 2007 decision and December 5, 2007 deaths of their parents a residential lot located at No. 251 Boni Serrano Street, Murphy, Cubao, Quezon City
resolution of the Court of Appeals in CA-G.R. SP No. 98649 are REVERSED and SET ASIDE. The November registered under Transfer Certificate of Title (TCT) No. RT-64333(35652) of the Register of Deeds of Quezon City;3
20, 2006 decision of the Regional Trial Court of Mandaluyong City, Branch 212 is REINSTATED. Petitioner that on August 24, 2006, they discovered that TCT No. RT-64333(35652) had been unlawfully cancelled and
Jerome Castro is ACQUITTED of slight oral defamation as defined and penalized in Article 358 of the Revised replaced by TCT No. N-290546 of the Register of Deeds of Quezon City under the names of Ramon and Josefina
Penal Code. Ricafort;4 and that, accordingly, they immediately caused the annotation of their affidavit of adverse claim on TCT
No. N-290546.
No pronouncement as to costs.
It appears that the parties entered into an amicable settlement during the pendency of Civil Case No. Q-07-59598
SO ORDERED. in order to end their dispute,5 whereby the complainants agreed to sell the property and the proceeds thereof
would be equally divided between the parties, and the complaint and counterclaim would be withdrawn
respectively by the complainants (as the plaintiffs) and the defendants. Pursuant to the terms of the amicable
settlement, Atty. Victorio, Jr. filed a Motion to Withdraw Complaint dated February 26, 2008, 6 which the RTC
granted in its order dated May 16, 2008 upon noting the defendants' lack of objection thereto and the defendants'
willingness to similarly withdraw their counterclaim.7
The complainants alleged that from the time of the issuance by the RTC of the order dated May 16, 2008, they Register of Deeds; that no irregularity occurred or was performed in the cancellation of the annotations; and that
could no longer locate or contact Atty. Victorio, Jr. despite making several phone calls and visits to his office; that the Register of Deeds was impleaded in Civil Case No. Q-07-59598 only as a nominal party, thereby discounting
they found out upon verification at the Register of Deeds of Quezon City that new annotations were made on TCT any involvement in the proceedings in the case.
No. N-290546, specifically: (1) the annotation of the letter-request appearing to be filed by Atty. Tolentino, Jr.8
seeking the cancellation of the affidavit of adverse claim and the notice of lis pendens annotated on TCT No. N- Atty. Cunanan did not file any comment.15
290546; and (2) the arinotation of the decision dated May 16, 2008 rendered in Civil Case No. Q-07-59598 by the
RTC, Branch 95, in Quezon City, granting the complainants' Motion to Withdraw Complaint;9 and that a copy of As the result of Atty. Quilala's allegation in his Comment in A.C. No. 8261 that it had been Atty. Caluya, Jr.'s
the letter-request dated June 30, 2008 addressed to Atty. Quilala, Registrar of Deeds of Quezon City, disclosed signature that appeared below the cancelled entries, the complainants filed another sworn disbarment complaint
that it was defendant dated August 26, 2010 alleging that Atty. Caluya, Jr. had forged the signature of Atty. Cunanan.16 This disbarment
Ramon Ricafort who had signed the letter. complaint was docketed as A.C. No. 8725, and was later on consolidated with A.C. No. 8261 17 because the
complaints involved the same parties and rested on similar allegations against the respondents.
Feeling aggrieved by their discovery, the complainants filed an appeal en consulta with the Land Registration
Authority (LRA), docketed as Consulta No. 4707, assailing the unlawful cancellation of their notice of adverse Atty. Quilala filed his Comment in A.C. No. 8725 to belie the allegation of forgery and to reiterate the arguments
claim and their notice of lis pendens under primary entries PE-2742 and PE-3828-9, respectively. The LRA set he had made in A.C. No. 8261.18 On his part, Atty. Caluya, Jr. manifested that he adopted Atty. Quilala's
Consulta No. 4707 for hearing on March 30, 2009, and directed the parties to submit their respective memoranda Comment.19
and/or supporting documents on or before such scheduled hearing.10 However, the records do not disclose
whether Consulta No. 4707 was already resolved, or remained pending at the LRA. Ruling
Unable to receive any response or assistance from Atty. Victorio, Jr. despite their having paid him for his We dismiss the complaints for disbarment for being bereft of merit.
professional services, the complainants felt that said counsel had abandoned their case. They submitted that the
cancellation of their notice of adverse claim and their notice of lis pendens without a court order specifically
Well entrenched in this jurisdiction is the rule that a lawyer may be disciplined for misconduct committed either in
allowing such cancellation resulted from the connivance and conspiracy between Atty. Victorio, Jr. and Atty.
