SECOND DIVISION

G.R. No. 124862. December 22, 1998

FE D. QUITA, petitioner, vs. COURT OF APPEALS and BLANDINA

DANDAN,* respondents.
DECISION
BELLOSILLO, J .:

FE D. QUITA and Arturo T. Padlan, both Filipinos, were married in the Philippines on 18
May 1941. They were not however blessed with children. Somewhere along the way their
relationship soured.Eventually Fe sued Arturo for divorce in San Francisco, California,
U.S.A. She submitted in the divorce proceedings a private writing dated 19 July 1950 evidencing
their agreement to live separately from each other and a settlement of their conjugal
properties. On 23 July 1954 she obtained a final judgment of divorce. Three (3) weeks thereafter
she married a certain Felix Tupaz in the same locality but their relationship also ended in a
divorce. Still in the U.S.A., she married for the third time, to a certain Wernimont.
On 16 April 1972 Arturo died. He left no will. On 31 August 1972 Lino Javier Inciong filed
a petition with the Regional Trial Court of Quezon City for issuance of letters of administration
concerning the estate of Arturo in favor of the Philippine Trust Company. Respondent Blandina
Dandan (also referred to as Blandina Padlan), claiming to be the surviving spouse of Arturo
Padlan, and Claro, Alexis, Ricardo, Emmanuel, Zenaida and Yolanda, all surnamed Padlan,
named in the petition as surviving children of Arturo Padlan, opposed the petition and prayed for
the appointment instead of Atty. Leonardo Cabasal, which was resolved in favor of the
latter. Upon motion of the oppositors themselves, Atty. Cabasal was later replaced by Higino
Castillon. On 30 April 1973 the oppositors (Blandina and the Padlan children) submitted certified
photocopies of the 19 July 1950 private writing and the final judgment of divorce between
petitioner and Arturo. Later Ruperto T. Padlan, claiming to be the sole surviving brother of the
deceased Arturo, intervened.
On 7 October 1987 petitioner moved for the immediate declaration of heirs of the decedent
and the distribution of his estate. At the scheduled hearing on 23 October 1987, private
respondent as well as the six (6) Padlan children and Ruperto failed to appear despite due
notice. On the same day, the trial court required the submission of the records of birth of the
Padlan children within ten (10) days from receipt thereof, after which, with or without the
documents, the issue on the declaration of heirs would be considered submitted for
resolution. The prescribed period lapsed without the required documents being submitted.

The trial court invoking Tenchavez v. Escao[1] which held that "a foreign divorce between
Filipino citizens sought and decreed after the effectivity of the present Civil Code (Rep. Act 386)
was not entitled to recognition as valid in this jurisdiction," [2] disregarded the divorce between
petitioner and Arturo. Consequently, it expressed the view that their marriage subsisted until the
death of Arturo in 1972.Neither did it consider valid their extrajudicial settlement of conjugal
properties due to lack of judicial approval. [3] On the other hand, it opined that there was no
showing that marriage existed between private respondent and Arturo, much less was it shown
that the alleged Padlan children had been acknowledged by the deceased as his children with
her. As regards Ruperto, it found that he was a brother of Arturo.On 27 November 1987 [4] only
petitioner and Ruperto were declared the intestate heirs of Arturo. Accordingly, equal
adjudication of the net hereditary estate was ordered in favor of the two intestate heirs.[5]
On motion for reconsideration, Blandina and the Padlan children were allowed to present
proofs that the recognition of the children by the deceased as his legitimate children, except
Alexis who was recognized as his illegitimate child, had been made in their respective records of
birth. Thus on 15 February 1988[6] partial reconsideration was granted declaring the Padlan
children, with the exception of Alexis, entitled to one-half of the estate to the exclusion of
Ruperto Padlan, and petitioner to the other half. [7] Private respondent was not declared an
heir. Although it was stated in the aforementioned records of birth that she and Arturo were
married on 22 April 1947, their marriage was clearly void since it was celebrated during the
existence of his previous marriage to petitioner.
In their appeal to the Court of Appeals, Blandina and her children assigned as one of the
errors allegedly committed by the trial court the circumstance that the case was decided without
a hearing, in violation of Sec. 1, Rule 90, of the Rules of Court, which provides that if there is a
controversy before the court as to who are the lawful heirs of the deceased person or as to the
distributive shares to which each person is entitled under the law, the controversy shall be heard
and decided as in ordinary cases.
Respondent appellate court found this ground alone sufficient to sustain the appeal; hence,
on 11 September 1995 it declared null and void the 27 November 1987 decision and 15 February
1988 order of the trial court, and directed the remand of the case to the trial court for further
proceedings.[8] On 18 April 1996 it denied reconsideration.[9]
Should this case be remanded to the lower court for further proceedings? Petitioner insists
that there is no need because, first, no legal or factual issue obtains for resolution either as to the
heirship of the Padlan children or as to their respective shares in the intestate estate of the
decedent; and, second, the issue as to who between petitioner and private respondent is the
proper heir of the decedent is one of law which can be resolved in the present petition based on
established facts and admissions of the parties.

We cannot sustain petitioner. The provision relied upon by respondent court is clear: If there
is a controversy before the court as to who are the lawful heirs of the deceased person or as to
the distributive shares to which each person is entitled under the law, the controversy shall be
heard and decided as in ordinary cases.
We agree with petitioner that no dispute exists either as to the right of the six (6) Padlan
children to inherit from the decedent because there are proofs that they have been duly
acknowledged by him and petitioner herself even recognizes them as heirs of Arturo Padlan;
[10]
nor as to their respective hereditary shares. But controversy remains as to who is the legitimate
surviving spouse of Arturo. The trial court, after the parties other than petitioner failed to appear
during the scheduled hearing on 23 October 1987 of the motion for immediate declaration of
heirs and distribution of estate, simply issued an order requiring the submission of the records of
birth of the Padlan children within ten (10) days from receipt thereof, after which, with or
without the documents, the issue on declaration of heirs would be deemed submitted for
resolution.
We note that in her comment to petitioner's motion private respondent raised, among others,
the issue as to whether petitioner was still entitled to inherit from the decedent considering that
she had secured a divorce in the U.S.A. and in fact had twice remarried. She also invoked the
above quoted procedural rule.[11] To this, petitioner replied that Arturo was a Filipino and as such
remained legally married to her in spite of the divorce they obtained. [12] Reading between the
lines, the implication is that petitioner was no longer a Filipino citizen at the time of her divorce
from Arturo. This should have prompted the trial court to conduct a hearing to establish her
citizenship. The purpose of a hearing is to ascertain the truth of the matters in issue with the aid
of documentary and testimonial evidence as well as the arguments of the parties either
supporting or opposing the evidence. Instead, the lower court perfunctorily settled her claim in
her favor by merely applying the ruling in Tenchavez v. Escao.
Then in private respondent's motion to set aside and/or reconsider the lower court's decision
she stressed that the citizenship of petitioner was relevant in the light of the ruling in Van Dorn v.
Romillo Jr.[13] that aliens may obtain divorces abroad, which may be recognized in the
Philippines, provided they are valid according to their national law. She prayed therefore that
the case be set for hearing.[14]Petitioner opposed the motion but failed to squarely address the
issue on her citizenship.[15] The trial court did not grant private respondent's prayer for a hearing
but proceeded to resolve her motion with the finding that both petitioner and Arturo were
"Filipino citizens and were married in the Philippines."[16] It maintained that their divorce
obtained in 1954 in San Francisco, California, U.S.A., was not valid in Philippine
jurisdiction. We deduce that the finding on their citizenship pertained solely to the time
of their marriage as the trial court was not supplied with a basis to determine petitioner's
citizenship at the time of their divorce. The doubt persisted as to whether she was still a Filipino
citizen when their divorce was decreed. The trial court must have overlooked the materiality of

this aspect. Once proved that she was no longer a Filipino citizen at the time of their
divorce, Van Dorn would become applicable and petitioner could very well lose her right to
inherit from Arturo.
Respondent again raised in her appeal the issue on petitioner's citizenship;[17] it did not merit
enlightenment however from petitioner.[18] In the present proceeding, petitioner's citizenship is
brought anew to the fore by private respondent. She even furnishes the Court with the transcript
of stenographic notes taken on 5 May 1995 during the hearing for the reconstitution of the
original of a certain transfer certificate title as well as the issuance of new owner's duplicate copy
thereof before another trial court. When asked whether she was an American citizen petitioner
answered that she was since 1954. [19]Significantly, the decree of divorce of petitioner and Arturo
was obtained in the same year. Petitioner however did not bother to file a reply memorandum to
erase the uncertainty about her citizenship at the time of their divorce, a factual issue requiring
hearings to be conducted by the trial court. Consequently, respondent appellate court did not err
in ordering the case returned to the trial court for further proceedings.
We emphasize however that the question to be determined by the trial court should be
limited only to the right of petitioner to inherit from Arturo as his surviving spouse. Private
respondent's claim to heirship was already resolved by the trial court. She and Arturo were
married on 22 April 1947 while the prior marriage of petitioner and Arturo was subsisting
thereby resulting in a bigamous marriage considered void from the beginning under Arts. 80 and
83 of the Civil Code. Consequently, she is not a surviving spouse that can inherit from him as
this status presupposes a legitimate relationship.[20]
As regards the motion of private respondent for petitioner and her counsel to be declared in
contempt of court and that the present petition be dismissed for forum shopping, [21] the same lacks
merit. For forum shopping to exist the actions must involve the same transactions and same
essential facts and circumstances. There must also be identical causes of action, subject matter
and issue.[22] The present petition deals with declaration of heirship while the subsequent petitions
filed before the three (3) trial courts concern the issuance of new owner's duplicate copies of
titles of certain properties belonging to the estate of Arturo. Obviously, there is no reason to
declare the existence of forum shopping.
WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals
ordering the remand of the case to the court of origin for further proceedings and declaring null
and void its decision holding petitioner Fe D. Quita and Ruperto T. Padlan as intestate heirs
is AFFIRMED. The order of the appellate court modifying its previous decision by granting onehalf (1/2) of the net hereditary estate to the Padlan children, namely, Claro, Ricardo, Emmanuel,
Zenaida and Yolanda, with the exception of Alexis, all surnamed Padlan, instead of Arturo's
brother Ruperto Padlan, is likewise AFFIRMED.The Court however emphasizes that the

reception of evidence by the trial court should be limited to the hereditary rights of petitioner as
the surviving spouse of Arturo Padlan.
The motion to declare petitioner and her counsel in contempt of court and to dismiss the
present petition for forum shopping is DENIED.
SO ORDERED.
Puno, Mendoza, and Martinez, JJ., concur.

Quita vs Court of Appeals December 22, 1998 (Digested)

Fact of the Case:
Fe D. Quita, the petitioner, and Arturo T. Padlan, both Filipinos, were married in the
Philippines on May 18, 1941. They got divorce in San Francisco on July 23, 1954.
Both of them remarried another person. Arturo remarried Bladina Dandan, the
respondent herewith. They were blessed with six children. On April 16, 1972, when
Arturo died, the trial court was set to declared as to who will be the intestate heirs.
The trial court invoking Tenchavez vs Escano case held that the divorce acquired by
the petitioner is not recognized in our country. Private respondent stressed that the
citizenship of petitioner was relevant in the light of the ruling in Van Dorn v.
Rommillo Jr that aliens who obtain divorce abroad are recognized in the Philippnes
provided they are valid according to their national law. The petitioner herself
answered that she was an American citizen since 1954. Through the hearing she
also stated that Arturo was a Filipino at the time she obtained the divorce. Implying
the she was no longer a Filipino citizen. The Trial court disregarded the respondents
statement. The net hereditary estate was ordered in favor the Fe D. Quita and
Ruperto, the brother of Arturo. Blandina and the Padlan children moved for
reconsideration. On February 15, 1988 partial reconsideration was granted declaring
the Padlan children, with the exception of Alexis, entitled to one- half of the estate
to the exclusion of Ruperto Padlan, and the other half to Fe Quita. Private
respondent was not declared an heir for her marriage to Arturo was declared void
since it was celebrated during the existence of his previous marriage to petitioner.
Blandina and her children appeal to the Court of Appeals thatthe case was decided
without a hearing in violation of the Rules of Court.
Issue: (1) Whether or not Blandinas marriage to Arturo void ab initio. (2) Whether or
not Fe D. Quita be declared the primary beneficiary as surviving spouse of Arturo.
Held: No. The marriage of Blandina and Arturo is not void. The citizenship of Fe D.
Quita at the time of their divorce is relevant to this case. The divorce is valid here
since she was already an alien at the time she obtained divorce, and such is valid in

their countrys national law. Thus, Fe D. Quita is no longer recognized as a wife of

Arturo. She cannot be the primary beneficiary or will be recognized as surviving
spouse of Arturo.

GERBERT R. CORPUZ,
Petitioner,

G.R. No. 186571

Present:

CARPIO MORALES, J., Chairperson,

BRION,
BERSAMIN,
*
ABAD, and
VILLARAMA, JR., JJ.

versus -

DAISYLYN TIROL STO.

TOMAS and The SOLICITOR
GENERAL,
Respondents. -- -

Promulgated:
August 11, 2010

x--------------------------------------------------------------------------------------------------------------x

DECISION
BRION, J.:
Before the Court is a direct appeal from the decision [1] of the Regional Trial
Court (RTC) of Laoag City, Branch 11, elevated via a petition for review
on certiorari[2]under Rule 45 of the Rules of Court (present petition).
Petitioner Gerbert R. Corpuz was a former Filipino citizen who acquired
Canadian citizenship through naturalization on November 29, 2000.[3] On January
18, 2005, Gerbert married respondent Daisylyn T. Sto. Tomas, a Filipina,
in Pasig City.[4] Due to work and other professional commitments, Gerbert left
for Canada soon after the wedding. He returned to the Philippines sometime in
April 2005 to surprise Daisylyn, but was shocked to discover that his wife was
having an affair with another man. Hurt and disappointed, Gerbert returned
to Canada and filed a petition for divorce. The Superior Court of
Justice, Windsor, Ontario, Canada granted Gerberts petition for divorce
onDecember 8, 2005. The divorce decree took effect a month later, on January 8,
2006.[5]

Two years after the divorce, Gerbert has moved on and has found another
Filipina to love. Desirous of marrying his new Filipina fiance in the Philippines,
Gerbert went to the Pasig City Civil Registry Office and registered the Canadian
divorce decree on his and Daisylyns marriage certificate. Despite the registration
of the divorce decree, an official of the National Statistics Office (NSO) informed
Gerbert that the marriage between him and Daisylyn still subsists under Philippine
law; to be enforceable, the foreign divorce decree must first be judicially
recognized by a competent Philippine court, pursuant to NSO Circular No. 4, series
of 1982.[6]
Accordingly, Gerbert filed a petition for judicial recognition of foreign
divorce and/or declaration of marriage as dissolved (petition) with the
RTC. Although summoned, Daisylyn did not file any responsive pleading but
submitted instead a notarized letter/manifestation to the trial court. She offered no
opposition to Gerberts petition and, in fact, alleged her desire to file a similar case
herself but was prevented by financial and personal circumstances. She, thus,
requested that she be considered as a party-in-interest with a similar prayer to
Gerberts.
In its October 30, 2008 decision,[7] the RTC denied Gerberts petition. The
RTC concluded that Gerbert was not the proper party to institute the action for
judicial recognition of the foreign divorce decree as he is a naturalized Canadian
citizen. It ruled that only the Filipino spouse can avail of the remedy, under the
second paragraph of Article 26 of the Family Code, [8] in order for him or her to be
able to remarry under Philippine law.[9] Article 26 of the Family Code reads:
Art. 26. All marriages solemnized outside the Philippines, in
accordance with the laws in force in the country where they were
solemnized, and valid there as such, shall also be valid in this country,
except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and
38.
Where a marriage between a Filipino citizen and a foreigner is
validly celebrated and a divorce is thereafter validly obtained
abroad by the alien spouse capacitating him or her to remarry, the

Filipino spouse shall likewise have capacity to remarry under

Philippine law.

