Topic: Article 19 of the New Civil Code of the Philippines

TOCOMS PHILIPPINES, INC., VS. PHILIPS ELECTRONICS AND LIGHTING, INC.

G.R. No. 214046; February 05, 2020

Facts: As evidenced by their annual Distribution Agreement, Philips Singapore, a for-

eign corporation, and PELI, its agent in the Philippines, designated Tocoms as distribu-
tor of Philips Domestic Appliances in the country and it was regularly renewed yearly.
Before the end of 2012, Tocoms disclosed its marketing plans for the year 2012 to
Philips representatives. Tocoms has continuously been delivered its commitment
and has even exceeded its sales target annually. However, on January 2 2013, PELI
called for a meeting and terminated the agreement, which was s surprise to Tocoms.
Tocoms discovered that PELI and Fabriano had been working together as early as De-
cember 2012 to sell Fabriano the products covered by the Distribution Agreement at a
much lower price. As a result, Tocoms is under threat of incurring losses.

Tocoms prayed for payment of actual and exemplary damages, and attorney's fees. Peli
filed a Motion to Dismiss, alleging that the trial court has not acquired jurisdiction over
its persons. Public respodent denied Peli’s Motion to Dismiss. PELI thus filed a Petition
for Certiorari with the CA to assail the denial of its Motion to Dismiss and was granted
by the CA. Tocoms filed a Motion for Reconsideration, which the CA denied. Hence, this
petition.

Issue: Whether or not Peli acted in bad faith.

Ruling: The court ruled that bad faith under the law cannot be presumed. The claim for
damages of the plaintiff is principally anchored on the Human Relations Provisions of
the Civil Code of the Philippines among others. Article 19 provides that “every person
must, in the exercise of his rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith.” Article 20 also provides
that, “every person who, contrary to law, willfully or negligently causes damage to an-
other, shall indemnify the latter for the same.” And under Article 21, “any person who
willfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damage.”

The bad faith and malice on the part of the defendants were further shown when defen-
dant Fabriano S.P.A. Inc. prodded a client of the plaintiff, specifically Western Market-
ing, to just return the Philips products to the plaintiff as it can sell the same products at a
very much lower price.

However, PELI has not had the opportunity to prove that the foregoing acts mentioned
in the Complaint were indeed made without malice and bad faith, since it was not even
able to file an answer to Tocoms' complaint.

In conclusion, bad faith must be established by clear and convincing evidence. Hence,
the case must be reinstated.

Topic: Article 36 of the New Civil Code of the Philippines

 BERNARDINE S. SANTOS-GANTAN, JOHN-ROSS C. GANTAN, G.R. No. 225193,
October 14, 2020

Facts: The petitioner and the respondent got married twice by civil rites. Being next door
neighbors, she knew long before that he was irresponsible and had been in and out of
school. He was also irritable and unable to keep a job. Yet she still married him hoping
he would change. But he did not. Respondent was often unruly and violent, especially
when drunk. He frequently abused her physically, even during their petty arguments.
She even suffered a miscarriage due to his fits of anger. He was also verbally and emo -
tionally cruel to her. In 2006, respondent left to work in Korea where he later had an il-
licit affair. When his overseas employment expired, he decided to live with his
paramour. From then on, they have been separated. She consulted a clinical psycholo-
gist, Dr. Martha Johanna Dela Cruz (Dr. Dela Cruz), who opined that their marriage
should be nullified on ground of her husband's psychological incapacity. Dr. Dela Cruz
was not able to interview respondent as the latter did not come despite repeated invita-
tions.

The trial court granted the petition and declared void ab initio the marriage between pe-
titioner and respondent. There is therefore inability to pursue fundamental adult life
tasks including close and meaningful intimate relationship. The Office of the Solicitor
General (OSG) filed a motion for reconsideration. It asserted that Dr. Dela Cruz's psy-
chological report did not deserve credit in view of her failure to personally examine re-
spondent. The Court of Appeals reversed and dismissed the petition, arguing that
respondent’s acts of physical violence and infidelity do not necessarily equate to psy-
chological incapacity. Too, respondent's alleged psychological incapacity was not
shown to have juridical antecedence.

Hence, this petition.

