TORTS 1. Intentional Torts arts.

. 19-21, 1822-1824, 1911, 1314, NCC SECOND DIVISION x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION PATROCINIA RAVINA AND WILFREDO RAVINA, Peti tioners , QUISUMBING, Acting C.J.: Present: For review a re the Decision1[1] da ted Februa ry 21, 2002 and the Resolution2[2] da ted October 7, 2003 of the Court of Appeals in CA-G.R. CV No. 54560. The appellate court modified the Decision3[3] da ted September 26, 1995 of the Regional Trial Court QUISUMBING, Acting C.J., (RTC) of Da vao Ci ty, Branch 15. Chai rperson, CARPIO MORALES, BRION, a nd MARY ANN P. VILLA ABRILLE, for herself and in behalf of INGRID DLYN P. VILLA ABRILLE, INGREMARK DWIGHT VILLA ABRILLE, INGRESOLL DIELS VILLA ABRILLE AND INGRELYN DYAN VILLA ABRILLE, Respondents. BERSAMIN, ABAD, JJ. 1[1] Rollo, pp. 44-70. Penned by Associate Justice Ruben T. Reyes (now a retired member of this Court), with Associate Justices Renato C. Dacudao and M ariano C. Del Castillo (now a member of this Court) concurring. 2[2] Id. at 71. 3[3] CA rollo, pp. 47-54. Penned by Judge Jesus V. Quitain. Additional member per Special Order No. 761. 4[4] With editorial changes for brevity. Si mpl y s ta ted, the fa cts as found by the Court of Appeals4[4] a re as follows : Respondent Ma ry Ann Pasaol Villa Abrille and Pedro Villa Abrille a re husba nd and wi fe. They ha ve four children, who a re also pa rties to the ins tant case and a re represented by thei r mother, Ma ry Ann. G.R. No. 160708 Promulga ted: October 16, 2009

- versus -

In 1982, the spouses a cqui red a 555-squa re meter pa rcel of land denomina ted as Lot 7, loca ted a t Ka muning Street, Juna Subdi vision, Ma tina , Da va o Ci ty, and covered by Transfer Certi fi ca te of Ti tle (TCT) No. T-88674 i n thei r names . Said l ot is adja cent to a pa rcel of land whi ch Pedro a cqui red when he was still single and whi ch is regis tered solel y in his name under TCT No. T-26471. Through thei r joint efforts a nd the proceeds of a l oan from the Development Ba nk of the Philippines (DBP), the spouses buil t a house on Lot 7 a nd Pedros lot. The house was finished in the ea rl y 1980s but the spouses continuousl y made improvements , including a poul try house and an annex. In 1991, Pedro got a mis tress and began to neglect his fa mily. Ma ry Ann was forced to sell or mortgage thei r mova bles to support the famil y a nd the s tudies of her children. By himself, Pedro offered to sell the house and the two lots to herein peti tioners , Pa trocinia and Wilfredo Ra vina . Ma ry Ann objected and notified the peti tioners of her objections , but Pedro nonetheless sold the house and the two lots wi thout Ma ry Anns consent, as evidenced by a Deed of Sale5[5] da ted June 21, 1991. It appea rs on the said deed tha t Ma ry Ann did not si gn on top of her name. On Jul y 5, 1991 while Ma ry Ann was outside the house and the four children were in s chool , Pedro together wi th a rmed members of the Ci vilian Armed Forces Geographi cal Uni t (CAFGU) and acti ng in conni vance wi th peti tioners6[6] began trans ferring all thei r belongings from the house to an a partment. When Ma ry Ann and her daughter Ingri d Villa Abrille came home, they were s topped from entering i t. They waited outside the ga te until evening under the rain. They sought help from the Talomo Police Stati on, but poli ce authori ties refused to intervene, sa ying that i t was a famil y ma tter. Ma ry Ann alleged tha t the i ncident caused stress , tension and anxiety to her children, so much so that one flunked a t school . Thus , respondents Ma ry Ann and her children filed a complaint for Annul ment of Sale, Specifi c

Performance, Da mages and Attorneys Fees wi th Prelimina ry Ma nda tory Injuncti on7[7] agains t Pedro and herein peti tioners (the Ra vinas) in the RTC of Da va o Ci ty. During the trial, Pedro decla red that the house was buil t wi th his own money. Peti tioner Pa trocinia Ra vina tes tified tha t they bought the house and l ot from Pedro, a nd tha t her husband, peti tioner Wilfredo Ra vina , examined the titles when they bought the property. On September 26, 1995, the trial court ruled in fa vor of herein respondent Ma ry Ann P. Villa Abrille as follows : WHEREFORE, judgment is rendered as follows : 1. The sale of lot 8 covered by TCT No. 26471 by defendant Pedro Abrille appea ring i n the Deed of Sale ma rked as Exh. E is void as to one half or 277.5 s qua re meters representing the sha re of plainti ff Ma ry Villa Abrille. 2. That sale of Lot 7 covered by TCT No. [88674] by defendant Pedro Villa Abrille in the Deed of Sale (Exh. A) is valid as to one half or 277.5 squa re meters of the 555 square meters as one half belongs to defendant Pedro Abrille but i t is void as to the other half or 277.5 squa re meters as i t belongs to plainti ff Ma ry Abrille who did not sell her share nor gi ve her consent to the sale. 3. That sale of the house mentioned i n the Deed of Sale (Exh. A) is valid as fa r as the one half of the house representing the sha re of defendant Pedro Abrille is concerned but void as to the other half whi ch is the sha re of plaintiff Ma ry Abrille because she did not gi ve her consent/si gn the said sale. 4. The defendants shall jointl y pa y the plainti ffs .

5[5] Records, pp. 144-145. Exh. T. 6[6] CA rollo, p. 53. 7[7] Records, pp. 1-7.

4. A. Seventeen Thousand Pesos (P17,000.00) representing the value of the movables and bel ongi ng[s] tha t were l ost when unknown men unceremoniousl y and wi thout thei r knowledge a nd consent removed thei r movables from thei r house and brought them to an apa rtment.

On appeal , the Court of Appeals modified the decision, thus : WHEREFORE, the appealed judgment is hereby MODIFIED as follows : 1. The sale of lot covered by TCT No. 26471 in fa vor of defendants spouses Wil fredo and Pa trocinia Ra vina is declared valid.

4. B. One Hundred Thousand Pesos (P 100,000.00) to plaintiff Ma ry Abrille as moral da mages . 2. The sale of lot covered by TCT No. 88674 i n fa vor of said defendants spouses Ra vina , together wi th the house thereon, is decla red null and void. 4. C. Fi fty Thousand Pesos (P50,000.00) to ea ch of the four children as moral da mages , namel y: 3. Defendant Pedro Abrille is ordered to return the value of the consideration for the lot covered by TCT No. 88674 a nd the house thereon to co-defendants spouses Ra vina .

a) Ingrid Villa Abrille Fi fty Thousand (P50,000.00), b) Ingrema rk Villa Abrille Fifty Thousand (P50,000.00), c) Ingresoll Villa Abrille Fifty Thousand (P50,000.00) and d) Ingrel yn Villa Abrille Fifty Thousand (P50,000.00).

Pesos Pesos Pesos Pesos

4. Defendants spouses Ra vina [a ]re ordered to reconvey the lot and house covered by TCT No. 88674 in fa vor of spouses Pedro a nd Ma ry Villa Abrille and to deli ver possession to them.

5. Ten Thousand Pesos (P10,000.00) as exemplary da mages by wa y of exa mple and correction for the publi c good. 5. Plaintiffs a re gi ven the option to exercise thei r ri ghts under Arti cle [450] of the New Ci vil Code wi th respect to the improvements introduced by defendant spouses Ra vi na. 6. The cos ts of sui t.8[8]

8[8] CA rollo, pp. 53-54.

6. Defendants Pedro Villa Abrille a nd spouses Ra vina a re ordered to pa y joi ntl y a nd severally the plainti ffs as follows :

PURCHASERS FOR VALUE, THE SAME BEING CONTRARY TO LAW AND EVIDENCE. a) One Hundred Thousand Pesos (P100,000.00) to plaintiff Ma ry Villa Abrille as moral dama ges. III. THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONERS PATROCIN[I]A RAVINA AND WILFREDO RAVINA ARE LIABLE FOR DAMAGES, THE SAME BEING CONTRARY TO LAW AND EVIDENCE.10[10]

b) Fi fty Thousand Pesos (P50,000.00) as moral da mages to ea ch of the four children, na mel y: Ingrid Villa Abrille, Ingrema rk Villa Abrille, Ingresoll Villa Abrille and Ingrel yn Villa Abrille.

c) Ten Thousand (P10,000.00) as exemplary da mages by wa y of exa mple and correction for the publi c good.

In essence, peti tioners assail the appellate courts decla ra tion that the sale to them by Pedro of the lot covered by TCT No. T-88674 is null a nd void. However, in addressing this issue, i t is i mpera ti ve to determine: (1) whether the s ubject property covered by TCT No. T-88674 is an exclusi ve property of Pedro or conjugal property, and (2) whether i ts sale by Pedro was valid considering the absence of Ma ry Anns consent. Peti tioners assert that the s ubject lot covered by TCT No. T-88674 was the exclusi ve property of Pedro ha ving been acqui red by him through ba rter or exchange.11[11] They allege tha t the subject lot was a cqui red by Pedro wi th the proceeds of the sale of one of his exclusi ve properties . Allegedl y, Pedro a nd his sister Ca rmelita ini tially agreed to exchange thei r exclusi ve lots covered by TCT No. T-26479 a nd TCT No. T26472, res pecti vel y. La ter, however, Pedro sold the lot covered by TCT No. T-26472 to one Francis ca Teh Ti ng and purchased the property of Ca rmelita using the proceeds of the sale. A new ti tle, TCT No. T-88674, was issued therea fter. Thus , peti tioners insis t tha t the subject lot remains to be an exclusi ve property of Pedro as i t was a cqui red or purchased through the exclusi ve funds or money of the la tter. We a re not persuaded. Arti cle 160 of the New Ci vil Code provi des, All property of the ma rria ge is presumed to belong to the conjugal pa rtners hip, unless i t be proved tha t i t pertains exclusi vel y to the husband or to the wife. There is no issue wi th rega rd to the lot covered by TCT No. T-26471, whi ch was an excl usive property of Pedro, ha vi ng been a cqui red by hi m before his ma rriage to Ma ry 10[10] Id. at 24. Id.

SO ORDERED.9[9]

Thei r Motion for Reconsidera tion ha ving been denied, peti tioners filed this peti tion. Peti tioners a rgue tha t: I. THE COURT OF APPEALS ERRED WHEN IT DECLARED x x x THE SALE OF LOT COVERED BY TCT NO. 88674 IN FAVOR OF SPOUSES RAVINA, TOGETHER WITH THE HOUSE THEREON, AS NULL AND VOID SINCE IT IS CLEARLY CONTRARY TO LAW AND EVIDENCE. II. THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONERS PATROCIN[I]A RAVINA AND WILFREDO RAVINA ARE NOT INNOCENT

9[9] Rollo, pp. 68-69.

11[11]

Ann. However, the lot covered by TCT No. T-88674 was a cqui red in 1982 during the ma rria ge of Pedro and Ma ry Ann. No evi dence was a dduced to show tha t the subject property was a cqui red through exchange or barter. The presumption of the conjugal na ture of the property subsists in the absence of clea r, satis factory and convincing evidence to overcome said presumpti on or to prove tha t the subject property is exclusi vel y owned by Pedro.12[12] Peti tioners ba re assertion would not suffi ce to overcome the presumption tha t TCT No. T-88674, a cqui red during the ma rriage of Pedro and Ma ry Ann, is conjugal. Likewise, the house buil t thereon is conjugal property, ha ving been constructed through the joint efforts of the spouses, who had even obtained a l oan from DBP to cons truct the house. Si gni fica ntl y, a sale or encumbrance of conjugal property concluded a fter the effecti vi ty of the Famil y Code on Augus t 3, 1988, is governed by Arti cle 124 of the same Code tha t now treats such a disposition to be void if done (a) wi thout the consent of both the husband and the wife, or (b) i n case of one spouses inability, the a uthori ty of the court. Arti cle 124 of the Famil y Code, the governing law a t the time the assailed sale was contra cted, is expli ci t: ART. 124. The a dminis tra tion and enjoyment of the conjugal pa rtnership property s hall belong to both spouses jointl y. In case of disagreement, the husbands decision shall prevail , subject to recourse to the court by the wife for proper remedy whi ch mus t be a vailed of wi thin fi ve yea rs from the da te of the contra ct i mplementing such decision. In the event that one s pouse is incapa ci ta ted or otherwise unable to pa rti cipa te in the adminis trati on of the conjugal properties , the other spouse ma y assume sole powers of administra tion. These powers do not include the powers of disposi tion or encumbrance whi ch must ha ve the authori ty of the court or the wri tten consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transacti on shall be cons trued as a continuing offer on the pa rt of the consenting spouse and the thi rd pers on, and ma y be perfected as a binding contra ct upon the a cceptance by the other spouse or authori za tion by

the court before the offer is wi thdrawn by ei ther or both offerors . (Emphasis supplied.)