This conclusion, the RTC stated, is consistent with the legislative intent behind the
enactment of the second paragraph of Article 26 of the Family Code, as determined
by the Court in Republic v. Orbecido III;[10] the provision was enacted to avoid the
absurd situation where the Filipino spouse remains married to the alien spouse
who, after obtaining a divorce, is no longer married to the Filipino spouse.[11]
THE PETITION
From the RTCs ruling,[12] Gerbert filed the present petition.[13]
Gerbert asserts that his petition before the RTC is essentially for declaratory
relief, similar to that filed in Orbecido; he, thus, similarly asks for a determination
of his rights under the second paragraph of Article 26 of the Family Code. Taking
into account the rationale behind the second paragraph of Article 26 of the Family
Code, he contends that the provision applies as well to the benefit of the alien
spouse. He claims that the RTC ruling unduly stretched the doctrine
in Orbecido by limiting the standing to file the petition only to the Filipino spouse
an interpretation he claims to be contrary to the essence of the second paragraph of
Article 26 of the Family Code. He considers himself as a proper party, vested with
sufficient legal interest, to institute the case, as there is a possibility that he might
be prosecuted for bigamy if he marries his Filipina fiance in the Philippines since
two marriage certificates, involving him, would be on file with the Civil Registry
Office. The Office of the Solicitor General and Daisylyn, in their respective
Comments,[14] both support Gerberts position.
Essentially, the petition raises the issue of whether the second paragraph of
Article 26 of the Family Code extends to aliens the right to petition a court of
this jurisdiction for the recognition of a foreign divorce decree.
THE COURTS RULING
The alien spouse can claim no right under
the second paragraph of Article 26 of the
Family Code as the substantive right it

establishes is in favor of the Filipino

spouse
The resolution of the issue requires a review of the legislative history and intent
behind the second paragraph of Article 26 of the Family Code.
The Family Code recognizes only two types of defective marriages void [15] and
voidable[16] marriages. In both cases, the basis for the judicial declaration of
absolute nullity or annulment of the marriage exists before or at the time of the
marriage. Divorce, on the other hand, contemplates the dissolution of the lawful
union for cause arising after the marriage.[17] Our family laws do not recognize
absolute divorce between Filipino citizens.[18]
Recognizing the reality that divorce is a possibility in marriages between a
Filipino and an alien, President Corazon C. Aquino, in the exercise of her
legislative powers under the Freedom Constitution, [19] enacted Executive Order No.
(EO) 227, amending Article 26 of the Family Code to its present wording, as
follows:
Art. 26. All marriages solemnized outside the Philippines, in
accordance with the laws in force in the country where they were
solemnized, and valid there as such, shall also be valid in this country,
except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and
38.
Where a marriage between a Filipino citizen and a foreigner is
validly celebrated and a divorce is thereafter validly obtained
abroad by the alien spouse capacitating him or her to remarry, the
Filipino spouse shall likewise have capacity to remarry under
Philippine law.

Through the second paragraph of Article 26 of the Family Code, EO 227

effectively incorporated into the law this Courts holding in Van Dorn v. Romillo,
Jr.[20] and Pilapil v. Ibay-Somera.[21] In both cases, the Court refused to
acknowledge the alien spouses assertion of marital rights after a foreign courts
divorce decree between the alien and the Filipino. The Court, thus, recognized that
the foreign divorce had already severed the marital bond between the spouses. The
Court reasoned in Van Dorn v. Romillo that:

To maintain x x x that, under our laws, [the Filipino spouse] has to

be considered still married to [the alien spouse] and still subject to a
wife's obligations x x x cannot be just. [The Filipino spouse] should
not be obliged to live together with, observe respect and fidelity, and
render support to [the alien spouse]. The latter should not continue to be
one of her heirs with possible rights to conjugal property. She should
not be discriminated against in her own country if the ends of justice
are to be served.[22]

As the RTC correctly stated, the provision was included in the law to avoid
the absurd situation where the Filipino spouse remains married to the alien spouse
who, after obtaining a divorce, is no longer married to the Filipino spouse. [23] The
legislative intent is for the benefit of the Filipino spouse, by clarifying his or her
marital status, settling the doubts created by the divorce decree. Essentially, the
second paragraph of Article 26 of the Family Code provided the Filipino
spouse a substantive right to have his or her marriage to the alien spouse
considered as dissolved, capacitating him or her to remarry.[24] Without the
second paragraph of Article 26 of the Family Code, the judicial recognition of the
foreign decree of divorce, whether in a proceeding instituted precisely for that
purpose or as a related issue in another proceeding, would be of no significance to
the Filipino spouse since our laws do not recognize divorce as a mode of severing
the marital bond;[25] Article 17 of the Civil Code provides that the policy against
absolute divorces cannot be subverted by judgments promulgated in a foreign
country. The inclusion of the second paragraph in Article 26 of the Family Code
provides the direct exception to this rule and serves as basis for recognizing the
dissolution of the marriage between the Filipino spouse and his or her alien spouse.
Additionally, an action based on the second paragraph of Article 26 of the Family
Code is not limited to the recognition of the foreign divorce decree. If the court
finds that the decree capacitated the alien spouse to remarry, the courts can declare
that the Filipino spouse is likewise capacitated to contract another marriage. No
court in this jurisdiction, however, can make a similar declaration for the alien
spouse (other than that already established by the decree), whose status and legal
capacity are generally governed by his national law.[26]

Given the rationale and intent behind the enactment, and the purpose of the
second paragraph of Article 26 of the Family Code, the RTC was correct in
limiting the applicability of the provision for the benefit of the Filipino spouse. In
other words, only the Filipino spouse can invoke the second paragraph of Article
26 of the Family Code; the alien spouse can claim no right under this provision.
The foreign divorce decree is presumptive
evidence of a right that clothes the party
with legal interest to petition for its
recognition in this jurisdiction
We qualify our above conclusion i.e., that the second paragraph of Article 26
of the Family Code bestows no rights in favor of aliens with the complementary
statement that this conclusion is not sufficient basis to dismiss Gerberts petition
before the RTC. In other words, the unavailability of the second paragraph of
Article 26 of the Family Code to aliens does not necessarily strip Gerbert of legal
interest to petition the RTC for the recognition of his foreign divorce decree. The
foreign divorce decree itself, after its authenticity and conformity with the aliens
national law have been duly proven according to our rules of evidence, serves as a
presumptive evidence of right in favor of Gerbert, pursuant to Section 48, Rule 39
of the Rules of Court which provides for the effect of foreign judgments. This
Section states:
SEC. 48. Effect of foreign judgments or final orders.The effect of
a judgment or final order of a tribunal of a foreign country, having
jurisdiction to render the judgment or final order is as follows:
(a)

In case of a judgment or final order upon a specific thing,

the judgment or final order is conclusive upon the title of
the thing; and

(b)

In case of a judgment or final order against a person,

the judgment or final order is presumptive evidence of a
right as between the parties and their successors in
interest by a subsequent title.

In either case, the judgment or final order may be repelled by

evidence of a want of jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact.

To our mind, direct involvement or being the subject of the foreign judgment is
sufficient to clothe a party with the requisite interest to institute an action before
our courts for the recognition of the foreign judgment. In a divorce situation, we
have declared, no less, that the divorce obtained by an alien abroad may be
recognized in the Philippines, provided the divorce is valid according to his or her
national law.[27]
The starting point in any recognition of a foreign divorce judgment is the
acknowledgment that our courts do not take judicial notice of foreign judgments
and laws. Justice Herrera explained that, as a rule, no sovereign is bound to give
effect within its dominion to a judgment rendered by a tribunal of another country.
[28]
This means that the foreign judgment and its authenticity must be proven as
facts under our rules on evidence, together with the aliens applicable national law
to show the effect of the judgment on the alien himself or herself. [29] The
recognition may be made in an action instituted specifically for the purpose or in
another action where a party invokes the foreign decree as an integral aspect of his
claim or defense.
In Gerberts case, since both the foreign divorce decree and the national law
of the alien, recognizing his or her capacity to obtain a divorce, purport to be
official acts of a sovereign authority, Section 24, Rule 132 of the Rules of Court
comes into play. This Section requires proof, either by (1) official publications or
(2) copies attested by the officer having legal custody of the documents. If the
copies of official records are not kept in the Philippines, these must be (a)
accompanied by a certificate issued by the proper diplomatic or consular officer in
the Philippine foreign service stationed in the foreign country in which the record
is kept and (b) authenticated by the seal of his office.
The records show that Gerbert attached to his petition a copy of the divorce
decree, as well as the required certificates proving its authenticity,[30] but failed to
include a copy of the Canadian law on divorce.[31] Under this situation, we can, at
this point, simply dismiss the petition for insufficiency of supporting evidence,

unless we deem it more appropriate to remand the case to the RTC to determine
whether the divorce decree is consistent with the Canadian divorce law.
We deem it more appropriate to take this latter course of action, given the
Article 26 interests that will be served and the Filipina wifes (Daisylyns) obvious
conformity with the petition. A remand, at the same time, will allow other
interested parties to oppose the foreign judgment and overcome a petitioners
presumptive evidence of a right by proving want of jurisdiction, want of notice to a
party, collusion, fraud, or clear mistake of law or fact. Needless to state, every
precaution must be taken to ensure conformity with our laws before a recognition
is made, as the foreign judgment, once recognized, shall have the effect of res
judicata[32] between the parties, as provided in Section 48, Rule 39 of the Rules of
Court.[33]
In fact, more than the principle of comity that is served by the practice of
reciprocal recognition of foreign judgments between nations, the res judicata effect
of the foreign judgments of divorce serves as the deeper basis for extending
judicial recognition and for considering the alien spouse bound by its terms. This
same effect, as discussed above, will not obtain for the Filipino spouse were it not
for the substantive rule that the second paragraph of Article 26 of the Family Code
provides.
Considerations beyond the recognition of
the foreign divorce decree
As a matter of housekeeping concern, we note that the Pasig City Civil
Registry Office has already recorded the divorce decree on Gerbert and
Daisylyns marriage certificate based on the mere presentation of the decree.
[34]
We consider the recording to be legally improper; hence, the need to draw
attention of the bench and the bar to what had been done.
Article 407 of the Civil Code states that [a]cts, events and judicial decrees
concerning the civil status of persons shall be recorded in the civil register. The law
requires the entry in the civil registry of judicial decrees that produce legal
consequences touching upon a persons legal capacity and status, i.e., those
affecting all his personal qualities and relations, more or less permanent in nature,

not ordinarily terminable at his own will, such as his being legitimate or
illegitimate, or his being married or not.[35]
A judgment of divorce is a judicial decree, although a foreign one, affecting
a persons legal capacity and status that must be recorded. In fact, Act No. 3753 or
the Law on Registry of Civil Status specifically requires the registration of divorce
decrees in the civil registry:
Sec. 1. Civil Register. A civil register is established for recording
the civil status of persons, in which shall be entered:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)

births;
deaths;
marriages;
annulments of marriages;
divorces;
legitimations;
adoptions;
acknowledgment of natural children;
naturalization; and
changes of name.
xxxx

Sec. 4. Civil Register Books. The local registrars shall keep and
preserve in their offices the following books, in which they shall,
respectively make the proper entries concerning the civil status of
persons:
(1) Birth and death register;
(2) Marriage register, in which shall be entered not only the
marriages solemnized but also divorces and dissolved
marriages.
(3) Legitimation, acknowledgment, adoption, change of name and
naturalization register.

But while the law requires the entry of the divorce decree in the civil registry, the
law and the submission of the decree by themselves do not ipso facto authorize the
decreesregistration. The law should be read in relation with the requirement of a
judicial recognition of the foreign judgment before it can be given res
judicata effect. In the context of the present case, no judicial order as yet exists
recognizing the foreign divorce decree. Thus, the Pasig City Civil Registry Office
acted totally out of turn and without authority of law when it annotated the
Canadian divorce decree on Gerbert and Daisylyns marriage certificate, on the
strength alone of the foreign decree presented by Gerbert.
Evidently, the Pasig City Civil Registry Office was aware of the requirement
of a court recognition, as it cited NSO Circular No. 4, series of 1982, [36] and
Department of Justice Opinion No. 181, series of 1982 [37] both of which required a
final order from a competent Philippine court before a foreign judgment, dissolving
a marriage, can be registered in the civil registry, but it, nonetheless, allowed the
registration of the decree. For being contrary to law, the registration of the foreign
divorce decree without the requisite judicial recognition is patently void and cannot
produce any legal effect.
Another point we wish to draw attention to is that the recognition that the
RTC may extend to the Canadian divorce decree does not, by itself, authorize
the cancellation of the entry in the civil registry. A petition for recognition of a
foreign judgment is not the proper proceeding, contemplated under the Rules of
Court, for the cancellation of entries in the civil registry.
Article 412 of the Civil Code declares that no entry in a civil register shall
be changed or corrected, without judicial order. The Rules of Court supplements
Article 412 of the Civil Code by specifically providing for a special remedial
proceeding by which entries in the civil registry may be judicially cancelled or
corrected. Rule 108 of the Rules of Court sets in detail the jurisdictional and
procedural requirements that must be complied with before a judgment,
authorizing the cancellation or correction, may be annotated in the civil registry. It
also requires, among others, that the verified petition must be filed with the RTC of
the province where the corresponding civil registry is located; [38] that the civil
registrar and all persons who have or claim any interest must be made parties to the
proceedings;[39] and that the time and place for hearing must be published in a

newspaper of general circulation.[40] As these basic jurisdictional requirements have

not been met in the present case, we cannot consider the petition Gerbert filed with
the RTC as one filed under Rule 108 of the Rules of Court.
We hasten to point out, however, that this ruling should not be construed as
requiring two separate proceedings for the registration of a foreign divorce decree
in the civil registry one for recognition of the foreign decree and another
specifically for cancellation of the entry under Rule 108 of the Rules of Court. The
recognition of the foreign divorce decree may be made in a Rule 108 proceeding
itself, as the object of special proceedings (such as that in Rule 108 of the Rules of
Court) is precisely to establish the status or right of a party or a particular
fact. Moreover, Rule 108 of the Rules of Court can serve as the appropriate
adversarial proceeding[41] by which the applicability of the foreign judgment can be
measured and tested in terms of jurisdictional infirmities, want of notice to the
party, collusion, fraud, or clear mistake of law or fact.
WHEREFORE, we GRANT the petition for review on certiorari,
and REVERSE the October
30,
2008 decision
of
the Regional Trial Court of Laoag City, Branch 11, as well as its February 17,
2009 order. We order the REMAND of the case to the trial court for further
proceedings in accordance with our ruling above. Let a copy of this Decision be
furnished the Civil Registrar General. No costs.
SO ORDERED.
CIVIL LAW
Gerbert R. Corpuz (DIGESTED)
v.
Daisylyn Tirol Sto. Tomas and the Solicitor GeneralG.R. No. 186571, 11 August 2010,
THIRD DIVISION, (Brion, J.)
The unavailability of the second paragraph of Article 26 of the Family Code to aliens
does not necessarily strip Gerbert of legal interest to petition theRTC for the
recognition of his foreign divorce decree. The foreign divorce decreeitself, after its
authenticity and conformity with the alien's national law havebeen duly proven
according to our rules of evidence, serves as a presumptiveevidence of right in

favor of Gerbert, pursuant to Section 48, Rule 39 of theRules of Court which

provides for the effect of foreign judgments.
This is a petition for review on certiorari seeking a direct appeal from thedecision of
the Regional Trial Court of Laoag City.Petitioner Gerbert R. Corpuz is a naturalized
Canadian citizen who marriedrespondent Daisylyn Tirol Sto. Tomas but subsequently
left for Canada due towork and other professional commitments. When he returned
to the Philippines,he discovered that Sto. Tomas was already romantically involved
with anotherman. This brought about the filing of a petition for divorce by Corpuz in
Canadawhich was eventually granted by the Court Justice of Windsor, Ontario,
Canada.A month later, the divorce decree took effect. Two years later, Corpuz has
fallenin love with another Filipina and wished to marry her. He went to Civil
RegistryOffice of Pasig City to register the Canadian divorce decree on his
marriagecertificate with Sto. Tomas. However, despite the registration, an official of
National Statistics Office informed Corpuz that the former marriage still
subsistsunder the Philippine law until there has been a judicial recognition of
theCanadian divorce decree by a competent judicial court in view of NSO CircularNo.
4, series of 1982. Consequently, he filed a petition for judicial recognition of foreign
divorce and/or declaration of dissolution of marriage with the RTC.However, the RTC
denied the petition reasoning out that Corpuz cannot institutethe action for judicial
recognition of the foreign divorce decree because he is anaturalized Canadian
citizen. It was provided further that Sto. Tomas was theproper party who can
institute an action under the principle of Article 26 of theFamily Code which
capacitates a Filipino citizen to remarry in case the alienspouse obtains a foreign
divorce decree. Hence, this petition.
ISSUE:Whether or not the second paragraph of Article 26 of the Family Codegrants
aliens like Corpuz the right to institute a petition for judicial recognition of a foreign
divorce decree.
HELD:
Petition GRANTED. RTC Decision REVERSED.
The Supreme Court qualifies the above conclusion - i.e., that the secondparagraph
of Article 26 of the Family Code bestows no rights in favor of aliens -with the
complementary statement that this conclusion is not sufficient basis todismiss
Gerbert's petition before the RTC. In other words, the unavailability of the second
paragraph of Article 26 of the Family Code to aliens does notnecessarily strip
Gerbert of legal interest to petition the RTC for the recognitionof his foreign divorce
decree. The foreign divorce decree itself, after itsauthenticity and conformity with
the alien's national law have been duly provenaccording to our rules of evidence,
serves as a presumptive evidence of right infavor of Gerbert, pursuant to Section
48, Rule 39 of the Rules of Court whichprovides for the effect of foreign judgments.A
remand, at the same time, will allow other interested parties to opposethe foreign

judgment and overcome a petitioner's presumptive evidence of aright by proving

want of jurisdiction, want of notice to a party, collusion, fraud,or clear mistake of
law or fact. Needless to state, every precaution must betaken to ensure conformity
with our laws before a recognition is made, as theforeign judgment, once
recognized, shall have the effect of res judicata betweenthe parties, as provided in
Section 48, Rule 39 of the Rules of Court.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 80116 June 30, 1989
IMELDA MANALAYSAY PILAPIL, petitioner,
vs.
HON. CORONA IBAY-SOMERA, in her capacity as Presiding Judge of the Regional Trial Court
of Manila, Branch XXVI; HON. LUIS C. VICTOR, in his capacity as the City Fiscal of Manila;
and ERICH EKKEHARD GEILING, respondents.