Issue: Whether or not the Court of Appeals commits reversible error when it reversed
the trial court's decision granting the petition for declaration of nullity of her marriage
with respondent.

Ruling: Yes, commits reversible error when it reversed the trial court's decision granting
the petition for declaration of nullity of her marriage with respondent. Article 36 of the
Family Code states that, “a marriage contracted by any party who, at the time of the cel-
ebration, was psychologically incapacitated to comply with the essential marital obliga-
tions of marriage, shall likewise be void even if such incapacity becomes manifest only
after its solemnization.” Psychological incapacity refers to a mental incapacity that
causes a party to be non-cognitive of the basic marital covenants which must be as-
sumed and discharged by the parties to the marriage. However, there is no requirement
that the person to be declared psychologically incapacitated be personally examined by
a physician.

The fact that Dr. Dela Cruz was not able to personally examine respondent per se does
not nullify her finding of psychological incapacity, especially when such omission was
attributable to respondent's own failure or refusal to appear for interview despite re-
peated invitations that he or his relatives had received.

Hence, the CA commits reversible error when it reversed the trial court's decision grant-
ing the petition for declaration of nullity of her marriage with respondent

Topic: Article 19 of the New Civil Code of the Philippines

CAMP JOHN HAY DEVELOPMENT CORPORATION, REPRESENTED BY MANUEL
T. UBARRA, JR., VS. OFFICE OF THE OMBUDSMAN, ARNEL PACIANO D.
CASANOVA, FELICITO C. PAYUMO, ZORAYDA AMELIA C. ALONZO, TERESITA A.
DESIERTO, MA. AURORA GEOTINA-GARCIA, FERDINAND S. GOLEZ, ELMAR M.
GOMEZ AND MAXIMO L. SANGIL

G.R. No. 225565, January 13, 2021

Facts: CJH Development entered into a Lease Agreement with BCDA. On July 1, 2008,
the parties entered into a Restructuring Memorandum of Agreement (RMOA). The
BCDA, in turn, promised to maintain a One-Stop Action Center (OSAC). CJH Develop-
ment allegedly failed to pay its rental obligations starting October 2009 despite BCDA's
repeated demands. However, CJH Development countered that BCDA's failure to set
up a fully functioning OSAC caused the long delays in its project implementation, which
prejudiced its operations.

CJH Development sent several letters to BCDA for settlement, but was denied. There-
after, BCDA sent a notice to CJH Development terminating the 1996 Lease Agreement
and the 2008 RMOA due to CJH Development's failure to pay its outstanding rental obli-
gations. Hence, CJH Development filed a Complaint-Affidavit against BCDA officials.
Due to respondents' unjust refusal to comply with their obligations, petitioner allegedly
suffered undue injury by paying pursuant to the RMOA and having "great amounts of
unrealized profits.” Such refusal was allegedly done in evident bad faith and gross inex-
cusable negligence. The Ombudsman dismissed the complaint. CJH Development
moved for reconsideration but the Ombudsman denied.

Hence, CJH Development filed this Petition for Certiorari.

Issue: Whether private respondent intended to prejudice or injure petitioner when it re-
jected petitioner's offer and filed the action for collection.

Ruling: No. Both parties agree that to constitute an abuse of rights under Article 19 the
defendant must act with bad faith or intent to prejudice the plaintiff.

Good faith is presumed and that the burden of proving bad faith rests upon the party al-
leging the same. In the case at bar, petitioner has failed to prove bad faith on the part of
private respondent. Clearly, this would be inimical to the interests of any enterprise, es-
pecially a profit-oriented one like private respondent. It is plain to see that what we have
here is a mere exercise of rights, not an abuse thereof. The petitioner in this case can-
not compel BCDA to restructure the payment of its due and demandable obligation or to
unilaterally suspend payments. Hence, BCDA, as the lessor, cannot be compelled to re-
ceive in installment payments of petitioner's due and demandable rental.

