G.R. No.

149241 August 24, 2009

DART PHILIPPINES, INC., Petitioner,

vs.
SPOUSES FRANCISCO and ERLINDA CALOGCOG, Respondents.

DECISION

NACHURA, J.:

Petitioner assails in this Rule 45 petition the February 28, 2001 Decision 1 and the July 30, 2001 Resolution2 of the Court of Appeals
(CA) in CA-G.R. CV. No. 52474. The facts and proceedings that led to the filing of the instant petition are pertinently narrated
below.

Engaged in the business of manufacturing or importing into the Philippines Tupperware products and marketing the same under a
direct selling distribution system,3 petitioner entered into a Distributorship Agreement with respondents on March 3, 1986. 4 The
agreement was to expire on March 31, 1987 but was subject to an automatic renewal clause for two one-year terms.5 On April 1,
1991, the parties again executed another Distributorship Agreement 6 which was to expire on March 31, 1992 but renewable on a
yearly basis upon terms and conditions mutually agreed upon in writing by the parties. 7

Following the expiration of the agreement, petitioner, on April 30, 1992, informed respondents that, due to the latters several
violations thereof, it would no longer renew the same. 8 Respondents then made a handwritten promise for them to observe and
comply with the terms and conditions thereof.9 This convinced petitioner to extend, on July 24, 1992, the period of the distributorship
up to September 30, 1992.10

In the meantime, on July 2, 1992, petitioner subjected respondents account to an audit review. 11 In September 1992, petitioner
informed respondents that it had engaged the services of an auditing firm and that it was again subjecting respondents account to an
audit review.12 Objecting to the second audit,13 respondents disallowed the auditing firm from inspecting their books and records. As
a result, petitioner only accepted respondents purchase orders on pre-paid basis.141avvphi1

On September 29, 1992, a day before the expiry of the Distributorship Agreement, respondents filed before the Regional Trial Court
(RTC) of Pasig City a Complaint for damages with application for a writ of injunction and/or restraining order docketed as Civil
Case No. 62444.15 They alleged that petitioner abused its right when it caused the audit of their account and when it only honored
their orders if they were pre-paid, thereby causing damages to them of around P1.3M.16

On November 12, 1992, the trial court issued a writ of preliminary injunction and directed petitioner to observe the terms and
conditions of the Distributorship Agreement and to honor, deliver and fulfill its obligations in effecting deliveries of Tupperware
products to respondents.17 In the subsequent certiorari proceedings before the appellate court docketed as CA-G.R. SP No. 29560, the
CA ruled that the Distributorship Agreement already expired; thus, the trial court committed grave abuse of discretion in granting the
writ of preliminary injunction which had the effect of enforcing a contract that had long expired. 18

Respondents then moved before the trial court, on June 14, 1993, for the admission of their Supplemental Complaint,19 in which they
alleged that petitioner refused to award benefits to the members of respondents sales force and coerced the said members to transfer
to another distributor; that petitioner refused to comply with Sections 8 and 9 20 of the Distributorship Agreement by not paying
respondents the value of the products on hand and in their custody, and by not effecting the transfer of their good will to the
absorbing distributor; and that petitioner, by its actions which resulted in the loss of respondents sales force, had made inutile
respondents investment in their building. Respondents thus prayed for additional actual damages, specifically P4,495,000.00 for the
good will, P1M for the products on hand, and P3M for the cost of the building.

Expectedly, petitioner opposed the admission of the supplemental complaint.21 Amid the protestations of petitioner, the trial court
admitted the supplemental complaint22 and ordered the former to file its supplemental answer. 23

After trial on the merits, the RTC rendered its Decision24 on November 27, 1995. It ruled, among others, that the second audit was
unreasonable and was only made to harass respondents; that the shift from credit to pre-paid basis in the purchase orders of
respondents was another act of harassment; that petitioner had no valid reason to refuse the renewal of the distributorship agreement;
and that petitioner abused its rights under the said agreement. It then concluded that because of petitioners unjustified acts,
respondents suffered damages, among which were the salaries paid to the internal auditors during the first audit, the good will
money, the value of the warehouse, moral and exemplary damages, and attorneys fees. The dispositive portion of the RTC decision
reads:

WHEREFORE, judgment is hereby rendered dismissing for lack of merit [respondents] claims for payment of items subject of credit
memoranda, and for products alleged to be on hand at the termination of the [distributorship] agreement. On [respondents] other
claims, judgment is hereby rendered, as follows:

1. Ordering the [petitioner] to pay [respondents] the amount of P23,500.17 representing the salaries of internal auditors
engaged by the [petitioner] to conduct an audit on [respondents] financial records;

2. Ordering the [petitioner] to pay [respondents] the sum of P4,495,000.00 representing "goodwill" money which
[respondents] failed to realize;
 3. Ordering the [petitioner] to pay [respondents] the sum of P1,000,000.00 as reasonable compensation to the [respondents]
for acquiring a lot and constructing thereon a structure to serve as storage, assembly place and warehouse for [petitioners]
products;

4. Ordering the [petitioner] to pay [respondents] the sum of P500,000.00 as moral damages and another P500,000.00 as and
by way of exemplary damages; and

5. Ordering the [petitioner] to pay [respondents] the sum of P100,000.00 as attorneys fees, plus P2,000.00 per Court
appearance.

[Petitioners] counterclaims are hereby dismissed for lack of merit.

Costs against the [petitioner].

SO ORDERED.25

Aggrieved, petitioner timely interposed its appeal. In the assailed February 28, 2001 Decision,26 the appellate court affirmed with
modification the ruling of the trial court and disposed of the appeal as follows:

WHEREFORE, in view of the foregoing, the assailed decision of the court a quo is hereby AFFIRMED WITH MODIFICATION,
the award for moral damages is hereby REDUCED to P100,000.00 and the award for exemplary damages is hereby REDUCED to
P50,000.00. The award of P1,000,000.00 as reasonable compensation for the acquisition of the lot and construction of the building is
hereby DELETED.

SO ORDERED.27

Since its motion for reconsideration was subsequently denied by the appellate court in the further assailed July 30, 2001 Resolution, 28
petitioner instituted the instant petition for review on certiorari, raising the following grounds:

1. The Court of Appeals committed an error in affirming the decision of the trial court admitting the supplemental complaint
thereby taking cognizance of the issues raised and rendering judgment thereon.

2. The Court of Appeals committed an error in affirming the decision of the trial court holding petitioner liable to pay
respondents the "goodwill money" they allegedly failed to realize.

3. While petitioner lauds the Court of Appeals decision deleting the trial courts award of P1,000,000.00 by way of
compensation for the alleged acquisition of the lot and construction of the building, and appreciates the reduction of the trial
courts awards on the alleged moral damages and exemplary damages, the Court of Appeals still erred in not totally
dismissing respondents claims for damages including attorneys fees.

4. The Court of Appeals committed an error in not finding for the petitioner and in not awarding damages in favor of
petitioner by way of reasonable attorneys fees.29

The primordial issue to be resolved by the Court in the instant case is whether petitioner abused its rights under the distributorship
agreement when it conducted an audit of respondents account, when it accepted respondents purchase orders only if they were on a
pre-paid basis, and when it refused to renew the said distributorship agreement.

Preliminarily, the Court admits that, ordinarily, it will not review the findings of fact made by the appellate court. However,
jurisprudence lays down several exceptions, among which are the following which obtain in this case: when the judgment is based on
a misapprehension of facts and when the appellate court manifestly overlooked certain relevant facts not disputed by the parties,
which, if properly considered, could justify a different conclusion. 30 Thus, the Court finds it imperative to evaluate, as in fact it had
reviewed, the records of the case, including the evidence adduced during the trial, in relation to the arguments of the parties and the
applicable law and jurisprudence.

Under Article 19 of the Civil Code, 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. To find the existence of abuse of right under the said article, the
following elements must be present: (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.31 Accordingly, the exercise of a right shall always be in accordance with the purpose for which it has
been established, and must not be excessive or unduly harshthere must be no intention to injure another. 32 A person will be
protected only when he acts in the legitimate exercise of his right, that is, when he acts with prudence and in good faith, not when he
acts with negligence or abuse.33

Malice or bad faith is at the core of Article 19 of the Civil Code. Good faith refers to the state of mind which is manifested by the
acts of the individual concerned. It consists of the intention to abstain from taking an unconscionable and unscrupulous advantage of
another. It is presumed. Thus, he who alleges bad faith has the duty to prove the same. 34 Bad faith does not simply connote bad
judgment or simple negligence; it involves a dishonest purpose or some moral obloquy and conscious doing of a wrong, a breach of
known duty due to some motives or interest or ill will that partakes of the nature of fraud. Malice connotes ill will or spite and speaks
not in response to duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad faith or bad motive. 35
At the crux of this controversy, therefore, is whether petitioner acted in bad faith or intended to injure respondents when it caused the
auditing of the latters account, when it implemented the pre-paid basis in treating the latters orders, and when it refused to renew
the distributorship agreement.

The Court rules in the negative. We note that in the written correspondence of petitioner to respondents on April 30, 1992 informing
the latter of the non-renewal of the distributorship agreement, petitioner already pointed out respondents violations of the agreement.
The letter pertinently reads:

We found that you have committed the following acts which are contrary to provisions of Section 2(f) of our Agreement:

(a) You submitted several "Vanguard Reports" containing false statements of the sales performance of your units. A
comparison of the reports you submitted to our office with that actually reported by your managers show that the sales of
your units are actually much lower than that reported to Tupperware (Exhibits "G," "H," "I," "J," "L," "O," "P," "Q," and
"R.")

(b) The unauthorized alteration of the mechanics of "Nans Challenge," which is a Tupperware company sponsored
promotion campaign. The documentary evidence furnished us, Exhibit "E," shows that the amount of target party averages
were increased by you.

(c) Charging the managers for accounts of their dealers and for overdue kits (Exhibits "C" and "D"). 36

The correspondence prompted respondents to make a handwritten promise that they would observe and comply with the terms and
conditions of the distributorship agreement.37 This promise notwithstanding, petitioner was not barred from exercising its right in the
agreement to conduct an audit review of respondents account. Thus, an audit was made in July 1992. In September 1992, petitioner
informed respondents that it was causing the conduct of a second audit review. And as explained in petitioners September 11, 1992
correspondence to respondents, the second audit was intended to cover the period not subject of the initial audit (the period prior to
January 1 to June 30, 1992, and the period from July 1, 1992 to September 1992). 38 Because respondents objected to the second
audit, petitioner exercised its option under the agreement to vary the manner in which orders are processedthis time, instead of the
usual credit arrangement, petitioner only admitted respondents purchase orders on pre-paid basis. It may be noted that petitioner still
processed respondents orders and that the pre-paid basis was only implemented during the last month of the agreement, in
September 1992. With the expiry of the distributorship agreement on September 30, 1992, petitioner no longer acceded to a renewal
of the same.

From these facts, we find that bad faith cannot be attributed to the acts of petitioner. Petitioners exercise of its rights under the
agreement to conduct an audit, to vary the manner of processing purchase orders, and to refuse the renewal of the agreement was
supported by legitimate reasons, principally, to protect its own business. The exercise of its rights was not impelled by any evil
motive designed, whimsically and capriciously, to injure or prejudice respondents. The rights exercised were all in accord with the
terms and conditions of the distributorship agreement, which has the force of law between them. 39 Clearly, petitioner could not be
said to have committed an abuse of its rights. It may not be amiss to state at this juncture that a complaint based on Article 19 of the
Civil Code must necessarily fail if it has nothing to support it but innuendos and conjectures. 40

Given that petitioner has not abused its rights, it should not be held liable for any of the damages sustained by respondents. The law
affords no remedy for damages resulting from an act which does not amount to a legal wrong. Situations like this have been
appropriately denominated damnum absque injuria. 41 To this end, the Court reverses and sets aside the trial and appellate courts
rulings. Nevertheless, the Court sustains the trial courts order for the reimbursement by petitioner to respondents of P23,500.17, with
12% interest per annum, computed from the filing of the original complaint up to actual payment, representing the salaries of the
internal auditors, because, first, the award was never questioned by petitioner, and second, petitioner was the one which engaged the
services of the auditors.

As regards petitioners claim for attorneys fees, the Court cannot grant the same. We emphasized in prior cases that no premium
should be placed on the right to litigate. Attorneys fees are not to be awarded every time a party wins a suit. Even when a claimant is
compelled to litigate or to incur expenses to protect his rights, still attorneys fees may not be awarded where there is no sufficient
showing of bad faith in a partys persistence in a case other than an erroneous conviction of the righteousness of his cause.42

With the above disquisition, the Court finds no compelling reason to resolve the other issues raised in the petition.

WHEREFORE, premises considered, the petition is GRANTED. The decisions of the Regional Trial Court of Pasig City in Civil
Case No. 62444 and of the Court of Appeals in CA-G.R. CV. No. 52474 are REVERSED and SET ASIDE. Petitioner is ORDERED
to pay respondents P23,500.17 with interest at 12% per annum computed from the date of filing of the original complaint.

THIRD DIVISION

[G.R. No. 156841. June 30, 2005]

GF EQUITY, INC., petitioner, vs. ARTURO VALENZONA, respondent.

DECISION

CARPIO-MORALES, J.:
On challenge via Petition for Review on Certiorari is the Court of Appeals October 14, 2002 Decision[1] reversing that of the
Regional Trial Court (RTC) of Manila dated June 28, 1997[2] which dismissed the complaint of herein respondent Arturo Valenzona
(Valenzona) for breach of contract with damages against herein petitioner GF Equity, Inc. (GF Equity).