REGALADO, J.:
An ill-starred marriage of a Filipina and a foreigner which ended in a foreign absolute divorce, only to
be followed by a criminal infidelity suit of the latter against the former, provides Us the opportunity to
lay down a decisional rule on what hitherto appears to be an unresolved jurisdictional question.
On September 7, 1979, petitioner Imelda Manalaysay Pilapil, a Filipino citizen, and private
respondent Erich Ekkehard Geiling, a German national, were married before the Registrar of Births,
Marriages and Deaths at Friedensweiler in the Federal Republic of Germany. The marriage started
auspiciously enough, and the couple lived together for some time in Malate, Manila where their only
child, Isabella Pilapil Geiling, was born on April 20, 1980. 1
Thereafter, marital discord set in, with mutual recriminations between the spouses, followed by a
separation de facto between them.
After about three and a half years of marriage, such connubial disharmony eventuated in private
respondent initiating a divorce proceeding against petitioner in Germany before the Schoneberg
Local Court in January, 1983. He claimed that there was failure of their marriage and that they had
been living apart since April, 1982. 2
Petitioner, on the other hand, filed an action for legal separation, support and separation of property
before the Regional Trial Court of Manila, Branch XXXII, on January 23, 1983 where the same is still
pending as Civil Case No. 83-15866. 3

On January 15, 1986, Division 20 of the Schoneberg Local Court, Federal Republic of Germany,
promulgated a decree of divorce on the ground of failure of marriage of the spouses. The custody of
the child was granted to petitioner. The records show that under German law said court was locally
and internationally competent for the divorce proceeding and that the dissolution of said marriage
was legally founded on and authorized by the applicable law of that foreign jurisdiction. 4
On June 27, 1986, or more than five months after the issuance of the divorce decree, private
respondent filed two complaints for adultery before the City Fiscal of Manila alleging that, while still
married to said respondent, petitioner "had an affair with a certain William Chia as early as 1982 and
with yet another man named Jesus Chua sometime in 1983". Assistant Fiscal Jacinto A. de los
Reyes, Jr., after the corresponding investigation, recommended the dismissal of the cases on the
ground of insufficiency of evidence. 5 However, upon review, the respondent city fiscal approved a
resolution, dated January 8, 1986, directing the filing of two complaints for adultery against the
petitioner. 6 The complaints were accordingly filed and were eventually raffled to two branches of the
Regional Trial Court of Manila. The case entitled "People of the Philippines vs. Imelda Pilapil and William
Chia", docketed as Criminal Case No. 87-52435, was assigned to Branch XXVI presided by the
respondent judge; while the other case, "People of the Philippines vs. Imelda Pilapil and James Chua",
docketed as Criminal Case No. 87-52434 went to the sala of Judge Leonardo Cruz, Branch XXV, of the
same court. 7
On March 14, 1987, petitioner filed a petition with the Secretary of Justice asking that the aforesaid
resolution of respondent fiscal be set aside and the cases against her be dismissed. 8 A similar
petition was filed by James Chua, her co-accused in Criminal Case No. 87-52434. The Secretary of
Justice, through the Chief State Prosecutor, gave due course to both petitions and directed the
respondent city fiscal to inform the Department of Justice "if the accused have already been arraigned
and if not yet arraigned, to move to defer further proceedings" and to elevate the entire records of both
cases to his office for review. 9
Petitioner thereafter filed a motion in both criminal cases to defer her arraignment and to suspend
further proceedings thereon. 10 As a consequence, Judge Leonardo Cruz suspended proceedings in
Criminal Case No. 87-52434. On the other hand, respondent judge merely reset the date of the
arraignment in Criminal Case No. 87-52435 to April 6, 1987. Before such scheduled date, petitioner
moved for the cancellation of the arraignment and for the suspension of proceedings in said Criminal
Case No. 87-52435 until after the resolution of the petition for review then pending before the Secretary of
Justice. 11 A motion to quash was also filed in the same case on the ground of lack of jurisdiction, 12 which
motion was denied by the respondent judge in an order dated September 8, 1987. The same order also
directed the arraignment of both accused therein, that is, petitioner and William Chia. The latter entered a
plea of not guilty while the petitioner refused to be arraigned. Such refusal of the petitioner being
considered by respondent judge as direct contempt, she and her counsel were fined and the former was
ordered detained until she submitted herself for arraignment. 13 Later, private respondent entered a plea of
not guilty. 14
On October 27, 1987, petitioner filed this special civil action for certiorari and prohibition, with a
prayer for a temporary restraining order, seeking the annulment of the order of the lower court
denying her motion to quash. The petition is anchored on the main ground that the court is without
jurisdiction "to try and decide the charge of adultery, which is a private offense that cannot be
prosecuted de officio (sic), since the purported complainant, a foreigner, does not qualify as an

offended spouse having obtained a final divorce decree under his national law prior to his filing the
criminal complaint." 15
On October 21, 1987, this Court issued a temporary restraining order enjoining the respondents from
implementing the aforesaid order of September 8, 1987 and from further proceeding with Criminal
Case No. 87-52435. Subsequently, on March 23, 1988 Secretary of Justice Sedfrey A. Ordoez
acted on the aforesaid petitions for review and, upholding petitioner's ratiocinations, issued a
resolution directing the respondent city fiscal to move for the dismissal of the complaints against the
petitioner. 16
We find this petition meritorious. The writs prayed for shall accordingly issue.
Under Article 344 of the Revised Penal Code, 17 the crime of adultery, as well as four other crimes
against chastity, cannot be prosecuted except upon a sworn written complaint filed by the offended
spouse. It has long since been established, with unwavering consistency, that compliance with this rule is
a jurisdictional, and not merely a formal, requirement. 18 While in point of strict law the jurisdiction of the
court over the offense is vested in it by the Judiciary Law, the requirement for a sworn written complaint is
just as jurisdictional a mandate since it is that complaint which starts the prosecutory proceeding 19 and
without which the court cannot exercise its jurisdiction to try the case.
Now, the law specifically provides that in prosecutions for adultery and concubinage the person who
can legally file the complaint should be the offended spouse, and nobody else. Unlike the offenses of
seduction, abduction, rape and acts of lasciviousness, no provision is made for the prosecution of
the crimes of adultery and concubinage by the parents, grandparents or guardian of the offended
party. The so-called exclusive and successive rule in the prosecution of the first four offenses above
mentioned do not apply to adultery and concubinage. It is significant that while the State, as parens
patriae, was added and vested by the 1985 Rules of Criminal Procedure with the power to initiate
the criminal action for a deceased or incapacitated victim in the aforesaid offenses of seduction,
abduction, rape and acts of lasciviousness, in default of her parents, grandparents or guardian, such
amendment did not include the crimes of adultery and concubinage. In other words, only the
offended spouse, and no other, is authorized by law to initiate the action therefor.
Corollary to such exclusive grant of power to the offended spouse to institute the action, it
necessarily follows that such initiator must have the status, capacity or legal representation to do so
at the time of the filing of the criminal action. This is a familiar and express rule in civil actions; in
fact, lack of legal capacity to sue, as a ground for a motion to dismiss in civil cases, is determined as
of the filing of the complaint or petition.
The absence of an equivalent explicit rule in the prosecution of criminal cases does not mean that
the same requirement and rationale would not apply. Understandably, it may not have been found
necessary since criminal actions are generally and fundamentally commenced by the State, through
the People of the Philippines, the offended party being merely the complaining witness therein.
However, in the so-called "private crimes" or those which cannot be prosecuted de oficio, and the
present prosecution for adultery is of such genre, the offended spouse assumes a more predominant
role since the right to commence the action, or to refrain therefrom, is a matter exclusively within his
power and option.

This policy was adopted out of consideration for the aggrieved party who might prefer to suffer the
outrage in silence rather than go through the scandal of a public trial. 20 Hence, as cogently argued by
petitioner, Article 344 of the Revised Penal Code thus presupposes that the marital relationship is still
subsisting at the time of the institution of the criminal action for, adultery. This is a logical consequence
since the raison d'etre of said provision of law would be absent where the supposed offended party had
ceased to be the spouse of the alleged offender at the time of the filing of the criminal case. 21
In these cases, therefore, it is indispensable that the status and capacity of the complainant to
commence the action be definitely established and, as already demonstrated, such status or
capacity must indubitably exist as of the time he initiates the action. It would be absurd if his capacity
to bring the action would be determined by his status before or subsequent to the commencement
thereof, where such capacity or status existed prior to but ceased before, or was acquired
subsequent to but did not exist at the time of, the institution of the case. We would thereby have the
anomalous spectacle of a party bringing suit at the very time when he is without the legal capacity to
do so.
To repeat, there does not appear to be any local precedential jurisprudence on the specific issue as
to when precisely the status of a complainant as an offended spouse must exist where a criminal
prosecution can be commenced only by one who in law can be categorized as possessed of such
status. Stated differently and with reference to the present case, the inquiry ;would be whether it is
necessary in the commencement of a criminal action for adultery that the marital bonds between the
complainant and the accused be unsevered and existing at the time of the institution of the action by
the former against the latter.
American jurisprudence, on cases involving statutes in that jurisdiction which are in pari materia with
ours, yields the rule that after a divorce has been decreed, the innocent spouse no longer has the
right to institute proceedings against the offenders where the statute provides that the innocent
spouse shall have the exclusive right to institute a prosecution for adultery. Where, however,
proceedings have been properly commenced, a divorce subsequently granted can have no legal
effect on the prosecution of the criminal proceedings to a conclusion. 22
In the cited Loftus case, the Supreme Court of Iowa held that
'No prosecution for adultery can be commenced except on the complaint of the
husband or wife.' Section 4932, Code. Though Loftus was husband of defendant
when the offense is said to have been committed, he had ceased to be such when
the prosecution was begun; and appellant insists that his status was not such as to
entitle him to make the complaint. We have repeatedly said that the offense is
against the unoffending spouse, as well as the state, in explaining the reason for this
provision in the statute; and we are of the opinion that the unoffending spouse must
be such when the prosecution is commenced. (Emphasis supplied.)
We see no reason why the same doctrinal rule should not apply in this case and in our jurisdiction,
considering our statutory law and jural policy on the matter. We are convinced that in cases of such
nature, the status of the complainant vis-a-vis the accused must be determined as of the time the
complaint was filed. Thus, the person who initiates the adultery case must be an offended spouse,

and by this is meant that he is still married to the accused spouse, at the time of the filing of the
complaint.
In the present case, the fact that private respondent obtained a valid divorce in his country, the
Federal Republic of Germany, is admitted. Said divorce and its legal effects may be recognized in
the Philippines insofar as private respondent is concerned 23 in view of the nationality principle in our
civil law on the matter of status of persons.
Thus, in the recent case of Van Dorn vs. Romillo, Jr., et al., 24 after a divorce was granted by a United
States court between Alice Van Dornja Filipina, and her American husband, the latter filed a civil case in a
trial court here alleging that her business concern was conjugal property and praying that she be ordered
to render an accounting and that the plaintiff be granted the right to manage the business. Rejecting his
pretensions, this Court perspicuously demonstrated the error of such stance, thus:
There can be no question as to the validity of that Nevada divorce in any of the
States of the United States. The decree is binding on private respondent as an
American citizen. For instance, private respondent cannot sue petitioner, as her
husband, in any State of the Union. ...
It is true that owing to the nationality principle embodied in Article 15 of the Civil
Code, only Philippine nationals are covered by the policy against absolute divorces
the same being considered contrary to our concept of public policy and morality.
However, aliens may obtain divorces abroad, which may be recognized in the
Philippines, provided they are valid according to their national law. ...
Thus, pursuant to his national law, private respondent is no longer the husband of
petitioner. He would have no standing to sue in the case below as petitioner's
husband entitled to exercise control over conjugal assets. ... 25
Under the same considerations and rationale, private respondent, being no longer the husband of
petitioner, had no legal standing to commence the adultery case under the imposture that he was the
offended spouse at the time he filed suit.
The allegation of private respondent that he could not have brought this case before the decree of
divorce for lack of knowledge, even if true, is of no legal significance or consequence in this case.
When said respondent initiated the divorce proceeding, he obviously knew that there would no
longer be a family nor marriage vows to protect once a dissolution of the marriage is decreed.
Neither would there be a danger of introducing spurious heirs into the family, which is said to be one
of the reasons for the particular formulation of our law on adultery, 26 since there would thenceforth be
no spousal relationship to speak of. The severance of the marital bond had the effect of dissociating the
former spouses from each other, hence the actuations of one would not affect or cast obloquy on the
other.
The aforecited case of United States vs. Mata cannot be successfully relied upon by private
respondent. In applying Article 433 of the old Penal Code, substantially the same as Article 333 of
the Revised Penal Code, which punished adultery "although the marriage be afterwards declared
void", the Court merely stated that "the lawmakers intended to declare adulterous the infidelity of a

married woman to her marital vows, even though it should be made to appear that she is entitled to
have her marriage contract declared null and void, until and unless she actually secures a formal
judicial declaration to that effect". Definitely, it cannot be logically inferred therefrom that the
complaint can still be filed after the declaration of nullity because such declaration that the marriage
is void ab initio is equivalent to stating that it never existed. There being no marriage from the
beginning, any complaint for adultery filed after said declaration of nullity would no longer have a leg
to stand on. Moreover, what was consequently contemplated and within the purview of the decision
in said case is the situation where the criminal action for adultery was filed before the termination of
the marriage by a judicial declaration of its nullity ab initio. The same rule and requisite would
necessarily apply where the termination of the marriage was effected, as in this case, by a valid
foreign divorce.
Private respondent's invocation of Donio-Teves, et al. vs. Vamenta, hereinbefore cited, 27 must suffer
the same fate of inapplicability. A cursory reading of said case reveals that the offended spouse therein
had duly and seasonably filed a complaint for adultery, although an issue was raised as to its sufficiency
but which was resolved in favor of the complainant. Said case did not involve a factual situation akin to
the one at bar or any issue determinative of the controversy herein.
WHEREFORE, the questioned order denying petitioner's motion to quash is SET ASIDE and
another one enteredDISMISSING the complaint in Criminal Case No. 87-52435 for lack of
jurisdiction. The temporary restraining order issued in this case on October 21, 1987 is hereby made
permanent.
SO ORDERED.
Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

Separate Opinions

PARAS, J., concurring:

It is my considered opinion that regardless of whether We consider the German absolute divorce as
valid also in the Philippines, the fact is that the husband in the instant case, by the very act of his
obtaining an absolute divorce in Germany can no longer be considered as the offended party in case
his former wife actually has carnal knowledge with another, because in divorcing her, he already
implicitly authorized the woman to have sexual relations with others. A contrary ruling would be less
than fair for a man, who is free to have sex will be allowed to deprive the woman of the same
privilege.