Topic: Article 36 of the New Civil Code of the Philippines

 MARIA AURORA G. MATHAY, ISMAEL G. MATHAY III, MARIA SONYA M. RO-
DRIGUEZ, AND RAMON G. MATHAY VS. PEOPLE OF THE PHILIPPINES AND AN-
DREA L. GANDIONCO

G.R. No. 218964; June 30, 2020

Facts: Petitioners Maria Sonya M. Rodriguez, Ismael G. Mathay III, Ramon G. Mathay,
and Maria Aurora G. Mathay are siblings, whose parents are the late Quezon City
Mayor Ismael A. Mathay, Jr. and Sonya Gandionco Mathay. Sonya and her sons, Is-
mael III and Ramon, along with Sonya's youngest sister, Andrea L. Gandionco (private
respondent), organized Goldenrod, Inc. During her lifetime, Sonya managed and oper-
ated Goldenrod, Inc. When Sonya died, Goldenrod, Inc.'s General Information Sheet
(GIS)reflected Sonya as having subscribed to 30,000 shares of stocks in Goldenrod,
Inc., Thereafter, an amended GIS of Goldenrod, Inc. was filed with the SEC, showing
that private respondent owned 26,000 shares or 52% of the shareholdings of Golden-
rod, Inc. However, petitioners successively filed two (2) GIS of Goldenrod, Inc. with the
SEC wherein, private respondent's name as shareholder was likewise conspicuously
absent. Goldenrod, Inc. also executed the Deed of Absolute Sale of its real estate in fa-
vor of YIC Group of Companies, Inc.

Private respondent then filed a civil complaint for Injunction with Prayer for the Issuance
of Temporary Restraining Order (TRO) and Writ of Preliminary Mandatory Injunction,
and Mandamus against petitioners. Private respondent claimed deprivation of 26,000
shares (52%) of Goldenrod, Inc. belonging to her by virtue of the SPA she allegedly en-
tered into with Sonya. On April 23, 2013, Ismael filed a complaint against private re-
spondent to declare null and void the SPA. On March 26, 2014, private respondent filed
a complaint against petitioners for Qualified Theft through Falsification of Public Docu-
ments by a Private Individual, alleging that falsifying two (2) GISs, removing private re-
spondent from the list of owners/shareholders, and selling the property of the corpora-
tion. RTC found it premature to suspend the criminal action on this ground because of
its lack of jurisdiction on the person of the accused. The RTC held it untenable for peti-
tioners to seek such relief without surrendering to the jurisdiction of the court.

Petitioners thereafter filed a Petition for Certiorari with Urgent Prayer for Issuance of
TRO/Preliminary Injunction before the CA. Petitioners argued that the trial court judge
acted with grave abuse of discretion when he (3) failed to suspend the proceedings de-
spite the manifest existence of a prejudicial question in a previously instituted civil case.
The CA denied the petition for lack of merit. The CA gave short shrift to the argument of
petitioners that the ownership over the subject property must first be determined. The
CA held that the resolution of Civil Case No. Q-13-289 will not be determinative of the
outcome of the present criminal case as they are independent of each other. Petitioners
filed a motion for reconsideration, but the same was denied for lack of merit.

Issue: Whether or not there is a prejudicial question which warrants the suspension of
the criminal proceedings against petitioners.

Ruling: Yes. A criminal action may be suspended upon the pendency of a prejudicial
question in a civil action. The elements of a prejudicial question are: (a) the previously
instituted civil action involves an issue similar or intimately related to the issue raised in
the subsequent criminal action, and (b) the resolution of such issue determines whether
or not the criminal action may proceed.

There are two pending civil cases, Civil Case No. Q-13-73089 and Civil Case No. Q-13-
289, which bear issues that, to the mind of the Court, are determinative of the guilt or in-
nocence of petitioners in the instant criminal case.
Civil Case No. Q-13-73089 is a complaint for nullity of the SPA filed by Ismael against
private respondent, attacking the validity of the SPA on the ground of his lack of consent
thereto. Civil Case No. Q-13-289, on the other hand, involves private respondent pray-
ing for the return to her of 26,000 shares of stock in Goldenrod, Inc., among others. She
claims ownership over these shares on the basis of the SPA.

Hence, should private respondent be adjudged not entitled to the 26,000 shares of
stocks in the pending civil cases, there could have been no crime of qualified theft to
speak of. In the same vein, there would be no crime of falsification to speak of, as well,
because there would be no perversion of truth and the statements in the two (2) GISs in
2013 would neither be "untruthful statements in a narration of facts," nor "absolutely
false."