The factual antecedents of the case are as follows:

GF Equity, represented by its Chief Financial Officer W. Steven Uytengsu (Uytengsu), hired Valenzona as Head Coach of the Alaska
basketball team in the Philippine Basketball Association (PBA) under a Contract of Employment.[3]

As head coach, the duties of Valenzona were described in the contract to include the following:

xxx

1. . . . coaching at all practices and games scheduled for the CORPORATIONs TEAM during the scheduled season of the
ASSOCIATION . . ., coaching all exhibition games scheduled by the corporation as approved by the PBA during and prior to the
scheduled season, coaching (if invited to participate) in the ASSOCIATIONs All Star Game and attending every event conducted in
association with the All Star Game, and coaching the play-off games subsequent to the scheduled season based on the athletic
program of the PBA.

xxx

3. The COACH agrees to observe and comply with all requirements of the CORPORATION respecting conduct of its TEAM and its
players, at all times whether on or off the playing floor. The CORPORATION may, from time to time during the continuance of this
contract, establish reasonable rules for the government of its players at home and on the road; and such rules shall be part of this
contract as fully is (sic) if herein written and shall be the responsibility of the COACH to implement; x x x

4. The COACH agrees (a) to report at the time and place fixed by the CORPORATION in good physical condition; (b) to keep
himself throughout the entire season in good physical condition; (c) to give his best services, as well as his loyalty to the
CORPORATION, and to serve as basketball coach for the CORPORATION and its assignees; (d) to be neatly and fully attired in
public and always to conduct himself on and off the court according to the highest standards of honesty, morality, fair play and
sportsmanship; (e) not to do anything which is detrimental to the best interests of the CORPORATION.

xxx

7. The COACH agrees that if so requested by the CORPORATION, he will endorse the CORPORATIONs products in commercial
advertising, promotions and the like. The COACH further agrees to allow the CORPORATION or the ASSOCIATION to take
pictures of the COACH alone or together with others, for still photographs, motion pictures or television, at such times as the
CORPORATION or the ASSOCIATION may designate, and no matter by whom taken may be used in any manner desired by either
of them for publicity or promotional purposes. (Underscoring supplied).

xxx

Even before the conclusion of the contract, Valenzona had already served GF Equity under a verbal contract by coaching its team,
Hills Brothers, in the 3rd PBA Conference of 1987 where the team was runner-up.

Under the contract, GF Equity would pay Valenzona the sum of Thirty Five Thousand Pesos (P35,000.00) monthly, net of taxes, and
provide him with a service vehicle and gasoline allowance.

While the employment period agreed upon was for two years commencing on January 1, 1988 and ending on December 31, 1989, the
last sentence of paragraph 3 of the contract carried the following condition:

3. x x x If at any time during the contract, the COACH, in the sole opinion of the CORPORATION, fails to exhibit sufficient skill or
competitive ability to coach the team, the CORPORATION may terminate this contract. (Emphasis supplied)

Before affixing his signature on the contract, Valenzona consulted his lawyer who pointed out the one-sidedness of the above-quoted
last sentence of paragraph 3 thereof. The caveat notwithstanding, Valenzona still acceded to the terms of the contract because he had
trust and confidence in Uytengsu who had recommended him to the management of GF Equity.

During his stint as Alaskas head coach, the team placed third both in the Open and All-Filipino PBA Conferences in 1988.

Valenzona was later advised by the management of GF Equity by letter of September 26, 1988 of the termination of his services in
this wise:

We regret to inform you that under the contract of employment dated January 1, 1988 we are invoking our rights
specified in paragraph 3.

You will continue to be paid until your outstanding balance which, as of September 25, 1988, is P75,868.38 has been fully
paid.
 Please return the service vehicle to my office no later than September 30, 1988.[4] (Emphasis supplied)

Close to six years after the termination of his services, Valenzonas counsel, by letter of July 30, 1994,[5] demanded from GF Equity
payment of compensation arising from the arbitrary and unilateral termination of his employment. GF Equity, however, refused the
claim.

Valenzona thus filed on September 26, 1994 before the Regional Trial Court of Manila a complaint[6] against GF Equity for breach
of contract with damages, ascribing bad faith, malice and disregard to fairness and to the rights of the plaintiff by unilaterally and
arbitrarily pre-terminating the contract without just cause and legal and factual basis. He prayed for the award of actual damages in
the amount of P560,000.00 representing his unpaid compensation from September 26, 1988 up to December 31, 1989, at the rate of
P35,000.00 a month; moral damages in the amount of P100,000.00; exemplary damages in the amount of P50,000.00; attorneys fees
in the amount of P100,000.00; and costs of suit.

Before the trial court, Valenzona challenged the condition in paragraph 3 of the contract as lacking the element of mutuality of
contract, a clear transgression of Article 1308 of the New Civil Code, and reliance thereon, he contended, did not warrant his
unjustified and arbitrary dismissal.

GF Equity maintained, on the other hand, that it merely exercised its right under the contract to pre-terminate Valenzonas
employment due to incompetence. And it posited that he was guilty of laches and, in any event, his complaint should have been
instituted before a labor arbiter.

The trial court, upholding the validity of the assailed provision of the contract, dismissed, by decision of June 28, 1997,[7] the
complaint of Valenzona who, it held, was fully aware of entering into a bad bargain.

The Court of Appeals, before which Valenzona appealed, reversed the trial courts decision, by decision of October 14, 2002,[8] and
accordingly ordered GF Equity to pay him damages.

In its decision, the appellate court held that the questioned provision in the contract merely confers upon GF Equity the right to fire
its coach upon a finding of inefficiency, a valid reason within the ambit of its management prerogatives, subject to limitations
imposed by law, although not expressly stated in the clause; and the right granted in the contract can neither be said to be immoral,
unlawful, or contrary to public policy. It concluded, however, that while the mutuality of the clause is evident, GF Equity abused its
right by arbitrarily terminating . . . Valenzonas employment and opened itself to a charge of bad faith. Hence, finding that
Valenzonas claim for damages is obviously . . . based on Art. 19 of the Civil Code which provides:

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

the appellate court awarded Valenzona the following damages, furnishing the justification therefor:

. . . a) Compensatory damages representing his unearned income for 15 months. Actual and compensatory damages are those
recoverable because of a pecuniary loss in business, trade, property, profession, job or occupation. As testified, his employment
contract provided a monthly income of PhP35,000, which he lost from September 26, 1988 up to December 31, 1989 as a
consequence of his arbitrary dismissal; b) Moral damages of PhP20,000. The act caused wounded feelings on the part of the plaintiff.
Moral damages is recoverable under Article 2220 and the chapter on Human Relations of the Civil Code (Articles 1936) when a
contract is breached in bad faith; c) Exemplary damages of PhP20,000, by way of example or correction for the public good; and d)
When exemplary damages are awarded, attorneys fees can also be given. We deem it just to grant 10% of the actual damages as
attorneys fees. (Underscoring supplied)

Hence, this petition at bar, GF Equity faulting the appellate court in

. . . CONCLUD[ING] WRONGLY FROM ESTABLISHED FACTS IN A MANNER VIOLATIVE OF APPLICABLE LAWS AND
ESTABLISHED JURISPRUDENCE.[9]

GF Equity argues that the appellate court committed a non-sequitur when it agreed with the findings of fact of the lower court but
reached an opposite conclusion. It avers that the appellate court made itself a guardian of an otherwise intelligent individual well-
versed in tactical maneuvers; that the freedom to enter into contracts is protected by law, and the courts will not interfere therewith
unless the contract is contrary to law, morals, good customs, public policy or public order; that there was absolutely no reason for the
appellate court to have found bad faith on its part; and that, at all events, Valenzona is guilty of laches for his unexplained inaction
for six years.

Central to the resolution of the instant controversy is the determination of whether the questioned last sentence of paragraph 3 is
violative of the principle of mutuality of contracts.

Mutuality is one of the characteristics of a contract, its validity or performance or compliance of which cannot be left to the will of
only one of the parties.[10] This is enshrined in Article 1308 of the New Civil Code, whose underlying principle is explained in
Garcia v. Rita Legarda, Inc.,[11] viz:

Article 1308 of the New Civil Code reads as follows:

The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.

The above legal provision is a virtual reproduction of Article 1256 of the old Civil Code but it was so phrased as to emphasize the
principle that the contract must bind both parties. This, of course is based firstly, on the principle that obligations arising from
contracts have the force of law between the contracting parties and secondly, that there must be mutuality between the parties based
on their essential equality to which is repugnant to have one party bound by the contract leaving the other free therefrom (8
Manresa 556). Its ultimate purpose is to render void a contract containing a condition which makes its fulfillment dependent
exclusively upon the uncontrolled will of one of the contracting parties.

x x x (Emphasis, italics and underscoring supplied)

The ultimate purpose of the mutuality principle is thus to nullify a contract containing a condition which makes its fulfillment or
pre-termination dependent exclusively upon the uncontrolled will of one of the contracting parties.

Not all contracts though which vest to one party their determination of validity or compliance or the right to terminate the same are
void for being violative of the mutuality principle. Jurisprudence is replete with instances of cases[12] where this Court upheld the
legality of contracts which left their fulfillment or implementation to the will of either of the parties. In these cases, however, there
was a finding of the presence of essential equality of the parties to the contracts, thus preventing the perpetration of injustice on the
weaker party.

In the case at bar, the contract incorporates in paragraph 3 the right of GF Equity to pre-terminate the contract that if the coach, in the
sole opinion of the corporation, fails to exhibit sufficient skill or competitive ability to coach the team, the corporation may terminate
the contract. The assailed condition clearly transgresses the principle of mutuality of contracts. It leaves the determination of whether
Valenzona failed to exhibit sufficient skill or competitive ability to coach Alaska team solely to the opinion of GF Equity. Whether
Valenzona indeed failed to exhibit the required skill or competitive ability depended exclusively on the judgment of GF Equity. In
other words, GF Equity was given an unbridled prerogative to pre-terminate the contract irrespective of the soundness, fairness or
reasonableness, or even lack of basis of its opinion.

To sustain the validity of the assailed paragraph would open the gate for arbitrary and illegal dismissals, for void contractual
stipulations would be used as justification therefor.

The assailed stipulation being violative of the mutuality principle underlying Article 1308 of the Civil Code, it is null and void.

The nullity of the stipulation notwithstanding, GF Equity was not precluded from the right to pre-terminate the contract. The pre-
termination must have legal basis, however, if it is to be declared justified.

GF Equity failed, however, to advance any ground to justify the pre-termination. It simply invoked the assailed provision which is
null and void.

While GF Equitys act of pre-terminating Valenzonas services cannot be considered willful as it was based on a stipulation, albeit
declared void, it, in doing so, failed to consider the abuse of rights principle enshrined in Art. 19 of the Civil Code which provides:

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

This provision of law sets standards which must be observed in the exercise of ones rights as well as in the performance of its
duties, to wit: to act with justice; give every one his due; and observe honesty and good faith.

Since the pre-termination of the contract was anchored on an illegal ground, hence, contrary to law, and GF Equity negligently failed
to provide legal basis for such pre-termination, e.g. that Valenzona breached the contract by failing to discharge his duties
thereunder, GF Equity failed to exercise in a legitimate manner its right to pre-terminate the contract, thereby abusing the right of
Valenzona to thus entitle him to damages under Art. 19 in relation to Article 20 of the Civil Code the latter of which provides:

Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same.

In De Guzman v. NLRC,[13] this Court quoted the following explanation of Tolentino why it is impermissible to abuse our rights to
prejudice others.

The exercise of a right ends when the right disappears, and it disappears when it is abused, especially to the prejudice of others. The
mask of a right without the spirit of justice which gives it life is repugnant to the modern concept of social law. It cannot be said that
a person exercises a right when he unnecessarily prejudices another or offends morals or good customs. Over and above the specific
precepts of positive law are the supreme norms of justice which the law develops and which are expressed in three principles:
honeste vivere,[14] alterum non laedere[15] and jus suum quique tribuere;[16] and he who violates them violates the law. For this
reason, it is not permissible to abuse our rights to prejudice others.

The disquisition in Globe Mackay Cable and Radio Corporation v. Court of Appeals[17] is just as relevant as it is illuminating on the
present case. In that case, this Court declared that even granting that the therein petitioners might have had the right to dismiss the
therein respondent from work, the abusive manner in which that right was exercised amounted to a legal wrong for which the
petitioners must be held liable.
One of the more notable innovations of the New Civil Code is the codification of "some basic principles that are to be observed for
the rightful relationship between human beings and for the stability of the social order." [REPORT ON THE CODE COMMISSION
ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect of the
old Code which merely stated the effects of the law, but failed to draw out its spirit, incorporated certain fundamental precepts which
were "designed to indicate certain norms that spring from the fountain of good conscience" and which were also meant to serve as
"guides for human conduct [that] should run as golden threads through society, to the end that law may approach its supreme ideal,
which is the sway and dominance of justice" (Id.) Foremost among these principles is that pronounced in Article 19 which provides:

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

This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be
observed not only in the exercise of one's rights but also in the performance of one's duties. These standards are the following: to act
with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation
on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself
legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is
exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a
legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of
conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation.
Generally, an action for damages under either Article 20 or Article 21 would be proper.[18] Emphasis and underscoring supplied).

As for GF Equitys defense of laches on account of Valenzonas invocation of his right under the contract only after the lapse of six
years, the same fails.