In the case of Recto v. Harden (100 Phil. 427 [1956]), the Supreme Court considered the absolute
divorce between the American husband and his American wife as valid and binding in the Philippines
on the theory that their status and capacity are governed by their National law, namely, American
law. There is no decision yet of the Supreme Court regarding the validity of such a divorce if one of
the parties, say an American, is married to a Filipino wife, for then two (2) different nationalities
would be involved.
In the book of Senate President Jovito Salonga entitled Private International Law and precisely
because of theNational law doctrine, he considers the absolute divorce as valid insofar as the
American husband is concerned but void insofar as the Filipino wife is involved. This results in what
he calls a "socially grotesque situation," where a Filipino woman is still married to a man who is no
longer her husband. It is the opinion however, of the undersigned that very likely the opposite
expresses the correct view. While under the national law of the husband the absolute divorce will be
valid, still one of the exceptions to the application of the proper foreign law (one of the exceptions to
comity) is when the foreign law will work an injustice or injury to the people or residents of the forum.
Consequently since to recognize the absolute divorce as valid on the part of the husband would be
injurious or prejudicial to the Filipino wife whose marriage would be still valid under her national law,
it would seem that under our law existing before the new Family Code (which took effect on August
3, 1988) the divorce should be considered void both with respect to the American husband and the
Filipino wife.
The recent case of Van Dorn v. Romillo, Jr. (139 SCRA [1985]) cannot apply despite the fact that the
husband was an American can with a Filipino wife because in said case the validity of the divorce
insofar as the Filipino wife is concerned was NEVER put in issue.

Separate Opinions
PARAS, J., concurring:
It is my considered opinion that regardless of whether We consider the German absolute divorce as
valid also in the Philippines, the fact is that the husband in the instant case, by the very act of his
obtaining an absolute divorce in Germany can no longer be considered as the offended party in case
his former wife actually has carnal knowledge with another, because in divorcing her, he already
implicitly authorized the woman to have sexual relations with others. A contrary ruling would be less
than fair for a man, who is free to have sex will be allowed to deprive the woman of the same
privilege.
In the case of Recto v. Harden (100 Phil. 427 [1956]), the Supreme Court considered the absolute
divorce between the American husband and his American wife as valid and binding in the Philippines
on the theory that their status and capacity are governed by their National law, namely, American
law. There is no decision yet of the Supreme Court regarding the validity of such a divorce if one of
the parties, say an American, is married to a Filipino wife, for then two (2) different nationalities
would be involved.

In the book of Senate President Jovito Salonga entitled Private International Law and precisely
because of theNational law doctrine, he considers the absolute divorce as valid insofar as the
American husband is concerned but void insofar as the Filipino wife is involved. This results in what
he calls a "socially grotesque situation," where a Filipino woman is still married to a man who is no
longer her husband. It is the opinion however, of the undersigned that very likely the opposite
expresses the correct view. While under the national law of the husband the absolute divorce will be
valid, still one of the exceptions to the application of the proper foreign law (one of the exceptions to
comity) is when the foreign law will work an injustice or injury to the people or residents of the forum.
Consequently since to recognize the absolute divorce as valid on the part of the husband would be
injurious or prejudicial to the Filipino wife whose marriage would be still valid under her national law,
it would seem that under our law existing before the new Family Code (which took effect on August
3, 1988) the divorce should be considered void both with respect to the American husband and the
Filipino wife.
The recent case of Van Dorn v. Romillo, Jr. (139 SCRA [1985]) cannot apply despite the fact that the
husband was an American can with a Filipino wife because in said case the validity of the divorce
insofar as the Filipino wife is concerned was NEVER put in issue.
Footnotes

PILAPIL v IBAY-SOMERA174 SCRA 653 DIGESTED

FACTS:
On September 7, 1979, Imelda Manalaysay Pilapil, a Filipina and therespondent to
the case, and Erich Geiling, a German national, were married atFriedenweiler in the
Federal Republic of Germany. After about three and a half years of marriage, Geiling
initiated a divorce proceeding against Pilapil in Germanyin January 1983 while Pilapil
filed an action for legal separation, support andseparation of property before RTC of
Manila in January 23, 1983 where it is stillpending as a civil case. On January 15,
1986, the local Court of Germanypromulgated a divorce decree on the ground of
failure of marriage of the spouses. The custody of the child,Isabella Pilapil Geiling,
was granted to petitioner.On June 27, 1986, private respondent filed two complaints
for adultery alleging that,while still married to respondent, petitioner had an affair
with a certain William Chiaand Jesus Chua sometime in 1982 and 1983 respectively.
The respondent city fiscalapproved a resolution directing the filing of two complaints
for adultery againstpetitioner. Thereafter, petitioner filed a motion in both criminal
cases to defer herarraignment and to suspend further proceedings thereon.
Respondent judge merelyreset the date of the arraignment but before such
scheduled date, petitioner movedfor the suspension of proceedings. On September
8, 1987, respondent judge deniedthe motion to quash and also directed the
arraignment of both accused. Petitionerrefused to be arraigned and thus charged
with direct contempt and fined.

ISSUE:
Whether or not the private respondents adultery charges against thepetitioner is
still valid given the fact that both had been divorced prior to the filingof charges.
HELD:
The law provides that in prosecutions for adultery and concubinage theperson who
can legally file the complaint should only be the offended spouse. Thefact that
private respondent obtained a valid divorce in his country in 1983, isadmitted.
According to Article 15 of the Civil Code, with relation to the status of Filipino
citizens both here and abroad, since the legal separation of the petitionerand
respondent has been finalized through the courts in Germany and the RTC inManila,
the marriage of the couple were already finished, thus giving no merit to thecharges
the respondent filed against the petitioner. Private respondent, being nolonger
married to petitioner holds no legal merit to commence the adultery case asthe
offended spouse at the time he filed suit in 1986. The temporary restrainingorder
issued in this case was made permanent.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-68470 October 8, 1985
ALICE REYES VAN DORN, petitioner,
vs.
HON. MANUEL V. ROMILLO, JR., as Presiding Judge of Branch CX, Regional Trial Court of the
National Capital Region Pasay City and RICHARD UPTON respondents.

MELENCIO-HERRERA, J.:\
In this Petition for certiorari and Prohibition, petitioner Alice Reyes Van Dorn seeks to set aside the
Orders, dated September 15, 1983 and August 3, 1984, in Civil Case No. 1075-P, issued by
respondent Judge, which denied her Motion to Dismiss said case, and her Motion for
Reconsideration of the Dismissal Order, respectively.
The basic background facts are that petitioner is a citizen of the Philippines while private respondent
is a citizen of the United States; that they were married in Hongkong in 1972; that, after the
marriage, they established their residence in the Philippines; that they begot two children born on
April 4, 1973 and December 18, 1975, respectively; that the parties were divorced in Nevada, United
States, in 1982; and that petitioner has re-married also in Nevada, this time to Theodore Van Dorn.
Dated June 8, 1983, private respondent filed suit against petitioner in Civil Case No. 1075-P of the
Regional Trial Court, Branch CXV, in Pasay City, stating that petitioner's business in Ermita, Manila,
(the Galleon Shop, for short), is conjugal property of the parties, and asking that petitioner be
ordered to render an accounting of that business, and that private respondent be declared with right
to manage the conjugal property. Petitioner moved to dismiss the case on the ground that the cause
of action is barred by previous judgment in the divorce proceedings before the Nevada Court
wherein respondent had acknowledged that he and petitioner had "no community property" as of
June 11, 1982. The Court below denied the Motion to Dismiss in the mentioned case on the ground
that the property involved is located in the Philippines so that the Divorce Decree has no bearing in
the case. The denial is now the subject of this certiorari proceeding.
Generally, the denial of a Motion to Dismiss in a civil case is interlocutory and is not subject to
appeal. certiorari and Prohibition are neither the remedies to question the propriety of an
interlocutory order of the trial Court. However, when a grave abuse of discretion was patently
committed, or the lower Court acted capriciously and whimsically, then it devolves upon this Court in
a certiorari proceeding to exercise its supervisory authority and to correct the error committed which,
in such a case, is equivalent to lack of jurisdiction. 1 Prohibition would then lie since it would be useless

and a waste of time to go ahead with the proceedings. 2 Weconsider the petition filed in this case within
the exception, and we have given it due course.

For resolution is the effect of the foreign divorce on the parties and their alleged conjugal property in
the Philippines.
Petitioner contends that respondent is estopped from laying claim on the alleged conjugal property
because of the representation he made in the divorce proceedings before the American Court that
they had no community of property; that the Galleon Shop was not established through conjugal
funds, and that respondent's claim is barred by prior judgment.
For his part, respondent avers that the Divorce Decree issued by the Nevada Court cannot prevail
over the prohibitive laws of the Philippines and its declared national policy; that the acts and
declaration of a foreign Court cannot, especially if the same is contrary to public policy, divest
Philippine Courts of jurisdiction to entertain matters within its jurisdiction.
For the resolution of this case, it is not necessary to determine whether the property relations
between petitioner and private respondent, after their marriage, were upon absolute or relative
community property, upon complete separation of property, or upon any other regime. The pivotal
fact in this case is the Nevada divorce of the parties.
The Nevada District Court, which decreed the divorce, had obtained jurisdiction over petitioner who
appeared in person before the Court during the trial of the case. It also obtained jurisdiction over
private respondent who, giving his address as No. 381 Bush Street, San Francisco, California,
authorized his attorneys in the divorce case, Karp & Gradt Ltd., to agree to the divorce on the ground
of incompatibility in the understanding that there were neither community property nor community
obligations. 3 As explicitly stated in the Power of Attorney he executed in favor of the law firm of KARP &
GRAD LTD., 336 W. Liberty, Reno, Nevada, to represent him in the divorce proceedings:
xxx xxx xxx
You are hereby authorized to accept service of Summons, to file an Answer, appear
on my behalf and do an things necessary and proper to represent me, without further
contesting, subject to the following:
1. That my spouse seeks a divorce on the ground of incompatibility.
2. That there is no community of property to be adjudicated by the Court.
3. 'I'hat there are no community obligations to be adjudicated by the court.
xxx xxx xxx 4
There can be no question as to the validity of that Nevada divorce in any of the States of the United
States. The decree is binding on private respondent as an American citizen. For instance, private
respondent cannot sue petitioner, as her husband, in any State of the Union. What he is contending

in this case is that the divorce is not valid and binding in this jurisdiction, the same being contrary to
local law and public policy.
It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, 5 only
Philippine nationals are covered by the policy against absolute divorces the same being considered
contrary to our concept of public police and morality. However, aliens may obtain divorces abroad, which
may be recognized in the Philippines, provided they are valid according to their national law. 6 In this
case, the divorce in Nevada released private respondent from the marriage from the standards of
American law, under which divorce dissolves the marriage. As stated by the Federal Supreme Court of
the United States in Atherton vs. Atherton, 45 L. Ed. 794, 799:
The purpose and effect of a decree of divorce from the bond of matrimony by a court
of competent jurisdiction are to change the existing status or domestic relation of
husband and wife, and to free them both from the bond. The marriage tie when thus
severed as to one party, ceases to bind either. A husband without a wife, or a wife
without a husband, is unknown to the law. When the law provides, in the nature of a
penalty. that the guilty party shall not marry again, that party, as well as the other, is
still absolutely freed from the bond of the former marriage.
Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He
would have no standing to sue in the case below as petitioner's husband entitled to exercise control
over conjugal assets. As he is bound by the Decision of his own country's Court, which validly
exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his
own representation before said Court from asserting his right over the alleged conjugal property.
To maintain, as private respondent does, that, under our laws, petitioner has to be considered still
married to private respondent and still subject to a wife's obligations under Article 109, et. seq. of the
Civil Code cannot be just. Petitioner should not be obliged to live together with, observe respect and
fidelity, and render support to private respondent. The latter should not continue to be one of her
heirs with possible rights to conjugal property. She should not be discriminated against in her own
country if the ends of justice are to be served.
WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to dismiss the
Complaint filed in Civil Case No. 1075-P of his Court.
Without costs.
SO ORDERED.
Teehankee (Chairman), Plana, Relova, Gutierrez, Jr., De la Fuente and Patajo, JJ., concur.

Van Dorn vs. Romillo Jr. 139 SCRA 139 October 8, 1985
Fact of the Case:

Petitioner Alicia Reyes Van is citizen of the Philippines while private respondent
Richard Upton is a citizen of the United States, were married on 1972 at Hongkong.
On 1982, they got divorced in Nevada, United States; and the petitioner remarried
to Theodore Van Dorn. On July 8, 1983, private respondent filed suit against
petitioner, asking that the petitioner be ordered to render an accounting of her
business in Ermita, Manila, and be declared with right to manage the conjugal
property. Petitioner moved to dismiss the case on the ground that the cause of
action is barred by previous judgement in the divorce proceeding before Nevada
Court where respondent acknowledged that they had no community property. The
lower court denied the motion to dismiss on the ground that the property involved is
located in the Philippines, that the Divorce Decree has no bearing in the case.
Respondent avers that Divorce Decree abroad cannot prevail over the prohibitive
laws of the Philippines.
Issue:
(1)Whether or not the divorce obtained the spouse valid to each of them.
(2)Whether or not Richard Upton may assert his right on conjugal properties.
Held:
As to Richard Upton the divorce is binding on him as an American Citizen.As he is
bound by the Decision of his own countrys Court, which validly exercised
jurisdiction over him, and whose decision he does not repudiate, he is estopped by
his own representation before said Court from asserting his right over the alleged
conjugal property. Only Philippine Nationals are covered by the policy against
absolute divorce the same being considered contrary to our concept of public policy
and morality. Alicia Reyes under our National law is still considered married to
private respondent. However, petitioner should not be obliged to live together with,
observe respect and fidelity, and render support to private respondent. The latter
should not continue to be one of her heirs with possible rights to conjugal property.
She should not be discriminated against her own country if the ends of justice are to
be served.

THIRD DIVISION
[G.R. No. 122823. November 25, 1999]
SEA COMMERCIAL COMPANY, INC., petitioner, vs. THE HONORABLE
COURT OF APPEALS, JAMANDRE INDUSTRIES, INC. and TIRSO
JAMANDRE,respondents.
DECISION
GONZAGA-REYES, J.:

In this petition for review by certiorari, SEA Commercial Company, Inc. (SEACOM) assails
the decision of the Court of Appeals in CA-G.R. CV NO. 31263 affirming in toto the decision of
the Regional Trial Court of Manila, Branch 5, in Civil Case No. 122391, in favor of Jamandre
Industries, Inc. (JII) et al., the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the defendant and against the
plaintiff, ordering the plaintiff:
1) To pay defendant the sum of P66,156.15 (minus 18,843.85) with legal interest
thereon, from the date of the filing of the counterclaim until fully paid;
2) To pay defendant P2,000.00 as moral and exemplary damages;

3) To pay attorneys fees in the sum of P10,000.00; and

4) To pay the costs of this suit.
SO ORDERED.
SEACOM is a corporation engaged in the business of selling and distributing agricultural
machinery, products and equipment. On September 20, 1966, SEACOM and JII entered into a
dealership agreement whereby SEACOM appointed JII as its exclusive dealer in the City and
Province of Iloilo[1] Tirso Jamandre executed a suretyship agreement binding himself jointly and
severally with JII to pay for all obligations of JII to SEACOM [2]. The agreement was
subsequently amended to include Capiz in the territorial coverage and to make the dealership
agreement on a non-exclusive basis[3]. In the course of the business relationship arising from the
dealership agreement, JII allegedly incurred a balance of P18,843.85 for unpaid deliveries, and
SEACOM brought action to recover said amount plus interest and attorneys fees.
JII filed an Answer denying the obligation and interposing a counterclaim for damages
representing unrealized profits when JII sold to the Farm System Development Corporation
(FSDC) twenty one (21) units of Mitsubishi power tillers. In the counterclaim, JII alleged that as
a dealer in Capiz, JII contracted to sell in 1977 twenty-four (24) units of Mitsubishi power tillers
to a group of farmers to be financed by said corporation, which fact JII allegedly made known to
petitioner, but the latter taking advantage of said information and in bad faith, went directly to
FSDC and dealt with it and sold twenty one (21) units of said tractors, thereby depriving JII of
unrealized profit of eighty-five thousand four hundred fifteen and 61/100 pesos (P85,415.61).
The trial court rendered its decision on January 24, 1990 ordering JII to pay SEACOM the
amount of Eighteen Thousand Eight Hundred Forty Three and 85/100 (P18,843.85) representing
its outstanding obligation. The trial court likewise granted JIIs counterclaim for unrealized
profits, and for moral and exemplary damages and attorney fees as above quoted.
SEACOM appealed the decision on the counterclaim.
The Court of Appeals held that while there exists no agency relationship between SEACOM
and JII, SEACOM is liable for damages and unrealized profits to JII.