The pa rti cula r provision in the New Ci vil Code gi ving the wi fe ten (10) yea rs to annul the alienation or encumbrance was not ca rried over to the Famil y Code. It is thus clea r tha t alienation or encumbra nce of the conjugal pa rtnership property by the husband wi thout the consent of the wife is null and void. Hence, jus t like the rule in absolute communi ty of property, i f the husba nd, wi thout knowledge and consent of the wife, sells conjugal property, s uch sale is void. If the sale was wi th the knowledge but without the approval of the wi fe, thereby resulting in a disagreement, such sale is a nnullable at the ins tance of the wife who is gi ven fi ve (5) yea rs from the date the contra ct i mplementing the decision of the husband to ins ti tute the case.13[13] Here, respondent Ma ry Ann ti mel y filed the a cti on for a nnul ment of sale within fi ve (5) yea rs from the da te of sale and execution of the deed. However, her a ction to annul the sale pertains onl y to the conjugal house and lot and does not include the lot covered by TCT No. T-26471, a property exclusi vel y belonging to Pedro and which he can dispose of freel y wi thout Ma ry Anns consent. On the second assignment of error, peti tioners contend that they a re buyers in good fai th.14[14] Accordingl y, they need not inqui re whether the l ot was purchased by money exclusi vel y belonging to Pedro or of the common fund of the spouses and ma y rel y on the certi fi ca tes of ti tle. The contention is bereft of merit. As correctl y held by the Court of Appeals, a purchaser in good faith is one who buys the property of another wi thout notice that so me other person has a right to, or interes t in, such property and pa ys a full and fai r pri ce for the sa me a t the ti me of such purchase, or before he has noti ce of the claim or i nteres t of 13[13] M . STA. M ARIA, PERSONS AND FAM ILY RELATIONS LAW, p. 511 (4th ed., 2004). 14[14] Rollo, p. 32.

12[12]

See Castro v. Miat, G.R. No. 143297, February 11, 2003, 397 SCRA 271, 280.

some other person in the property.15[15] To es tablish his s ta tus as a buyer for value in good fai th, a pers on dealing with land regis tered in the name of and occupied by the seller need onl y show tha t he relied on the face of the sellers certi fica te of ti tle. But for a person dealing with land regis tered in the name of and occupied by the seller whose capa ci ty to sell is res tri cted, such as by Arti cles 166 and 173 of the Ci vil Code or Article 124 of the Famil y Code, he mus t show that he inqui red into the la tters capa ci ty to sell in order to esta blish himself as a buyer for value in good fai th.16[16] In the present case, the property is regis tered in the na me of Pedro and his wi fe, Ma ry Ann. Peti tioners cannot deny knowledge that during the time of the sale in 1991, Pedro was ma rried to Ma ry Ann. However, Ma ry Anns confo rmi ty did not appea r in the deed. Even assuming tha t peti tioners believed in good faith tha t the subject property is the exclusi ve property of Pedro, they were apprised by Ma ry Anns lawyer of her objecti on to the sale and yet they s till proceeded to purchase the property wi thout Ma ry Anns wri tten consent. Moreover, the respondents were the ones in a ctual , visible and publi c possession of the property a t the ti me the transa ction was being made. Thus, a t the time of sale, petitioners knew tha t Ma ry Ann has a ri ght to or interest in the subject properties and yet they failed to obtain her conformi ty to the deed of sale. Hence, peti tioners cannot now i nvoke the protection a ccorded to purchasers i n good fai th. Now, if a voidable contra ct is annulled, the restora tion of what has been gi ven is proper. The rela tionship between the pa rties in any contra ct even i f subsequentl y annulled mus t alwa ys be cha ra cteri zed and punctua ted by good fai th and fai r dealing.17[17] Hence, in consonance wi th justi ce and equi ty and the salutary pri nciple of non-enri chment a t anothers expense, we sustain the appellate courts order di recting

Pedro to return to petitioner spouses the value of the considerati on for the lot covered by TCT No. T-88674 and the house thereon. However, this court rules tha t petitioners cannot claim reimbursements for improvements they i ntroduced a fter thei r good fai th had ceased. As correctl y found by the Court of Appeals , peti tioner Pa trocinia Ra vina made improvements and renova tions on the house a nd l ot a t the time when the complaint agains t them was filed. Ra vina continued introducing improvements duri ng the pendency of the a ction.18[18] Thus , Arti cle 449 of the New Ci vil Code is appli cable. It provides tha t, (h)e who builds, plants or sows in bad fai th on the land of another, loses what is built, planted or sown wi thout right to indemnity.19[19] On the last issue, petitioners claim tha t the decision awa rding da mages to respondents is not supported by the evidence on record.20[20] The claim is erroneous to say the least. The manner by which respondent a nd her children were removed from the famil y home deserves our condemnati on. On Jul y 5, 1991, while respondent was out and her children were in s chool , Pedro Villa Abrille a cting in conni vance wi th the peti tioners21[21] surrepti tiousl y transferred all thei r personal belongings to a nother pla ce. The respondents then were not allowed to enter thei r ri ghtful home or fa mily abode despi te thei r i mpassioned pleas. Fi rml y es tablished i n our ci vil law is the doctrine tha t: Every person mus t, in the exercise of his rights and in the performance of his duties , a ct with jus ti ce, gi ve everyone his due, and observe hones ty a nd good faith.22[22] When a ri ght is exercised i n a

15[15] San Lorenzo Development Corporation v. Court of Appeals, G.R. No. 124242, January 21, 2005, 449 SCRA 99, 117. 16[16] 339. Bautista v. Silva, G.R. No. 157434, September 19, 2006, 502 SCRA 334, 338-

18[18] 19[19] 20[20] 21[21]

Rollo, p. 63. Lumungo v. Usman, No. L-25359, September 28, 1968, 25 SCRA 255, 262. Rollo, p. 36. CA rollo, p. 53. CIVIL CODE, Art. 19.

17[17] Heirs of Ignacia Aguilar-Reyes v. Mijares, G.R. No. 143826, August 28, 2003, 410 SCRA 97, 109.

22[22]

ma nner tha t does not conform wi th such norms a nd resul ts in da mages to another, a legal wrong is thereby commi tted for whi ch the wrong doer mus t be held responsible. Si milarl y, any pers on who willfull y ca uses loss or injury to another in a manner tha t is contra ry to morals , good customs or publi c poli cy shall compensa te the latter for the da mages caused.23[23] It is pa tent i n this case that peti tioners alleged a cts fall short of these established ci vil la w s tanda rds. WHEREFORE, we deny the ins tant pe tition for la ck of meri t. The Decision da ted Februa ry 21, 2002 and the Resolution da ted October 7, 2003 of the Court of Appeals in CA-G.R. CV No. 54560 a re AFFIRMED.

23[23]

CIVIL CODE, Art. 21.

SECOND DIVISION [G.R. No. 101749, July 10, 1992] CONRADO BUNAG, JR., PETITIONER, VS. HON. COURT OF APPEALS, FIRST DIVISION, AND ZENAIDA B. CIRILO, RESPONDENTS. D E CISION REGALADO, J.:

Plaintiff was 26 yea rs old on November 5, 1974 when she tes tified, single and had fi nished a college course i n Commerce (t.s.n., p. 4, Nov. 5, 1974). It appea rs tha t on September 8, 1973, a t about 4:00 o'cl ock in the afternoon, while she was walking along Fi gueras Street, Pasa y Ci ty on her wa y to the Sa n Juan de Dios Canteen to take her snack, defendant, Conra do Bunag, Jr., came riding i n a ca r dri ven by a male companion. Plainti ff and defendant Bunag, Jr. were sweethea rts , but two weeks before September 8, 1973, they had a qua rrel, and Buna g, Jr., wanted to talk ma tters over wi th plaintiff, so tha t he invi ted her to take thei r merienda a t the Aris tocra t Restaura nt in Manila i nstead of at the Sa n Juan de Dios Ca nteen, to whi ch plainti ff obliged, as she believed in his sinceri ty (t.s.n., pp. 8-10, Nov. 5, 1974). Plaintiff rode in the ca r and took the front seat beside the dri ver while Buna g, Jr. sea ted hi mself by her ri ght side. The ca r tra velled north on i ts wa y to the Aristocra t Res taurant but upon rea ching San Jua n Street in Pasa y Ci ty, i t turned abruptl y to the ri ght, to whi ch plaintiff protested, but whi ch the duo ignored and ins tead threa tened her not to make any noise as they were ready to die and would bump the ca r a gainst the post if she persis ted. Fri ghtened and silenced, the ca r tra velled its course thru F.B. Ha rrison Bouleva rd until they rea ched a motel . Plaintiff was then pulled and dra gged from the ca r agains t her will , and a mids t her cries and pleas. In spi te of her struggle she was no ma tch to the joint s trength of the two male comba tants because of her natural weakness being a woman and her small s tature. Eventuall y, she was brought inside the hotel where the defendant Buna g, Jr. deflowered her a gainst her will and consent. She coul d not fi ght ba ck and repel the a tta ck because after Bunag, Jr. had forced her to lie down and embra ced her, his companion held her two feet, removed her panty, a fter whi ch he left. Bunag, Jr. threa tened her tha t he would ask his companion to come ba ck and hold her feet i f she did not surrender her womanhood to hi m, thus he succeeded in feas ting on her vi rgini ty. Plaintiff des cribed the pains she fel t and how blood came out of her pri va te pa rts a fter her va gina was penetra ted by the penis of the defendant Bunag, Jr. (t.s.n. pp. 17-24, Nov. 5, 1974). After tha t outra ge on her vi rgini ty, plaintiff asked Bunag, Jr. once more to allow her to go home but the la tter would not consent and sta ted tha t he would onl y let her go after they were ma rried as he intended to ma rry her, so much so that she promised not to make any s candal and to ma rry him. Thereafter, they took a ta xi together after the ca r tha t they used had al ready gone, and proceeded to the house of Juana de Leon, Buna g, Jr.'s grandmother in Pa mplona , Las Pias , Metro Manila where they a rri ved at 9:30 o'cl ock in the evening (t.s .n., p. 26, Nov. 5, 1974). At about ten (10) o'clock tha t same evening, defendant Conra do Bunag, Sr., fa ther of Bunag, Jr. a rri ved and assured plaintiff tha t the following da y whi ch was a Monda y, she and Bunag, Jr. would go to Ba coor, to appl y for a ma rria ge license, whi ch they did. They filed thei r applica tions for marria ge license

Peti tioner appeals for the reversal of the decision [1] of respondent Court of Appeals promulga ted on Ma y 17, 1991 in CA-G.R. CV No. 07054, enti tled "Zenaida B. Ci rilo vs . Conrado Buna g, Sr. and Conrado Bunag, Jr.," whi ch affi rmed in toto the decision of the Regional Trial Court, Bra nch XI at Bacoor, Ca vi te, and, implici tl y, respondent court's resolution of September 3, 1991[2] denyi ng peti tioner's motion for reconsidera tion. Respondent court ha vi ng assiduousl y dis cussed the salient antecedents of this case, vis-a vis the fa ctual findings of the court bel ow, the evidence of record and the contentions of the pa rties , i t is appropria te tha t i ts findings , whi ch we approve and adopt, be extensi vel y reproduced hereunde r: "Based on the evi dence on record, the following fa cts a re considered indisputable. On the afternoon of September 8, 1973, defendant-appellant Bunag, Jr. brought plainti ffappellant to a motel or hotel where they had sexual intercourse. La ter tha t evening, said defendant-appellant brought plaintiff-appellant to the house of his gra ndmother Juana de Leon in Pa mplona , Las Pias , Metro Manila , where they li ved together as husband and wi fe for 21 da ys , or until September 29, 1973. On Septembe r 10, 1973, defendantappellant Bunag, Jr. and plaintiff-appellant filed their respecti ve applica tions for a ma rria ge license wi th the Offi ce of the Local Ci vil Regis tra r of Ba coor, Ca vi te. On October 1, 1973, after lea ving plainti ff-appellant, defendant-appellant Bunag, Jr. filed an affida vi t wi thdrawi ng his applica tion for a ma rriage li cense. "Plaintiff-appellant contends tha t on the afternoon of September 8, 1973, defendantappellant Bunag, Jr., together wi th an unidentified male companion, abducted her in the vi cini ty of the Sa n Juan de Dios Hospi tal in Pasay Ci ty a nd brought her to a motel where she was ra ped. The court a quo, whi ch adopted her evidence, summa rized the same whi ch we pa raphrased as follows :