Laches has been defined as the failure or neglect for an unreasonable and unexplained length of time to do that which by exercising
due diligence, could or should have been done earlier, thus giving rise to a presumption that the party entitled to assert it either has
abandoned or declined to assert it. It is not concerned with mere lapse of time; the fact of delay, standing alone, is insufficient to
constitute laches.[19]

Laches applies in equity, whereas prescription applies at law. Our courts are basically courts of law, not courts of equity. Laches
cannot thus be invoked to evade the enforcement of an existing legal right. Equity, which has been aptly described as a justice outside
legality, is applied only in the absence of, and never against, statutory law. Aequetas nunquam contravenit legis. Thus, where the
claim was filed within the statutory period of prescription, recovery therefor cannot be barred by laches. The doctrine of laches
should never be applied earlier than the expiration of time limited for the commencement of actions at law,[20] unless, as a general
rule, inexcusable delay in asserting a right and acquiescense in existing conditions are proven.[21] GF Equity has not proven, nay
alleged, these.

Under Article 1144[22] of the New Civil Code, an action upon a written contract must be brought within 10 years from the time the
right of action accrues. Since the action filed by Valenzona is an action for breach upon a written contract, his filing of the case 6
years from the date his cause of action arose was well within the prescriptive period, hence, the defense of laches would not, under
the circumstances, lie.

Consequently, Valenzona is entitled to recover actual damages his salary which he should have received from the time his services
were terminated up to the time the employment contract expired.[23]

As for moral damages which the appellate court awarded, Article 2220 of the New Civil Code allows such award to breaches of
contract where the defendant acted fraudulently or in bad faith. Malice or bad faith implies a conscious and intentional design to do a
wrongful act for a dishonest purpose or moral obliquity. It contemplates a state of mind affirmatively operating with furtive design or
ill-will.[24] Bad faith means a breach of a known duty through some motive of interest or ill will. It must, however, be substantiated
by evidence. Bad faith under the law cannot be presumed, it must be established by clear and convincing evidence.

As earlier stated, however, the pre-termination of the contract was not willful as GF Equity based it on a provision therein which is
void. Malice or bad faith cannot thus be ascribed to GF Equity.

The unbroken jurisprudence is that in breach of contract cases where a party is not shown to have acted fraudulently or in bad faith,
liability for damages is limited to the natural and probable consequences of the breach of the obligation which the parties had
foreseen or could reasonably have foreseen. The damages, however, do not include moral damages.[25]

The award by the appellate court of moral damages must thus be set aside. And so must the award of exemplary damages, absent a
showing that GF Equity acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.[26]

The award to Valenzona of attorneys fees must remain, however, GF Equity having refused to pay the balance of Valenzonas salaries
to which he was, under the facts and circumstances of the case, entitled under the contract, thus compelling him to litigate to protect
his interest.[27]

WHEREFORE, the decision of the Court of Appeals dated October 14, 2002 is hereby SET ASIDE and another rendered declaring
the assailed provision of the contract NULL AND VOID and ORDERING petitioner, GF Equity, to pay private respondent, Arturo
Valenzona, actual damages in the amount of P525,000.00 and attorneys fees in the amount of P60,000.00.

Costs against petitioner.

GF EQUITY, INC. vs. ARTURO VALENZONA
G.R. No. 156841. June 30, 2005

Facts: GF Equity hired Valenzona as Head Coach of the Alaska basketball team in the Philippine Basketball Association under a
Contract of Employment where GF Equity would pay Valenzona the sum of P35,000.00 monthly. While the employment period
agreed upon was for two years commencing, the last sentence of paragraph 3 of the contract carried the following condition: 3. x x x
If at any time during the contract, the COACH, in the sole opinion of the CORPORATION, fails to exhibit sufficient skill or
competitive ability to coach the team, the CORPORATION may terminate this contract. The caveat notwithstanding, Valenzona still
acceded to the terms of the contract. Thereafter, Valenzona was terminated as coach of the Alaska team. Valenzona demanded from
GF Equity payment of compensation arising from the arbitrary and unilateral termination of his employment. GF Equity, however,
refused the claim. Valenzona thus filed before the RTC Manila a complaint against GF Equity for breach of contract with damages.
The trial court, upholding the validity of the assailed provision of the contract, dismissed the complaint.

Issue: Whether the questioned last sentence of paragraph 3 is violative of the principle of
mutuality of contracts.

Held: Mutuality is one of the characteristics of a contract, its validity or performance or compliance of which cannot be left to the
will of only one of the parties. The ultimate purpose of the mutuality principle is thus to nullify a contract containing a condition
which makes its fulfillment or pre-termination dependent exclusively upon the uncontrolled will of one of the contracting parties. In
the case at bar, the contract incorporates in paragraph 3 the right of GF Equity to pre-terminate the contract. The assailed condition
clearly transgresses the principle of mutuality of contracts. GF Equity was given an unbridled prerogative to pre-terminate the
contract irrespective of the soundness, fairness or reasonableness, or even lack of basis of its opinion. The assailed stipulation being
violative of the mutuality principle underlying Article 1308 of the Civil Code, it is null and void.

[G.R. No. 206806. June 25, 2014.]

ARCO PULP AND PAPER CO., INC. and CANDIDA A. SANTOS, petitioners, vs. DAN T. LIM, doing business under the
name and style of QUALITY PAPERS & PLASTIC PRODUCTS ENTERPRISES, respondent.

LEONEN, J p:

FACTS:

1. Dan T. Lim (Lim) works in the business of supplying scrap papers, cartons, and other rawmaterials, under the name and Quality
Paper and Plastic Products, Enterprises, to factories engaged in the paper mill business. He delivered scrap papers to Arco Pulp and
Paper Company, Inc. (Arco Pulp and Paper) through its CEO and President, Candida A. Santos. The parties allegedly agreed that
Arco Pulp and Paper would either pay Lim the value of the raw materials or deliver to him their finish products of equivalent value.

2. Lim alleged that when he delivered the raw materials, Arco Pulp and Paper issued a post-dated check, with the assurance that the
check would not bounce. When he deposited the check, it was dishonored for being drawn against a closed account.

3. On the same day, Arco Pulp and Paper, and a certain Eric Sy executed a memorandum of agreement where Arco Pulp and Paper
bound themselves to deliver their finishedproducts to Megapack Container Corp., owned by Eric Sy. According to the memorandum,
the raw materials would be supplied by Lim, through his company, Quality Paper and Plastic Products.

4. Lim sent a demand letter to Arco Pulp and Paper but no payment was made to him. Hence, he filed a complaint for collection of
sum of money.

5. The RTC rendered a judgment in favor of Arco Pulp and Paper and dismissed the complained, holding that when Arco Pulp and
Paper and Eric Sy and entered into the memorandum of agreement, novation took place, which extinguished Arco Pulp and Paper;s
obligation to Lim.

6. On appeal, Lim argued that novation did not take place since the memorandum of agreement between Arco Pulp and Paper and
Eric Sy was an exclusive and private agreement between them.

7. The CA reversed the RTC decision and ruled that the facts and circumstances in this case clearly showed the existence of an
alternative obligation.

ISSUE: Whether the obligation between the parties was an alternative obligation.

HELD: Yes. The obligation between the parties was an alternative obligation. The rule on alternative obligation is governed by
Article 1199 of the Civil Code. In an alternative obligation, there is more than one object, and the fulfillment of one is sufficient,
determined by the choice of debtor who generally has the right of election. The right of election is extinguished when the party who
may exercise that option categorically and unequivocally makes his or her choice known. The choice of the debtor must also be
communicated to the creditor who must receive notice of it since the object of this notice is to give the creditoropportunity to
express his consent, or to impugn the election made by the debtor, and only after said notice shall the election take legal effect when
consented by the creditor, or if impugned by the latter, when declared proper by a competent court. According to the factual findings
of the trial court and appellate court, the original contract between the parties was for respondent to deliver scrap papers worth
Php7,220,968.31 to petitioner Arco Pulp and Paper. The payment for this delivery became petitioner Arco Pulp and Papers
obligation. By agreement, petitioner Arco Pulp and Paper, as the debtor, had the option to either (1) pay the price or (2) deliver the
finished products of equivalent value of respondent. The appellate court, therefore, correctly identified the obligation between the
parties as an alternative obligation, whereby petitioner, Arco Pulp and Paper, after receiving the raw materials from respondent,
would either pay him the price of the raw materials or in the alternative, deliver to him the finished products of equivalent value.
When petitioner Arco Pulp and Paper tendered a check to respondent in partial payment for the scrap papers, they exercised their
options to pay the price. Respondents receipt of the check and his subsequent act of depositing it constituted his notice of petitioner
Arco Pulp and Papers option to pay. This choice was also shown by the terms of the memorandum of agreement, which was
executed on the same day. The memorandum declared in clear terms that the delivery of petitioner Arco Pulp and Papers finished
products would be to a third person, thereby extinguishing the option to deliver the finished product of equivalent value to
respondent.

DISPOSITIVE: WHEREFORE, the petition is DENIED in part. The decision in CA-G.R. CV

No. 95709 is AFFIRMED.

G.R. No. 206806 June 25, 2014

ARCO PULP AND PAPER CO., INC. and CANDIDA A. SANTOS, Petitioners,
vs.
DAN T. LIM, doing business under the name and style of QUALITY PAPERS & PLASTIC PRODUCTS ENTERPRISES,
Respondent.

DECISION

LEONEN, J.:

Novation must be stated in clear and unequivocal terms to extinguish an obligation. It cannot be presumed and may be implied only
if the old and new contracts are incompatible on every point.

Before us is a petition for review on certiorari1 assailing the Court of Appeals decision2 in CA-G.R. CV No. 95709, which stemmed
from a complaint3 filed in the Regional Trial Court of Valenzuela City, Branch 171, for collection of sum of money.

The facts are as follows:

Dan T. Lim works in the business of supplying scrap papers, cartons, and other raw materials, under the name Quality Paper and
Plastic Products, Enterprises, to factories engaged in the paper mill business.4 From February 2007 to March 2007, he delivered
scrap papers worth 7,220,968.31 to Arco Pulp and Paper Company, Inc. (Arco Pulp and Paper) through its Chief Executive Officer
and President, Candida A. Santos.5 The parties allegedly agreed that Arco Pulp and Paper would either pay Dan T. Lim the value of
the raw materials or deliver to him their finished products of equivalent value.6

Dan T. Lim alleged that when he delivered the raw materials, Arco Pulp and Paper issued a post-dated check dated April 18, 20077
in the amount of 1,487,766.68 as partial payment, with the assurance that the check would not bounce.8 When he deposited the check
on April 18, 2007, it was dishonored for being drawn against a closed account.9

On the same day, Arco Pulp and Paper and a certain Eric Sy executed a memorandum of agreement10 where Arco Pulp and Paper
bound themselves to deliver their finished products to Megapack Container Corporation, owned by Eric Sy, for his account.
According to the memorandum, the raw materials would be supplied by Dan T. Lim, through his company, Quality Paper and Plastic
Products. The memorandum of agreement reads as follows:

Per meeting held at ARCO, April 18, 2007, it has been mutually agreed between Mrs. Candida A. Santos and Mr. Eric Sy that ARCO
will deliver 600 tons Test Liner 150/175 GSM, full width 76 inches at the price of P18.50 per kg. to Megapack Container for Mr.
Eric Sys account. Schedule of deliveries are as follows:

....

It has been agreed further that the Local OCC materials to be used for the production of the above Test Liners will be supplied by
Quality Paper & Plastic Products Ent., total of 600 Metric Tons at P6.50 per kg. (price subject to change per advance notice).
Quantity of Local OCC delivery will be based on the quantity of Test Liner delivered to Megapack Container Corp. based on the
above production schedule.11

On May 5, 2007, Dan T.Lim sent a letter12 to Arco Pulp and Paper demanding payment of the amount of 7,220,968.31, but no
payment was made to him.13

Dan T. Lim filed a complaint14 for collection of sum of money with prayer for attachment with the Regional Trial Court, Branch
171, Valenzuela City, on May 28, 2007. Arco Pulp and Paper filed its answer15 but failed to have its representatives attend the pre-
trial hearing. Hence, the trial court allowed Dan T. Lim to present his evidence ex parte.16

On September 19, 2008, the trial court rendered a judgment in favor of Arco Pulp and Paper and dismissed the complaint, holding
that when Arco Pulp and Paper and Eric Sy entered into the memorandum of agreement, novation took place, which extinguished
Arco Pulp and Papers obligation to Dan T. Lim.17
Dan T. Lim appealed18 the judgment with the Court of Appeals. According to him, novation did not take place since the
memorandum of agreement between Arco Pulp and Paper and Eric Sy was an exclusive and private agreement between them. He
argued that if his name was mentioned in the contract, it was only for supplying the parties their required scrap papers, where his
conformity through a separate contract was indispensable.19

On January 11, 2013, the Court of Appeals20 rendered a decision21 reversing and setting aside the judgment dated September 19,
2008 and ordering Arco Pulp and Paper to jointly and severally pay Dan T. Lim the amount of P7,220,968.31 with interest at 12%
per annum from the time of demand; P50,000.00 moral damages; P50,000.00 exemplary damages; and P50,000.00 attorneys fees.22

The appellate court ruled that the facts and circumstances in this case clearly showed the existence of an alternative obligation.23 It
also ruled that Dan T. Lim was entitled to damages and attorneys fees due to the bad faith exhibited by Arco Pulp and Paper in not
honoring its undertaking.24

Its motion for reconsideration25 having been denied,26 Arco Pulp and Paper and its President and Chief Executive Officer, Candida
A. Santos, bring this petition for review on certiorari.