This Court, however, is convinced that with or without the existence of an agency
relationship between appellant SEACOM and appellee JII and notwithstanding the
error committed by the lower court in finding that an agency relationship existed
between appellant and defendant corporation the former is liable for the unrealized

profits which the latter could have gained had not appellant unjustly stepped in and in
bad faith unethically intervened.
It should be emphasized that the very purpose of the dealership agreement is for
SEACOM to have JII as its dealer to sell its products in the provinces of Capiz and
Iloilo. In view of this agreement, the second assigned error that the lower court erred
in holding that appellant learned of the FSDC transaction from defendant JII is clearly
immaterial and devoid of merit. The fact that the dealership is on a non-exclusive
basis does not entitle appellant SEACOM to join the fray as against its dealer. To do
so, is to violate the norms of conduct enjoined by Art. 19 of the Civil Code. By virtue
of such agreement, the competition in the market as regards the sale of farm
equipment shall be between JII, as the dealer of SEACOM and other companies, not
as against SEACOM itself. However, SEACOM, not satisfied with the presence of its
dealer JII in the market, joined the competition even as the against the latter and,
therefore, changed the scenario of the competition thereby rendering inutile the
dealership agreement which they entered into the manifest prejudice of JII. Hence, the
trial court was correct when it applied Art. 19 of the Civil Code in the case at bar in
that appellant SEACOM acted in bad faith when it competed with its own dealer as
regards the sale of farm machineries, thereby depriving appellee JII of the opportunity
to gain a clear profit of P85,000.00.
and affirmed the judgment appealed from in toto.
Hence this petition for review on certiorari, which submits the following reasons for the
allowance thereof:

THE RESPONDENT COURT OF APPEALS DECIDED QUESTIONS OF

SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW AND
JURISPRUDENCE, CONSIDERING THAT:
A

THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING

THAT PETITIONER IS LIABLE TO PAY DAMAGES AND UNREALIZED
PROFITS TO THE PRIVATE RESPONDENTS DESPITE THE FACT THAT NO
AGENCY RELATIONSHIP EXISTS BETWEEN THEM.
B

THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING

THAT PETITIONER ACTED IN BAD FAITH AGAINST THE PRIVATE
RESPONDENT CORPORATION DESPITE THE FACT THAT SAID RULING IS
CONTRARY TO THE EVIDENCE ON RECORD.
C

THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING

THAT THE NON-EXCLUSIVITY CLAUSE IN THE DEALERSHIP AGREEMENT
EXECUTED BETWEEN THE PETITIONER AND PRIVATE RESPONDENT
CORPORATION PRECLUDES THE PETITIONER FROM COMPETING WITH
THE PRIVATE RESPONDENT CORPORATION.
D

THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING

THAT PRIVATE RESPONDENT IS ENTITLED TO UNREALIZED PROFITS,
MORAL AND EXEMPLARY DAMAGES AND ATTORNEYS FEES.[4]
Petitioner SEACOM disputes the conclusion of the Court of Appeals that despite the fact
that no agency relationship existed between the parties, the SEACOM is still liable in damages
and unrealized profits for the reason that it acted in bad faith. Petitioner SEACOM invokes the
non-exclusivity clause in the dealership agreement and claims that the transaction with FSDC
was concluded pursuant to a public bidding and not on the basis of alleged information it
received from private respondent Tirso Jamandre. Moreover, petitioner SEACOM claims that it
did not underprice its products during the public bidding wherein both SEACOM and JII
participated. Petitioner also disputes the award of moral damages to JII which is a corporation, in
the absence of any evidence that the said corporation had a good reputation which was debased.
Private respondents in their comment, contends that the four assigned errors raise mixed
questions of fact and law and are therefore beyond the jurisdiction of the Supreme Court which
may take cognizance of only questions of law. The assigned errors were also refuted to secure
affirmance of the appealed decision. JII maintains that the bidding set by FSDC on March 24,
1997 was scheduled after the demonstration conducted by JII, and after JII informed SEACOM
about the preference of the farmers to buy Mitsubishi tillers. JII further rebuts the SEACOMs
contention that the transaction with FSDC was pursuant to a public bidding with full disclosure
to the public and private respondent JII considering that JII had nothing to do with the list of 37
bidders and cannot be bound by the listing made by SEACOMs employee; moreover, JII did not
participate in the bidding not having been informed about it. Furthermore, the price at which
SEACOM sold to FSDC was lower than the price it gave to JII. Also, even if the dealership

agreement was not exclusive, it was breached when petitioner in bad faith sold directly to FSDC
with whom JII had previously offered the subject farm equipment. With respect to the awards of
moral and exemplary damages, JII seeks an affirmation of the ruling of the Court of Appeals
justifying the awards.
SEACOM filed Reply defending the jurisdiction of this Court over the instant petition since
the decision of the Court of Appeals was based on a misapprehension of facts. SEACOM insists
that FSDCs purchase was made pursuant to a public bidding, and even if SEACOM did not
participate thereon, JII would not necessarily have closed the deal since thirty seven (37) bidders
participated. SEACOM contends that no evidence was presented to prove that the bidding was a
fraudulent scheme of SEACOM and FSDC. SEACOM further controverts JIIs contention that JII
did not take part in the bidding as Tirso Jamandre was one of the bidders and that SEACOM
underpriced its products to entice FSDC to buy directly from it. In fine, JII is not entitled to the
award of unrealized profits and damages.
In its Rejoinder, private respondents insist that there is an agency relationship, citing the
evidence showing that credit memos and not cash vouchers were issued to JII by SEACOM for
every delivery from November 26, 1976 to December 24, 1978. Private respondents maintain
that SEACOM torpedoed the emerging deal between JII and FSDC after being informed about it
by JII by dealing directly with FSDC at a lower price and after betraying JII, SEACOM would
cover up the deceit by conniving with FSDC to post up a sham public bidding.
SEACOMs sur-rejoinder contains basically a reiteration of its contention in previous
pleadings. Additionally, it is contended that private respondents are barred from questioning in
their Rejoinder, the finding of the Court of Appeals that there is no agency relationship between
the parties since this matter was not raised as error in their comment.
The core issue is whether SEACOM acted in bad faith when it competed with its own dealer
as regards the sale of farm machineries to FSDC.
Both the trial court and the Court of Appeals held affirmatively; the trial court found that JII
was an agent of SEACOM and the act of SEACOM in dealing directly with FSDC was unfair
and unjust to its agent, and that there was fraud in the transaction between FSDC and SEACOM
to the prejudice of JII. On the other hand, the Court of Appeals ruled that there was no agency
relationship between the parties but SEACOM is nevertheless liable in damages for having acted
in bad faith when it competed with its own dealer in the sale of the farm machineries to
FSDC. Both courts invoke as basis for the award Article 19 of the Civil Code which reads as
follows:

"Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due and observe honesty and good faith.

The principle of abuse of rights stated in the above article, departs from the classical theory
that he who uses a right injures no one. The modern tendency is to depart from the classical and
traditional theory, and to grant indemnity for damages in cases where there is an abuse of rights,
even when the act is not illicit.[5]
Article 19 was intended to expand the concept of torts by granting adequate legal remedy for
the untold number of moral wrongs which is impossible for human foresight to provide
specifically in statutory law.[6] If mere fault or negligence in ones acts can make him liable for
damages for injury caused thereby, with more reason should abuse or bad faith make him
liable. The absence of good faith is essential to abuse of right. Good faith is an honest intention
to abstain from taking any unconscientious advantage of another, even through the forms or
technicalities of the law, together with an absence of all information or belief of fact which
would render the transaction unconscientious. In business relations, it means good faith as
understood by men of affairs.[7]
While Article 19 may have been intended as a mere declaration of principle [8], the cardinal
law on human conduct expressed in said article has given rise to certain rules, e.g. that where a
person exercises his rights but does so arbitrarily or unjustly or performs his duties in a manner
that is not in keeping with honesty and good faith, he opens himself to liability. [9] The elements of
an abuse of rights under Article 19 are: (1) there is a legal right or duty; (2) which is exercised in
bad faith; (3) for the sole intent of prejudicing or injuring another.[10]
The issue whether JII is entitled to recovery on its counterclaim for unrealized profit in the
twenty one (21) units of Mitsubishi power tillers sold by SEACOM to FSDC was resolved by the
trial court in favor of JII on the basis of documentary evidence[11] showing that (1) JII has
informed SEACOM as early as February 1977 of the promotions undertaken by JII for the sale of
24 contracted units to FSDC and in connection therewith, requested a 50% discount to make the
price competitive, and to increase the warranty period for eight months to one year. In said letter
Jamandre clarified that they were not amenable to SEACOMs offering directly to FSDC and to
be only given the usual overriding commission as we have considerable investments on this
transaction. (2) In response, the general sales manager of SEACOM declined to give the
requested 50% discount and offered a less 30% less 10% up to end March xxx on cash before
delivery basis, granted the requested extension of the warranty period and stated that we are glad
to note that you have quite a number of units pending with the FSDC.
The trial court ruled that with said information, SEACOM dealt directly with FSDC and
offered its units at a lower price, leaving FSDC no choice but to accept the said offer of
(SEACOM).
In affirming the judgment of the of the trial court, the Court of Appeals held that by virtue of
the dealership agreement the competition in the market as regards the sale of farm equipment

shall be between JII, as the dealer of SEACOM, and other companies, not as against SEACOM
itself, the Court stated:

However, SEACOM not satisfied with the presence of its dealer JII in the market,
joined the competition even as against the latter, and thereby changed the scenario of
the competition thereby rendering inutile the dealership agreement which they entered
into to the manifest prejudice of JII. Hence the trial court trial court was correct when
it applied Art. 19 of the Civil Code in the case at bar in that appellant SEACOM acted
in bad faith when it competed with its own dealer as regards the sale of farm
machineries, thereby depriving appellee JII of the opportunity to gain a clear profit
of P85,000.00.
We find no cogent reason to overturn the factual finding of the two courts that SEACOM
joined the bidding for the sale of the farm equipment after it was informed that JII was already
promoting the sales of said equipment to the FSDC. Moreover, the conclusion of the trial court
that the SEACOM offered FSDC a lower price than the price offered by JII to FSDC is supported
by the evidence: the price offered by JII to FSDC is P27,167 per unit[12] but the prices at which
SEACOM sold to FSDC were at P22,867.00 for Model CT 83-2, P21,093.50 for model CT 83-E,
and P18,979.25 for model CT 534. The fact that SEACOM may have offered to JII, in lieu of a
requested 50% discount, a discount effectively translating to 37% of the list price and actually
sold to FSDC at 35% less than the list price [13] does not detract from the fact that by participating
in the bidding of FSDC, it actually competed with its own dealer who had earlier conducted
demonstrations and promoted its own products for the sale of the very same equipment, Exh. N
for the plaintiff confirms that both SEACOM and Jamandre participated in the bidding.
[14]
However, the SEACOM was awarded the contract directly from Manila. [15] The testimony of
Tirso Jamandre that JII was the sole representative of SEACOM in the local demonstrations to
convince the farmers and cooperative officers to accept the Mitsubishi brand of equipment in
preference to other brands, was unrebutted by SEACOM.
Clearly, the bad faith of SEACOM was established. By appointing as a dealer of its
agricultural equipment, SEACOM recognized the role and undertaking of JII to promote and sell
said equipment.Under the dealership agreement, JII was to act as a middleman to sell SEACOMs
products, in its area of operations, i.e. Iloilo and Capiz provinces, to the exclusion of other
places,[16] to send its men to Manila for training on repair, servicing and installation of the items
to be handled by it, and to comply with other personnel and vehicle requirements intended for
the benefit of the dealership.[17] After being informed of the demonstrations JII had conducted to
promote the sales of SEACOM equipment, including the operations at JIIs expense conducted
for five months, and the approval of its facilities (service and parts) by FSDC, [18] SEACOM
participated in the bidding for the said equipment at a lower price, placing itself in direct
competition with its own dealer. The actuations of SEACOM are tainted by bad faith.

Even if the dealership agreement was amended to make it on a non-exclusive basis,

SEACOM may not exercise its right unjustly or in a manner that is not in keeping with
honesty or good faith; otherwise it opens itself to liability under the abuse of right rule embodied
in Article 19 of the Civil Code above-quoted. This provision, together with the succeeding article
on human relation, was intended to embody certain basic principles that are to be observed for
the rightful relationship between human beings and for the stability of the social order. [20] What is
sought to be written into the law is the pervading principle of equity and justice above strict
legalism.[21]
[19]

We accordingly resolve to affirm the award for unrealized profits. The Court of Appeals
noted that the trial court failed to specify to which the two appellees the award for moral and
exemplary damages is granted. However, in view of the fact that moral damages are not as a
general rule granted to a corporation, and that Tirso Jamandre was the one who testified on his
feeling very aggrieved and on his mental anguish and sleepless nights thinking of how SEACOM
dealt with us behind (our) backs,[22] the award should go to defendant Jamandre, President of JII.
WHEREFORE, the judgment appealed from is AFFIRMED with the modification that the
award of P2,000.00 in moral and exemplary damages shall be paid to defendant Tirso Jamandre.
Costs against appellant.
SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.

FIRST DIVISION

[G.R. No. 128690. January 21, 1999]

ABS-CBN
BROADCASTING
CORPORATION, petitioners,
vs. HONORABLE
COURT
OF
APPEALS,
REPUBLIC
BROADCASTING CORP., VIVA PRODUCTIONS, INC., and
VICENTE DEL ROSARIO, respondents.
DECISION
DAVIDE, JR., C.J.:

In this petition for review on certiorari, petitioners ABS-CBN Broadcasting Corp.

(hereinafter ABS-CBN) seeks to reverse and set aside the decision[1] of 31 October 1996 and the
resolution[2] of 10 March 1997 of the Court of Appeals in CA-G.R. CV No. 44125. The former
affirmed with modification the decision[3] of 28 April 1993 of the Regional Trial Court (RTC) of
Quezon City, Branch 80, in Civil Case No. Q-12309. The latter denied the motion to reconsider
the decision of 31 October 1996.
The antecedents, as found by the RTC and adopted by the Court of Appeals, are as follows:

In 1990, ABS-CBN and VIVA executed a Film Exhibition Agreement (Exh. A)

whereby Viva gave ABS-CBN an exclusive right to exhibit some Viva
films. Sometime in December 1991, in accordance with paragraph 2.4 [sic] of said
agreement stating that1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) Viva
films for TV telecast under such terms as may be agreed upon by the parties hereto,

provided, however, that such right shall be exercised by ABS-CBN from the actual
offer in writing.
Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president
Charo Santos-Concio, a list of three (3) film packages (36 title) from which ABSCBN may exercise its right of first refusal under the afore-said agreement (Exhs. 1
par. 2, 2, 2-A and 2-B Viva). ABS-CBN, however through Mrs. Concio, can tick off
only ten (10) titles (from the list) we can purchase (Exh. 3 Viva) and therefore did not
accept said list (TSN, June 8, 1992, pp. 9-10). The titles ticked off by Mrs. Concio are
not the subject of the case at bar except the film Maging Sino Ka Man.
For further enlightenment, this rejection letter dated January 06, 1992 (Exh 3 Viva) is
hereby quoted:
6 January 1992
Dear Vic,
This is not a very formal business letter I am writing to you as I would like to express
my difficulty in recommending the purchase of the three film packages you are
offering ABS-CBN.
From among the three packages I can only tick off 10 titles we can purchase. Please
see attached. I hope you will understand my position. Most of the action pictures in
the list do not have big action stars in the cast. They are not for primetime. In line with
this I wish to mention that I have not scheduled for telecast several action pictures in
our very first contract because of the cheap production value of these movies as well
as the lack of big action stars. As a film producer, I am sure you understand what I am
trying to say as Viva produces only big action pictures.
In fact, I would like to request two (2) additional runs for these movies as I can only
schedule them in out non-primetime slots. We have to cover the amount that was paid
for these movies because as you very well know that non-primetime advertising rates
are very low. These are the unaired titles in the first contract.
1. Kontra Persa [sic]
2. Raider Platoon
3. Underground guerillas
4. Tiger Command
5. Boy de Sabog
6. lady Commando
7. Batang Matadero
8. Rebelyon

I hope you will consider this request of mine.