(Exhibi ts 'A' and 'C') and a fter tha t plainti ff and defendant Bunag, Jr. returned to the house of Juana de Leon and li ved there as husband and wi fe from September 8, 1973 to September 29, 1973. On September 29, 1973 defendant Bunag, Jr. left and never returned, humiliating plainti ff and compelled her to go ba ck to her pa rents on October 3, 1973. Plaintiff was asha med when she went home and could not sleep a nd eat because of the deception done agains t her by defendants -appellants (t.s.n., p. 35, Nov. 5, 1974). 'The tes ti mony of plaintiff was corrobora ted in toto by her uncle, Vi venci o Bansagan who decla red tha t on September 8, 1973 when plainti ff failed to a rri ve home a t 9:00 o'clock in the evening, his sister who is the mother of plainti ff asked hi m to look for her but his efforts proved futile, and he told his sis ter tha t plainti ff might ha ve ma rried (baka nag asawa , t.s .n., pp. 5-6, Ma rch 18, 1976). However, in the a fternoon of the next da y (Sunda y), his sister tol d him tha t Francis co Cabrera , a ccompanied by ba rrio captain Ja cinto Manalili of Ligas, Bacoor, Ca vi te, informed her tha t plaintiff and Bunag, Jr. were in Cabrera's house, so tha t her sister reques ted hi m to go and see the plaintiff, whi ch he did, and a t the house of Mrs . Juana de Leon in Pa mplona, Las Pi as, Metro Manila he met defendant Conra do Bunag, Sr., who told him, 'Pa re, the children a re here al ready. Let us settle the ma tter and ha ve them ma rried'. 'He conferred wi th plaintiff who told him tha t as she had alrea dy lost her honor, she would bea r her sufferi ngs as Boy Bunag, Jr. and his fa ther promised they would be ma rried.' Defendants-appellants , on the other hand, deny tha t defendant-appellant Conrado Buna g, Jr. abducted and raped plaintiff-appellant on September 8, 1973. On the contra ry, plaintiff-appellant and defendant-appellant Buna g, Jr. eloped on tha t da te because of the opposi tion of the latter's fa ther to thei r rela tionship. "Defendants -appellants claim tha t defendant-appellant Bunag, Jr. and plaintiff-appellant had ea rlier made plans to elope and get ma rried, and this fact was known to thei r friends, among them, Archi tect Chi to Rodriguez. The couple made good thei r plans to elope on the afternoon of September 8, 1973, when defendants -appellant Buna g, Jr., a ccompanied by his friend Guillermo Ramos, Jr., met plaintiff-appellant and her offi cemate na med Lydia in the vi cini ty of the San Juan de Dios Hospi tal. The foursome then proceeded to (the) aforesaid hospi tal's canteen where they had some sna cks . Later, Guillermo Ramos , Jr. took Lydia to Qui rino Avenue where she could get a ride home, thereby lea ving the defendantappellant Bunag, Jr. and plaintiff-appellant alone. According to defendant-appellant Buna g, Jr., after Guillermo Ramos , Jr., and Lydia left, he and plaintiff-appellant took a ta xi

to the Golden Gate and Flamingo Hotels where they tried to get a room, but these were full . They finall y got a room a t the Holida y Hotel , where defendant-appellant registered using his real name and residence certifi ca te number. Three hours later, the couple checked out of the hotel and proceeded to the house of Juana de Leon a t Pa mplona , Las Pias , where they s ta yed until September 19, 1973. Defendant-appellant claims that bi tter disagreements wi th plaintiff-appellant over money and the threa ts made to his life prompted him to break off thei r plan to get ma rried. "During this period, defendant-a ppellant Buna g, Sr. denied ha vi ng gone to the house of Juan de Leon and telling plainti ff-appellant tha t she would be wed to defendant-appellant Buna g, Jr. In fa ct, he phoned Atty. Conrado Adreneda , member of the boa rd of di rectors of Mandala Corpora tion, defenda nt-appellant Bunag, Jr.'s employer, three times between the evening of September 8, 1973 and September 9, 1973 inqui ring as to the whereabouts of his son. He ca me to know about his son's whereabouts when he was told of the couple's elopement late in the afternoon of September 9, 1973 by his mother Candida Ga wa ran. He likewise denied ha ving met rela ti ves and emissaries of plaintiff-appellant and agreeing to her ma rriage to his son. [3] A complaint for da mages for alleged brea ch of promise to ma rry was filed by herein pri va te respondent Zenaida B. Ci rilo agains t petitioner Conrado Bunag, Jr. and his fa ther, Conrado Buna g, Sr., as Ci vil Case No. N-2028 of the Regional Trial Court, Branch XIX a t Ba coor, Ca vi te. On Augus t 20, 1983, on a finding, inter alia, tha t petitioner had forcibl y abducted and raped pri va te respondent, the trial court rendered a decision [4] orderi ng peti tioner Buna g, Jr. to pa y pri va te respondent P80,000.00 as moral da mages , P20,000.00 as exempla ry da mages , P20,000.00 by wa y of temperate da mages , and P10,000.00 for and as a ttorney's fees , as well as the cos ts of suit. Defendant Conrado Bunag, Sr. was absol ved from a ny and all liability. Pri va te respondent appealed tha t porti on of the l ower court's decision dis culpa ting Conrado Buna g, Sr. from ci vil liability in this case. On the other hand, the Bunags , as defendants-appellants , assigned in thei r appeal several errors allegedl y commi tted by the trial court, whi ch were summa ri zed by respondent court as follows : (1) in finding that defendant-appellant Conrado Buna g, Jr. forci bl y abducted and ra ped plainti ff-appellant; (2) in finding that defendants-appellants promised plainti ff-appellant tha t she would be wed to defendant-appellant Conrado Bunag, Jr.; and (3) in awa rding plaintiff-appellant da mages for the brea ch of defendants-appellants promise of marria ge.[5] As s ta ted a t the outset, on Ma y 17, 1991 respondent Court of Appeals rendered judgment dismissing both appeals and affi rming in toto the decision of the trial court. His motion for reconsidera tion ha ving been denied, peti tioner Bunag, Jr. is before us on a petiti on for

review, contending that (1) respondent court failed to consider vi tal exhibi ts , tes ti monies and incidents for peti tioner's defense, resul ting in the misapprehension of fa cts and vi olati ve of the law on prepara tion of judgments ; and (2) i t erred in the applica tion of the proper law and jurisprudence by holding tha t there was forci ble abduction wi th rape, not jus t a simple elopement and an agreement to ma rry, a nd in the awa rd of excessive da mages .[6] Peti tioner Buna g, Jr. fi rs t contends tha t both the trial and appellate courts failed to ta ke into considera tion the alleged fa ct tha t he and pri va te respondent had agreed to ma rry, and tha t there was no case of forcible abduction wi th rape, but one of simple elopement and agreement to ma rry. It is a verred tha t the a greement to ma rry has been sufficientl y proven by the testi monies of the wi tnesses for both pa rties and the exhibi ts presented in court. This submission, therefore, clea rl y hinges on the credibility of the witnesses and evidence presented by the pa rties and the weight a ccorded thereto in the fa ctual findings of the trial court and the Court of Appeals. In effect, wha t peti tioner would want this Court to do is to evalua te and anal yze anew the evidence, both tes timonial and documenta ry, presented before and calibrated by the trial court, and as further meti culousl y reviewed and dis cussed by respondent court. The issue raised prima ril y and ineluctabl y invol ves ques tions of fa ct. We a re, therefore, once a gain cons trained to s tress the well -entrenched sta tutory and jurisprudential ma nda te tha t findings of fa ct of the Court of Appeals a re, as a rule, conclusi ve upon this Court. Onl y questi ons of law, dis tinctl y set forth, ma y be raised in a petiti on for review on certiorari under Rule 45 of the Rules of Court, subject to clea rl y settled exceptions i n case law. Our jurisdi ction in cases brought to us from the Court of Appeals is limi ted to reviewing and revising the errors of law i mputed to the la tter, i ts findings of fact being conclusi ve. This Court has empha ti cally decla red tha t i t is not i ts function to anal yze or weigh such evidence all over a gain, i ts jurisdi ction being limi ted to reviewing errors of law tha t mi ght ha ve been commi tted by the lower court. Ba rring, therefore, a showing tha t the findings complained of a re totally devoid of support in the record, or that they a re so gla ringl y erroneous as to cons titute serious abuse of discretion, such fi ndings mus t s tand, for this Court is not expected or requi red to exa mine or contras t the oral and documenta ry evidence submi tted by the pa rties.[7] Nei ther does the ins tant case reveal any fea ture falling wi thin any of the exceptions whi ch under our decisional rules ma y wa rrant a review of the fa ctual findings of the Court of Appeals. On the foregoing considera tions and our

review of the records , we sus tain the holding of respondent court in fa vor of pri va te respondent. Peti tioner likewise asserts tha t since the a ction invol ves a brea ch of promise to ma rry, the trial court erred in awa rding da mages . It is true tha t in this jurisdi ction, we adhere to the time -honored rule that an a ction for brea ch of promise to ma rry has no s tanding in the ci vil law, apa rt from the ri ght to recover money or property adva nced by the plaintiff upon the fai th of such promise. [8] Generall y, therefore, a brea ch of promise to ma rry per se is not a ctionable, except where the plaintiff has a ctuall y incurred expenses for the weddi ng and the necessa ry incidents thereof. However, the awa rd of moral da mages is allowed in cases specified in or analogous to those provided in Arti cle 2219 of the Ci vil Code. Correla ti vel y, under Arti cle 21 of said Code, in relation to pa ragraph 10 of said Arti cle 2219, any person who wilfull y causes loss or injury to another i n a manner tha t is contra ry to morals, good cus toms or public poli cy shall compensate the latter for moral damages . [9] Arti cle 21 was adopted to remedy the countless gaps in the s tatutes whi ch lea ve so many vi ctims of moral wrongs helpless even though they ha ve a ctuall y suffered ma terial and moral injury, and is intended to vouchsa fe adequa te legal remedy for tha t untold number of moral wrongs whi ch is impossible for human foresight to speci ficall y provide for in the sta tutes . [10] Under the ci rcums tances obtaining in the case a t ba r, the a cts of peti tioner in forcibl y abducting pri va te respondent a nd ha ving ca rnal knowledge with her agains t her will, and therea fter promising to ma rry her in order to esca pe cri minal liability, onl y to therea fter renege on such promise after cohabi ting with her for twenty-one da ys , i rremissibl y consti tute a cts contra ry to morals and good cus toms . These a re grossly insensa te and reprehensible tra nsgressions whi ch indisputabl y wa rrant and abundantl y jus tify the awa rd of moral and exempla ry da mages , pursuant to Arti cle 21 in rela tion to pa ra graphs 3 a nd 10, Arti cle 2219, and Arti cles 2229 and 2234 of the Ci vil Code. Peti tioner woul d, however, belabor the fa ct that said damages were a warded by the trial court on the basis of a finding tha t he is guil ty of forcible abducti on wi th rape, despi te the pri or dismissal of the complaint therefor filed by pri va te respondent wi th the Pasa y Ci ty Fis cal's Offi ce. Generall y, the basis of ci vil liability from cri me is the fundamental postulate of our law tha t every person cri minally liable for a felony is also ci vill y liable. In other words, cri minal

liability will gi ve rise to ci vil liability ex deli cto onl y i f the sa me felonious a ct or omission [11] resul ts in da mage or injury to another and is the di rect and proxima te cause thereof. Hence, extinction of the penal action does not ca rry wi th it the extincti on of ci vil liability unless the exti nction proceeds from a declara tion in a final judgment that the fast from whi ch the ci vil might a rise did not exist. [12] In the ins tant case, the dismissal of the complaint for forcible abduction wi th rape was by mere resolution of the fis cal a t the prelimina ry investi ga tion sta ge. There is no decla ra tion in a final judgment tha t the fa ct from whi ch the ci vil case might a rise did not exist. Consequentl y, the dismissal did not in a ny wa y a ffect the ri ght of herein pri va te respondent to ins ti tute a ci vil a ction a rising from the offense because such prelimina ry dismissal of the penal a ction did not ca rry with i t the extinction of the ci vil acti on. The reason most often gi ven for this holding is tha t the two proceedings i nvol ved a re not between the same pa rties. Furthermore, i t has long been emphasized, wi th continuing validi ty up to now, that there a re di fferent rules as to the competency of wi tnesses and the quantum of evidence in cri minal and ci vil proceedings. In a criminal a ction, the Sta te mus t prove i ts case by evi dence which shows the guilt of the accused beyond reasonable doubt, while in a ci vil a ction i t is suffi cient for the plainti ff to sus tain his cause by preponderance of evidence onl y.[13] Thus , in Rillon, et al . vs . Rillon,[14] we stressed tha t it is not now necessary tha t a cri minal prosecution for rape be fi rst ins ti tuted and prosecuted to final judgment before a ci vil a ction based on said offense i n fa vor of the offended woman can likewise be ins tituted and prosecuted to final judgment. WHEREFORE, the peti tion is hereby DENIED for la ck of meri t, and the assailed judgment and resolution a re hereby AFFIRMED. SO ORDERED. Narvasa, C.J., (Chairman), and Padilla, JJ., concur. Nocon, J., no pa rt.

[3]

Ibid., 15-19. Ibid., 27-57; Annex C, Peti tion; per Executi ve Judge Ildefonso M. Bleza . Ibid., 15. Ibid., 7. Morales vs. Court of Appeals , et al., 197 SCRA 391 (1991). De Jesus, et al. vs. Syquia , 58 Phil. 866 (1933). Ford vs. Court of Appeals, et al ., 186 SCRA 21 (1990).

[4]

[5]

[6]

[7]

[8]

[9]

[10]

Globe Ma cka y Cable and Radio Corp., et al. vs. Court of Appeals, et al., 176 SCRA 778 (1989).
[11]

Ca lalang, et al . vs. Intermediate Appella te Court, et al ., 194 SCRA 514 (1991).

[12]

Sec. 2(b), Rule 111, 1985 Rules of Criminal Procedure; Fa raon, et al . vs. Prieta, 24 SCRA 582 (1968).
[13]

Oca mpo, et al . vs. Jenkins , et al., 14 Phil. 681 (1909). 107 Phil . 783 (1960).

[14]

[1]

Penned by Presiding Justi ce Rodol fo A. Nocon, with Associa te Jus ti ces Antonio M. Ma rtinez and Asaali S. Isna ni, concurri ng; Annex A, Peti tion; Rollo, 14.
[2]

Rollo, 24-26.

EN BANC [G.R. No. L-7817. October 31, 1956.] ALFREDO M. VELAYO, in his capacity as Assignee of the insolvent COMMERCIAL AIR LINES, INC. (CALI), Plaintiff-Appellant, vs. SHELL COMPANY OF THE PHILIPPINE ISLANDS, LTD., Defendant-Appellee, YEK HUA TRADING CORPORATION, PAUL SYCIP and MABASA & CO., intervenors.