On one hand, petitioners argue that the execution of the memorandum of agreement constituted a novation of the original obligation
since Eric Sy became the new debtor of respondent. They also argue that there is no legal basis to hold petitioner Candida A. Santos
personally liable for the transaction that petitioner corporation entered into with respondent. The Court of Appeals, they allege, also
erred in awarding moral and exemplary damages and attorneys fees to respondent who did not show proof that he was entitled to
damages.27

Respondent, on the other hand, argues that the Court of Appeals was correct in ruling that there was no proper novation in this case.
He argues that the Court of Appeals was correct in ordering the payment of 7,220,968.31 with damages since the debt of petitioners
remains unpaid.28 He also argues that the Court of Appeals was correct in holding petitioners solidarily liable since petitioner
Candida A. Santos was "the prime mover for such outstanding corporate liability."29 In their reply, petitioners reiterate that novation
took place since there was nothing in the memorandum of agreement showing that the obligation was alternative. They also argue
that when respondent allowed them to deliver the finished products to Eric Sy, the original obligation was novated.30

A rejoinder was submitted by respondent, but it was noted without action in view of A.M. No. 99-2-04-SC dated November 21,
2000.31

The issues to be resolved by this court are as follows:

1. Whether the obligation between the parties was extinguished by novation

2. Whether Candida A. Santos was solidarily liable with Arco Pulp and Paper Co., Inc.

3. Whether moral damages, exemplary damages, and attorneys fees can be awarded

The petition is denied.

The obligation between the

parties was an alternative
obligation

The rule on alternative obligations is governed by Article 1199 of the Civil Code, which states:

Article 1199. A person alternatively bound by different prestations shall completely perform one of them.

The creditor cannot be compelled to receive part of one and part of the other undertaking.

"In an alternative obligation, there is more than one object, and the fulfillment of one is sufficient, determined by the choice of the
debtor who generally has the right of election."32 The right of election is extinguished when the party who may exercise that option
categorically and unequivocally makes his or her choice known.33

The choice of the debtor must also be communicated to the creditor who must receive notice of it since: The object of this notice is to
give the creditor . . . opportunity to express his consent, or to impugn the election made by the debtor, and only after said notice shall
the election take legal effect when consented by the creditor, or if impugned by the latter, when declared proper by a competent
court.34

According to the factual findings of the trial court and the appellate court, the original contract between the parties was for
respondent to deliver scrap papers worth P7,220,968.31 to petitioner Arco Pulp and Paper. The payment for this delivery became
petitioner Arco Pulp and Papers obligation. By agreement, petitioner Arco Pulp and Paper, as the debtor, had the option to either (1)
pay the price or(2) deliver the finished products of equivalent value to respondent.35

The appellate court, therefore, correctly identified the obligation between the parties as an alternative obligation, whereby petitioner
Arco Pulp and Paper, after receiving the raw materials from respondent, would either pay him the price of the raw materials or, in the
alternative, deliver to him the finished products of equivalent value.
When petitioner Arco Pulp and Paper tendered a check to respondent in partial payment for the scrap papers, they exercised their
option to pay the price. Respondents receipt of the check and his subsequent act of depositing it constituted his notice of petitioner
Arco Pulp and Papers option to pay.

This choice was also shown by the terms of the memorandum of agreement, which was executed on the same day. The memorandum
declared in clear terms that the delivery of petitioner Arco Pulp and Papers finished products would be to a third person, thereby
extinguishing the option to deliver the finished products of equivalent value to respondent.

The memorandum of
agreement did not constitute
a novation of the original
contract

The trial court erroneously ruled that the execution of the memorandum of agreement constituted a novation of the contract between
the parties. When petitioner Arco Pulp and Paper opted instead to deliver the finished products to a third person, it did not novate the
original obligation between the parties.

The rules on novation are outlined in the Civil Code, thus:

Article 1291. Obligations may be modified by:

(1) Changing their object or principal conditions;

(2) Substituting the person of the debtor;

(3) Subrogating a third person in the rights of the creditor. (1203)

Article 1292. In order that an obligation may be extinguished by another which substitute the same, it is imperative that it be so
declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other. (1204)

Article 1293. Novation which consists in substituting a new debtor in the place of the original one, may be made even without the
knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new debtor gives him the
rights mentioned in Articles 1236 and 1237. (1205a)

Novation extinguishes an obligation between two parties when there is a substitution of objects or debtors or when there is
subrogation of the creditor. It occurs only when the new contract declares so "in unequivocal terms" or that "the old and the new
obligations be on every point incompatible with each other."36

Novation was extensively discussed by this court in Garcia v. Llamas:37

Novation is a mode of extinguishing an obligation by changing its objects or principal obligations, by substituting a new debtor in
place of the old one, or by subrogating a third person to the rights of the creditor. Article 1293 of the Civil Code defines novation as
follows:

"Art. 1293. Novation which consists in substituting a new debtor in the place of the original one, may be made even without the
knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new debtor gives him rights
mentioned in articles 1236 and 1237."

In general, there are two modes of substituting the person of the debtor: (1) expromision and (2) delegacion. In expromision, the
initiative for the change does not come from and may even be made without the knowledge of the debtor, since it consists of a
third persons assumption of the obligation. As such, it logically requires the consent of the third person and the creditor. In
delegacion, the debtor offers, and the creditor accepts, a third person who consents to the substitution and assumes the obligation;
thus, the consent of these three persons are necessary. Both modes of substitution by the debtor require the consent of the creditor.

Novation may also be extinctive or modificatory. It is extinctive when an old obligation is terminated by the creation of a new one
that takes the place of the former. It is merely modificatory when the old obligation subsists to the extent that it remains compatible
with the amendatory agreement. Whether extinctive or modificatory, novation is made either by changing the object or the principal
conditions, referred to as objective or real novation; or by substituting the person of the debtor or subrogating a third person to the
rights of the creditor, an act known as subjective or personal novation. For novation to take place, the following requisites must
concur:

1) There must be a previous valid obligation.

2) The parties concerned must agree to a new contract.

3) The old contract must be extinguished.

4) There must be a valid new contract.

Novation may also be express or implied. It is express when the new obligation declares in unequivocal terms that the old obligation
is extinguished. It is implied when the new obligation is incompatible with the old one on every point. The test of incompatibility is
whether the two obligations can stand together, each one with its own independent existence.38 (Emphasis supplied)

Because novation requires that it be clear and unequivocal, it is never presumed, thus:

In the civil law setting, novatio is literally construed as to make new. So it is deeply rooted in the Roman Law jurisprudence, the
principle novatio non praesumitur that novation is never presumed.At bottom, for novation tobe a jural reality, its animus must
be ever present, debitum pro debito basically extinguishing the old obligation for the new one.39 (Emphasis supplied) There is
nothing in the memorandum of agreement that states that with its execution, the obligation of petitioner Arco Pulp and Paper to
respondent would be extinguished. It also does not state that Eric Sy somehow substituted petitioner Arco Pulp and Paper as
respondents debtor. It merely shows that petitioner Arco Pulp and Paper opted to deliver the finished products to a third person
instead.

The consent of the creditor must also be secured for the novation to be valid:

Novation must be expressly consented to. Moreover, the conflicting intention and acts of the parties underscore the absence of any
express disclosure or circumstances with which to deduce a clear and unequivocal intent by the parties to novate the old
agreement.40 (Emphasis supplied)

In this case, respondent was not privy to the memorandum of agreement, thus, his conformity to the contract need not be secured.
This is clear from the first line of the memorandum, which states:

Per meeting held at ARCO, April 18, 2007, it has been mutually agreed between Mrs. Candida A. Santos and Mr. Eric Sy. . . .41

If the memorandum of agreement was intended to novate the original agreement between the parties, respondent must have first
agreed to the substitution of Eric Sy as his new debtor. The memorandum of agreement must also state in clear and unequivocal
terms that it has replaced the original obligation of petitioner Arco Pulp and Paper to respondent. Neither of these circumstances is
present in this case.

Petitioner Arco Pulp and Papers act of tendering partial payment to respondent also conflicts with their alleged intent to pass on their
obligation to Eric Sy. When respondent sent his letter of demand to petitioner Arco Pulp and Paper, and not to Eric Sy, it showed that
the former neither acknowledged nor consented to the latter as his new debtor. These acts, when taken together, clearly show that
novation did not take place. Since there was no novation, petitioner Arco Pulp and Papers obligation to respondent remains valid and
existing. Petitioner Arco Pulp and Paper, therefore, must still pay respondent the full amount of P7,220,968.31.

Petitioners are liable for

damages

Under Article 2220 of the Civil Code, moral damages may be awarded in case of breach of contract where the breach is due to fraud
or bad faith:

Art. 2220. Willfull injury to property may be a legal ground for awarding moral damages if the court should find that, under the
circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or
in bad faith. (Emphasis supplied)

Moral damages are not awarded as a matter of right but only after the party claiming it proved that the breach was due to fraud or bad
faith. As this court stated:

Moral damages are not recoverable simply because a contract has been breached. They are recoverable only if the party from whom
it is claimed acted fraudulently or in bad faith or in wanton disregard of his contractual obligations. The breach must be wanton,
reckless, malicious or in bad faith, and oppressive or abusive.42

Further, the following requisites must be proven for the recovery of moral damages:

An award of moral damages would require certain conditions to be met, to wit: (1)first, there must be an injury, whether physical,
mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established;
(3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth,
the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code.43

Here, the injury suffered by respondent is the loss of P7,220,968.31 from his business. This has remained unpaid since 2007. This
injury undoubtedly was caused by petitioner Arco Pulp and Papers act of refusing to pay its obligations.

When the obligation became due and demandable, petitioner Arco Pulp and Paper not only issued an unfunded check but also entered
into a contract with a third person in an effort to evade its liability. This proves the third requirement.

As to the fourth requisite, Article 2219 of the Civil Code provides that moral damages may be awarded in the following instances:

Article 2219. Moral damages may be recovered in the following and analogous cases:
 (1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in Article 309;

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

Breaches of contract done in bad faith, however, are not specified within this enumeration. When a party breaches a contract, he or
she goes against Article 19 of the Civil Code, which states: Article 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

Persons who have the right to enter into contractual relations must exercise that right with honesty and good faith. Failure to do so
results in an abuse of that right, which may become the basis of an action for damages. Article 19, however, cannot be its sole basis:

Article 19 is the general rule which governs the conduct of human relations. By itself, it is not the basis of an actionable tort. Article
19 describes the degree of care required so that an actionable tort may arise when it is alleged together with Article 20 or Article
21.44

Article 20 and 21 of the Civil Code are as follows:

Article 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the
same.

Article 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.

To be actionable, Article 20 requires a violation of law, while Article 21 only concerns with lawful acts that are contrary to morals,
good customs, and public policy:

Article 20 concerns violations of existing law as basis for an injury. It allows recovery should the act have been willful or negligent.
Willful may refer to the intention to do the act and the desire to achieve the outcome which is considered by the plaintiff in tort action
as injurious. Negligence may refer to a situation where the act was consciously done but without intending the result which the
plaintiff considers as injurious.

Article 21, on the other hand, concerns injuries that may be caused by acts which are not necessarily proscribed by law. This article
requires that the act be willful, that is, that there was an intention to do the act and a desire to achieve the outcome. In cases under
Article 21, the legal issues revolve around whether such outcome should be considered a legal injury on the part of the plaintiff or
whether the commission of the act was done in violation of the standards of care required in Article 19.45

When parties act in bad faith and do not faithfully comply with their obligations under contract, they run the risk of violating Article
1159 of the Civil Code:

Article 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in
good faith.

Article 2219, therefore, is not an exhaustive list of the instances where moral damages may be recovered since it only specifies,
among others, Article 21. When a party reneges on his or her obligations arising from contracts in bad faith, the act is not only
contrary to morals, good customs, and public policy; it is also a violation of Article 1159. Breaches of contract become the basis of
moral damages, not only under Article 2220, but also under Articles 19 and 20 in relation to Article 1159.

Moral damages, however, are not recoverable on the mere breach of the contract. Article 2220 requires that the breach be done
fraudulently or in bad faith. In Adriano v. Lasala:46
To recover moral damages in an action for breach of contract, the breach must be palpably wanton, reckless and malicious, in bad
faith, oppressive, or abusive. Hence, the person claiming bad faith must prove its existence by clear and convincing evidence for the
law always presumes good faith.

Bad faith does not simply connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and conscious
doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud. It is,
therefore, a question of intention, which can be inferred from ones conduct and/or contemporaneous statements.47 (Emphasis
supplied)

Since a finding of bad faith is generally premised on the intent of the doer, it requires an examination of the circumstances in each
case.

When petitioner Arco Pulp and Paper issued a check in partial payment of its obligation to respondent, it was presumably with the
knowledge that it was being drawn against a closed account. Worse, it attempted to shift their obligations to a third person without
the consent of respondent.

Petitioner Arco Pulp and Papers actions clearly show "a dishonest purpose or some moral obliquity and conscious doing of a wrong,
a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud."48 Moral damages may,
therefore, be awarded.

Exemplary damages may also be awarded. Under the Civil Code, exemplary damages are due in the following circumstances:

Article 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner.

Article 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be
adjudicated.

Article 2234. While the amount of the exemplary damages need not be proven, the plaintiff must show that he is entitled to moral,
temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be
awarded.