The other dramatic films have been offered to us before and have been rejected
because of the ruling of MTRCB to have them aired at 9:00 p.m. due to their very
adult themes.
As for the 10 titles I have choosen [sic] from the 3 packages please consider including
all the other Viva movies produced last year, I have quite an attractive offer to make.
Thanking you and with my warmest regards.
(Signed)
Charo Santos-Concio
On February 27, 1992, defendant Del Rosario approached ABS-CBNs Ms. Concio,
with a list consisting of 52 original movie titles (i.e., not yet aired on television)
including the 14 titles subject of the present case, as well as 104 re-runs (previously
aired on television) from which ABS-CBN may choose another 52 titles, as a total of
156 titles, proposing to sell to ABS-CBN airing rights over this package of 52
originals and 52 re-runs for P60,000,000.00 of which P30,000,000.00 will be in cash
and P30,000,000.00 worth of television spots (Exh. 4 to 4-C Viva; 9 Viva).
On April 2, 1992, defendant Del Rosario and ABS-CBNs general manager, Eugenio
Lopez III, met at the Tamarind Grill Restaurant in Quezon City to discuss the package
proposal of VIVA. What transpired in that lunch meeting is the subject of conflicting
versions. Mr. Lopez testified that he and Mr. Del Rosario allegedly agreed that ABSCBN was granted exclusive film rights to fourteen (14) films for a total consideration
of P36 million; that he allegedly put this agreement as to the price and number of
films in a napkin and signed it and gave it to Mr. Del Rosario (Exh. D; TSN, pp. 2426, 77-78, June 8, 1992).On the other hand. Del Rosario denied having made any
agreement with Lopez regarding the 14 Viva films; denied the existence of a napkin in
which Lopez wrote something; and insisted that what he and Lopez discussed at the
lunch meeting was Vivas film package offer of 104 films (52 originals and 52 re-runs)
for a total price of P60 million. Mr. Lopez promising [sic]to make a counter proposal
which came in the form of a proposal contract Annex C of the complaint (Exh. 1 Viva;
Exh C ABS-CBN).
On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vicepresident for Finance discussed the terms and conditions of Vivas offer to sell the 104
films, after the rejection of the same package by ABS-CBN.

On April 07, 1992, defendant Del Rosario received through his secretary , a
handwritten note from Ms. Concio, (Exh. 5 Viva), which reads: Heres the draft of the
contract. I hope you find everything in order, to which was attached a draft exhibition
agreement (Exh. C ABS-CBN; Exh. 9 Viva p. 3) a counter-proposal covering 53 films,
52 of which came from the list sent by defendant Del Rosario and one film was added
by Ms. Concio, for a consideration of P35 million. Exhibit C provides that ABS-CBN
is granted film rights to 53 films and contains a right of first refusal to 1992 Viva
Films. The said counter proposal was however rejected by Vivas Board of Directors
[in the] evening of the same day, April 7, 1992, as Viva would not sell anything less
than the package of 104 films for P60 million pesos (Exh. 9 Viva), and such rejection
was relayed to Ms. Concio.
On April 29, 1992, after the rejection of ABS-CBN and following several negotiations
and meetings defendant Del Rosario and Vivas President Teresita Cruz, in
consideration of P60 million, signed a letter of agreement dated April 24, 1992,
granting RBS the exclusive right to air 104 Viva-produced and/or acquired films (Exh.
7-A - RBS; Exh. 4 RBS) including the fourteen (14) films subject of the present case. [4]
On 27 May 1992, ABS-CBN filed before the RTC a complaint for specific performance with
a prayer for a writ of preliminary injunction and/or temporary restraining order against private
respondents Republic Broadcasting Corporation[5] (hereafter RBS), Viva Production (hereafter
VIVA), and Vicente del Rosario. The complaint was docketed as Civil Case No. Q-92-12309.
On 28 May 1992, the RTC issued a temporary restraining order [6] enjoining private
respondents from proceeding with the airing, broadcasting, and televising of the fourteen VIVA
films subject of the controversy, starting with the film Maging Sino Ka Man, which was
scheduled to be shown on private respondent RBS channel 7 at seven oclock in the evening of
said date.
On 17 June 1992, after appropriate proceedings, the RTC issued an order [7] directing the
issuance of a writ of preliminary injunction upon ABS-CBNs posting of a P35 million
bond. ABS-CBN moved for the reduction of the bond,[8] while private respondents moved for
reconsideration of the order and offered to put up a counterbond.[9]
In the meantime, private respondents filed separate answer with counterclaim. [10] RBS also
set up a cross-claim against VIVA.
On 3 August 1992, the RTC issued an order [11] dissolving the writ of preliminary injunction
upon the posting by RBS of a P30 million counterbond to answer for whatever damages ABSCBN might suffer by virtue of such dissolution. However, it reduced petitioners injunction bond
to P15 million as a condition precedent for the reinstatement of the writ of preliminary injunction
should private respondents be unable to post a counterbond.
At the pre-trial[12] on 6 August 1992, the parties upon suggestion of the court, agreed to
explore the possibility of an amicable settlement. In the meantime, RBS prayed for and was
granted reasonable time within which to put up a P30 million counterbond in the event that no
settlement would be reached.

As the parties failed to enter into an amicable settlement, RBS posted on 1 October 1992 a
counterbond, which the RTC approved in its Order of 15 October 1992.[13]
On 19 October 1992, ABS-CBN filed a motion for reconsideration [14] of the 3 August and 15
October 1992 Orders, which RBS opposed.[15]
On 29 October, the RTC conducted a pre-trial.[16]
Pending resolution of its motion for reconsideration, ABS-CBN filed with the Court of
Appeals a petition[17] challenging the RTCs Order of 3 August and 15 October 1992 and praying
for the issuance of a writ of preliminary injunction to enjoin the RTC from enforcing said
orders. The case was docketed as CA-G.R. SP No. 29300.
On 3 November 1992, the Court of Appeals issued a temporary restraining order [18] to enjoin
the airing, broadcasting, and televising of any or all of the films involved in the controversy.
On 18 December 1992, the Court of Appeals promulgated a decision [19] dismissing the
petition in CA-G.R. SP No. 29300 for being premature. ABS-CBN challenged the dismissal in a
petition for review filed with this Court on 19 January 1993, which was docketed s G.R. No.
108363.
In the meantime the RTC received the evidence for the parties in Civil Case No. Q-9212309. Thereafter, on 28 April 1993, it rendered a decision [20] in favor of RBS and VIVA and
against ABS-CBN disposing as follows:

WHEREFORE, under cool reflection and prescinding from the foregoing, judgment is
rendered in favor of defendants and against the plaintiff.
(1) The complaint is hereby dismissed;
(2) Plaintiff ABS-CBN is ordered to pay defendant RBS the following:
a) P107,727.00 the amount of premium paid by RBS to the surety which issued
defendants RBSs bond to lift the injunction;
b) P191,843.00 for the amount of print advertisement for Maging Sino Ka Man in
various newspapers;
c) Attorneys fees in the amount of P1 million;
d) P5 million as and by way of moral damages;
e) P5 million as and by way of exemplary damages;
(3) For the defendant VIVA, plaintiff ABS-CBN is ordered to pay P212,000.00 by way of
reasonable attorneys fees.
(4) The cross-claim of defendant RBS against defendant VIVA is dismissed.
(5) Plaintiff to pay the costs.

According to the RTC, there was no meeting of minds on the price and terms of the
offer. The alleged agreement between Lopez III and Del Rosario was subject to the approval of
the VIVA Board of Directors, and said agreement was disapproved during the meeting of the
Board on 7 April 1992. Hence, there was no basis for ABS-CBNs demand that VIVA signed the

1992 Film Exhibition Agreement.Furthermore, the right of first refusal under the 1990 Film
Exhibition Agreement had previously been exercised per Ms. Concios letter to Del Rosario
ticking off ten titles acceptable to them, which would have made the 1992 agreement an entirely
new contract.
On 21 June 1993, this Court denied[21] ABS-CBNs petition for review in G.R. No. 108363, as
no reversible error was committed by the Court of Appeals in its challenged decision and the
case had become moot and academic in view of the dismissal of the main action by the court a
quo in its decision of 28 April 1993.
Aggrieved by the RTCs decision, ABS-CBN appealed to the Court of Appeals claiming that
there was a perfected contract between ABS-CBN and VIVA granting ABS-CBN the exclusive
right to exhibit the subject films. Private respondents VIVA and Del Rosario also appealed
seeking moral and exemplary damages and additional attorneys fees.
In its decision of 31 October 1996, the Court of Appeals agreed with the RTC that the
contract between ABS-CBN and VIVA had not been perfected, absent the approval by the VIVA
Board of Directors of whatever Del Rosario, its agent, might have agreed with Lopez III. The
appellate court did not even believe ABS-CBNs evidence that Lopez III actually wrote down
such an agreement on a napkin, as the same was never produced in court. It likewise rejected
ABS-CBNs insistence on its right of first refusal and ratiocinated as follows:

As regards the matter of right of first refusal, it may be true that a Film Exhibition
Agreement was entered into between Appellant ABS-CBN and appellant VIVA under
Exhibit A in 1990 and that parag. 1.4 thereof provides:
1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) VIVA
films for TV telecast under such terms as may be agreed upon by the parties hereto,
provided, however, that such right shall be exercised by ABS-CBN within a period of
fifteen (15) days from the actual offer in writing (Records, p. 14).
[H]owever, it is very clear that said right of first refusal in favor of ABS-CBN shall
still be subjected to such terms as may be agreed upon by the parties thereto, and that
the said right shall be exercised by ABS-CBN within fifteen (15) days from the actual
offer in writing.
Said parag. 1.4 of the agreement Exhibit A on the right of first refusal did not fix the
price of the film right to the twenty-four (24) films, nor did it specify the terms
thereof. The same are still left to be agreed upon by the parties.
In the instant case, ABS-CBNs letter of rejection Exhibit 3 (Records, p. 89) stated that
it can only tick off ten (10) films, and the draft contract Exhibit C accepted only
fourteen (14) films, while parag. 1.4 of Exhibit A speaks of the next twenty-four (24)
films.

The offer of VIVA was sometime in December 1991, (Exhibits 2, 2-A, 2-B; Records,
pp. 86-88; Decision, p. 11, Records, p. 1150), when the first list of VIVA films was
sent by Mr. Del Rosario to ABS-CBN.The Vice President of ABS-CBN, Mrs. Charo
Santos-Concio, sent a letter dated January 6, 1992 (Exhibit 3, Records, p. 89) where
ABS-CBN exercised its right of refusal by rejecting the offer of VIVA. As aptly
observed by the trial court, with the said letter of Mrs. Concio of January 6, 1992,
ABS-CBN had lost its right of first refusal. And even if We reckon the fifteen (15) day
period from February 27, 1992 (Exhibit 4 to 4-C) when another list was sent to ABSCBN after the letter of Mrs. Concio, still the fifteen (15) day period within which
ABS-CBN shall exercise its right of first refusal has already expired. [22]
Accordingly, respondent court sustained the award factual damages consisting in the cost of
print advertisements and the premium payments for the counterbond, there being adequate proof
of the pecuniary loss which RBS has suffered as a result of the filing of the complaint by ABSCBN. As to the award of moral damages, the Court of Appeals found reasonable basis therefor,
holding that RBSs reputation was debased by the filing of the complaint in Civil Case No. Q-9212309 and by the non-showing of the film Maging Sino Ka Man. Respondent court also held that
exemplary damages were correctly imposed by way of example or correction for the public good
in view of the filing of the complaint despite petitioners knowledge that the contract with VIVA
had not been perfected. It also upheld the award of attorneys fees, reasoning that with ABSCBNs act of instituting Civil Case No. Q-92-12309, RBS was unnecessarily forced to
litigate. The appellate court, however, reduced the awards of moral damages to P 2 million,
exemplary damages to P2 million, and attorneys fees to P500,000.00.
On the other hand, respondent Court of Appeals denied VIVA and Del Rosarios appeal
because it was RBS and not VIVA which was actually prejudiced when the complaint was filed
by ABS-CBN.
Its motion for reconsideration having been denied, ABS-CBN filed the petition in this case,
contending that the Court of Appeals gravely erred in
I

RULING THAT THERE WAS NO PERFECTED CONTRACT BETWEEN PETITIONER

AND PRIVATE RESPONDENT VIVA NOTWITHSTANDING PREPONFERANCE OF
EVIDENCE ADDUCED BY PETITIONER TO THE CONTRARY.
II

IN AWARDING ACTUAL AND COMPENSATORY DAMAGES IN FAVOR OF PRIVATE

RESPONDENT RBS.
III

IN AWARDING MORAL AND EXEMPLARY DAMAGES IN FAVOR OF PRIVATE

RESPONDENT RBS.
IV

IN AWARDING ATORNEYS FEES OF RBS.

ABS-CBN claims that it had yet to fully exercise its right of first refusal over twenty-four
titles under the 1990 Film Exhibition Agreement, as it had chosen only ten titles from the first
list. It insists that we give credence to Lopezs testimony that he and Del Rosario met at the
Tamarind Grill Restaurant, discussed the terms and conditions of the second list (the 1992 Film
Exhibition Agreement) and upon agreement thereon, wrote the same on a paper napkin. It also
asserts that the contract has already been effective, as the elements thereof, namely, consent,
object, and consideration were established. It then concludes that the Court of Appeals
pronouncements were not supported by law and jurisprudence, as per our decision of 1
December 1995 in Limketkai Sons Milling, Inc. v. Court of Appeals, [23] which cited Toyota Shaw,
Inc. v. Court of Appeals;[24] Ang Yu Asuncion v. Court of Appeals,[25] and Villonco Realty
Company v. Bormaheco, Inc.[26]
Anent the actual damages awarded to RBS, ABS-CBN disavows liability therefor. RBS
spent for the premium on the counterbond of its own volition in order to negate the injunction
issued by the trial court after the parties had ventilated their respective positions during the
hearings for the purpose. The filing of the counterbond was an option available to RBS, but it
can hardly be argued that ABS-CBN compelled RBS to incur such expense. Besides, RBS had
another available option, i.e., move for the dissolution of the injunction; or if it was determined
to put up a counterbond, it could have presented a cash bond. Furthermore under Article 2203 of
the Civil Code, the party suffering loss injury is also required to exercise the diligence of a good
father of a family to minimize the damages resulting from the act or omission. As regards the
cost of print advertisements, RBS had not convincingly established that this was a loss
attributable to the non-showing of Maging Sino Ka Man; on the contrary, it was brought out
during trial that with or without the case or injunction, RBS would have spent such an amount to
generate interest in the film.
ABS-CBN further contends that there was no other clear basis for the awards of moral and
exemplary damages. The controversy involving ABS-CBN and RBS did not in any way originate
from business transaction between them. The claims for such damages did not arise from any
contractual dealings or from specific acts committed by ABS-CBN against RBS that may be
characterized as wanton, fraudulent, or reckless; they arose by virtue only of the filing of the
complaint. An award of moral and exemplary damages is not warranted where the record is
bereft of any proof that a party acted maliciously or in bad faith in filing an action. [27] In any case,
free resort to courts for redress of wrongs is a matter of public policy. The law recognizes the
right of every one to sue for that which he honestly believes to be his right without fear of
standing trial for damages where by lack of sufficient evidence, legal technicalities, or a different
interpretation of the laws on the matter, the case would lose ground. [28]One who, makes use of his
own legal right does no injury.[29] If damage results from filing of the complaint, it is damnum
absque injuria.[30] Besides, moral damages are generally not awarded in favor of a juridical
person, unless it enjoys a good reputation that was debased by the offending party resulting in
social humiliation.[31]
As regards the award of attorneys fees, ABS-CBN maintains that the same had no factual,
legal, or equitable justification. In sustaining the trial courts award, the Court of Appeals acted in
clear disregard of the doctrine laid down in Buan v. Camaganacan[32] that the text of the decision
should state the reason why attorneys fees are being awarded; otherwise, the award should be
disallowed. Besides, no bad faith has been imputed on, much less proved as having been
committed by, ABS-CBN. It has been held that where no sufficient showing of bad faith would

be reflected in a partys persistence in a case other than an erroneous conviction of the

righteousness of his cause, attorneys fees shall not be recovered as cost.[33]
On the other hand, RBS asserts that there was no perfected contract between ABS-CBN and
VIVA absent meeting of minds between them regarding the object and consideration of the
alleged contract. It affirms that ABS-CBNs claim of a right of first refusal was correctly rejected
by the trial court. RBS insists the premium it had paid for the counterbond constituted a
pecuniary loss upon which it may recover. It was obliged to put up the counterbond due to the
injunction procured by ABS-CBN. Since the trial court found that ABS-CBN had no cause of
action or valid claim against RBS and, therefore not entitled to the writ of injunction, RBS could
recover from ABS-CBN the premium paid on the counterbond. Contrary to the claim of ABSCBN, the cash bond would prove to be more expensive, as the loss would be equivalent to the
cost of money RBS would forego in case the P30 million came from its funds or was borrowed
from banks.
RBS likewise asserts that it was entitled to the cost of advertisements for the cancelled
showing of the film Maging Sino Ka Man because the print advertisements were out to announce
the showing on a particular day and hour on Channel 7, i.e., in its entirety at one time, not as
series to be shown on a periodic basis. Hence, the print advertisements were good and relevant
for the particular date of showing, and since the film could not be shown on that particular date
and hour because of the injunction, the expenses for the advertisements had gone to waste.
As regards moral and exemplary damages, RBS asserts that ABS-CBN filed the case and
secured injunctions purely for the purpose of harassing and prejudicing RBS. Pursuant then to
Articles 19 and 21 of the Civil Code, ABS-CBN must be held liable for such
damages. Citing Tolentino,[34] damages may be awarded in cases of abuse of rights even if the
done is not illicit, and there is abuse of rights where a plaintiff institutes an action purely for the
purpose of harassing or prejudicing the defendant.
In support of its stand that a juridical entity can recover moral and exemplary damages,
private respondent RBS cited People v. Manero,[35] where it was stated that such entity may
recover moral and exemplary damages if it has a good reputation that is debased resulting in
social humiliation. It then ratiocinates; thus:

There can be no doubt that RBS reputation has been debased by ABS-CBNs acts in
this case. When RBS was not able to fulfill its commitment to the viewing public to
show the film Maging Sino Ka Man on the scheduled dates and times (and on two
occasions that RBS advertised), it suffered serious embarrassment and social
humiliation. When the showing was cancelled, irate viewers called up RBS offices
and subjected RBS to verbal abuse (Announce kayo ng announce, hindi ninyo naman
ilalabas, nanloloko yata kayo) (Exh. 3-RBS, par.3). This alone was not something
RBS brought upon itself. It was exactly what ABS-CBN had planted to happen.
The amount of moral and exemplary damages cannot be said to be excessive. Two
reasons justify the amount of the award.