D E CISION FELIX, J.: Antecedents The Commercial Ai r Li nes, Inc., whi ch will be hereinafter referred to as CALI, is a corpora tion dul y organi zed and existing in a ccordance wi th the Philippines laws , wi th offi ces in the Ci ty of Ma nila and previously enga ged in ai r transporta tion business. The Shell Company of the P. I., Ltd., whi ch will be designated as the Defendant, is on the other hand, a corpora tion organized under the laws of England and dul y licensed to do business in the Philippines, wi th pri ncipal offi ces a t the Hongkong and Shanghai Bank building in the Ci ty of Manila. Si nce the s ta rt of CALIs opera tions , i ts fuel needs were all supplied by the Defendant. Mr. Des mond Fi tzgerald, i ts Credit Ma nager who extended credi t to CALI, was in cha rge of the collection thereof. However, all ma tters referring to extensions of the term of pa yment had to be decided fi rst by Mr. Stephen Crawford and later by Mr. Wildred Wooding, who represented in this country Defendants Boa rd of Di rectors, the residence of whi ch is in London, England (Exhs . 4-B a nd 4-A). As of Augus t, 1948, the books of the Defendant s howed a balance of P170,162.58 in i ts fa vor for goods i t sold and deli vered to CALI. Even before Augus t 6, 1948, Defendant had reasons to believe tha t the financial conditi on of the CALI was for from being sa tisfa ctory. As a matter of fa ct, according to Mr. Fi tzgerald, CALIs Douglas C-54 plane, then in California , was offered to hi m by Mr. Al fonso Syci p, CALIs President of the Boa rd of Di rectors , i n pa rtial settlement of thei r a ccounts , whi ch offer was, however, declined by Mr. Cra wford, probabl y because upon i nqui ries made by Mr. Fi tzgerald sometime before Augus t 6, 1948, for the purpose of prepari ng the report for i ts London offi ce rega rding CALIs i ndebtedness, Col . La mbert, CALIs Vi ce President and General Mana ger, answered tha t the total outs tanding liabilities of his corporati on was onl y P550,000, a nd the ma nagement of Defendant probabl y assumed tha t the assets of the CALI coul d very well meet said liabilities and were not included to take cha rge of the sale of CALIs said Douglas C-54 plane to collect its credi t.

On August 6, 1948, the mana gement of CALI informally convened i ts pri ncipal credi tors (excepting onl y the insigni fica nt small claims) who were i nvi ted to a luncheon tha t was held between 12:chanrobles vi rtuallawlibrary00 and 2:chanroblesvi rtuallawlibra ry00 oclock in the a fternoon of that da y in the Trade and Commerce Building a t 123 Juan Luna St., Manila , and informed them tha t CALI was in a s ta te of i nsol vency and had to s top opera tion. The credi tors present, or represented a t the meeting, were:chanrobles vi rtuallawlibra ry Mr. A. L. Ba rtolini , representing Fi res tone Ti re & Rubber Co.; cha n robles vi rtualawlibra ryMr. Qui ntin Yu, representing Commercial News ; chan robles vi rtualawlibra ryMr. Ma rk Pringle, representing Smi th, Bell & Co. (Lloyds of London); chan robles vi rtualawlibra ryMess rs . Vi cente Liwa g, C. Dominguez and Pa cifi co Agca oili, representing Na tional Ai rports Corpora tion; chan robles vi rtualawlibra ryMess rs . W. J. Bunnel a nd Ma nuel Chan, representing Goodri ch Interna tional Rubber Co.; chan robles vi rtualawlibra ryMr. G. E. Adai r, representing Goodyea r Ti re & Rubber Co.; chan robles vi rtualawlibra ryMr. J. T. Chuidian, representing Gibbs , Gibbs , Chuidian & Quasha ; chan robles virtualawlibra ryMr. E. Valera, representing Mabasa & Co.; chan robles vi rtualawlibra ryMr. D. Fi tzgerald, representing Shell Co. P.I. Ltd.; chan robles vi rtualawlibra ryand Mr. Al fonso Z. Sycip, representing himself, Yek Hua Trading Corpora tion and Paul Sycip (Exhs . NN, JJJ, MM, QQQ, II -4, SS, TT, UU, VV, WW, XX, YY, ZZ, AAA, BBB, CCC, DDD, EEE, FFF, GGG, and HHH). The persons present, including Mr. Desmond Fi tzgerald, signed their names and the na mes of the companies they represented on a memora ndum pad of the law fi rm Quisumbing, Syci p, and Quisumbing (Exhs . VV and VV-1). In that meeting at noontime of Augus t 6, 1948, out of the 194 credi tors in all (Exh. OO) 15 were listed as principal credi tors ha ving big balances (Exh. NN), to wi t:chanrobles vi rtuallawlibrary 13th Ai r Force P12,880.00 Ci vil Aeronautics Administra tion 98,127.00 Gi bbs , Giibs, Chuidian & Quasha 5,544.90 Goodri ch Intl Rubber Co. 3,142.47 Goodyea r Ti re & Rubber Co. 1,727.50 Mabasa & Co. 4,867.72 Manila Intl Ai rport 55,280.04 Manila Intl Ai r Terminal (PAL) 36,163.68 Shell Co. of the Phil., Ltd. 152,641.68

Smi th, Bell & Co., Ltd. 45,534.00 Paul Sycip 8,189.33 Mrs . Buena ventura 20,000.00 Fi res tone Ti re & Rubber Co. 4,911.72 Alfonso Sycip 575,880.83 Yek Hua Trading Corp. 487,871.20 P1,512,762.87 Wha t occurred in that meeting ma y be summa rized as follows :chanrobles vi rtuallawlibrary Mr. Alexander Sycip, Secreta ry of the Board of Di rectors of the CALI, informed the creditors present tha t this corporati on was insol vent a nd had to s top opera tions . He explained the memorandum agreement executed by the CALI wi th the Philippine Ai r Lines , Inc., on August 4, 1948, rega rding the proposed sale to the la tter of the a viati on equipments of the former (Exhs . MM a nd QQQ, pa r. 1 memo of meeting; chan robles vi rtualawlibra ryExhs. III and PPP P. Agcaoilis memorandum dated Augus t 7, 1948, to the General Ma nager of the Na tional Airports Corp.). Mr. Alexander Syci p was assisted in the explana tion by CPA Al fredo Vela yo of Washington, Syci p & Company, Auditors of the CALI, who dis cussed the balance sheets and dis tributed copies thereof to the credi tors present (Exhs. NN, NN-1 to 7; chan robles vi rtualawlibra ryExh. JJ P. Agca oilis copy of balance sheet p. 229- 230 t.s.n., Nov. 27, 1951, of the testi mony of D. Fi tzgerald). The said balance sheet made mention of a C-54 plane in the Uni ted Sta tes , the property now invol ved in this suit. He was likewise assisted in his explana tion by Mr. Curtis L. La mbert, Vi ce President and General Manager of the CALI, who des cribed i n grea ter detail the assets of the CALI. There was a general unders tanding among all the credi tors present on the desirabili ty of consumma ting the sale in fa vor of the Philippine Ai r Lines Inc. (Exhs. MM a nd QQQ, pa r. 2 Memo of meeting; chan robles vi rtualawlibra ryExhs . III and PPP, pa r. 5 P. Agcoailis memorandum da ted Augus t 7, 1948, to the General Mana ger of the Na tional Ai rports Corp.; chan robles vi rtualawlibra rya nd pp. 299-300 t.s .n., Janua ry 15, 1952, of the tes timony of Desmond Fi tzgerald). Then followed a discussion on the pa yment of claims of credi tors and the preferences claimed for the a ccounts due to the employees , the Government and the Na tional Ai rports Corpora tion. The representati ves of the la tter Mess rs . Vicente H. Li wag, C. Dominguez and Pa ci fico V. Agcaoili, contended tha t thei r a ccounts were preferred. The other credi tors disputed such contention of preference (Exhs . MM and QQQ, pa r. 3 0151 Memo of meeting; chan robles vi rtualawlibra ryExhs . III and PPP, pa r. 3 P. Agcaoilis memora ndum da ted Augus t 1, 1948, to the General Mana ger of the Na tional Ai rports

Corp.; chan roblesvi rtualawlibraryand pp. 247-248 t.s .n., Ja nua ry 10, 1952, of the tes timony of D. Fi tzgerald). No unders tanding was rea ched on this point and i t was then generall y agreed that the ma tter of preference be further s tudied by a working commi ttee to be formed (Exhs . MM, pa r. 3 Memo of meeting). The credi tors present agreed to the forma tion of a working commi ttee to continue the discussion of the pa yment of claims and preferences alleged by certain credi tors , a nd i t was further agreed tha t said working committee would supervise the preserva tion of the properties of the corpora tion while the credi tors attempted to come to an unders tanding as to a fair distribution of the assets among them (Exhs . MM a nd QQQ, Memo of meeting). From the la tter exhibit the following is copied:chanrobles vi rtuallawlibra ry 4. Certain specifi c matters such as the amount owing to the Philippine Ai r Lines, Inc., and the claims of Smi th, Bell vs . Co., (representing Lloyds of London) tha t its claim should be offset a gainst the pa yments whi ch ma y be due to CALI from insurance claims we re not taken up in detail. It was agreed tha t these matters together with the general question of wha t a re preferred claims should be the s ubject of further discussions, but s hall not interfere wi th the consumma tion of the sale in fa vor of PAL. 5. The credi tors present a greed to the forma tion of the working commi ttee to s upervise the preserva tion of the properties of the corpora ti on and a greed further tha t Mr. Fi tzgerald shall represent the creditors as a whole in this commi ttee. It was unders tood, however, tha t all ques tions rela ting to preference of claims can be decided onl y by the creditors assembled. 6. It was the sense of the pers ons present tha t, i f possible, the insol vency court be a voided but that should the credi tors not meet in agreement, then all the profi ts from the sale will be submi tted to an insol vency court for proper di vision a mong the credi tors . To this working commi ttee, Mr. Desmond Fi tzgerald, Credit Ma nager, of the Defendant, Atty. Agcaoili of the Na tional Ai rports Corporati on and Atty. Alexander Sycip (Exhs . III a nd PPP, pa r. 5 P. Agca oilis memorandum da ted Augus t 7, 1948, to the General Ma nager of the Na tional Ai rports (Corp.) were a ppointed. After the credi tors present knew the balance sheet a nd hea rd the explana tions of the offi cers of the CALI, i t was thei r unanimous opinion tha t i t would be advantageous not to present s uits agains t this corpora tion but to s tri ve for a fai r pro-ra ta di vision of i ts assets (Exh. MM, pa r 6, Memo of meeting), although the mana gement of the CALI announced that i n case of nonagreement of the credi tors on a pro-ra ta di vision of the assets, i t would file insol vency proceedings (p. 70, t.s .n., October 22, 1951). Mr. Fi tzgerald di d not decline the nomina tion to form pa rt of said worki ng commi ttee and on Augus t 9, 1948, the 3 members thereof dis cussed methods of a chieving the objecti ves of the commi ttee as decided a t the creditors meeting, whi ch were to preserve the assets of the CALI and to s tudy the wa y of making a fai r di vision of all the assets a mon g the

creditors . Atty. Sycip made an offer to Mr. D. Fi tzgerald to name a representa ti ve to oversee the preserva tion of the assets of the CALI, but Mr. Fi tzgerald replied tha t the creditors could rel y on Col . Lambert. Atty. Pa ci fico Agcaoili promised to re fer the a rguments adduced a t the second meeting to the General Mana ger of the Na tional Ai rports Corpora tions and to obtain the a dvi ce of the Corpora te Counsel, so the negotia tion wi th respect to the di vision of assets of the CALI a mong the credi tors was le ft pending or under advi ce when on tha t very da y of the meeting of the working commi ttee, Augus t 9, 1948, whi ch Mr. Fi tzgerald attended, Defendant effected a telegraphi c trans fer of i ts credit agains t the CALI to the Ameri can corpora tion Shell Oil Company, Inc., assigning its credit, a mounting to $79,440.00, whi ch was subsequentl y followed by a deed of assignment of credi t da ted August 10, 1948, the credit a mounting this time to the sum of $85,081.29 (Exh. I). On Augus t 12, 1948, the Ameri can corpora tion Shell Oil Company, Inc., filed a complaint agains t the CALI in the Superior Court of the Sta te of California , U.S.A. in a nd for the County of San Berna rdino, for the collection of an assigned credit of $79,440.00 Case No. 62576 of said Court (Exhs. A, E, F, G, H, V, and Z) and a wri t of a tta chment was applied for and issued on the same da te a gainst a C-54 plane (Exhs . B, C, D, Y, W, X, and X-1). On September 17, 1948, an a mended complaint was filed to recover an assigned credi t of $85,081.29 (Exhs . I, K, L, M, Q, R, S, T, U, DD) and a supplemental atta chment for a higher sum was applied for and issued agains t the C-54 plane, plus miscellaneous personal properties held by Pa cifi c Overseas Ai r Lines for the CALI (Exhs . N, O, P, AA, BB, BB-1 a nd CC) a nd on Janua ry 5, 1949, a judgment by default was entered by the Ameri can court (Exhs . J, EE, FF, GG, and HH). Unawa re of Defendants assignments of credi t and a tta chment sui t, the s tockholders of CALI resol ved in a s pecial meeting of Augus t 12, 1948, to approve the memora ndum agreement of sale to the Philippine Ai r Li nes, Inc, and noted that the Boa rd had been tryi ng to rea ch a n agreement wi th the credi tors of the corpora tion to prevent insol vency proceedings , but s o fa r no defini te agreement had been rea ched (Exh. OO Mi nutes of Augus t 12, 1948, stockholders meeting). By the fi rst week of September, 1948, the Na tional Airports Corpora ti on learned of Defendants a ction in the United Sta tes and hastened to file i ts own complaint wi th a tta chment agains t the CALI in the Court of Fi rs t Insta nce of Manila (Exhs. KKK, LLL, a nd MMM). The CALI, also prompted by Defendants a ction in getting the alleged undue preference over the other credi tors by a tta ching the C-54 plane in the Uni ted Sta tes , beyond the jurisdi ction of the Philippines , filed on October 7, 1948, a peti tion for volunta ry i nsol vency. On this da te, an order of insol vency was issued by the court (Exh. JJ) whi ch necessa rily s ta yed the Na tional Ai rports Corpora ti ons a ction a gainst the CALI and