In Tankeh v. Development Bank of the Philippines,49 we stated that:

The purpose of exemplary damages is to serve as a deterrent to future and subsequent parties from the commission of a similar
offense. The case of People v. Ranteciting People v. Dalisay held that:

Also known as punitive or vindictive damages, exemplary or corrective damages are intended to serve as a deterrent to serious
wrong doings, and as a vindication of undue sufferings and wanton invasion of the rights of an injured or a punishment for those
guilty of outrageous conduct. These terms are generally, but not always, used interchangeably. In common law, there is preference in
the use of exemplary damages when the award is to account for injury to feelings and for the sense of indignity and humiliation
suffered by a person as a result of an injury that has been maliciously and wantonly inflicted, the theory being that there should be
compensation for the hurt caused by the highly reprehensible conduct of the defendantassociated with such circumstances as
willfulness, wantonness, malice, gross negligence or recklessness, oppression, insult or fraud or gross fraudthat intensifies the
injury. The terms punitive or vindictive damages are often used to refer to those species of damages that may be awarded against a
person to punish him for his outrageous conduct. In either case, these damages are intended in good measure to deter the wrongdoer
and others like him from similar conduct in the future.50 (Emphasis supplied; citations omitted)

The requisites for the award of exemplary damages are as follows:

(1) they may be imposed by way of example in addition to compensatory damages, and only after the claimant's right to
them has been established;

(2) that they cannot be recovered as a matter of right, their determination depending upon the amount of compensatory
damages that may be awarded to the claimant; and

(3) the act must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or malevolent manner.51

Business owners must always be forthright in their dealings. They cannot be allowed to renege on their obligations, considering that
these obligations were freely entered into by them. Exemplary damages may also be awarded in this case to serve as a deterrent to
those who use fraudulent means to evade their liabilities.

Since the award of exemplary damages is proper, attorneys fees and cost of the suit may also be recovered.

Article 2208 of the Civil Code states:

Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered,
except:
(1) When exemplary damages are awarded[.]
Petitioner Candida A. Santos
is solidarily liable with
petitioner corporation

Petitioners argue that the finding of solidary liability was erroneous since no evidence was adduced to prove that the transaction was
also a personal undertaking of petitioner Santos. We disagree.

In Heirs of Fe Tan Uy v. International Exchange Bank,52 we stated that:

Basic is the rule in corporation law that a corporation is a juridical entity which is vested with a legal personality separate and distinct
from those acting for and in its behalf and, in general, from the people comprising it. Following this principle, obligations incurred by
the corporation, acting through its directors, officers and employees, are its sole liabilities. A director, officer or employee of a
corporation is generally not held personally liable for obligations incurred by the corporation. Nevertheless, this legal fiction may be
disregarded if it is used as a means to perpetrate fraud or an illegal act, or as a vehicle for the evasion of an existing obligation, the
circumvention of statutes, or to confuse legitimate issues.

....

Before a director or officer of a corporation can be held personally liable for corporate obligations, however, the following requisites
must concur: (1) the complainant must allege in the complaint that the director or officer assented to patently unlawful acts of the
corporation, or that the officer was guilty of gross negligence or bad faith; and (2) the complainant must clearly and convincingly
prove such unlawful acts, negligence or bad faith.

While it is true that the determination of the existence of any of the circumstances that would warrant the piercing of the veil of
corporate fiction is a question of fact which cannot be the subject of a petition for review on certiorari under Rule 45, this Court can
take cognizance of factual issues if the findings of the lower court are not supported by the evidence on record or are based on a
misapprehension of facts.53 (Emphasis supplied)

As a general rule, directors, officers, or employees of a corporation cannot be held personally liable for obligations incurred by the
corporation. However, this veil of corporate fiction may be pierced if complainant is able to prove, as in this case, that (1) the officer
is guilty of negligence or bad faith, and (2) such negligence or bad faith was clearly and convincingly proven.

Here, petitioner Santos entered into a contract with respondent in her capacity as the President and Chief Executive Officer of Arco
Pulp and Paper. She also issued the check in partial payment of petitioner corporations obligations to respondent on behalf of
petitioner Arco Pulp and Paper. This is clear on the face of the check bearing the account name, "Arco Pulp & Paper, Co., Inc."54
Any obligation arising from these acts would not, ordinarily, be petitioner Santos personal undertaking for which she would be
solidarily liable with petitioner Arco Pulp and Paper.

We find, however, that the corporate veil must be pierced. In Livesey v. Binswanger Philippines:55

Piercing the veil of corporate fiction is an equitable doctrine developed to address situations where the separate corporate personality
of a corporation is abused or used for wrongful purposes. Under the doctrine, the corporate existence may be disregarded where the
entity is formed or used for non-legitimate purposes, such as to evade a just and due obligation, or to justify a wrong, to shield or
perpetrate fraud or to carry out similar or inequitable considerations, other unjustifiable aims or intentions, in which case, the fiction
will be disregarded and the individuals composing it and the two corporations will be treated as identical.56 (Emphasis supplied)

According to the Court of Appeals, petitioner Santos was solidarily liable with petitioner Arco Pulp and Paper, stating that:

In the present case, We find bad faith on the part of the [petitioners] when they unjustifiably refused to honor their undertaking in
favor of the [respondent]. After the check in the amount of 1,487,766.68 issued by [petitioner] Santos was dishonored for being
drawn against a closed account, [petitioner] corporation denied any privity with [respondent]. These acts prompted the [respondent]
to avail of the remedies provided by law in order to protect his rights.57

We agree with the Court of Appeals. Petitioner Santos cannot be allowed to hide behind the corporate veil.1wphi1 When petitioner
Arco Pulp and Papers obligation to respondent became due and demandable, she not only issued an unfunded check but also
contracted with a third party in an effort to shift petitioner Arco Pulp and Papers liability. She unjustifiably refused to honor
petitioner corporations obligations to respondent. These acts clearly amount to bad faith. In this instance, the corporate veil may be
pierced, and petitioner Santos may be held solidarily liable with petitioner Arco Pulp and Paper.

The rate of interest due on

the obligation must be
reduced in view of Nacar v.
Gallery Frames58

In view, however, of the promulgation by this court of the decision dated August 13, 2013 in Nacar v. Gallery Frames,59 the rate of
interest due on the obligation must be modified from 12% per annum to 6% per annum from the time of demand.

Nacar effectively amended the guidelines stated in Eastern Shipping v. Court of Appeals,60 and we have laid down the following
guidelines with regard to the rate of legal interest:
To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping Linesare accordingly modified to
embody BSP-MB Circular No. 799, as follows:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the
contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining
the measure of recoverable damages.

II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as
the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money,
the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the
Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages
awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged
on unliquidated claims or damages, except when or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the
claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for
the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether
the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this
interim period being deemed to be by then an equivalent to a forbearance of credit.

And, in addition to the above, judgments that have become final and executory prior to July 1, 2013, shall not be disturbed and shall
continue to be implemented applying the rate of interest fixed therein.61 (Emphasis supplied; citations omitted.)

According to these guidelines, the interest due on the obligation of P7,220,968.31 should now be at 6% per annum, computed from
May 5, 2007, when respondent sent his letter of demand to petitioners. This interest shall continue to be due from the finality of this
decision until its full satisfaction.

WHEREFORE, the petition is DENIED in part. The decision in CA-G.R. CV No. 95709 is AFFIRMED.

Petitioners Arco Pulp & Paper Co., Inc. and Candida A. Santos are hereby ordered solidarily to pay respondent Dan T. Lim the
amount of P7,220,968.31 with interest of 6% per annum at the time of demand until finality of judgment and its full satisfaction, with
moral damages in the amount of P50,000.00, exemplary damages in the amount of P50,000.00, and attorney's fees in the amount of
P50,000.00.

SO ORDERED.

G.R. No. L-20089 December 26, 1964

BEATRIZ P. WASSMER, plaintiff-appellee,

vs.
FRANCISCO X. VELEZ, defendant-appellant.

Jalandoni & Jamir for defendant-appellant.

Samson S. Alcantara for plaintiff-appellee.

BENGZON, J.P., J.:

The facts that culminated in this case started with dreams and hopes, followed by appropriate planning and serious endeavors, but
terminated in frustration and, what is worse, complete public humiliation.

Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of love, decided to get married and set September 4,
1954 as the big day. On September 2, 1954 Velez left this note for his bride-to-be:

Dear Bet

Will have to postpone wedding My mother opposes it. Am leaving on the Convair today.

Please do not ask too many people about the reason why That would only create a scandal.

Paquing
But the next day, September 3, he sent her the following telegram:

NOTHING CHANGED REST ASSURED RETURNING VERY SOON APOLOGIZE MAMA PAPA LOVE .

PAKING

Thereafter Velez did not appear nor was he heard from again.

Sued by Beatriz for damages, Velez filed no answer and was declared in default. Plaintiff adduced evidence before the clerk of court
as commissioner, and on April 29, 1955, judgment was rendered ordering defendant to pay plaintiff P2,000.00 as actual damages;
P25,000.00 as moral and exemplary damages; P2,500.00 as attorney's fees; and the costs.

On June 21, 1955 defendant filed a "petition for relief from orders, judgment and proceedings and motion for new trial and
reconsideration." Plaintiff moved to strike it cut. But the court, on August 2, 1955, ordered the parties and their attorneys to appear
before it on August 23, 1955 "to explore at this stage of the proceedings the possibility of arriving at an amicable settlement." It
added that should any of them fail to appear "the petition for relief and the opposition thereto will be deemed submitted for
resolution."

On August 23, 1955 defendant failed to appear before court. Instead, on the following day his counsel filed a motion to defer for two
weeks the resolution on defendants petition for relief. The counsel stated that he would confer with defendant in Cagayan de Oro City
the latter's residence on the possibility of an amicable element. The court granted two weeks counted from August 25, 1955.

Plaintiff manifested on June 15, 1956 that the two weeks given by the court had expired on September 8, 1955 but that defendant and
his counsel had failed to appear.

Another chance for amicable settlement was given by the court in its order of July 6, 1956 calling the parties and their attorneys to
appear on July 13, 1956. This time. however, defendant's counsel informed the court that chances of settling the case amicably were
nil.

On July 20, 1956 the court issued an order denying defendant's aforesaid petition. Defendant has appealed to this Court. In his
petition of June 21, 1955 in the court a quo defendant alleged excusable negligence as ground to set aside the judgment by default.
Specifically, it was stated that defendant filed no answer in the belief that an amicable settlement was being negotiated.

A petition for relief from judgment on grounds of fraud, accident, mistake or excusable negligence, must be duly supported by an
affidavit of merits stating facts constituting a valid defense. (Sec. 3, Rule 38, Rules of Court.) Defendant's affidavit of merits attached
to his petition of June 21, 1955 stated: "That he has a good and valid defense against plaintiff's cause of action, his failure to marry
the plaintiff as scheduled having been due to fortuitous event and/or circumstances beyond his control." An affidavit of merits like
this stating mere conclusions or opinions instead of facts is not valid. (Cortes vs. Co Bun Kim, L-3926, Oct. 10, 1951; Vaswani vs. P.
Tarrachand Bros., L-15800, December 29, 1960.)

Defendant, however, would contend that the affidavit of merits was in fact unnecessary, or a mere surplusage, because the judgment
sought to be set aside was null and void, it having been based on evidence adduced before the clerk of court. In Province of
Pangasinan vs. Palisoc, L-16519, October 30, 1962, this Court pointed out that the procedure of designating the clerk of court as
commissioner to receive evidence is sanctioned by Rule 34 (now Rule 33) of the Rules of Court. Now as to defendant's consent to
said procedure, the same did not have to be obtained for he was declared in default and thus had no standing in court (Velez vs.
Ramas, 40 Phil. 787; Alano vs. Court of First Instance, L-14557, October 30, 1959).

In support of his "motion for new trial and reconsideration," defendant asserts that the judgment is contrary to law. The reason given
is that "there is no provision of the Civil Code authorizing" an action for breach of promise to marry. Indeed, our ruling in
Hermosisima vs. Court of Appeals (L-14628, Sept. 30, 1960), as reiterated in Estopa vs. Biansay (L-14733, Sept. 30, 1960), is that
"mere breach of a promise to marry" is not an actionable wrong. We pointed out that Congress deliberately eliminated from the draft
of the new Civil Code the provisions that would have it so.

It must not be overlooked, however, that the extent to which acts not contrary to law may be perpetrated with impunity, is not
limitless for Article 21 of said Code provides that "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."

The record reveals that on August 23, 1954 plaintiff and defendant applied for a license to contract marriage, which was subsequently
issued (Exhs. A, A-1). Their wedding was set for September 4, 1954. Invitations were printed and distributed to relatives, friends and
acquaintances (Tsn., 5; Exh. C). The bride-to-be's trousseau, party drsrses and other apparel for the important occasion were
purchased (Tsn., 7-8). Dresses for the maid of honor and the flower girl were prepared. A matrimonial bed, with accessories, was
bought. Bridal showers were given and gifts received (Tsn., 6; Exh. E). And then, with but two days before the wedding, defendant,
who was then 28 years old,: simply left a note for plaintiff stating: "Will have to postpone wedding My mother opposes it ... " He
enplaned to his home city in Mindanao, and the next day, the day before the wedding, he wired plaintiff: "Nothing changed rest
assured returning soon." But he never returned and was never heard from again.

Surely this is not a case of mere breach of promise to marry. As stated, mere breach of promise to marry is not an actionable wrong.
But to formally set a wedding and go through all the above-described preparation and publicity, only to walk out of it when the
matrimony is about to be solemnized, is quite different. This is palpably and unjustifiably contrary to good customs for which
defendant must be held answerable in damages in accordance with Article 21 aforesaid.
Defendant urges in his afore-stated petition that the damages awarded were excessive. No question is raised as to the award of actual
damages. What defendant would really assert hereunder is that the award of moral and exemplary damages, in the amount of
P25,000.00, should be totally eliminated.

Per express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in the cases mentioned in Article
21 of said Code. As to exemplary damages, defendant contends that the same could not be adjudged against him because under
Article 2232 of the New Civil Code the condition precedent is that "the defendant acted in a wanton, fraudulent, reckless, oppressive,
or malevolent manner." The argument is devoid of merit as under the above-narrated circumstances of this case defendant clearly
acted in a "wanton ... , reckless [and] oppressive manner." This Court's opinion, however, is that considering the particular
circumstances of this case, P15,000.00 as moral and exemplary damages is deemed to be a reasonable award.