The first is that the humiliation suffered by RBS, is national in extent. RBS operations
as a broadcasting company is [sic] nationwide. Its clientele, like that of ABS-CBN,
consists of those who own and watch television. It is not an exaggeration to state, and
it is a matter of judicial notice that almost every other person in the country watches
television. The humiliation suffered by RBS is multiplied by the number of
televiewers who had anticipated the showing of the film, Maging Sino Ka Man on
May 28 and November 3, 1992 but did not see it owing to the cancellation. Added to
this are the advertisers who had placed commercial spots for the telecast and to whom
RBS had a commitment in consideration of the placement to show the film in the
dates and times specified.
The second is that it is a competitor that caused RBS suffer the humiliation. The
humiliation and injury are far greater in degree when caused by an entity whose
ultimate business objective is to lure customers (viewers in this case) away from the
competition.[36]
For their part, VIVA and Vicente del Rosario contend that the findings of fact of the trial
court and the Court of Appeals do not support ABS-CBNs claim that there was a perfected
contract. Such factual findings can no longer be disturbed in this petition for review under Rule
45, as only questions of law can be raised, not questions of fact. On the issue of damages and
attorneys fees, they adopted the arguments of RBS.
The key issues for our consideration are (1) whether there was a perfected contract between
VIVA and ABS-CBN, and (2) whether RBS is entitled to damages and attorneys fees. It may be
noted that that award of attorneys fees of P212,000 in favor of VIVA is not assigned as another
error.
I

The first issue should be resolved against ABS-CBN. A contract is a meeting of minds
between two persons whereby one binds himself to give something or render some service to
another[37] for a consideration. There is no contract unless the following requisites concur: (1)
consent of the contracting parties; (2) object certain which is the subject of the contract; and (3)
cause of the obligation, which is established.[38] A contract undergoes three stages:
(a) preparation, conception, or generation, which is the period of negotiation and bargaining,
ending at the moment of agreement of the parties;
(b) perfection or birth of the contract, which is the moment when the parties come to agree on
the terms of the contract; and
(c) consummation or death, which is the fulfillment or performance of the terms agreed upon in
the contract.[39]

Contracts that are consensual in nature are perfected upon mere meeting of the minds. Once
there is concurrence between the offer and the acceptance upon the subject matter, consideration,
and terms of payment a contract is produced. The offer must be certain. To convert the offer into
a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be
plain, unequivocal, unconditional, and without variance of any sort from the proposal. A

qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is a
rejection of the original offer. Consequently, when something is desired which is not exactly
what is proposed in the offer, such acceptance is not sufficient to generate consent because any
modification or variation from the terms of the offer annuls the offer.[40]
When Mr. Del Rosario of Viva met Mr. Lopez of ABS-CBN at the Tamarind Grill on 2 April
1992 to discuss the package of films, said package of 104 VIVA films was VIVAs offer to ABSCBN to enter into a new Film Exhibition Agreement. But ABS-CBN, sent through Ms. Concio,
counter-proposal in the form a draft contract proposing exhibition of 53 films for a consideration
of P35 million. This counter-proposal could be nothing less than the counter-offer of Mr. Lopez
during his conference with Del Rosario at Tamarind Grill Restaurant. Clearly, there was no
acceptance of VIVAs offer, for it was met by a counter-offer which substantially varied the terms
of the offer.
ABS-CBNs reliance in Limketkai Sons Milling, Inc. v. Court of Appeals [41] and Villonco
Realty Company v. Bormaheco, Inc.,[42] is misplaced. In these cases, it was held that an
acceptance may contain a request for certain changes in the terms of the offer and yet be a
binding acceptance as long as it is clear that the meaning of the acceptance is positively and
unequivocally to accept the offer, whether such request is granted or not. This ruling was,
however, reversed in the resolution of 29 March 1996, [43] which ruled that the acceptance of an
offer must be unqualified and absolute, i.e., it must be identical in all respects with that of the
offer so as to produce consent or meetings of the minds.
On the other hand, in Villonco, cited in Limketkai, the alleged changes in the revised
counter-offer were not material but merely clarificatory of what had previously been agreed
upon. It cited the statement in Stuart v. Franklin Life Insurance Co.[44] that a vendors change in a
phrase of the offer to purchase, which change does not essentially change the terms of the offer,
does not amount to a rejection of the offer and the tender of a counter-offer.[45] However, when
any of the elements of the contract is modified upon acceptance, such alteration amounts to a
counter-offer.
In the case at bar, ABS-CBN made no unqualified acceptance of VIVAs offer hence, they
underwent period of bargaining. ABS-CBN then formalized its counter-proposals or counteroffer in a draft contract. VIVA through its Board of Directors, rejected such counter-offer. Even if
it be conceded arguendo that Del Rosario had accepted the counter-offer, the acceptance did not
bind VIVA, as there was no proof whatsoever that Del Rosario had the specific authority to do
so.
Under the Corporation Code,[46] unless otherwise provided by said Code, corporate powers,
such as the power to enter into contracts, are exercised by the Board of Directors. However, the
Board may delegate such powers to either an executive committee or officials or contracted
managers. The delegation, except for the executive committee, must be for specific purposes.
[47]
Delegation to officers makes the latter agents of the corporation; accordingly, the general rules
of agency as to the binding effects of their acts would apply.[48] For such officers to be deemed
fully clothed by the corporation to exercise a power of the Board, the latter must specially
authorize them to do so. that Del Rosario did not have the authority to accept ABS-CBNs
counter-offer was best evidenced by his submission of the draft contract to VIVAs Board of
Directors for the latters approval. In any event, there was between Del Rosario and Lopez III no
meeting of minds. The following findings of the trial court are instructive:

A number of considerations militate against ABS-CBNs claim that a contract was

perfected at that lunch meeting on April 02, 1992 at the Tamarind Grill.
FIRST, Mr. Lopez claimed that what was agreed upon at the Tamarind Grill referred
to the price and the number of films, which he wrote on a napkin. However, Exhibit C
contains numerous provisions which were not discussed at the Tamarind Grill, if
Lopez testimony was to be believed nor could they have been physically written on a
napkin. There was even doubt as to whether it was a paper napkin or cloth napkin. In
short what were written in Exhibit C were not discussed, and therefore could not have
been agreed upon, by the parties. How then could this court compel the parties to sign
Exhibit C when the provisions thereof were not previously agreed upon?
SECOND, Mr. Lopez claimed that what was agreed upon as the subject matter of the
contract was 14 films. The complaint in fact prays for delivery of 14 films. But
Exhibit C mentions 53 films as its subject matter. Which is which? If Exhibit C
reflected the true intent of the parties, then ABS-CBNs claim for 14 films in its
complaint is false or if what it alleged in the complaint is true, then Exhibit C did not
reflect what was agreed upon by the parties. This underscores the fact that there was
no meeting of the minds as to the subject matter of the contract, so as to preclude
perfection thereof. For settled is the rule that there can be no contract where there is
no object certain which is its subject matter (Art. 1318, NCC).
THIRD, Mr. Lopez [sic] answer to question 29 of his affidavit testimony (Exh. D)
States:
We were able to reach an agreement. VIVA gave us the exclusive license to show
these fourteen (14) films, and we agreed to pay Viva the amount of P16,050,000.00 as
well as grant Viva commercial slots worth P19,950,000.00. We had already earmarked
this P16,050,000.00.
which gives a total consideration of P36 million (P19,951,000.00 plus P16,050,000.00
equals P36,000,000.00).
On cross-examination Mr. Lopez testified:
Q What was written in this napkin?
A The total price, the breakdown the known Viva movies, the 7 blockbuster movies and the other 7
Viva movies because the price was broken down accordingly. The none [sic] Viva and the seven
other Viva movies and the sharing between the cash portion and the concerned spot portion in the
total amount of P35 million pesos.

Now, which is which? P36 million or P35 million? This weakens ABS-CBNs claim.

FOURTH. Mrs. Concio, testifying for ABS-CBN stated that she transmitted Exhibit C
to Mr. Del Rosario with a handwritten note, describing said Exhibit C as a draft. (Exh.
5 Viva; tsn pp. 23-24, June 08, 1992). The said draft has a well defined meaning.
Since Exhibit C is only a draft, or a tentative, provisional or preparatory writing
prepared for discussion, the terms and conditions thereof could not have been
previously agreed upon by ABS-CBN and Viva.Exhibit C could not therefore legally
bind Viva, not having agreed thereto. In fact, Ms. Concio admitted that the terms and
conditions embodied in Exhibit C were prepared by ABS-CBNs lawyers and there
was no discussion on said terms and conditions.
As the parties had not yet discussed the proposed terms and conditions in Exhibit C,
and there was no evidence whatsoever that Viva agreed to the terms and conditions
thereof, said document cannot be a binding contract. The fact that Viva refused to sign
Exhibit C reveals only two [sic] well that it did not agree on its terms and conditions,
and this court has no authority to compel Viva to agree thereto.
FIFTH. Mr. Lopez understand [sic] that what he and Mr. Del Rosario agreed upon at
the Tamarind Grill was only provisional, in the sense that it was subject to approval by
the Board of Directors of Viva. He testified:
Q Now, Mr. Witness, and after that Tamarinf meeting the second meeting wherein you claimed that
you have the meeting of the minds between you and Mr. Vic del Rosario, what happened?
A Vic Del Rosario was supposed to call us up and tell us specifically the result of the discussion with
the Board of Directors.
Q And you are referring to the so-called agreement which you wrote in [sic] a piece of paper?
A Yes, sir.
Q So, he was going to forward that to the board of Directors for approval?
A Yes, sir (Tsn, pp. 42-43, June 8, 1992)
Q Did Mr. Del Rosario tell you that he will submit it to his Board for approval?
A Yes, sir. (Tsn, p. 69, June 8, 1992).

The above testimony of Mr. Lopez shows beyond doubt that he knew Mr. Del Rosario
had no authority to bind Viva to a contract with ABS-CBN until and unless its Board
of Directors approved it. The complaint, in fact, alleges that Mr. Del Rosario is the
Executive Producer of defendant Viva which is a corporation. (par. 2, complaint). As a
mere agent of Viva, Del Rosario could not bind Viva unless what he did is ratified by
its Directors. (Vicente vs.Geraldez, 52 SCRA 210; Arnold vs. Willets and Paterson, 44
Phil. 634). As a mere agent, recognized as such by plaintiff, Del Rosario could not be
held liable jointly and severally with Viva and his inclusion as party defendant has no

legal basis. (Salonga vs. Warner Barnes [sic],COLTA, 88 Phil. 125; Salmon vs. Tan,
36 Phil. 556).
The testimony of Mr. Lopez and the allegations in the complaint are clear admissions
that what was supposed to have been agreed upon at the Tamarind Grill between Mr.
Lopez and Del Rosario was not a binding agreement. It is as it should be because
corporate power to enter into a contract is lodged in the Board of Directors. (Sec. 23,
Corporation Code). Without such board approval by the Viva board, whatever
agreement Lopez and Del Rosario arrived at could not ripen into a valid binding upon
Viva (Yao Ka Sin Trading vs. Court of Appeals, 209 SCRA 763). The evidence
adduced shows that the Board of Directors of Viva rejected Exhibit C and insisted that
the film package for 104 films be maintained (Exh. 7-1 Cica). [49]
The contention that ABS-CBN had yet to fully exercise its right of first refusal over twentyfour films under the 1990 Film Exhibition Agreement and that the meeting between Lopez and
Del Rosario was a continuation of said previous contract is untenable. As observed by the trial
court, ABS-CBNs right of first refusal had already been exercised when Ms. Concio wrote to
Viva ticking off ten films.Thus:

[T]he subsequent negotiation with ABS-CBN two (2) months after this letter was
sent, was for an entirely different package. Ms. Concio herself admitted on crossexamination to having used or exercised the right of first refusal. She stated that
the list was not acceptable and was indeed not accepted by ABS-CBN, (Tsn, June
8, 1992, pp. 8-10). Even Mr. Lopez himself admitted that the right of first refusal
may have been already exercised by Ms. Concio (as she had). (TSN, June 8, 1992,
pp. 71-75). Del Rosario himself knew and understand [sic] that ABS-CBN has
lost its right of first refusal when his list of 36 titles were rejected (Tsn, June 9,
1992, pp. 10-11).[50]
II

However, we find for ABS-CBN on the issue of damages. We shall first take up actual
damages. Chapter 2, Title XVIII, Book IV of the Civil Code is the specific law on actual or
compensatory damages.Except as provided by law or by stipulation, one is entitled to
compensation for actual damages only for such pecuniary loss suffered by him as he has duly
proved.[51] The indemnification shall comprehend not only the value of the loss suffered, but also
that of the profits that the obligee failed to obtain. [52] In contracts and quasi-contracts the damages
which may be awarded are dependent on whether the obligor acted with good faith or
otherwise. In case of good faith, the damages recoverable are those which are the natural and
probable consequences of the breach of the obligation and which the parties have foreseen or
could have reasonably foreseen at the time of the constitution of the obligation. If the obligor
acted with fraud, bad faith, malice, or wanton attitude, he shall be responsible for all damages
which may be reasonably attributed to the non-performance of the obligation. [53] In crimes and
quasi-delicts, the defendants shall be liable for all damages which are the natural and probable

consequences of the act or omission complained of, whether or not such damages have been
foreseen or could have reasonably been foreseen by the defendant.[54]
Actual damages may likewise be recovered for loss or impairment of earning capacity in
cases of temporary or permanent personal injury, or for injury to the plaintiffs business standing
or commercial credit.[55]
The claim of RBS for actual damages did not arise from contract, quasi-contract, delict, or
quasi-delict. It arose from the fact of filing of the complaint despite ABS-CBNs alleged
knowledge of lack of cause of action. Thus paragraph 12 of RBSs Answer with Counterclaim
and Cross-claim under the heading COUNTERCLAIM specifically alleges:
12. ABS-CBN filed the complaint knowing fully well that it has no cause of action against
RBS. As a result thereof, RBS suffered actual damages in the amount of P6,621,195.32.[56]

Needless to state the award of actual damages cannot be comprehended under the above law on
actual damages. RBS could only probably take refuge under Articles 19, 20, and 21 of the Civil
Code, which read as follows:

ART. 19. Every person must, in the exercise of hid rights and in the performance of
his duties, act with justice, give everyone his due, and observe honesty and good faith.
ART. 20. Every person who, contrary to law, wilfully or negligently causes damage to
another shall indemnify the latter for the same.
ART. 21. Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage.
It may further be observed that in cases where a writ of preliminary injunction is issued, the
damages which the defendant may suffer by reason of the writ are recoverable from the
injunctive bond.[57] In this case, ABS-CBN had not yet filed the required bond; as a matter of fact,
it asked for reduction of the bond and even went to the Court of Appeals to challenge the order
on the matter. Clearly then, it was not necessary for RBS to file a counterbond. Hence, ABSCBN cannot be held responsible for the premium RBS paid for the counterbond.
Neither could ABS-CBN be liable for the print advertisements for Maging Sino Ka Man for
lack of sufficient legal basis. The RTC issued a temporary restraining order and later, a writ of
preliminary injunction on the basis of its determination that there existed sufficient ground for
the issuance thereof. Notably, the RTC did not dissolve the injunction on the ground of lack of
legal and factual basis, but because of the plea of RBS that it be allowed to put up a counterbond.
As regards attorneys fees, the law is clear that in the absence of stipulation, attorneys fees
may be recovered as actual or compensatory damages under any of the circumstances provided
for in Article 2208 of the Civil Code.[58]
The general rule is that attorneys fees cannot be recovered as part of damages because of the
policy that no premium should be placed on the right to litigate. [59] They are not to be awarded
every time a party wins a suit. The power of the court t award attorneys fees under Article 2208

demands factual, legal, and equitable justification.[60] Even when a claimant is compelled to
litigate with third persons or to incur expenses to protect his rights, still attorneys fees may not be
awarded where no sufficient showing of bad faith could be reflected in a partys persistence in a
case other than an erroneous conviction of the righteousness of his cause.[61]
As to moral damages the law is Section 1, Chapter 3, Title XVIII, Book IV of the Civil
Code. Article 2217 thereof defines what are included in moral damages, while Article 2219
enumerates the cases where they may be recovered. Article 2220 provides that moral damages
may be recovered in breaches of contract where the defendant acted fraudulently or in bad
faith. RBSs claim for moral damages could possibly fall only under item (10) of Article 2219,
thereof which reads:

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.
Moral damages are in the category of an award designed to compensate the claimant for
actual injury suffered and not to impose a penalty on the wrongdoer.[62] The award is not meant to
enrich the complainant at the expense of the defendant, but to enable the injured party to obtain
means, diversion, or amusements that will serve to obviate the moral suffering he has
undergone. It is aimed at the restoration, within the limits of the possible, of the spiritual status
quo ante, and should be proportionate to the suffering inflicted. [63] Trial courts must then guard
against the award of exorbitant damages; they should exercise balanced restrained and measured
objectivity to avoid suspicion that it was due to passion, prejudice, or corruption or the part of
the trial court.[64]
The award of moral damages cannot be granted in favor of a corporation because, being
an artificial person and having existence only in legal contemplation, it has no feelings, no
emotions, no senses. It cannot, therefore, experience physical suffering and mental anguish,
which can be experienced only by one having a nervous system. [65] The statement in People v.
Manero[66] and Mambulao Lumber Co. v. PNB[67] that a corporation may recover moral damages if
it has a good reputation that is debased, resulting in social humiliation is an obiter dictum. On
this score alone the award for damages must be set aside, since RBS is a corporation.
The basic law on exemplary damages is Section 5 Chapter 3, Title XVIII, Book IV of the
Civil Code. These are imposed by way of example or correction for the public good, in addition
to moral, temperate, liquidated, or compensatory damages. [68] They are recoverable in criminal
cases as part of the civil liability when the crime was committed with one or more aggravating
circumstances;[69] in quasi-delicts, if the defendant acted with gross negligence; [70] and in contracts
and quasi-contracts, if the defendant acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner.[71]
It may be reiterated that the claim of RBS against ABS-CBN is not based on contract, quasicontract, delict, or quasi-delict. Hence, the claims for moral and exemplary damages can only be
based on Articles 19, 20, and 21 of the Civil Code.
The elements of abuse of right under Article 19 are the following: (1) the existence of a legal
right or duty, (2) which is exercised in bad faith, and (3) for the sole intent of prejudicing or
injuring another.Article 20 speaks of the general sanction for all provisions of law which do not
especially provide for their own sanction; while Article 21 deals with acts contra bonus mores,

and has the following elements: (1) there is an act which is legal, (2) but which is contrary to
morals, good custom, public order, or public policy, and (3) and it is done with intent to injure.[72]
Verily then, malice or bad faith is at the core of Articles 19, 20, and 21. Malice or bad faith
implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral
obliquity.[73]Such must be substantiated by evidence.[74]
There is no adequate proof that ABS-CBN was inspired by malice or bad faith. It was
honestly convinced of the merits of its cause after it had undergone serious negotiations
culminating in its formal submission of a draft contract. Settled is the rule that the adverse result
of an action does not per se make the action wrongful and subject the actor to damages, for the
law could not have meant impose a penalty on the right to litigate. If damages result from a
persons exercise of a right, it is damnum absque injuria.[75]
WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of
Appeals in CA-G.R. CV No. 44125 is hereby REVERSED except as to unappealed award of
attorneys fees in favor of VIVA Productions, Inc.
No pronouncement as to costs.
SO ORDERED.
Melo, Kapunan, Martinez, and Pardo, JJ., concur.
Case: ABS-CBN BROADCASTING CORP. v.CA, REPUBLIC BROADCASTING CORP., VIVA
PRODUCTIONS, INC.,and VICENTE DEL ROSARIO (301 SCRA 589)Date: January 21,
1999Ponente: C.J. Davide, Jr.
Facts:
In 1990, ABS-CBN and VIVA executed a Film Exhibition Agreement whereby VIVA
gave ABS-CBN an exclusiveright to exhibit some VIVA films. According to the
agreement, ABS-CBN shall have the right of first refusal to the next 24VIVA films for
TV telecast under such terms as may be agreed upon by the parties, however, such
right shall be exercisedby ABS-CBN from the actual offer in writing.Sometime in
December 1991, VIVA, through Vicente Del Rosario (Executive Producer), offered
ABS-CBNthrough VP Charo Santos-Concio, a list of 3 film packages from which ABSCBN may exercise its right of first refusal.ABS-CBN, however through Mrs. Concio,
tick off only 10 titles they can purchase among which is the film Maging SinoKa
Man which is one of the subjects of the present case, therefore, it did not accept
the said list asper the rejection letterauthored by Mrs. Concio sent to Del
Rosario.Subsequently, Del Rosario approached Mrs. Concio with another list
consisting of 52 original movie titles and 104re-runs, proposing to sell to ABS-CBN
airing rights for P60M (P30M in cash and P30M worth of television spots). DelRosario
and ABS-CBNs General Manager, Eugenio Lopez III, met at the Tamarind Grill
Restaurant in QC to discuss thepackage proposal but to no avail.Four days later, Del
Rosario and Mr. Graciano Gozon, Senior VP of Finance of Republic Broadcasting
Corporation (RBS/Channel 7) discussed the terms and conditions of VIVAs offer. A

day after that, Mrs. Concio sent the draft of the contract between ABS-CBN and VIVA
which contained a counter-proposal covering 53 films for P35M. VIVAs Board of
Directors rejected the counter-proposal as it would not sell anything less than the
package of 104 films for P60M.After said rejection, ABS-CBN closed a deal with RBS
including the 14 films previously ticked off by ABS-CBN.Consequently, ABS-CBN filed
a complaint for specific performance with prayer for a writ of preliminary
injunctionand/or TRO against RBS, VIVA and Del Rosario. RTC then enjoined the
latter from airing the subject films. RBS posted aP30M counterbond to dissolve the
injunction. Later on, the trial court as well as the CA dismissed the complaint
holdingthat there was no meeting of minds between ABS-CBN and VIVA, hence,
there was no basis for ABS-CBNs demand, furthermore, the right of first refusal had
previously been exercised.Hence, the present petition, ABS-CBN argued that an
agreement was made during the meeting of Mr. Lopez and Del Rosario jotted down
on a napkin (this was never produced in court). Moreover, it had yet to fully
exercise its right of first refusal since only 10 titles were chosen from the first list. As
to actual, moral and exemplary damages, there was noclear basis in awarding the
same.
Issue:
WON a contract was perfected between ABS-CBN and VIVA and WON moral
damages may be awarded to acorporation
Held:
Both NO.
Ratio:
Contracts that are consensual in nature are perfected upon mere meeting of the
minds. Once there isconcurrence between the offer and the acceptance upon the
subject matter, consideration, and terms of payment acontract is produced. The
offer must be certain. To convert the offer into a contract, the acceptance must be
absoluteand must not qualify the terms of the offer; it must be plain, unequivocal,
unconditional, and without variance of any sortfrom the proposal. A qualified
acceptance, or one that involves a new proposal, constitutes a counter-offer and is
arejection of the original offer. Consequently, when something is desired which is
not exactly what is proposed in the offer,such acceptance is not sufficient to
generate consent because any modification or variation from the terms of the
offerannuls the offer.After Mr. Del Rosario of Viva met Mr. Lopez of ABS-CBN to
discuss the package of films, ABS-CBN, sent throughMs. Concio, counter-proposal in
the form a draft contract. This counter-proposal could be nothing less than the
counter-offer of Mr. Lopez during his conference with Del Rosario. Clearly, there was
no acceptance of VIVAs offer, for it was met by a counter-offer which substantially
varied the terms of the offer.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-8883

July 14, 1959

ALFREDO M. VELAYO, ETC., plaintiff,

vs.
SHELL COMPANY OF THE PHILIPPINES ISLANDS, LTD., defendant-appellee.
ALFONSO Z. SYCIP, ET. AL., intervenors-appellants.
Sycip, Quisumbing, Salazar and Associates for appellants.
Ozaeta, Lichauco and Picazo for appellee.
BAUTISTA ANGELO, J.:
On December 17, 1948, Alfredo M. Velayo as assignees of the insolvent Commercial Airlines, Inc.,
instituted an action against Shell Company of the Philippine Islands, Ltd., in the Court of First
Instance of Manila for injunction and damages (Civil Case No. 6966). On October 26, 1951, a
complaint in intervention was filed by Alfonso Sycip, Paul Sycip, and Yek Trading Corporation, and
on November 14, 1951, by Mabasa & Company.
After trial wherein plaintiff presented evidence in his behalf, but none in behalf of intervenors, the
court rendered decision dismissing plaintiff's complaint as well as those filed by the intervenors. On
March 31, 1954, counsel for plaintiff filed a notice of appeal, appeal bond, and record on appeal in
behalf only of plaintiff even if they also represent the intervenors, which in due time were approved,

the Court instructing its clerk to forward the record on appeal to the Supreme Court together with all
the evidence presented in the case. This instruction was actually complied with.
On August 31, 1954, the Deputy Clerk of the Supreme Court notified counsel of plaintiff that the
record as well as the evidence have already been received and that they should file their brief within
45 days from receipt of the notice. On November 2, 1954, counsel filed their brief for appellants. On
November 6, 1954, or 7 months after the judgment had become final as against the intervenors, and
4 days after counsel for appellants had submitted the latter's brief, counsel for intervenors filed with
the Supreme Court a petition for correction of the record on appeal in order to enable them to insert
therein the names of the intervenors as appellants, the petition being based, among others, on the
ground that the omission of the names of the intervenors in said record on appeal was due to the
mistake of the typist who prepared it while the attorney in charge was on vacation. The petition was
vigorously opposed by counsel for defendant, contending that the same would serve no purpose,
whatsoever considering that the intervenors had not presented any evidence in support of their
claim, aside from the fact that the alleged absence of the attorney of the intervenors cannot
constitute a justification for the alleged omission of the intervenors as appellants. On November 12,
1954, the Court denied the petition. Counsel intervenors moved for a reconsideration of the order,
but the same was denied.
On November 19, 1954, counsel for intervenors filed with the lower court a petition for relief under
Rule 38 of the Rules of Court, wherein he reiterated the same grounds they alleged in the petition for
correction filed by them in the Supreme Court, which petition was denied on November 27, 1954, for
having been filed outside the reglementary period fixed in said Rule 38. Counsel filed a motion for
reconsideration, which was again denied, the Court stating that "no judgment or order has been
rendered, nor any other proceeding taken by this Court on the right of the intervenors to appeal."
On December 20, 1954, counsel filed once more a motion to amend the record on appeal based on
grounds identical with those alleged in the petition for correction filed before the Supreme Court. On
December 27, 1954, the lower court denied the motion. On January 6, 1955, counsel filed a petition
for relief from this last order entered on December 27, 1954, to which counsel for defendant filed an
opposition. On February 5, 1955, hearing was had on both the petition for relief and the opposition,
and on February 9, 1955, the petition was denied on the ground that the case is already before the
Supreme Court on appeal. It is from this order that the counsel for intervenors has taken the appeal
now before us.
The instant appeal has no merit.
To begin with, the only remedy which appellants now seek in this appeal is the inclusion of the
intervenors as appellants in the appeal from the decision rendered in the main case, but this remedy
has already been denied twice by this Court, first, in its resolution of November 12, 1954 denying
their petition for correction of the record on appeal, and, second, in denying their motion for
reconsideration of said resolution. It should be noted that the grounds relied upon in this appeal are
the same grounds alleged in said petition for correction.
In the second place, the intervenors have no right or reason to appeal from the decision in the main
case, it appearing that they did not introduce any evidence during the trial in support of their

complaint, which shows that their appeal would be merely pro-forma. And, in any event, they made
the attempt to amend the record on appealseven (7) months after the decision had become final
against them.
In the third place, the intervenors have no right or reason to file a petition for relief under Rule 38 of
the Rules of Court from the order of the lower court issued on December 27, 1954, for the reason
that the same was entered upon a motion filed by them. Indeed they cannot reasonably assert that
the order was entered against them through fraud, accident, mistake, or negligence. The fraud
mentioned in Rule 38 is the fraud committed by the adverse party and certainly the same cannot be
attributed to the Court.
Finally, it appears that the main case has already been decided by this Court on the merits on
October 31, 1956, reversing the decision of the lower court and awarding damages to plaintiff, which
apparently is the very purpose which the intervenors seek to accomplish in joining the appeal as coappellants. This appeal, therefore, has already become moot.
Wherefore, the order appealed from is affirmed, with costs against appellants.
Paras, C.J., Bengzon, Padilla, Montemayor, Labrador, Concepcion, Endencia and Barrera,
JJ., concur.

100 Phil 168 Civil Law Torts and Damages Obligations arising from human relations
velayo case
Prior to 1948, Commercial Airlines (CALI) owed P170k (abt. $79k) to Shell Company. CAL
offered its C-54 plane as payment to Shell Company (the plane was in California) but Shell
at that time declined as it thought CALI had sufficient money to pay its debt. In 1948
however, CALI was going bankrupt so it called upon an informal meeting of its creditors. In
that meeting, the creditors agreed to appoint representatives to a working committee that
would determine the order of preference as to how each creditor should be paid. They also
agreed not to file suit against CALI but CALI did reserve that it will file insolvency
proceedings should its assets be not enough to pay them up. Shell Company was
represented by a certain Fitzgerald to the three man working committee. Later, the working
committee convened to discuss how CALIs asset should be divided amongst the creditors
but while such was pending, Fitzgerald sent a telegraph message to Shell USA advising the
latter that Shell Philippines is assigning its credit to Shell USA in the amount of $79k,
thereby effectively collecting almost all if not the entire indebtedness of CALI to Shell
Philippines. Shell USA got wind of the fact that CALI has a C-54 plane is California and so
Shell USA petitioned before a California court to have the plane be the subject of a writ of
attachment which was granted.

Meanwhile, the stockholders of CALI were unaware of the assignment of credit made by
Shell Philippines to Shell USA and they went on to approve the sale of CALIs asset to the
Philippine Airlines. In September 1948, the other creditors learned of the assignment made
by Shell. This prompted these other creditors to file their own complaint of attachment
against CALIs assets. CALI then filed for insolvency proceedings to protect its assets in the
Philippines from being attached. Alfredo Velayos appointment as CALIs assignee was
approved in lieu of the insolvency proceeding. In order for him to recover the C-54 plane in
California, it filed for a writ of injunction against Shell Philippines in order for the latter to
restrain Shell USA from proceeding with the attachment and in the alternative that judgment
be awarded in favor of CALI for damages double the amount of the C-54 plane. The C-54
plane was not recovered. Shell Company argued it is not liable for damages because there
is nothing in the law which prohibits a company from assigning its credit, it being a common
practice.
ISSUE: Whether or not Shell is liable for damages considering that it did not violate any law.
HELD: Yes. The basis of such liability, in the absence of law, is Article 21 of the Civil Code
which states:
Art. 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage.
Thus at one stroke, the legislator, if the forgoing rule is approved (as it was approved),
would vouchsafe adequate legal remedy for that untold numbers of moral wrongs which is
impossible for human foresight to provide for specifically in the statutes. A moral wrong or
injury, even if it does not constitute a violation of a statute law, should be compensated by
damages. Moral damages (Art. 2217) may be recovered (Art. 2219). In Article 20, the
liability for damages arises from a willful or negligent act contrary to law. In this article, the
act is contrary to morals, good customs or public policy.