dissol ved i ts a ttachment (Exh. NNN), thus compelling the Na tional Ai rports Corpora tion to file i ts claims wi th the insol vency court (Exh. SS). By order of October 28, 1948, the Court confi rmed the appointment of Mr. Al fredo M. Vela yo, who was unani mousl y elected by the creditors as Assignee in the proceedings , and ordered him to qualify as such by taking the oa th of offi ce within 5 da ys from noti ce a nd filing a bond i n the sum of P30,000.00 to be a pproved by the Court condi tioned upon the fai thful performance of his duties , and providing further tha t all funds tha t the Assignee ma y collect or recei ve from the debtors of the corpora tion, or from any other source or sources, be deposited in a local bank (Exh. KK). On November 3, 1948, the clerk of court executed a deed of conveya nce i n fa vor of the Assignee (Al fredo M. Vela yo) over all the assets of the CALI (Exh. LL). The Case. After properl y qualifying as Assignee, Alfredo M. Vela yo ins ti tuted this case (No. 6966 of the Court of Fi rs t Ins tance of Ma nila) on December 17, 1948, agains t the Shell Company of P. I., Ltd., for the purpose of securi ng from the Court a wri t of injuncti on res training Defendant, i ts agents , servants , a ttorneys a nd soli ci tors from prosecuting in and for the County of San Berna rdino in the Superior Court of the Sta te of Cali fornia , U.S.A. the a forementioned Ci vil Case No. 62576 a gains t the ins ol vent Commercial Ai r Lines , Inc., begun by i t in the name of the Ameri can corpora tion Shell Oil Company, Inc., and as an al ternati ve remedy, i n case the purported assignment of Defendants alleged credit to the Ameri can corpora tion Shell Oil Company, Inc., and the a ttachment issued agains t CALI in the said Superior Court of California shall ha ve the effect of defeating the procurement by Plaintiff as Assignee in insol vency of the a bove - mentioned ai rplane, whi ch is the property of the insol vent CALI, situa ted in the Onta rio Interna tional Ai rport, wi th in the County of San Berna rdino, State of California , U.S.A., tha t judgment for da mages in double the value of the ai rplane be awa rded in fa vor of Plaintiff agains t Defendant, wi th costs . The complaint further pra ys tha t upon the filing of a bond executed to the Defendant in an amount to be fi xed by the Court, to the effect tha t Plaintiff will pa y to Defendant all da mages the latter ma y sustain by reason of the injunction if the Court should finall y decide that the Plaintiff was not enti tled thereto, the Court issued a wri t of prelimi nary injunction enjoining the Defendant, i ts agent, serva nts, a ttorneys and solici tor, from prosecuting the a forementioned case No. 62576, the same wri t of prelimina ry injuncti on to issue wi thout noti ce to the Defendant i t appea ring by veri fied complaint tha t the grea t i rrepa rable i njury will resul t to the Plaintiff-Appellant before the ma tter could be on notice. The Plaintiff also pra ys for such other remedies tha t the Court ma y deem proper in the premises. On December 20, 1948, the Defendant filed an opposi tion to the Plaintiffs petition for the issuance of a wri t of the prelimina ry injunction, and on December 22, 1948, the Court

denied the same because whether the conveya nce of Defendants credi t was fraudulent or not, the Philippine court would not be in position to enforce i ts orders as agains t the Ameri can corpora tion Shell Oil Company, Inc., whi ch is outside of the jurisdi ction of the Philippines . Plaintiff ha ving failed to res train the progress of the a tta chment sui t in the Uni ted Sta tes by denial of his appli ca tion for a wri t of prelimina ry injuncti on a nd the consequences on execution of the C-54 pla ne in the County of San Berna rdino, Sta te of California, U. S. A., he confines his a ction to the recovery of damages agains t the Defendant. On December 28, 1948, Defendant filed i ts answer to the complaint, whi ch was amended on Februa ry 3, 1949. In i ts answer, Defendant, besides denying certain a verments of the complaint alleged, a mong other reasons , tha t the assignment of i ts credi t in fa vor of the Shell Oil Company, Inc., in the Uni ted Sta tes was for a valuable consideration and made in a ccordance with the es tablished commercial pra cti ces, there being no law prohibi ting a creditor from assigning his credi t to another; chan roblesvi rtualawlibrarytha t it ha d no interes t wha tsoever in Ci vil Case No. 62576 ins tituted in the Superi or Court in the Sta te of California by the Shell Oil Company, Inc., whi ch is a separa te and distinct corporati on organi zed and exis ting in the Sta te of Vi rginia and doing business in the Sta te of Cali fornia , U. S. A., the Defendant ha ving as i ts s tockholders the Shell Petroleum Company of London and other persons residing in tha t Ci ty, while the Shell Oil Company Inc., of the Uni ted Sta te has i ts principal s tockholders the Shell Union Oil Company of the U.S. a nd presumabl y countless Ameri can investors i nasmuch as i ts sha res of s tock a re being tra ded dail y in the New York s tock ma rket; chan robles vi rtualawlibra rythat Mr. Fi tzgerald, Defendants Credi t Manager, was merel y invi ted to a luncheon-meeting a t the Trade and Commerce Building in the Ci ty of Manila on Augus t 6, 1948, wi thout knowing the purpose for whi ch i t was called; chan robles vi rtualawlibra ryand tha t Mr. Fi tzgerald could not ha ve officiall y represented the Defendant a t tha t time beca use such authority resides on Mr. Stephen Crawfurd. Defendant, therefore, pra ys tha t the complaint be dismissed wi th cos ts agains t the Plaintiff. Then Al fonso Syci p, Yek Hua Trading Corpora tion a nd Paul Sycip, as well as Ma basa & Co., filed, with permission of the Court, thei r respecti ve complaints in intervention taking the side of the Plaintiff. These complaints in intervention were ti mel y answered by Defendant whi ch pra yed tha t they be dismissed. After proper proceedings and hea ring, the Court rendered decision on Februa ry 26, 1954, dismissing the complaint as well as the complaints in intervention, wi th cos ts a gainst the Plaintiff. In view of this outcome, Plaintiff comes to us pra yi ng tha t the judgment of the lower court be reversed and tha t the Defendant be ordered to pa y hi m dama ges in the sum of P660,000 (being double the value of the ai rplane as es tablished by evidence, i .e.,

P330,000), wi th cos ts , and for such other remedy as the Court ma y deem jus t and equitable in the premises. The Issues. Ei ther a dmission of the pa rties, or by preponderance of evidence, or by sheer weight of the ci rcumstance a ttending the transacti ons herein invol ved, We fi nd tha t the fa cts na rra ted in the preceding sta tement of the antecedents ha ve been su ffi cientl y es tablished, and the questi ons a t issue submitted to our determina tion i n this ins tance ma y be boiled down to the following proposi tions :chanrobles vi rtuallawlibra ry (1) Whether or not under the fa cts of the case, the Defendant Shell Company of the P. I., Ltd., taking advanta ge of i ts knowledge of the existence of CALIs airplane C-54 a t the Onta rio Interna tional Ai rport wi thin the Country of San Berna rdino, Sta te of Cali fornia , U. S. A., (Which knowledge i t a cqui red:chanrobles vi rtuallawlibra ry fi rst a t the informal luncheonmeeting of the principal credi tors of CALI on August 5, 1948, where i ts Credi t Mana ger, Mr. Desmond Fi tzgerald, was selected to form pa rt of the Working Commi ttee to supervise the preserva tion of CALIs properties and to s tudy the wa y of making a fai r di vision of all the assets among the credi tors and thus a void the ins ti tution of insol vency proceedings in court; chan robles vi rtualawlibra ryand Subsequentl y, at the meeting of Augus t 9, 1948, when said Mr. Fi tzge rald met the other members of the said Working Commi ttee and hea rd and dis cussed the contention of certain credi tors of CALI on the a ccounts due the employees , the Government and the Na tional Ai rports Corpora tion who alleged that thei r claims were preferred), a cted in bad faith and betra yed the confidence and trus t of the other credi tors of CALI present in said meeting by a ffecting a has ty telegra phi c tra nsfer of its credi t to the Ameri can corpora tion Shell Oil Company, Inc., for the sum of $79,440 whi ch was subsequentl y followed by a deed of assignment of credit dated Augus t 10, 1948, amounting this time to the sum of $85,081.28 (Exhs . Z), thus defeating the purpose of the informal meetings of CALIs pri ncipal credi tors end depri vi ng the Plaintiff, as i ts Assignee, of the means of obtaining said C-54 plane, or the value thereof, to the detri ment and prejudi ce of the other CALIs credi tors who were consequentl y depri ved of thei r sha re in the distribution of said val ue; chan robles vi rtualawlibra ryand (2) Whether or not by reason of said betra yal of confidence and trus t, Defendant ma y be made under the law to answer for the dama ges pra yed by the Plaintiff; chan robles vi rtualawlibra rya nd if so, wha t should be the a mount of such damages . DISCUSSION OF THE CONTROVERSY I. The mere enuncia tion of the fi rs t proposition can lead to no other conclusion than tha t Defendant, upon learning the preca ri ous economi c si tua tion of CALI and tha t wi th all probability, i t could not get much of i ts outs tanding credi t because of the preferred claims

of certain other creditors , forgot tha t Ma n does not li ve by bread alone a nd enti rel y dis rega rded all moral inhibi tory tenets . So, on the very da y i ts Credi t Ma nager a ttended the meeting of the Working Commi ttee on Augus t 9, 1948, i t hastil y made a telegra phi c assignment of i ts credi t agains t the CALI to i ts sister Ameri can Corpora tion, the Shell Oil Company, Inc., and by wha t is s ta ted in the preceding pa ges hereof, We know tha t were the da maging effects of said assignment upon the ri ght of other credi tors of the CALI to pa rti cipa te in the proceeds of said CALIs plane C-54. Defendants endea vor to extri ca te i tself from any liability caused by s uch evi dent misdeed of its pa rt, alleging tha t Mr. Fi tzgerald had no authori ty from his principal to commi t the la tter on any a greement; chan robles vi rtualawlibra rythat the assignment of i ts credi t in fa vor of i ts sister corpora tion, Shell Oil Company, Inc., was for a valuable considerati on and i n a ccordance wi th the es tablished commercial pra ctices ; chan robles vi rtualawlibra rytha t there is no law prohibi ting a credi tor from assigning his credi t to another; chan robles vi rtualawlibra ryand that the Shell Oil Company Inc., of the Uni ted Sta tes is a corpora tion different and independent from the Defendant. But all these defenses a re enti rel y immaterial and ha ve no bea ring on the main ques tion a t issue in this appeal . Moreover, we might sa y tha t Defendant could not ha ve a ccomplished the trans fer of i ts credi t to i ts sister corpora ti on if all the Shell companies throughout the worl d would not ha ve a s ort of union, relation or unders tanding a mong themsel ves to come to the aid of ea ch other. The telegraphic tra nsfer made wi thout knowledge and a t the ba ck of the other creditors of CALI ma y be a shrewd a nd surprise move tha t enabled Defendant to collect almost all i f not the enti re a mount of i ts credit, but the Court of Jus ti ce cannot countenance s uch a tti tude a t all , and much less from a forei gn corpora ti on to the detri ment of our Government and local business. To jus ti fy i ts acti ons , Defendant ma y also claim tha t Mr. Fi tzgerald, based on his feeling of dis trus t and apprehension, entertained the convi ction tha t intervenors Al fonso Sycip and Yek Hua Trading Corpora tion tried to ta ke undue adva ntage by infil trati ng thei r credi ts . But even assuming for the sake of a rgument, tha t these intervenors reall y resorted to such s tra tegem or fra udulent devi ce, yet Defendants a ct finds not jus tifi ca tion for no misdeed on the pa rt of a person is cured by a ny misdeed of ano ther, and i t is to be noted tha t nei ther Al fonso Z. Sycip, nor Yek Hua Trading Corpora tion were the onl y credi tors of CALI, nor even preferred ones, a nd tha t the infil tra tion of ones credi t is of no sequence i f i t ca nnot be proven in the insol vency proceedings to the satis faction of the court. Under the ci rcumstances of the case, Defendants transfer of i ts aforementioned credi t would ha ve been jus tified onl y i f Mr. Fitzgerald had declined to take pa rt in the Working Commi ttee and frankl y and hones tl y informed the other creditors present tha t he had no authori ty to bind his principal and that the latter was to be left free to collect i ts credi t from CALI by wha tever means his pri ncipal deemed wise and were a vailable to i t. But then such informa tion would ha ve i mmedia tel y dissol ved all a ttempts to come to an ami cable

conciliation among the credi tors and would ha ve precipi ta ted the filing in court of CALIs volunta ry insol vency proceedings and nuli fied the i ntended trans fer of Defendants credi t to i ts above-mentioned sister corpora tion. II. We ma y agree with the trial judge, tha t the assignment of Defendants credi t for a valuable considera tion is not vi olati ve of the provisions of secti ons 32 and 70 of the Insol vency Law (Publi c Act No. 1956), because the assignment was made since Augus t 9, 1948, the ori ginal complaint in the Uni ted Sta tes was filed on Augus t 12, 1948, and the wri t of atta chment issued on this same da te, while CALI filed i ts petition for insol vency on October 7, 1948. At his Honor correctl y s ta tes, said Sections 32 and 70 onl y contempla te a cts and tra nsactions occuring wi thin 30 da ys prior to the commencement of the proceedings i n ins ol vency and, consequentl y, all other a cts outside of the 30-da y peri od cannot possibl y be considered as coming within the orbi t of the opera tion. In a ddi tion to this , We ma y a dd tha t Arti cle 70 of the Insol vency La w refers to a cts of the debtor (in this case the insol vent CALI) and not of the creditor, the Shell Company of the P. I. Ltd. But section 70 does not consti tute the onl y provisions of the law perti nent to the matter. The Insol vency Law also provi des the following:chanrobles virtuallawlibra ry SEC. 33. The assignee shall ha ve the ri ght to recover all the es ta te, debt and effects of said insol vent. If a t the time of the commencement of the proceedings in insol vency, an a ction is pendi ng i n the name of the debtor, for the recovery of a debt or other thing mi ght or ought to pass to the assignee by the assignment, the assignee shall be allowed to prosecute the a ction, in like manner and wi th life effect as if it had been originall y commenced by him. If there a re any ri ghts of action in fa vor of the insol vency for da mages , on any account, for whi ch a n a ction is not pending the assignee shall ha ve the ri ght to prosecute the sa me with effect as the insol vent mi ght ha ve done himself i f no proceedings in insol vency had been ins ti tuted cralaw . It mus t not be forgotten tha t in a ccordance with the spi ri t of the Insol vency La w and wi th the provisions of Chapter V thereof whi ch deal wi th the powers and duties of a recei ver, the assignee represents the insol vent as well as the credi tors in volunta ry and involunta ry proceedings Intes ta te of Ma riano G. Veloso, etc. vs . Vda . de Veloso S. C. G. R. No. 42454; chan roblesvi rtualawlibra ryHunter, Kerr & Co. vs . Sa muel Murra y, 48 Phil . 449; chan robles vi rtualawlibra ryCha rtered Bank vs . Imperial, 48 Phil. 931; chan robles vi rtualawlibra ryAsia Banking Corpora tion vs . Herri dge, 45 Phil . 527 (II Tolentinos Commercial Laws of the Philippines , 633). See also Section 36 of the Insol vency Law.From the foregoing, We see tha t Plaintiff, as Assignee of the Insol vent CALI, had pers onality a nd authori ty to ins ti tute this case for dama ges, a nd the onl y questi on that remains determina tion is whether the pa yment of dama ges sought to be recovered from Defendant ma y be ordered under the La w and the evidence of record.