PREMISES CONSIDERED, with the above-indicated modification, the lower court's judgment is hereby affirmed, with costs.

Beatriz Wassmer vs Francisco Velez

In 1954, Francisco Velez and Beatriz Wassmer planned their marriage. They decided to schedule it on September 4, 1954. And so
Wassmer made preparations such as: making and sending wedding invitations, bought her wedding dress and other apparels, and
other wedding necessities. But 2 days before the scheduled day of wedding, Velez sent a letter to Wassmer advising her that he will
not be able to attend the wedding because his mom was opposed to said wedding. And one day before the wedding, he sent another
message to Wassmer advising her that nothing has changed and that he will be returning soon. However, he never returned.

This prompted Wassmer to file a civil case against Velez. Velez never filed an answer and eventually judgment was made in favor of
Wassmer. The court awarded exemplary and moral damages in favor of Wassmer.

On appeal, Velez argued that his failure to attend the scheduled wedding was because of fortuitous events. He further argued that he
cannot be held civilly liable for breaching his promise to marry Wassmer because there is no law upon which such an action may be
grounded. He also contested the award of exemplary and moral damages against him.

ISSUE: Whether or not the award of damages is proper.

HELD: Yes. The defense of fortuitous events raised by Velez is not tenable and also unsubstantiated. It is true that a breach of
promise to marry per se is not an actionable wrong. However, in this case, it was not a simple breach of promise to marry. because of
such promise, Wassmer made preparations for the wedding. Velezs unreasonable withdrawal from the wedding is contrary to
morals, good customs or public policy. Wassmers cause of action is supported under Article 21 of the Civil Code which provides in
part 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.

And under the law, any violation of Article 21 entitles the injured party to receive an award for moral damages as properly awarded
by the lower court in this case. Further, the award of exemplary damages is also proper. Here, the circumstances of this case show
that Velez, in breaching his promise to Wassmer, acted in wanton, reckless, and oppressive manner this warrants the imposition of
exemplary damages against him.

G.R. No. 97336 February 19, 1993

GASHEM SHOOKAT BAKSH, petitioner,

vs.
HON. COURT OF APPEALS and MARILOU T. GONZALES, respondents.

Public Attorney's Office for petitioner.

Corleto R. Castro for private respondent.

DAVIDE, JR., J.:

This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to review and set aside the Decision 1 of the respondent
Court of Appeals in CA-G.R. CV No. 24256 which affirmed in toto the 16 October 1939 Decision of Branch 38 (Lingayen) of the
Regional Trial Court (RTC) of Pangasinan in Civil Case No. 16503. Presented is the issue of whether or not damages may be
recovered for a breach of promise to marry on the basis of Article 21 of the Civil Code of the Philippines.

The antecedents of this case are not complicated:

On 27 October 1987, private respondent, without the assistance of counsel, filed with the aforesaid trial court a complaint 2 for
damages against the petitioner for the alleged violation of their agreement to get married. She alleges in said complaint that: she is
twenty-two (22) years old, single, Filipino and a pretty lass of good moral character and reputation duly respected in her community;
petitioner, on the other hand, is an Iranian citizen residing at the Lozano Apartments, Guilig, Dagupan City, and is an exchange
student taking a medical course at the Lyceum Northwestern Colleges in Dagupan City; before 20 August 1987, the latter courted
and proposed to marry her; she accepted his love on the condition that they would get married; they therefore agreed to get married
after the end of the school semester, which was in October of that year; petitioner then visited the private respondent's parents in
Baaga, Bugallon, Pangasinan to secure their approval to the marriage; sometime in 20 August 1987, the petitioner forced her to live
with him in the Lozano Apartments; she was a virgin before she began living with him; a week before the filing of the complaint,
petitioner's attitude towards her started to change; he maltreated and threatened to kill her; as a result of such maltreatment, she
sustained injuries; during a confrontation with a representative of the barangay captain of Guilig a day before the filing of the
complaint, petitioner repudiated their marriage agreement and asked her not to live with him anymore and; the petitioner is already
married to someone living in Bacolod City. Private respondent then prayed for judgment ordering the petitioner to pay her damages
in the amount of not less than P45,000.00, reimbursement for actual expenses amounting to P600.00, attorney's fees and costs, and
granting her such other relief and remedies as may be just and equitable. The complaint was docketed as Civil Case No. 16503.

In his Answer with Counterclaim, 3 petitioner admitted only the personal circumstances of the parties as averred in the complaint and
denied the rest of the allegations either for lack of knowledge or information sufficient to form a belief as to the truth thereof or
because the true facts are those alleged as his Special and Affirmative Defenses. He thus claimed that he never proposed marriage to
or agreed to be married with the private respondent; he neither sought the consent and approval of her parents nor forced her to live
in his apartment; he did not maltreat her, but only told her to stop coming to his place because he discovered that she had deceived
him by stealing his money and passport; and finally, no confrontation took place with a representative of the barangay captain.
Insisting, in his Counterclaim, that the complaint is baseless and unfounded and that as a result thereof, he was unnecessarily dragged
into court and compelled to incur expenses, and has suffered mental anxiety and a besmirched reputation, he prayed for an award of
P5,000.00 for miscellaneous expenses and P25,000.00 as moral damages.

After conducting a pre-trial on 25 January 1988, the trial court issued a Pre-Trial Order 4 embodying the stipulated facts which the
parties had agreed upon, to wit:

1. That the plaintiff is single and resident (sic) of Baaga, Bugallon, Pangasinan, while the defendant is single,
Iranian citizen and resident (sic) of Lozano Apartment, Guilig, Dagupan City since September 1, 1987 up to the
present;

2. That the defendant is presently studying at Lyceum Northwestern, Dagupan City, College of Medicine, second
year medicine proper;

3. That the plaintiff is (sic) an employee at Mabuhay Luncheonette , Fernandez Avenue, Dagupan City since July,
1986 up to the present and a (sic) high school graduate;

4. That the parties happened to know each other when the manager of the Mabuhay Luncheonette, Johhny Rabino
introduced the defendant to the plaintiff on August 3, 1986.

After trial on the merits, the lower court, applying Article 21 of the Civil Code, rendered on 16 October 1989 a decision 5 favoring the
private respondent. The petitioner was thus ordered to pay the latter damages and attorney's fees; the dispositive portion of the
decision reads:

IN THE LIGHT of the foregoing consideration, judgment is hereby rendered in favor of the plaintiff and against
the defendant.

1. Condemning (sic) the defendant to pay the plaintiff the sum of twenty thousand (P20,000.00) pesos as moral
damages.

2. Condemning further the defendant to play the plaintiff the sum of three thousand (P3,000.00) pesos as atty's fees
and two thousand (P2,000.00) pesos at (sic) litigation expenses and to pay the costs.

3. All other claims are denied. 6

The decision is anchored on the trial court's findings and conclusions that (a) petitioner and private respondent were lovers, (b)
private respondent is not a woman of loose morals or questionable virtue who readily submits to sexual advances, (c) petitioner,
through machinations, deceit and false pretenses, promised to marry private respondent, d) because of his persuasive promise to
marry her, she allowed herself to be deflowered by him, (e) by reason of that deceitful promise, private respondent and her parents
in accordance with Filipino customs and traditions made some preparations for the wedding that was to be held at the end of
October 1987 by looking for pigs and chickens, inviting friends and relatives and contracting sponsors, (f) petitioner did not fulfill his
promise to marry her and (g) such acts of the petitioner, who is a foreigner and who has abused Philippine hospitality, have offended
our sense of morality, good customs, culture and traditions. The trial court gave full credit to the private respondent's testimony
because, inter alia, she would not have had the temerity and courage to come to court and expose her honor and reputation to public
scrutiny and ridicule if her claim was false. 7

The above findings and conclusions were culled from the detailed summary of the evidence for the private respondent in the
foregoing decision, digested by the respondent Court as follows:

According to plaintiff, who claimed that she was a virgin at the time and that she never had a boyfriend before,
defendant started courting her just a few days after they first met. He later proposed marriage to her several times
and she accepted his love as well as his proposal of marriage on August 20, 1987, on which same day he went with
her to her hometown of Baaga, Bugallon, Pangasinan, as he wanted to meet her parents and inform them of their
relationship and their intention to get married. The photographs Exhs. "A" to "E" (and their submarkings) of
 defendant with members of plaintiff's family or with plaintiff, were taken that day. Also on that occasion, defendant
told plaintiffs parents and brothers and sisters that he intended to marry her during the semestral break in October,
1987, and because plaintiff's parents thought he was good and trusted him, they agreed to his proposal for him to
marry their daughter, and they likewise allowed him to stay in their house and sleep with plaintiff during the few
days that they were in Bugallon. When plaintiff and defendant later returned to Dagupan City, they continued to
live together in defendant's apartment. However, in the early days of October, 1987, defendant would tie plaintiff's
hands and feet while he went to school, and he even gave her medicine at 4 o'clock in the morning that made her
sleep the whole day and night until the following day. As a result of this live-in relationship, plaintiff became
pregnant, but defendant gave her some medicine to abort the fetus. Still plaintiff continued to live with defendant
and kept reminding him of his promise to marry her until he told her that he could not do so because he was already
married to a girl in Bacolod City. That was the time plaintiff left defendant, went home to her parents, and
thereafter consulted a lawyer who accompanied her to the barangay captain in Dagupan City. Plaintiff, her lawyer,
her godmother, and a barangay tanod sent by the barangay captain went to talk to defendant to still convince him to
marry plaintiff, but defendant insisted that he could not do so because he was already married to a girl in Bacolod
City, although the truth, as stipulated by the parties at the pre-trial, is that defendant is still single.

Plaintiff's father, a tricycle driver, also claimed that after defendant had informed them of his desire to marry
Marilou, he already looked for sponsors for the wedding, started preparing for the reception by looking for pigs and
chickens, and even already invited many relatives and friends to the forthcoming wedding. 8

Petitioner appealed the trial court's decision to the respondent Court of Appeals which docketed the case as CA-G.R. CV No. 24256.
In his Brief, 9 he contended that the trial court erred (a) in not dismissing the case for lack of factual and legal basis and (b) in
ordering him to pay moral damages, attorney's fees, litigation expenses and costs.

On 18 February 1991, respondent Court promulgated the challenged decision 10 affirming in toto the trial court's ruling of 16 October
1989. In sustaining the trial court's findings of fact, respondent Court made the following analysis:

First of all, plaintiff, then only 21 years old when she met defendant who was already 29 years old at the time, does
not appear to be a girl of loose morals. It is uncontradicted that she was a virgin prior to her unfortunate experience
with defendant and never had boyfriend. She is, as described by the lower court, a barrio lass "not used and
accustomed to trend of modern urban life", and certainly would (sic) not have allowed
"herself to be deflowered by the defendant if there was no persuasive promise made by the defendant to marry her."
In fact, we agree with the lower court that plaintiff and defendant must have been sweethearts or so the plaintiff
must have thought because of the deception of defendant, for otherwise, she would not have allowed herself to be
photographed with defendant in public in so (sic) loving and tender poses as those depicted in the pictures Exhs.
"D" and "E". We cannot believe, therefore, defendant's pretense that plaintiff was a nobody to him except a
waitress at the restaurant where he usually ate. Defendant in fact admitted that he went to plaintiff's hometown of
Baaga, Bugallon, Pangasinan, at least thrice; at (sic) the town fiesta on February 27, 1987 (p. 54, tsn May 18,
1988), at (sic) a beach party together with the manager and employees of the Mabuhay Luncheonette on March 3,
1987 (p. 50, tsn id.), and on April 1, 1987 when he allegedly talked to plaintiff's mother who told him to marry her
daughter (pp. 55-56, tsn id.). Would defendant have left Dagupan City where he was involved in the serious study
of medicine to go to plaintiff's hometown in Baaga, Bugallon, unless there was (sic) some kind of special
relationship between them? And this special relationship must indeed have led to defendant's insincere proposal of
marriage to plaintiff, communicated not only to her but also to her parents, and (sic) Marites Rabino, the owner of
the restaurant where plaintiff was working and where defendant first proposed marriage to her, also knew of this
love affair and defendant's proposal of marriage to plaintiff, which she declared was the reason why plaintiff
resigned from her job at the restaurant after she had accepted defendant's proposal (pp. 6-7, tsn March 7, 1988).