Topic: Article 19, 20, 21 of the New Civil Code of the Philippines

PATRICIA ZAMORA RIINGEN,, VS. WESTERN UNION FINANCIAL SERVICES

(HONG KONG) LIMITED, PHILIPPINES REPRESENTATIVE OFFICE
 G.R. No. 252716: March 03, 2021

Facts: Riingen alleged that she joined Western Union as Marketing Director in 2005.
She retired from Western Union on August 31, 2016. On June 24, 2016, Riingen infor-
mally expressed her interest in availing of the early retirement package under the Em-
ployees' Retirement Plan through an e-mail sent to Jocelyn Flordeliza (Flordeliza),
Western Union's Manager for Human Relations in the Philippines. According to the Em-
ployees' Retirement Plan, the employees of Western Union are given the option to retire
upon reaching the age of 50 with at least 10 years of service.

On August 5, 2016, Flordeliza replied to Riingen. Flordeliza confirmed that the retire-
ment benefits of Riingen is free from tax. Through another email dated August 8, 2016,
Riingen formalized her intent to retire by August 31, 2016. On August 11, 2016,
Flordeliza sent to Riingen a revised computation of the latter's retirement package reit-
erating that "As the age of Riingen is not more than 50, the lump sum is not taxable."
However, on August 24, 2016, Manganotti informed Riingen that her retirement benefits
are not tax-free. Manganotti explained that Western Union's Retirement Plan does not
match certain requirements that would grant the tax exemption to qualified retirees. On
the day of her retirement, Western Union's external auditor informed Riingen that West-
ern Union failed to register its Employees' Retirement Plan in accordance with the re-
quirements of the Bureau of Internal Revenue (BIR). Further, in an e-mail dated Sep-
tember 1, 2016, Tim Cinalli, insisted that the Employees' Retirement Plan was never in-
tended for registration because registration is time-consuming and complicated. Riingen
likewise insisted that assuming Western Union intentionally failed to register the Plan
with the BIR, Western Union misled its employees by not informing them of its failure to
register. Riingen claimed that such failure reeks of bad faith. Hence, Riingen prayed that
the amount withheld by Western Union corresponding to the tax should be returned to
her. In addition, she asked the LA to award moral damages, exemplary damages, and
attorney's fees. 12

LA rendered its Decision ordering Western Union to pay to Riingen the following:
P4,243,292.85 representing the tax withheld from her; P500,000.00 as moral damages;
P250,000.00 as exemplary damages; 6% legal interest in the amount of P254,597.57;
and P524,789.04 as 10% attorney's fees. The LA based its decision to grant the mone-
tary claims of Riingen on the doctrine of abuse of rights. The LA ruled that Western
Union's acts violated the rights of Riingen under Articles 19, 20, and 21 of the Civil
Code. Aggrieved, Western Union elevated the case to the NLRC. The NLRC issued its
Decision affirming the ruling of the LA. However, the Commission deleted the award of
moral and exemplary damages. The NLRC disagreed with the LA that Western Union
abused its rights in not registering its Employees' Retirement Plan to the BIR. The
NLRC is not convinced that Western Union acted in bad faith. The NLRC acknowledged
that Western Union's avoidance of large administrative costs and continuous funding of
the Plan if registered, is a valid management prerogative.

Western Union moved for reconsideration which was denied. Thereafter, Western Union
filed a Petition for Certiorari to the CA. The CA granted the petition filed by Western
Union and held that there was no basis for the grant of P4,243,292.85 representing the
withheld taxes of Riingen's retirement benefit. The matter of choosing whether to regis-
ter the Retirement Plan with the BIR is a legitimate act of management that is not con -
trary to law, morals, public policy, and public order.

Issue: Whether or not Western Union should pay Riingen damages due to abuse of
right.

Ruling: No. The Court finds that the decision of the NLRC was based on substantial evi-
dence and rooted in law and jurisprudence. Hence, it was an error for the CA to reverse
the same, absent grave abuse of discretion amounting to lack or excess of Hence, it af-
firmed the ruling of the NLRC that Western Union did not abuse its rights in not register -
ing its Employees' Retirement Plan to the BIR and that Western Union did not act in bad
faith. Hence, Western Union's avoidance of large administrative costs and continuous
funding of the Plan if registered, is a valid management prerogative.