IF ANY PERSON, before the assignment is made, ha ving noti ce of the commencement of the proceedings in insol vency, or ha vi ng reason to believe tha t insol vency proceedings a re about to be commenced, embezzles or disposes of any money, goods , chattels , or effects of the i nsol vent, he is cha rgeable therewi th, and liable to an a ction by the assignee for double the value of the property sought to be embezzled or disposed of, to be recei ved for the benefi t of the insol vent esta te. The wri ter of this decision does not entertain any doubt tha t the Defendant taking adva ntage of his knowledge tha t insol vency proceedings were to be ins tituted by CALI i f the credi tors did not come to an unders tanding as to the manner of distri bution of the insol vent asset a mong them, and believing i t mos t probable tha t they would not a rri ve a t such unders tanding as i t was really the case s chemed and effected the trans fer of i ts sister corpora tion in the United Sta tes, where CALIs plane C-54 was by tha t swi ft and unsuspected opera tion effica ciously disposed of said insol vents property depri ving the la tter and the Assignee tha t was la tter appointed, of the opportuni ty to recover said plane. In addi tion to the a forementioned Secti on 37, Chapter 2 of the PRELIMINARY TITLE of the Ci vil Code, dealing on Human Relations , provides the following:chanroblesvi rtuallawlibra ry Art 19. Any pers on mus t, i n the exercise of his rights and in the performances of his duties, a ct wi th jus tice, gi ve everyone his due and observe hones ty and good fai th. It ma ybe said tha t this a rti cle onl y contains a mere declara tions of principles and while such s ta tement ma y be is essentially correct, yet We find tha t such decla ra tion is implemented by Arti cle 21 a nd sequence of the sa me Chapter whi ch pres cribe the following:chanroblesvi rtuallawlibra ry Art. 21. Any person who wilfull y causes loss or injury to another in a manner tha t is contra ry to morals , good customs or publi c poli cy shall compensa te the latter for the da mage. The Code Commission commenting following:chanroblesvi rtuallawlibra ry on this a rti cle, sa ys the

changed from age to a ge, the cons cience of man has remained fi xed to i ts ancient moori ngs , one ca nnot but feel tha t i t is sa fe and saluta ry to trans mute, as fa r as ma y be, moral norms into legal rules, thus i mpa rting to every legal s ys tem tha t endu ring quality whi ch ought to be one of i ts superlati ve a ttributes. Furthermore, there is no belief of more baneful consequence upon the social order than tha t a person ma y wi th i mpunity cause damage to his fellow-men so long as he does not brea k any law of the Sta te, though he ma y be defying the mos t sa cred postulates of morality. Wha t is more, the vi ctim loses fai th in the ability of the government to afford hi m protection or relief. A provision simila r to the one under consideration is embodied in a rti cl e 826 of the German Ci vil Code. The same observa tions ma y be ma de concerning injuri ous a cts tha t a re contra ry to publi c policy but a re not forbidden by s ta tute. There a re countless a cts of such cha ra cter, but ha ve not been foreseen by the lawmakers . Among these a re many business pra cti ces tha t a re unfai r or oppressi ve, and certain a cts of landholders and employers a ffecting thei r tenants and employees which contra vene the publi c poli cy of social jus ti ce. Another rule is expressed in Arti cle 24 which compels the return of a thing a cqui red wi thout jus t or legal grounds . This provision embodies the doctri ne that no pers on should unjustl y enri ch hi mself a t the expense of another, whi ch has been one of the mains ta ys of every legal s ys tem for centuries. It is mos t needful tha t this ancient principles be clea rl y and speci fi cally consecra ted i n the proposed Ci vil Code to the end tha t in cases not foreseen by the lawma ker, no one ma y unjus tl y benefi t himsel f to the prejudi ce of another. The German Ci vil Code has a simila r provision (a rt. 812). (Report of the Code Commission on the Proposed Ci vil Code of the Philippines , p. 40- 41). From the Ci vil Code Annota ted by Ambrosio Pa dilla, Vol . I, p. 51, 1956 edi tion, We also copy the following:chanrobles vi rtuallawlibra ry A moral wrong or injury, even if i t does not consti tute a vi olation of a s ta tute law, should be compensated by da mages . Moral dama ges (Art. 2217) ma y be recovered (Art. 2219). In Arti cle 20, the liability for da mages a rises from a willful or negligent a ct contra ry to law. In this a rti cle, the a ct is contra ry to morals , good cus toms or publi c poli cy. Now, i f Arti cle 23 of the tha t:chanroblesvi rtuallawlibra ry Ci vil Code goes as fa r as to provide

Thus a t one s troke, the legislator, i f the forgoing rule is approved (as i t was approved), would vouchsafe adequate legal remedy for tha t untol d numbers of moral wrongs whi ch is i mpossible for human foresight to provi de for speci ficall y in the sta tutes . But, it ma y be asked, would this proposed a rti cle obli tera te the bounda ry line between morality and la w? The a nswer is tha t, in the las t anal ysis, every good law dra ws i ts brea th of life from morals, from those princi ples whi ch a re wri tten wi th words of fi re in the conscience of man. If this premises is admi tted, then the proposed rule is a prudent ea rnes t of jus ti ce in the fa ce of the i mpossibility of enumera ting, one by one, all wrongs whi ch cause dama ges. When i t is reflected tha t while codes of law and s ta tutes ha ve

Even if an a ct or event causing damage to anothers property was not due to the faul t or negligence of the Defendant, the la tter shall be liable for indemni ty i f through the a ct or event he was benefi ted.

wi th mere much more reason the Defendant should be liable for indemni ty for a cts i t committed in ba d faith a nd wi th betra yal of confidence. It ma y be a rgued tha t the a forequoted provisions of the Ci vil Code onl y came into effect on August 30, 1950, a nd tha t they ca nnot be a pplicable to a cts tha t took pla ce in 1948, pri or to i ts effecti vi ty. But Arti cle 2252 of the Ci vil Code, though providing tha t:chanroblesvi rtuallawlibra ry Cha nges made a nd new provisions and rules laid down by this Code whi ch ma y be prejudi ce or impai r ves ted or a cqui red ri ghts in a ccordance wi th the ol d legislation, shall ha ve no retroa cti ve effect cralaw . implies that when the new provisions of the Code does nor prejudi ce or impair ves ted or a cqui red ri ghts in a ccordance wi th the old legislation a nd it cannot be alleged tha t in the case a t ba r Defendant had any vested or acqui red ri ght to betra y the confidence of the insol vent CALI or of i ts credi tors said new provisions, like those on Human Rela tions , can be gi ven retroa cti ve effect. Moreover, Arti cle 2253 of the Ci vil Code further provides :chanrobles vi rtuallawlibra ry cralaw But if a right should be decla red for the fi rs t time in this Code, i t shall be effecti ve a t once, even though the a ct or event whi ch ma y gi ve rise thereto ma y ha ve been done or ma y ha ve occurred under the prior legisla tion, provided said new ri ght does not prejudi ce or i mpai r any ves ted or a cqui red ri ght, of the same origin. and a ccording to Arti cle 2254, no ves ted or a cqui red right can a rise from acts or omissions whi ch a re a gainst the law or whi ch infri nge upon the ri ght of others . In case of Juan Cas tro vs . Acro Ta xi cab Company, (82 Phil., 359; chan robles vi rtualawlibra ry47 Off. Gaz., [5] 2023), one of the ques tion a t issue was whether or not the provisions of the New Ci vil Code of the Philippines on moral dama ges should be applied to an a ct of negligence whi ch occurred before the effecti vi ty of said code, and this Court, through Mr. Justi ce Briones, sus taining the a ffi rma ti ve proposition a nd ci ting decisions of the Supreme Court of Spain of Februa ry 14, 1941, and November 14, 1934, as well as the comment of Mr. Cas tan, Chief Jus tice of the Supreme Court of Spain, about the revolutiona ry tendency of Spa nish jurisprudence, said the following:chanroblesvi rtuallawlibra ry We conclude, therefore, rea ffirming the doctrine laid down in the case of Lilius (59 J. F. 800) in the sense tha t indemnity lies for moral and patri monial da mages whi ch incl ude physi cal and pain sufferings. Wi th this (doctrine), We effect in this jurisdicti on a real s ymbiosis 1 of the Spanish and Ameri can La ws and, a t the same time, We a ct in consonance wi th the spi ri t and progressi ve ma rch of time (translation)

The wri ter of this decision does not see any reason for not appl ying the provisions of Secti on 37 of the Insol vency La w to the case a t ba r, speciall y i f We take into considerati on tha t the term any person used therein ca nnot be limi ted to the offi cers or employee of the i nsol vent, as no s uch limi ta tion exis t in the wording of the section (See also Sec. 38 of the same Act), and tha t, as s ta ted before, the Defendant s chemed and affected the trans fer of i ts credi ts (from whi ch it could deri ve pra cticall y nothing) to i ts sister corpora tion in the Uni ted States where CALIs plane C-54 was then situa ted, succeeding by such s wift and unsuspected opera tion in disposing of said insol vents property by removi ng i t from the possession and owners hip of the ins ol vent. However, some members of this Court entertain doubt as to the applica bility of said section 37 because in thei r opinion wha t Defendant in reali ty disposed of was its own credi t and not the insol vents property, al though this was pra cti cally the effect and resul t of the s cheme. Ha vi ng in mind this objection and tha t the provisions of Arti cle 37 ma king the pers on coming wi thin i ts purview liable for double the value of the property sought to be disposed of consti tute a sort of penal clause whi ch shall be stri ctl y cons trued, and considering further that the same resul t ma y be obtained, by appl ying onl y the provisions of the Ci vil Code, the wri ter of this decision yields to the objection a forementioned. Arti cles 2229, 2232, 2234, 2142, a nd follows :chanroblesvi rtuallawlibra ry 2143 of the Ci vil Code read as

Art. 2229. Exemplary or correcti ve da mages are imposed, by wa y of exa mple or correction for the publi c good, in addi tion to the moral , tempera te , liqui dated or compensatory dama ges. Art. 2232. In contra cts quasi-contra cts, the Court ma y a wa rd exempla ry damages if the Defendant a cted in a wanton, fraudulent, reckless, oppressi ve, or malevolent manner. Art. 2234. While the a mount of the exempla ry da mages need not be proved, the Plaintiff mus t show that he is enti tled to moral , tempera te, or compensatory dama ges before the court ma y consider the question of whether or not exempla ry dama ges should be awa rded. In case liquida ted dama ges should be upon, al though no proof of loss is necessa ry in order tha t such liquidated dama ges be recovered, nevertheless, before the court ma y consider the question of granting exempla ry in addi tion to the liquida ted da mages , the Plaintiff mus t show tha t he would be enti tled to moral, tempera te or compensatory dama ges were it not for the s tipula tion for liquida ted da mages . Art. 2142. Certain lawful , volunta ry and unila teral a cts gi ve rise to the juridi cal rela tion of quasi-contra ct to the end tha t no one shall be unjus tl y enri ched or benefi ted a t the expense of another. Art, 2143. The provisions for quasi-contra cts in this Chapter do not excl ude other quasicontra cts whi ch ma y come within the purview of the preceding a rti cle.

In a ccordance wi th these quoted provisions of the Ci vil Code, We hold Defendant liable to pa y to the Plaintiff, for the benefi t of the insol vent CALI and i ts credi tors , as compensa tory da mages a sum equi valent to the val ue of the plane a t the time a forementioned and another equal sum as exempla ry dama ges . There is no clea r proof in the record a bout the real value of CALIs plane C-54 a t the ti me when Defendants credi t was assigned to i ts sis ter corpora tion in the United Sta tes. Judgment Wherefore, a nd on the s trength of the foregoing considera tions, the decision appealed from is reversed and Defendant-Appellee-, Shell Company of the Philippine Islands , Ltd., is hereby sentenced to pa y to Plaintiff-Appellant, as Assignee of the insol vent CALI, da mages in a sum double the amount of the value of the insol vents ai rplane C-54 a t the time Defendants credi t agains t the CALI was assigned to i ts sister corpora tion i n the Uni ted Sta tes , which val ue shall be determined in the corresponding incident in the l ower court after this decision becomes final . Cos ts a re ta xed agains t Defendant-Appellee. It is SO ORDERED. Paras, C.J., Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., and Endencia, concur.