Upon the other hand, appellant does not appear to be a man of good moral character and must think so low and
have so little respect and regard for Filipino women that he openly admitted that when he studied in Bacolod City
for several years where he finished his B.S. Biology before he came to Dagupan City to study medicine, he had a
common-law wife in Bacolod City. In other words, he also lived with another woman in Bacolod City but did not
marry that woman, just like what he did to plaintiff. It is not surprising, then, that he felt so little compunction or
remorse in pretending to love and promising to marry plaintiff, a young, innocent, trustful country girl, in order to
satisfy his lust on her. 11

and then concluded:

In sum, we are strongly convinced and so hold that it was defendant-appellant's fraudulent and deceptive
protestations of love for and promise to marry plaintiff that made her surrender her virtue and womanhood to him
and to live with him on the honest and sincere belief that he would keep said promise, and it was likewise these
(sic) fraud and deception on appellant's part that made plaintiff's parents agree to their daughter's living-in with him
preparatory to their supposed marriage. And as these acts of appellant are palpably and undoubtedly against morals,
good customs, and public policy, and are even gravely and deeply derogatory and insulting to our women, coming
as they do from a foreigner who has been enjoying the hospitality of our people and taking advantage of the
opportunity to study in one of our institutions of learning, defendant-appellant should indeed be made, under Art.
21 of the Civil Code of the Philippines, to compensate for the moral damages and injury that he had caused
plaintiff, as the lower court ordered him to do in its decision in this case. 12

Unfazed by his second defeat, petitioner filed the instant petition on 26 March 1991; he raises therein the single issue of whether or
not Article 21 of the Civil Code applies to the case at bar. 13
It is petitioner's thesis that said Article 21 is not applicable because he had not committed any moral wrong or injury or violated any
good custom or public policy; he has not professed love or proposed marriage to the private respondent; and he has never maltreated
her. He criticizes the trial court for liberally invoking Filipino customs, traditions and culture, and ignoring the fact that since he is a
foreigner, he is not conversant with such Filipino customs, traditions and culture. As an Iranian Moslem, he is not familiar with
Catholic and Christian ways. He stresses that even if he had made a promise to marry, the subsequent failure to fulfill the same is
excusable or tolerable because of his Moslem upbringing; he then alludes to the Muslim Code which purportedly allows a Muslim to
take four (4) wives and concludes that on the basis thereof, the trial court erred in ruling that he does not posses good moral
character. Moreover, his controversial "common law life" is now his legal wife as their marriage had been solemnized in civil
ceremonies in the Iranian Embassy. As to his unlawful cohabitation with the private respondent, petitioner claims that even if
responsibility could be pinned on him for the live-in relationship, the private respondent should also be faulted for consenting to an
illicit arrangement. Finally, petitioner asseverates that even if it was to be assumed arguendo that he had professed his love to the
private respondent and had also promised to marry her, such acts would not be actionable in view of the special circumstances of the
case. The mere breach of promise is not actionable. 14

On 26 August 1991, after the private respondent had filed her Comment to the petition and the petitioner had filed his Reply thereto,
this Court gave due course to the petition and required the parties to submit their respective Memoranda, which they subsequently
complied with.

As may be gleaned from the foregoing summation of the petitioner's arguments in support of his thesis, it is clear that questions of
fact, which boil down to the issue of the credibility of witnesses, are also raised. It is the rule in this jurisdiction that appellate courts
will not disturb the trial court's findings as to the credibility of witnesses, the latter court having heard the witnesses and having had
the opportunity to observe closely their deportment and manner of testifying, unless the trial court had plainly overlooked facts of
substance or value which, if considered, might affect the result of the case. 15

Petitioner has miserably failed to convince Us that both the appellate and trial courts had overlooked any fact of substance or values
which could alter the result of the case.

Equally settled is the rule that only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of
Court. It is not the function of this Court to analyze or weigh all over again the evidence introduced by the parties before the lower
court. There are, however, recognized exceptions to this rule. Thus, in Medina vs. Asistio, Jr., 16 this Court took the time, again, to
enumerate these exceptions:

xxx xxx xxx

(1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures (Joaquin v. Navarro,
93 Phil. 257 [1953]); (2) When the inference made is manifestly mistaken, absurb or impossible (Luna v. Linatok,
74 Phil. 15 [1942]); (3) Where there is a grave abuse of discretion (Buyco v. People, 95 Phil. 453 [1955]); (4)
When the judgment is based on a misapprehension of facts (Cruz v. Sosing,
L-4875, Nov. 27, 1953); (5) When the findings of fact are conflicting (Casica v. Villaseca, L-9590 Ap. 30, 1957;
unrep.) (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellate and appellee (Evangelista v. Alto Surety and Insurance Co., 103 Phil.
401 [1958]);
(7) The findings of the Court of Appeals are contrary to those of the trial court (Garcia v. Court of Appeals, 33
SCRA 622 [1970]; Sacay v. Sandiganbayan, 142 SCRA 593 [1986]); (8) When the findings of fact are conclusions
without citation of specific evidence on which they are based (Ibid.,); (9) When the facts set forth in the petition as
well as in the petitioners main and reply briefs are not disputed by the respondents (Ibid.,); and (10) The finding of
fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by the evidence
on record (Salazar v. Gutierrez, 33 SCRA 242 [1970]).

Petitioner has not endeavored to joint out to Us the existence of any of the above quoted exceptions in this case. Consequently, the
factual findings of the trial and appellate courts must be respected.

And now to the legal issue.

The existing rule is that a breach of promise to marry per se is not an actionable wrong. 17 Congress deliberately eliminated from the
draft of the New Civil Code the provisions that would have made it so. The reason therefor is set forth in the report of the Senate
Committees on the Proposed Civil Code, from which We quote:

The elimination of this chapter is proposed. That breach of promise to marry is not actionable has been definitely
decided in the case of De Jesus vs. Syquia. 18 The history of breach of promise suits in the United States and in
England has shown that no other action lends itself more readily to abuse by designing women and unscrupulous
men. It is this experience which has led to the abolition of rights of action in the so-called Heart Balm suits in many
of the American states. . . . 19

This notwithstanding, the said Code contains a provision, Article 21, which is designed to expand the concept of torts or quasi-delict
in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human
foresight to specifically enumerate and punish in the statute books. 20

As the Code Commission itself stated in its Report:

 But the Code Commission had gone farther than the sphere of wrongs defined or determined by positive law. Fully
sensible that there are countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even
though they have actually suffered material and moral injury, the Commission has deemed it necessary, in the
interest of justice, to incorporate in the proposed Civil Code the following rule:

Art. 23. 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.

An example will illustrate the purview of the foregoing norm: "A" seduces the nineteen-year old daughter of "X".
A promise of marriage either has not been made, or can not be proved. The girl becomes pregnant. Under the
present laws, there is no crime, as the girl is above nineteen years of age. Neither can any civil action for breach of
promise of marriage be filed. Therefore, though the grievous moral wrong has been committed, and though the girl
and family have suffered incalculable moral damage, she and her parents cannot bring action for damages. But
under the proposed article, she and her parents would have such a right of action.

Thus at one stroke, the legislator, if the forgoing rule is approved, would vouchsafe adequate legal remedy for that
untold number of moral wrongs which it is impossible for human foresight to provide for specifically in the
statutes. 21

Article 2176 of the Civil Code, which defines a quasi-delict thus:

Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called
a quasi-delict and is governed by the provisions of this Chapter.

is limited to negligent acts or omissions and excludes the notion of willfulness or intent. Quasi-delict, known in Spanish
legal treatises as culpa aquiliana, is a civil law concept while torts is an Anglo-American or common law concept. Torts is
much broader than culpa aquiliana because it includes not only negligence, but international criminal acts as well such as
assault and battery, false imprisonment and deceit. In the general scheme of the Philippine legal system envisioned by the
Commission responsible for drafting the New Civil Code, intentional and malicious acts, with certain exceptions, are to be
governed by the Revised Penal Code while negligent acts or omissions are to be covered by Article 2176 of the Civil Code.
22
In between these opposite spectrums are injurious acts which, in the absence of Article 21, would have been beyond
redress. Thus, Article 21 fills that vacuum. It is even postulated that together with Articles 19 and 20 of the Civil Code,
Article 21 has greatly broadened the scope of the law on civil wrongs; it has become much more supple and adaptable than
the Anglo-American law on torts. 23

In the light of the above laudable purpose of Article 21, We are of the opinion, and so hold, that where a man's promise to marry is in
fact the proximate cause of the acceptance of his love by a woman and his representation to fulfill that promise thereafter becomes
the proximate cause of the giving of herself unto him in a sexual congress, proof that he had, in reality, no intention of marrying her
and that the promise was only a subtle scheme or deceptive device to entice or inveigle her to accept him and to obtain her consent to
the sexual act, could justify the award of damages pursuant to Article 21 not because of such promise to marry but because of the
fraud and deceit behind it and the willful injury to her honor and reputation which followed thereafter. It is essential, however, that
such injury should have been committed in a manner contrary to morals, good customs or public policy.

In the instant case, respondent Court found that it was the petitioner's "fraudulent and deceptive protestations of love for and promise
to marry plaintiff that made her surrender her virtue and womanhood to him and to live with him on the honest and sincere belief that
he would keep said promise, and it was likewise these fraud and deception on appellant's part that made plaintiff's parents agree to
their daughter's living-in with him preparatory to their supposed marriage." 24 In short, the private respondent surrendered her
virginity, the cherished possession of every single Filipina, not because of lust but because of moral seduction the kind illustrated
by the Code Commission in its example earlier adverted to. The petitioner could not be held liable for criminal seduction punished
under either Article 337 or Article 338 of the Revised Penal Code because the private respondent was above eighteen (18) years of
age at the time of the seduction.

Prior decisions of this Court clearly suggest that Article 21 may be applied in a breach of promise to marry where the woman is a
victim of moral seduction. Thus, in Hermosisima vs. Court of Appeals, 25 this Court denied recovery of damages to the woman
because:

. . . we find ourselves unable to say that petitioner is morally guilty of seduction, not only because he is
approximately ten (10) years younger than the complainant who was around thirty-six (36) years of age, and as
highly enlightened as a former high school teacher and a life insurance agent are supposed to be when she
became intimate with petitioner, then a mere apprentice pilot, but, also, because the court of first instance found
that, complainant "surrendered herself" to petitioner because, "overwhelmed by her love" for him, she "wanted to
bind" him by having a fruit of their engagement even before they had the benefit of clergy.

In Tanjanco vs. Court of Appeals, 26 while this Court likewise hinted at possible recovery if there had been moral seduction, recovery
was eventually denied because We were not convinced that such seduction existed. The following enlightening disquisition and
conclusion were made in the said case:

The Court of Appeals seem to have overlooked that the example set forth in the Code Commission's memorandum
refers to a tort upon a minor who had been seduced. The essential feature is seduction, that in law is more than
 mere sexual intercourse, or a breach of a promise of marriage; it connotes essentially the idea of deceit, enticement,
superior power or abuse of confidence on the part of the seducer to which the woman has yielded (U.S. vs.
Buenaventura, 27 Phil. 121; U.S. vs. Arlante, 9 Phil. 595).

It has been ruled in the Buenaventura case (supra) that

To constitute seduction there must in all cases be some sufficient promise or inducement and the
woman must yield because of the promise or other inducement. If she consents merely from
carnal lust and the intercourse is from mutual desire, there is no seduction (43 Cent. Dig. tit.
Seduction, par. 56) She must be induced to depart from the path of virtue by the use of some
species of arts, persuasions and wiles, which are calculated to have and do have that effect, and
which result in her person to ultimately submitting her person to the sexual embraces of her
seducer (27 Phil. 123).

And in American Jurisprudence we find:

On the other hand, in an action by the woman, the enticement, persuasion or deception is the
essence of the injury; and a mere proof of intercourse is insufficient to warrant a recovery.

Accordingly it is not seduction where the willingness arises out of sexual desire of curiosity of
the female, and the defendant merely affords her the needed opportunity for the commission of
the act. It has been emphasized that to allow a recovery in all such cases would tend to the
demoralization of the female sex, and would be a reward for unchastity by which a class of
adventuresses would be swift to profit. (47 Am. Jur. 662)

xxx xxx xxx

Over and above the partisan allegations, the fact stand out that for one whole year, from 1958 to 1959, the plaintiff-
appellee, a woman of adult age, maintain intimate sexual relations with appellant, with repeated acts of intercourse.
Such conduct is incompatible with the idea of seduction. Plainly there is here voluntariness and mutual passion; for
had the appellant been deceived, had she surrendered exclusively because of the deceit, artful persuasions and wiles
of the defendant, she would not have again yielded to his embraces, much less for one year, without exacting early
fulfillment of the alleged promises of marriage, and would have cut short all sexual relations upon finding that
defendant did not intend to fulfill his defendant did not intend to fulfill his promise. Hence, we conclude that no
case is made under article 21 of the Civil Code, and no other cause of action being alleged, no error was committed
by the Court of First Instance in dismissing the complaint. 27

In his annotations on the Civil Code, 28 Associate Justice Edgardo L. Paras, who recently retired from this Court, opined that in a
breach of promise to marry where there had been carnal knowledge, moral damages may be recovered:

. . . if there be criminal or moral seduction, but not if the intercourse was due to mutual lust. (Hermosisima vs.
Court of Appeals,
L-14628, Sept. 30, 1960; Estopa vs. Piansay, Jr., L-14733, Sept. 30, 1960; Batarra vs. Marcos, 7 Phil. 56 (sic);
Beatriz Galang vs. Court of Appeals, et al., L-17248, Jan. 29, 1962). (In other words, if the CAUSE be the promise
to marry, and the EFFECT be the carnal knowledge, there is a chance that there was criminal or moral seduction,
hence recovery of moral damages will prosper. If it be the other way around, there can be no recovery of moral
damages, because here mutual lust has intervened). . . .

together with "ACTUAL damages, should there be any, such as the expenses for the wedding presentations (See Domalagon
v. Bolifer, 33 Phil. 471).

Senator Arturo M. Tolentino 29 is also of the same persuasion:

It is submitted that the rule in Batarra vs. Marcos, 30 still subsists, notwithstanding the incorporation of the present
article 31 in the Code. The example given by the Code Commission is correct, if there was seduction, not
necessarily in the legal sense, but in the vulgar sense of deception. But when the sexual act is accomplished without
any deceit or qualifying circumstance of abuse of authority or influence, but the woman, already of age, has
knowingly given herself to a man, it cannot be said that there is an injury which can be the basis for indemnity.

But so long as there is fraud, which is characterized by willfulness (sic), the action lies. The court, however, must
weigh the degree of fraud, if it is sufficient to deceive the woman under the circumstances, because an act which
would deceive a girl sixteen years of age may not constitute deceit as to an experienced woman thirty years of age.
But so long as there is a wrongful act and a resulting injury, there should be civil liability, even if the act is not
punishable under the criminal law and there should have been an acquittal or dismissal of the criminal case for that
reason.