his professional or private capacity. The test is whether his conduct shows him to be wanting in moral character,
Tolentino, Jr., and from the taking advantage of their positions as officials in the Registry of Deeds by respondents
honesty, probity, and good demeanor, or whether his conduct renders him unworthy to continue as an officer of
Atty. Quilala, the Chief Registrar, and Atty. Cunanan, the acting Registrar and signatory of the new annotations.
the Court.20 Verily, Canon 7 of the Code of Professional Responsibility mandates all lawyers to uphold at all times
Thus, they claimed to be thereby prejudiced.
the dignity and integrity of the Legal Profession. Lawyers are similarly required under Rule 1.01, Canon 1 of the
same Code not to engage in any unlawful, dishonest and immoral or deceitful conduct. Failure to observe these
On July 6, 2009, the Court required the respondents to comment on the verified complaint.11
tenets of the Code of Professional Responsibility exposes the lawyer to disciplinary sanctions as provided in
Section 27, Rule 138 of the Rules of Court, as amended, viz.:chanroblesvirtuallawlibrary
Atty. Victorio, Jr. asserted in his Comment dated August 17, 200912 that complainant Robert Torres had been Section 27. Disbarment or suspension of attorneys by Supreme Court, grounds therefor. � A member of the bar
actively involved in the proceedings in Civil Case No. Q-07-59598, which included the mediation process; that the may be disbarred or suspended from his office as attorney by the Supreme Court for any deceit, malpractice, or
complainants, after having aggressively participated in the drafting of the amicable settlement, could not now claim other gross misconduct in such office, grossly immoral conduct, or by reason of his conviction of a crime involving
that they had been deceived into entering the agreement in the same way that they could not feign ignorance of moral turpitude, or for any violation of the oath which he is required to take before the admission to practice, or for
the conditions contained therein; that he did not commit any abandonment as alleged, but had performed in good a wilful disobedience appearing as an attorney for a party to a case without authority so to do. The practice of
faith his duties as the counsel for the complainants in Civil Case No. Q-07-59598; that he should not be held soliciting cases at law for the purpose of gain, either personally or through paid agents or brokers, constitutes
responsible for their representation in other proceedings, such as that before the LRA, which required a separate malpractice.
engagement; and that the only payment he had received from the complainants were those for his appearance The complainants' allegations of the respondents' acts and omissions are insufficient to establish any censurable
fees of P1,000.00 for every hearing in the RTC. conduct against them.

In his Comment dated August 24, 2009,13 Atty. Tolentino, Jr. refuted the charge of conspiracy, stressing that he Section 10 of Presidential Decree No. 1529 (Property Registration Decree) enumerates the general duties of the
was not acquainted with the other respondents, except Atty. Victorio, Jr. whom he had met during the hearings in Register of Deeds, as follows:
Civil Case No. Q-07-59598; that although he had notarized the letter-request dated June 30, 2008 of Ramon
Ricafort to the Register of Deeds, he had no knowledge about how said letter-request had been disposed of by Section 10. General functions of Registers of Deeds. - x x x
the Register of Deeds; and that the present complaint was the second disbarment case filed by the complainants
against him with no other motive except to harass and intimidate him.
It shall be the duty of the Register of Deeds to immediately register an instrument presented for registration
dealing with real or personal property which complies with all the requisites for registration. He shall see to it that
Atty. Quilala stated in his Comment dated September 1, 200914 that it was Atty. Caluya, Jr., another Deputy
said instrument bears the proper documentary science stamps and that the same are properly canceled. If the
Register of Deeds, who was the actual signing authority of the annotations that resulted in the cancellation of the
instrument is not registrable, he shall forthwith deny registration thereof and inform the presenter of such denial in
affidavit of adverse claim and the notice of lis pendens on TCT No. N-290546; that the cancellation of the
annotations was undertaken in the regular course of official duty and in the exercise of the ministerial duty of the
writing, stating the ground or reason therefor, and advising him of his right to appeal by consulta in accordance
with Section 117 of this Decree. (Emphasis supplied) RULE 1.04 - A lawyer shall encourage his clients to avoid, end or settle a controversy if it will admit of a fair
The aforementioned duty of the Register of Deeds is ministerial in nature.21 A purely ministerial act or duty is one settlement.
that an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to the mandate In fine, the presumption of the validity of the amicable settlement of the complainants and the defendants in Civil
of a legal authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of the Case No. Q-07-59598 subsisted.28
act done. If the law imposes a duty upon a public officer and gives him the right to decide how or when the duty
shall be performed, such duty is discretionary, not ministerial. The duty is ministerial only when its discharge Anent the complainants' charge of abandonment against Atty. Victorio, Jr., Rule 18.03 and Rule 18.04, Canon 18
requires neither the exercise of official discretion nor the exercise of judgment.22 of the Code of Professional Responsibility are applicable, to wit:
CANON 18 - A lawyer shall serve his client with competence and diligence.