The movants maintain tha t there is evi dence sufficient to s upport a finding tha t CALIs C54 plane had a fai r ma rket value of $165,000 a t or a bout the time Defendant credi t was assigned to its sister corpora tion in the United Sta tes and the plane atta ched. This moti on was opposed by Defendant-Appellee whi ch was replied by Plaintiff- Appellant wi th a supplemental motion for reconsidera tion, and then retorted wi th a mani festa tion and motion of Defendant-Appellant followed by Defendants answer to Plaintiffs motion for reconsidera tion. After considering the evidence pointed out by said pa rties in support of thei r respecti ve contentions , we a re more convinced tha t the proofs relati ve to the real value of CALI plane C-54 at the time Defendants credi t was assigned to its sister corpora tion in the Uni ted Sta tes , is not clea r. Hence, Plaintiff-Appellants and intervenors motion for reconsidera tion is hereby overruled. The main grounds on whi ch Defendant-Appellee bases i ts motion for reconsidera tion, as relied upon in its counsels memora nda and oral a rgument, ma y be reduced to the following:chanroblesvi rtuallawlibra ry (1) Tha t the Defendant Appellee is not guil ty of bad faith, i t ha ving done nothing but to protect legiti matel y i ts own interes t or credi t a gainst the bad fai th of i ts debtor, the insol vent CALI, under the control of the latters President Alfonso Syci p; (2) Tha t Appellees tra nsfer of i ts credi t to i ts sister corpora tion in the Uni ted States , did not prejudi ce the Government, because i ts claims were full y paid, nor caused any loss or injury to other creditors , except the enti ties and groups controlled by Al fonso Z. Syci p; (3) Tha t Appellee is not liable for exempla ry dama ges because the provisions of the new Ci vil Code on the ma tter a re not applicable to this case;

RESOLUTION July 30, 1957

FELIX, J.: Plaintiff-Appellant and i ntervenors on one hand a nd Defendant Shell Company of the Philippine Islands, Ltd., on the other, ha ve filed thei r respecti ve motions for reconsidera tion of Our decision rendered in this case. The motion of Plaintiff Appellant and the intervenors seeks the reconsideration of said decision in so fa r as i t held tha t:chanroblesvi rtuallawlibra ry There is no clea r proof in the record about the real value of CALIs plane C-54, a t the time when Defendants credi t was assigned to i ts sis ter corpora tion in the United Sta tes. and, upon such holding, i t orders tha t the value of the C-54 plane be determined in the corresponding incident in the lower Court after this decision becomes final .

(4) Tha t the Plaintiff-Appellant has no cause of a ction a gainst Defendant-Appellant and is not the real pa rty in interes t; chan robles vi rtualawlibra ryand (5) Tha t Plaintiffs right of a ction was based and prosecuted in the lower court under the provisions of the Insol vency La w and consequentl y tha t he is s topped from pursuing another theory a nd is not enti tled to da mages under the provisions of the New Ci vil Code. I. The fa cts on whi ch this Court based i ts conclusion that Defendant corpora tion a cted in bad fai th a re plainl y and explici tl y narra ted in the decision. They a re not a nd cannot be denied or contradi cted by said Defendant. On the contra ry they a re in many respects admitted by the Defendant and no a mount of reasoning can make Us change tha t conclusion. II. As pointed out by counsel for Plaintiff, Defendant choses to i gnore tha t besides the claims of intervenors Alfonso Z. Sycip and Yek Hua Trading Corpora tion, whi ch counsel for the Shell sa ys to consti tute 10/11 of the approved ordina ry claims , the re is s till 1/11 of the

other credi tors whose claims ha ve been also approved by the insol vency Court, in additi on to the ordina ry credi tors whose claims a re yet unapproved by the insol vency Court, amounting to P560,296,32, a nd no good reason sugges ts i tself why these unapproved but pendi ng claims should be taken into a ccount in considering the prejudi ce caused all the creditors of the insol vent CALI. As long as these claims a re pending, the contingency exis t, tha t these creditors ma y recover from the i nsol vent esta te a nd when they do, they will suffer to the diminution of CALIs asset resul ting from the a tta chment of the plane by Appellee Shell. Ans wering Defendants contention tha t the trans fer of its credit to its sister corporati on in the Uni ted Sta tes did not prejudi ce the Government or the other credi tors of CALI, counsel for Plaintiff-Appellant has the following to sa y:chanrobles vi rtuallawlibra ry So far as the claims of the Government a re concerned, i t is true tha t they were preferred claims and ha ve all been paid. But this ci rcums tance cannot erase the fa ct tha t the Appellees a ction jeopa rdised the Governments claims as well as the other claims . There was doubt as to the preferential chara cter of the Governments claims . Indeed, the preferential cha ra cter of one of the Governments claims necessitated a liti gati on to es tablish. Had i t been held to be an ordina ry claim, the Government would ha ve suffered as other creditors . But that is nei ther here nor there; chan robles vi rtualawlibra ryneither the cha ra cter of the claim nor the i denti ty of the claimant can possibl y a ffect the appli ca tion of a pri nciple tha t no person ma y profi t from his betra yal of a trus t. And the Appellant continues thus :chanrobles vi rtuallawlibra ry Appellee had a credi t of P170,000 a gains t the insol vent CALI as of Augus t 1948, whi ch is assigned to its sister corpora tion in the Uni ted Sta tes for P120.000. Hence, Appellee recovered 70% of i ts credit and immedia tel y upon making the assignment in 1948. More than this, the s tated considera tion was fi xed by and and between two sister companies . The fa ct remains tha t Appellees sister company was enabled to get hold of a C-54 plane worth about P330,000. On the other hand, the ordina ry credi tors who filed their claims agains t the insol vent CALI had to wait until November 1956 to get thei r di vidends and onl y a t the ra te of 30%, computed as follows :chanrobles vi rtuallawlibra ry Assets as of October 30, 1956 P668,605.15 Less :chanrobles vi rtuallawlibra ry Preferred claims s till uncollected, assignee and a ttorneys fees and other reserves P138,719.56

Amount a vailable for dis tribution P529,885.59 Di vi dent:chanrobles vi rtuallawlibra ry Amount a vailable for distri bution P529,885.59 = 30% Total of all ordina ry claims approved and unapproved P1,746,222.33 Ha d Appellee not assigned i ts credi t in 1948, the insol vent CALI would ha ve realized from the sale of the plane (whi ch was a tta ched by Appellee) P330,000 representing the fai r ma rket value of the plane at the time of the a tta chment. Therefore, if this amount of P330,000 i s added to the distributable amount of P529,- 885.59, the sha re of ea ch of the ordina ry credi tos would certai nl y amount to approxima tel y 1 1/2 times the di vidend ea ch of them has recei ved; chan robles vi rtualawlibra ryi n other words , each ordina ry credi tors would recei ved not 30% but approxima tel y 45% of his claim, and Appellee would recover approxima tel y onl y 45% and not 70% of its credi t. And even i f the sale of CALIs plane would not ha ve obtained the sum of P330,000.00, the proceeds thereof that might be diminished though a ffecting, no doubt, the cal cula ted di vi dend of ea ch of the ordina ry credi tors , esti mated a t 45% by reducing i t proporti ona tel y, such di minution would a t the same time increase the di fference between the di vi dend paid CALIs ordina ry creditors in November, 1956, and the di vidend of 70% secured by Defendant Shell in 1948. III and IV. Tha t Appellee Shell is not liable for exemplary da mages in this case and tha t Plaintiff-Appellant has no cause of action a gainst Defendant-Appellee, for he is not the real pa rty i n interes t, a re ma tters full y dis cussed in Our decision and We find no sensible reason for dis turbing the conclusions We rea ched therein. V. As to the fifth question raised by counsel for Appellee in the course of his oral a rgument at the hea ring in the Ci ty of Ba guio of his motion, i .e., tha t Plaintiffs ri ght of a ction was based a nd prosecuted i n the lower court under the provisions of the Insol vency Law and he is , therefore, s topped from pursuing on appeal another theory under whi ch he mi ght be entitled to dama ges in consonance with the provisions of the new Ci vil Code, We ma y invoke the decision in the case of Di maliwat vs . Asunci on, 59 Phil ., 396, 401. In tha t decision We said the following:chanrobles vi rtuallawlibra ry Vi cente Dimaliwa t contends tha t Esperanza Di maliwat has no ri ght to claim the ownership of the property in ques tion to the exclusion of the children of the thi rd ma rria ge, under the foregoing provisions of the Ci vil Code, beca use the case was not tried

on tha t theory i n the l ower court. We find no meri t i n tha t contention. The decision ci ted a re not in point. Arti cles 968 and 969 of the Ci vil Code a re rules of subs tanti ve la w, and i f they a re appli cable to the fa cts of this case they mus t be gi ven effect. The same thing ca n be said in the case a t ba r. Arti cles 19, 21, 2229, 2232, 2234, 2142 a nd 2143 of the new Ci vil Code a re rules of substanti ve law, and if they a re applicable to the fa cts of this case, whi ch We hold they do, they mus t be ma de opera ti ve and gi ven effect in this li tiga tion. xxx xxx x xx

insol vents property depri ving the la tter and the Assignee tha t was late r a ppointed, of the opportuni ty to recover said plane. These acts of Defendant Shell come squa rel y wi thin the sanction pres cribed by Congress by similar a cts a nd no reflection can be reasonabl y cast on Us i f in the measure of the exempla ry damages tha t we re to be imposed upon Defendant-Appellee, We were influenced by the provisions of Section 37 of the Insol vency La w. In this connection i t is to be noted tha t, a ccording to the Ci vil Code, exempla ry or correcti ve dama ges a re imposed by wa y of exa mple or correcti on for the public good, i n addi tion of the moral , tempera te, liquida ted or compensa tory dama ges Art. 2229, and tha t the amount of the exemplary da mages need not be proved (Art. 2234), for i t is left to the sound dis cretion of the Court. Notwithsta nding the foregoing, a majori ty of this Court was of the belief tha t the value of CALIs plane C-54, a t the ti me when Defendants credi t was assigned to i ts sister corpora tion in the Uni ted Sta tes , might resul t qui te high, and tha t exemplary da mages should not be left to specula tion but properl y determi ned by a certain a nd fi xed a mount. So they voted for the reconsideration of the decision wi th regard to the amount of exempla ry da mages whi ch this Court fi xed a t P25,000.00. Because of this a tti tude of the Court, the disposi ti ve pa rt of our decision rendered i n this case is hereby a mended to read as follows :chanrobles vi rtuallawlibra ry Wherefore, a nd on the s trength of the foregoing considera tions, the decision appealed from is reversed and Defendant-Appellee, Shell Company of the Philippine Islands Ltd., is hereby sentenced to pa y Plaintiff-Appellant, as Assignee of the insol vent CALI, compensatory da mages in a sum equal to the value of the insol vents airplane C-54 a t the time Defendants credit a gainst CALI was assigned to its sister corpora tion in the Uni ted Sta tes - whi ch shall be determined in the corresponding incident in the lower Court a fter this decision becomes final - a nd exempla ry da mages in the sum of P25,000. Cos ts a re ta xed agains t Defendant-Appellee. It is SO ORDERED. Pars, C.J., Padilla, Concepcion and Endencia, JJ., concur.

It ma ybe seen from the foregoing tha t the above mentioned grounds on which the moti on for reconsiderati on of the Defendant Shell s tand, a re not well taken. However, and despi te this fi nding, We insist to del ve in the ques tion of whether the exempla ry da mages imposed in this Court upon Defendant Appellee, whi ch the la tters counsel contends to be inequitable and unfai r, ma y be modi fied. It will be remembered tha t this case was looked into from the point of view of the provisions of Section 37 of the Insol vency Law, whi ch reads as follows :chanroblesvi rtuallawlibra ry SEC. 37. IF ANY PERSON, before the assignment is made, ha ving noti ce of the commencement of the proceedings in insol vency, or ha ving reason to believe tha t insol vency proceedings a re about to be commenced, embezzles or disposses of any of the money, goods, cha ttels, or effects of the i nsol vent, he is cha rgeable therewi th, and liable to a n a ction by the assignee for double the value of the property sought to be embezzled or disposed of, to be recei ved for the benefit of the insol vent es ta te. The wri ter of the decision was then and s till is of the opinion tha t the provisions of this section were applicable to the case, and a ccordingl y, tha t Defendant Shell was liable in this a ction i nsti tuted by the Assignee for double the value of the property disposed of, to be recei ved for the benefi t of the Insol vent es tate. However, some of the members of this Court, for the reasons al ready s ta ted in the decision, entertained s ome doubt as to the appli cability of said Secti on 37, and yielding to thei r objections the wri ter of the decision turned his eyes to the provisions of the new Ci vil Code, inasmuch as the same resul t could be a chieved. In the case at ba r, i t cannot be denied that:chanrobles vi rtuallawlibra ry Defendant ta king advanta ge of his knowledge tha t insol vency proceedi ngs were to be ins ti tuted by CALI i f the creditors did not come to an unders tanding as to the manner of dis tribution of the insol vent assets a mong them, and believing as mos t probable tha t they would not arri ve at such unders tanding, as i t was really the case - s chemed and effected the trans fer of its credi t to i ts sister corpora tion in the Uni ted Sta tes where CALIs plane C54 was and by this s wift a nd unsuspected operati on effica ciousl y disposed of said

December 6, 2006 SECOND DIVISION x -- --- -- --- -- --- -- --- --- -- --- -- --- -- --- --- -- --- -- --x ERNESTO RAMAS UYPITCHING and RAMAS UYPITCHING SONS, INC., Petitioners, Present: CORONA, J.: D E CISIO N G.R. No. 146322

PUNO, J., Chairperson, SANDOVALGUTIERREZ, - vers us CORONA, AZCUNA and GARCIA, JJ.

Honeste vivere, non alterum laedere et jus suum cuique tribuere. To li ve vi rtuousl y, not to injure others and to gi ve everyone his due. These supreme norms of jus ti ce a re the underl ying principles of law and order in society. We rea ffi rm them i n this peti tion for review on certiora ri assailing the Jul y 26, 2000 decision24[1] a nd October 18, 2000 resolution of the Court of Appeals (CA) in CA-G.R. CV No. 47571.

In 1982, respondent Ernesto C. Quiamco was approa ched by Juan Da valan,25[2] Josefi no Gabutero a nd Raul Generoso to a mi cabl y settle the ci vil aspect of a cri minal case

24[1] ERNESTO QUIAMCO, Respondent. Promulga ted: 25[2]

Penned by Associate Justice M artin S. Villarama, Jr. and concurred in by Presiding Justice Salome A. M ontoya (retired) and Associate Justice Romeo J. Callejo, Sr. (now a member of the Supreme Court) of the First Division of the Court of Appeals; rollo, pp. 26-36. Juan Dabalan in some parts of the records.

for robbery26[3] filed by Quiamco agains t them. They surrendered to him a red Honda XL100 motorcycle a nd a photocopy of i ts certifi ca te of regis tra tion. Respondent asked for the origi nal certi fi ca te of registra tion but the three a ccused never ca me to see him a gain. Meanwhile, the motorcycle was pa rked in an open spa ce inside respondents business es tablishment, Aves co-AVNE Enterprises, where i t was visible and a ccessible to the publi c.

On lea rning tha t respondent was not in Aves co-AVNE Enterprises, the poli cemen left to look for respondent i n his residence while petitioner Uypitching s ta yed in the es tablishment to take photographs of the motorcycle. Unable to find respondent, the policemen went ba ck to Aves co-AVNE Enterprises and, on peti tioner Uypi tchi ngs ins truction a nd over the clerks objection, took the motorcycle .

It turned out tha t, in October 1981, the motorcycle ha d been sold on ins tallment basis to Gabutero by peti tioner Ramas Uypi tching Sons , Inc., a fa mil y-owned corporati on ma naged by peti tioner Atty. Ernesto Ra mas Uypi tching. To secure i ts pa yment, the motorcycle was mortgaged to peti tioner corpora tion.27[4]

On Februa ry 18, 1991, peti tioner Uypi tching filed a cri minal complaint for qualified theft and/or viola tion of the Anti -Fencing Law29[6] a gainst respondent in the Offi ce of the Ci ty Prosecutor of Dumaguete Ci ty.30[7] Respondent moved for dismissal because the complaint did not cha rge a n offense as he had neither s tolen nor bought the motorcycle. The Offi ce of the Ci ty Prosecutor dismissed the complaint31[8] and denied peti tioner Uypi tchings subsequent motion for reconsidera tion. Respondent filed an a cti on for da mages a gainst peti tioners in the RTC of Duma guete Ci ty, Negros Oriental , Bra nch 37.32[9] He sought to hold the peti tioners liable for the following: (1) unlawful ta king of the motorcycle; (2) utterance of a defama tory rema rk (tha t respondent was a thief) and (3) precipi tate filing of a baseless and mali cious complaint. These a cts humiliated and emba rrassed the respondent a nd injured his reputa tion and integri ty.

When Gabutero could no longer pa y the ins tallments, Da valan assumed the obliga tion and continued the pa yments . In September 1982, however, Da valan s topped pa yi ng the remaining installments and told peti tioner corpora tions collector, Wilfredo Verao, tha t the motorcycle had allegedl y been taken by respondents men. Nine yea rs later, on Janua ry 26, 1991, petitioner Uypi tching, a ccompa nied by policemen,28[5] went to Aves co-AVNE Enterprises to recover the motorcycle. The leader of the police tea m, P/Lt. Arturo Vendiola, talked to the clerk in cha rge and asked for respondent. While P/Lt. Vendiola and the clerk were talking, petiti oner Uypi tching pa ced ba ck and forth inside the es tablishment utteri ng Quiamco is a thief of a motorcycle.

On Jul y 30, 1994, the trial court rendered a decision33[10] fi nding tha t peti tioner Uypi tching was moti va ted wi th mali ce and ill will when he called respondent a 29[6] Presidential Decree No. 1612. Docketed as I.S. No. 91-74. Resolution dated June 14, 1991; rollo, pp. 147-151. Presided by Judge Temistocles B. Diez. The case was docketed as Civil Case No.

26[3]

The case was filed in the Regional Trial Court (RTC) of Negros Oriental, Dumaguete City, Branch 31 where it was docketed as Criminal Case No. 5630. On M arch 3, 1986, the trial court (through Judge Rolando R. Villaraza) convicted Davalan and Generoso and acquitted Gabutero. The certificate of registration issued to Gabutero bore the notation M ortgaged. These policemen were P/Lt. Arturo Vendiola, Pfc. Damiola, Capt. Tayco, Pat. Romeo Tan and Pat. Catigtig.

30[7] 31[8] 32[9] 10492. 33[10]

27[4] 28[5]

Penned by Judge Temistocles B. Diez.

thief, took the motorcycle in an abusi ve manner and filed a baseless complaint for qualified theft and/or viola tion of the Anti -Fencing La w. Petiti oners acts were found to be contra ry to Arti cles 1934[11] and 2035[12] of the Ci vil Code. Hence, the trial court held peti tioners liable to respondent for P500,000 moral damages , P200,000 exemplary da mages and P50,000 a ttorneys fees plus cos ts .

CORRECTNESS OF THE FINDINGS OF THE RTC AND CA

Peti tioners appealed the RTC decision but the CA a ffi rmed the trial courts decision with modifi ca tion, reducing the a wa rd of moral and exempla ry da mages to P300,000 a nd P100,000, respecti vel y.36[13] Peti tioners sought reconsidera tion but i t was denied. Thus , this peti tion. As they never ques tioned the findings of the RTC and CA tha t malice a nd ill will a ttended not onl y the public i mputa tion of a cri me to respondent37[14] but also the taking of the motorcycle, petitioners were deemed to ha ve a ccepted the correctness of such findings . This alone was suffi cient to hold peti tioners liable for dama ges to respondent.

In thei r peti tion and memorandum, petitioners submi t tha t the sole (allegedl y) issue to be resol ved here is whether the filing of a complaint for qualified theft and/or vi olation of the Anti-Fencing Law in the Offi ce of the Ci ty Prosecutor warra nted the a wa rd of moral da mages , exemplary damages , a ttorneys fees and costs in fa vor of respondent.

Peti tioners sugges tion is misleading. They were held liable for da mages not onl y for ins ti tuting a groundless complaint agains t respondent but also for maki ng a slanderous rema rk and for ta king the motorcycle from respondents establishment in an a busi ve ma nner.

Nevertheless, to address peti tioners concern, we also find that the trial a nd appella te courts correctl y ruled that the filing of the complaint was tainted wi th malice and bad faith. Peti tioners themsel ves in fact des cribed thei r a ction as a precipi ta te a ct.38[15] Peti tioners were bent on portra yi ng respondent as a thief. In this connection, we quote with approval the following findings of the RTC, as adopted by the CA:

34[11]

Art. 19. Every person must in the exercise of his rights and in the performance of his duties, act with justice, give every one his due, and observe honesty and good faith. Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same. 37[14] The modification was based on the principle that moral and exemplary damages are not imposed to enrich a party.

35[12]

x x x There was malice or ill-will [in filing the complaint before the Ci ty Prosecutors Offi ce+ because Atty. Ernes to Ramas Uypitching knew or ought to ha ve known as he is a lawyer, tha t there was no probable cause a t all for filing a cri minal complaint for qualified theft and fencing a cti vi ty agains t [respondent]. Atty. Uypi tching had no In fact, malice is presumed from a defamatory imputation. Petition, p. 5; rollo, p.17.

36[13]

38[15]

personal knowledge tha t [respondent] stole the motorcycle in question. He was merel y told by his bill collector ([i.e.] the bill collector of Ra mas Uypi tching Sons, Inc.)[,] Wilfredo Verao[,] that Juan Da balan will [no longer] pa y the remaining ins tallment(s) for the motorcycle because the motorcycle was ta ken by the men of [respondent]. It mus t be noted tha t the term used by Wil fredo Verao i n informing Atty. Ernesto Ramas Uypi tching of the refusal of Juan Dabalan to pa y for the remaining ins tallment was *+taken*+, not *+unlawfull y taken*+ or s tolen. Yet, despite the double hea rsa y, Atty. Ernesto Ramas Uypi tchi ng not onl y executed the [complaintaffida vi t+ wherein he named *respondent+ as the suspect of the s tolen motorcycle but also cha rged *respondent+ of qualified theft and fenci ng a cti vi ty before the Ci ty *Prosecutors+ Offi ce of Duma guete. The absence of probable cause necessaril y signifies the presence of malice. Wha t is deplora ble in all these is that Juan Dabalan, the owner of the motorcycle, did not a ccuse [respondent] or the latters men of stealing the motorcycle*,+ much less bother*ed+ to file a case for qualified theft before the authori ties. Tha t Atty. Uypi tchings a ct in cha rging [respondent] wi th qualified theft and fencing a cti vi ty is tainted wi th mali ce is also shown by his ans wer to the ques tion of Cupid Gonzaga39[16] [during one of thei r conversa tions ] - why s hould you s till file a complaint? You ha ve al ready recovered the motorcycle*:+ Aron motagam ang ka watan ug motor. (To tea ch a lesson to the thief of motorcycle.)40[17]

PETITIONERS ABUSED THEIR RIGHT OF RECOVERY AS MORTGAGEE(S)

Peti tioners claim tha t they should not be held liable for peti tioner corpora tions exercise of its right as seller-mortgagee to recover the mortgaged vehi cle prelimina ry to the enforcement of i ts ri ght to foreclose on the mortga ge in case of defaul t. They a re clea rl y mis taken.

True, a mortga gee ma y take s teps to recover the mortga ged property to enable i t to enforce or protect i ts foreclosure ri ght thereon. There is , however, a well -defined procedure for the recovery of possession of mortgaged property: i f a mortgagee is unable to obtain possession of a mortga ged property for i ts sale on foreclosure, he must bring a civil action either to recover such possession as a preliminary step to the sale, or to obtain judicial foreclosure.41[18]

Moreover, the existence of malice, ill will or bad fai th is a factual ma tter. As a rule, findings of fa ct of the trial court, when a ffi rmed by the a ppellate court, a re conclusi ve on this Court. We see no compelling reason to reverse the findings of the RTC and the CA.

Peti tioner corpora tion failed to bri ng the proper ci vil a ction necessary to acqui re legal possession of the motorcycle. Instead, peti tioner Uypi tching des cended on respondents es tablishment wi th his poli cemen and ordered the seizu re of the motorcycle wi thout a sea rch wa rra nt or court order. Worse, in the course of the illegal sei zure of the motorcycle, peti tioner Uypi tchi ng even mouthed a slanderous s ta tement.

No doubt, peti tioner corpora tion, a cting through its co-peti tioner Uypi tching, bla tantl y disrega rded the la wful procedure for the enforcement of i ts right, to the prejudi ce of res pondent. Petitioners a cts viola ted the law as well as publi c morals , and trans gressed the proper norms of human relations . 39[16] 40[17] One of respondents witnesses. 41[18] CA Decision, supra note 1. Filinvest Credit Corporation v. Court of Appeals, G.R. No. 115902, 27 September 1995, 248 SCRA 549.

The basic pri nciple of human relations, embodied in Arti cle 19 of the Ci vil Code, provides :

Art. 19. Every person must in the exercise of his ri ghts and in the performance of his duties , a ct wi th jus ti ce, gi ve every one his due, and observe hones ty and good faith.

In this case, the manner by whi ch the motorcycle was taken a t peti tioners ins tance was not onl y a ttended by bad faith but also contra ry to the procedure laid down by law. Considered in conjunction with the defama tory s ta tement, peti tioners exercise of the right to recover the mortgaged vehi cle was utterl y prejudi cial and i njurious to respondent. On the other hand, the precipi tate a ct of filing an unfounded complaint could not in any wa y be considered to be in a ccordance wi th the purpose for which the ri ght to prosecute a crime was es tablished. Thus , the totali ty of peti tioners a ctions showed a cal culated design to emba rrass, humiliate and publi cl y ridi cule respondent. Peti tioners a cted in an excessivel y harsh fashion to the prejudi ce of respondent. Contra ry to law, peti tioners willfull y caused dama ge to respondent. Hence, they should indemnify hi m.45[22]

Arti cle 19, also known as the princi ple of abuse of ri ght, pres cribes tha t a person should not use his ri ght unjus tl y or contra ry to honesty and good faith, otherwise he opens hi mself to liability.42[19] It seeks to precl ude the use of, or the tendency to use, a legal ri ght (or duty) as a means to unjust ends.

WHEREFORE, the peti tion is hereby DENIED. The Jul y 26, 2000 decision a nd October 18, 2000 resolution of the Court of Appeals in CA-G.R. CV No. 47571 a re AFFIRMED.

Triple cos ts a gainst petitioners , considering tha t peti tioner Ernesto Ramas Uypi tching is a lawyer and an officer of the court, for his improper beha vior. There is an a buse of ri ght when i t is exercised solel y to prejudice or i njure another.43[20] The exercise of a ri ght must be in a ccordance wi th the purpose for whi ch i t was es tablished a nd must not be excessi ve or undul y ha rsh; there mus t be no intention to ha rm another.44[21] Otherwise, liability for dama ges to the injured pa rty will atta ch .

SO ORDERED.

42[19]

Hongkong Shanghai Banking Corporation, Ltd. v. Catalan, G.R. Nos. 15959091, 18 October 2004, 440 SCRA 498. Id. Id. 45[22] CIVIL CODE, Art. 20.

43[20] 44[21]