In Gabriel v. Register of Deeds of Rizal,23 the Court underscores that registration is a merely ministerial act of the
Register of Deeds, explaining: Rule 18.03 - A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith
[W]hether the document is invalid, frivolous or intended to harass, is not the duty of a Register of Deeds to decide, shall render him liable.
but a court of competent jurisdiction, and that it is his concern to see whether the documents sought to be
registered conform with the formal and legal requirements for such documents. Rule 18.04 - A lawyer shall keep the client informed of the status of his case and shall respond within a reasonable
In view of the foregoing, we find no abuse of authority or irregularity committed by Atty. Quilala, Atty. Cunanan, time to the client's request for information.
and Atty. Caluya, Jr. with respect to the cancellation of the notice of adverse claim and the notice of lis pendens There is no issue that the complainants engaged the services of Atty. Victorio, Jr. as their counsel in Civil Case
annotated on TCT No. N-290546. Whether or not the RTC order dated May 16, 2008 or the letter-request dated No. Q-07-59598. Atty. Victorio, Jr. served as such counsel. With Atty. Victorio, Jr. assistance, the complainants
June 30, 2008 had been falsified, fraudulent or invalid was not for them to determine inasmuch as their duty to obtained a fair settlement consisting in receiving half of the proceeds of the sale of the property in litis, without any
examine documents presented for registration was limited only to what appears on the face of the documents. If, portion of the proceeds accruing to counsel as his legal fees. The complainants did not competently and
upon their evaluation of the letter-request and the RTC order, they found the same to be sufficient in law and t]o persuasively show any unfaithfulness on the part of Atty. Victorio, Jr. as far as their interest in the litigation was
be in conformity with existing requirements, it became obligatory for them to perform their ministerial duty without concerned. Hence, Atty. Victorio, Jr. was not liable for abandonment.
unnecessary delay.24
Atty. Victorio, Jr. could not be faulted for the perceived inattention to any other matters subsequent to the
Should they be aggrieved by said respondents' performance of duty, complainants were not bereft of any remedy termination of Civil Case No. Q-07-59598. Unless otherwise expressly stipulated between them at any time during
because they could challenge the performance of duty by bringing the matter by way of consulta with the LRA, as the engagement, the complainants had no right to assume that Atty. Victorio, Jr.'s legal representation was
provided by Section 11725 of Presidential Decree No. 1529. But, as enunciated in Gabriel v. Register of Deeds of indefinite as to extend to his representation of them in the LRA. The Law Profession did not burden its members
Rizal,26 it was ultimately within the province of a court of competent jurisdiction to resolve issues concerning the with the responsibility of indefinite service to the clients; hence, the rendition of professional services depends on
validity or invalidity of a document registered by the Register of Deeds. the agreement between the attorney and the client. Atty. Victorio, Jr.'s alleged failure to respond to the
complainants' calls or visits, or to provide them with his whereabouts to enable them to have access to him despite
The complainants charge Atty. Victorio, Jr. and Atty. Tolentino, Jr. with having conspired with each other to the termination of his engagement in Civil Case No. Q-07-59598 did not equate to abandonment without the
guarantee that the parties in Civil Case No. Q-59598 would enter into the amicable settlement, and then to cause credible showing that he continued to come under the professional obligation towards them after the termination
the cancellation of the affidavit of adverse claim and notice of lis pendens annotated on TCT No. N-290546. The of Civil Case No.
complainants further fault Atty. Victorio, Jr. with having abandoned their cause since the issuance of the RTC of Q-07-59598.cralawred
its order dated May 16, 2008.
WHEREFORE, the Court DISMISSES the baseless disbarment complaints against Atty. Federico S. Tolentino, Jr.,
The complainants'charges are devoid of substance. Atty. Renato G. Cunanan, Atty. Daniel F. Victorio, Jr., Atty. Elbert T.
Quilala and Atty. Constante P. Caluya, Jr.
Although it is not necessary to prove a formal agreement in order to establish conspiracy because conspiracy may
be inferred from the circumstances attending the commission of an act, it is nonetheless essential that conspiracy
be established by clear and convincing evidence.27 The complainants failed in this regard. Outside of their bare
assertions that Atty. Victorio, Jr. and Atty. Tolentino, Jr. had conspired with each other in order to cause the SO ORDERED
dismissal of the complaint and then discharge of the annotations, they presented no evidence to support their Sereno, C. J., Leonardo-De Castro, Perez, and Perlas-Bernabe, JJ., concur.
allegation of conspiracy. On the contrary, the records indicated their own active pjarticipation in arriving at the
amicable settlement with the defendants in Civil Case No. Q-0759598. Hence, they could not now turn their backs
on the amicable settlement that they had themselves entered into.

Even assuming that Atty. Victorio, Jr. and Atty. Tolentino, Jr. initiated ahd participated in the settlement of the case,
there was nothing wrong in their doing so. It was actually their obligation as lawyers to do so, pursuant to Rule
1.04, Canon 1 of the Code of Professional Responsibility,