We are unable to agree with the petitioner's alternative proposition to the effect that granting, for argument's sake, that he did promise
to marry the private respondent, the latter is nevertheless also at fault. According to him, both parties are in pari delicto; hence,
pursuant to Article 1412(1) of the Civil Code and the doctrine laid down in Batarra vs. Marcos, 32 the private respondent cannot
recover damages from the petitioner. The latter even goes as far as stating that if the private respondent had "sustained any injury or
damage in their relationship, it is primarily because of her own doing, 33 for:

. . . She is also interested in the petitioner as the latter will become a doctor sooner or later. Take notice that she is a
plain high school graduate and a mere employee . . . (Annex "C") or a waitress (TSN, p. 51, January 25, 1988) in a
luncheonette and without doubt, is in need of a man who can give her economic security. Her family is in dire need
of financial assistance. (TSN, pp. 51-53, May 18, 1988). And this predicament prompted her to accept a proposition
that may have been offered by the petitioner. 34

These statements reveal the true character and motive of the petitioner. It is clear that he harbors a condescending, if not sarcastic,
regard for the private respondent on account of the latter's ignoble birth, inferior educational background, poverty and, as perceived
by him, dishonorable employment. Obviously then, from the very beginning, he was not at all moved by good faith and an honest
motive. Marrying with a woman so circumstances could not have even remotely occurred to him. Thus, his profession of love and
promise to marry were empty words directly intended to fool, dupe, entice, beguile and deceive the poor woman into believing that
indeed, he loved her and would want her to be his life's partner. His was nothing but pure lust which he wanted satisfied by a Filipina
who honestly believed that by accepting his proffer of love and proposal of marriage, she would be able to enjoy a life of ease and
security. Petitioner clearly violated the Filipino's concept of morality and brazenly defied the traditional respect Filipinos have for
their women. It can even be said that the petitioner committed such deplorable acts in blatant disregard of Article 19 of the Civil
Code which directs every person to act with justice, give everyone his due and observe honesty and good faith in the exercise of his
rights and in the performance of his obligations.

No foreigner must be allowed to make a mockery of our laws, customs and traditions.

The pari delicto rule does not apply in this case for while indeed, the private respondent may not have been impelled by the purest of
intentions, she eventually submitted to the petitioner in sexual congress not out of lust, but because of moral seduction. In fact, it is
apparent that she had qualms of conscience about the entire episode for as soon as she found out that the petitioner was not going to
marry her after all, she left him. She is not, therefore, in pari delicto with the petitioner. Pari delicto means "in equal fault; in a
similar offense or crime; equal in guilt or in legal fault." 35 At most, it could be conceded that she is merely in delicto.

Equity often interferes for the relief of the less guilty of the parties, where his transgression has been brought about
by the imposition of undue influence of the party on whom the burden of the original wrong principally rests, or
where his consent to the transaction was itself procured by
fraud. 36

In Mangayao vs. Lasud, 37 We declared:

Appellants likewise stress that both parties being at fault, there should be no action by one against the other (Art.
1412, New Civil Code). This rule, however, has been interpreted as applicable only where the fault on both sides is,
more or less, equivalent. It does not apply where one party is literate or intelligent and the other one is not. (c.f.
Bough vs. Cantiveros, 40 Phil. 209).

We should stress, however, that while We find for the private respondent, let it not be said that this Court condones the deplorable
behavior of her parents in letting her and the petitioner stay together in the same room in their house after giving approval to their
marriage. It is the solemn duty of parents to protect the honor of their daughters and infuse upon them the higher values of morality
and dignity.

WHEREFORE, finding no reversible error in the challenged decision, the instant petition is hereby DENIED, with costs against the
petitioner.

Gashem Shookat Baksh vs Court of Appeals

In August 1986, while working as a waitress in Dagupan City, Pangasinan, Marilou Gonzales, then 21 years old, met Gashem
Shookat Baksh, a 29 year old exchange student from Iran who was studying medicine in Dagupan. The two got really close and
intimate. On Marilous account, she said that Gashem later offered to marry her at the end of the semester. Marilou then introduced
Gashem to her parents where they expressed their intention to get married. Marilous parents then started inviting sponsors and
relatives to the wedding. They even started looking for animals to slaughter for the occasion.

Meanwhile, Marilou started living with Gashem in his apartment where they had sexual intercourse. But in no time, their relationship
went sour as Gashem began maltreating Marilou. Gashem eventually revoked his promise of marrying Marilou and he told her that
he is already married to someone in Bacolod City. So Marilou went home and later sued Gashem for damages.

The trial court ruled in favor of Marilou and awarded her P20k in moral damages. The Court of Appeals affirmed the decision of the
trial court.

On appeal, Gashem averred that he never proposed marriage to Marilou and that he cannot be adjudged to have violated Filipino
customs and traditions since he, being an Iranian, was not familiar with Filipino customs and traditions.

ISSUE: Whether or not the Court of Appeals is correct.

HELD: Yes. Gashem is liable to pay for damages in favor of Marilou not really because of his breach of promise to marry her but
based on Article 21 of the Civil Code which provides:

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.

Breach of promise to marry is not an actionable wrong per se. In this case, it is the deceit and fraud employed by Gashem that
constitutes a violation of Article 21 of the Civil Code. His promise of marrying Marilou was a deceitful scheme to lure her into
sexual congress. As found by the trial court, Marilou was not a woman of loose morals. She was a virgin before she met Gashem. She
would not have surrendered herself to Gashem had Gashem not promised to marry her. Gashems blatant disregard of Filipino
traditions on marriage and on the reputation of Filipinas is contrary to morals, good customs, and public policy. As a foreigner who is
enjoying the hospitality of our country and even taking advantage of the opportunity to study here he is expected to respect our
traditions. Any act contrary will render him liable under Article 21 of the Civil Code.

The Supreme Court also elucidated that Article 21 was meant to expand the concepts of torts and quasi delict. It is meant to cover
situations such as this case where the breach complained of is not strictly covered by existing laws. It was meant as a legal remedy
for the untold number of moral wrongs which is impossible for human foresight to specifically enumerate and punish in the statute
books such as the absence of a law penalizing a the breach of promise to marry.

The Supreme Court however agreed with legal luminaries that if the promise to marry was made and there was carnal knowledge
because of it, then moral damages may be recovered (presence of moral or criminal seduction), Except if there was mutual lust; or if
expenses were made because of the promise (expenses for the wedding), then actual damages may be recovered.

Gashem Shookat Baksh vs. Court of Appeals

GR No. 97336 - February 19, 1993

FACTS:
Petitioner was a medicine student at Lyceum Northwestern Colleges at Dagupan City. He was an Iranian exchange student and was
29 years old. Respondent was a former waitress on a luncheonette, and was 22 years old. Petitioner was allegedly the lover of the
respondent, and was said to promise marriage to the latter, which convinced her to live with him in his apartment. It was even alleged
that the petitioner went to the house of the respondent to inform her family about the marriage on the end of the semester. However,
the marriage did not materialize, with several beatings and maltreatment experienced by the respondent from the petitioner. The case
was filed in the RTC of Pangasinan, and the decision washeld in favor of the respondent. However, the petitioner claimed that the
judgment of the RTC was an error, for the claims of the respondent are not true, and that he did not know about the custom of the
Filipinos; his acts were in accordance of his custom. The decision of the RTC was affirmed in toto by the Court of Appeals. Hence,
the petitioner filed an appeal to theSupreme Court.

ISSUE:
Whether or not the respondent could claim payment for the damages incurred by the petitioner.

RULING:
Mere breach of marriage is not punishable by law. However, since the respondent was proved to have a good moral character, and
that she had just let her virginity be taken away by the petitioner since the latter offered a promise of marriage, then she could ask for
payment for damages. Furthermore, since she let her lover, the petitioner, deflowered her since she believed that his promise to
marry was true, and not due to her carnal desire, then she could have her claims against the petitioner. Moreover, the father of the
respondent had already looked for pigs and chicken for the marriage reception and the sponsors for the marriage, and then damages
were caused by the petitioner against the respondents, which qualified the claims of the respondent against the petitioner.

DECISION

PERALTA, J.

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking the reversal and setting aside of
the June 19, 2007 Decision1 and the October 11, 2007 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 79325. The
assailed CA Decision affirmed with modification the Decision3 dated March 21, 2003 of the Regional Trial Court (RTC) of Quezon
City, Branch 224, in Civil Case No. Q-98-34395, while the CA Resolution denied petitioner's Motion for Reconsideration.

The factual and procedural antecedents are as follows:

In September 1990, herein petitioner Manila International Airport Authority (MIAA) entered into a contract of lease with herein
respondent Avia Filipinas International Corporation (AFIC), wherein MIAA allowed AFIC to use specific portions of land as well as
facilities within the Ninoy Aquino International Airport exclusively for the latter's aircraft repair station and chartering operations.
The contract was for one (1) year, beginning September 1, 1990 until August 31, 1991, with a monthly rental of P6,580.00.

In December 1990, MIAA issued Administrative Order No. 1, Series of 1990, which revised the rates of dues, charges, fees or
assessments for the use of its properties, facilities and services within the airport complex. The Administrative Order was made
effective on December 1, 1990. As a consequence, the monthly rentals due from AFIC was increased to P15,996.50. Nonetheless,
MIAA did not require AFIC to pay the new rental fee. Thus, it continued to pay the original fee of P6,580.00.

After the expiration of the contract, AFIC continued to use and occupy the leased premises giving rise to an implied lease contract on
a monthly basis. AFIC kept on paying the original rental fee without protest on the part of MIAA.

Three years after the expiration of the original contract of lease, MIAA informed AFIC, through a billing statement dated October 6,
1994, that the monthly rental over the subject premises was increased to P15,966.50 beginning September 1, 1991, which is the date
immediately following the expiration of the original contract of lease. MIAA sought recovery of the difference between the increased
rental rate and the original rental fee amounting to a total of P347,300.50 covering thirty-seven (37) months between September 1,
1991 and September 31, 1994. Beginning October 1994, AFIC paid the increased rental fee. However, it refused to pay the lump sum
of P347,300.50 sought to be recovered by MIAA. For the continued refusal of AFIC to pay the said lump sum, its employees were
denied access to the leased premises from July 1, 1997 until March 11, 1998. This, notwithstanding, AFIC continued paying its
rentals. Subsequently, AFIC was granted temporary access to the leased premises.

AFIC then filed with the RTC of Quezon City a Complaint for damages with injunction against MIAA and its General Manager
seeking uninterrupted access to the leased premises, recovery of actual and exemplary damages, refund of its monthly rentals with
interest at the time that it was denied access to the area being rented as well as attorney's fees.

In its Answer with Counterclaim, MIAA contended that under its lease contract with AFIC, MIAA is allowed to either increase or
decrease the monthly rental; AFIC has rental arrears in the amount of P347,300.50; AFIC was wrong in claiming that MIAA took the
law into its own hands in denying AFIC and its employees access to the leased premises, because under the lease contract, in case of
failure on the part of AFIC to pay rentals for at least two (2) months, the contract shall become automatically terminated and
canceled without need of judicial action or process and it shall be lawful for MIAA or any person or persons duly authorized on its
behalf to take possession of the property either by padlocking the premises or posting its guards to prevent the entry of any person.
MIAA prayed for the award of exemplary damages as well as attorney's fees and litigation expenses.

On March 21, 2003, the RTC rendered its Decision, the dispositive portion of which reads as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the plaintiff [AFIC] and
as against the defendants [MIAA] ordering the latter to pay plaintiff the following:
a) the amount of P2,000,000.00 as actual damages;
b) the amount of P200,000.00 as exemplary damages;
c) to refund the monthly rental payments beginning July 1, 1997 up [to] March 11, 1998 with
interest at twelve (12%) percent;
d) the amount of P100,000.00 as attorney's fees;
e) cost of suit.
IT IS SO ORDERED.4

MIAA filed an appeal with the CA contending that the RTC erred in: (1) finding that MIAA is not entitled to apply the increase in
rentals as against AFIC; (2) finding that MIAA is not entitled to padlock the leased premises or post guards to prevent entry of AFIC
therein; and (3) awarding actual and exemplary damages and attorney's fees.

On June 19, 2007, the CA rendered its assailed Decision, the dispositive portion of which reads, thus:
 WHEREFORE, premises considered, the decision of the Regional Trial Court of Quezon City in Civil Case No. Q-
98-34395 is hereby AFFIRMED with MODIFICATION. The awards of actual/compensatory damages and
exemplary damages are deleted. The refund of monthly rental payments from July 1, 1997 to March 11, 1998 shall
earn interest of six percent (6%) per annum from the date of the filing of the complaint until the finality of this
decision. An interest of twelve percent (12%) per annum shall be imposed upon any unpaid balance from such
finality until the judgment amount is fully satisfied.

The award of attorney's fees stands.

SO ORDERED.5

MIAA filed a Motion for Reconsideration, but the CA denied it via its Resolution dated October 11, 2007.

Hence, the present petition for review on certiorari raising the following issues:

WHETHER THE HONORABLE COURT OF APPEALS CORRECTLY INTERPRETED THE PROVISIONS OF

THE LEASE CONTRACT IN LINE WITH THE PROVISIONS OF THE CIVIL CODE AND EXISTING
JURISPRUDENCE ON CONTRACTS.

WHETHER THE PRINCIPLE OF UNJUST ENRICHMENT IS APPLICABLE TO THE INSTANT CASE.

WHETHER RESPONDENT IS ENTITLED TO ATTORNEY'S FEES.6

Petitioner MIAA contends that, as an administrative agency possessed of quasi-legislative and quasi-judicial powers as provided for
in its charter, it is empowered to make rules and regulations and to levy fees and charges; that its issuance of Administrative Order
No. 1, Series of 1990 is pursuant to the exercise of the abovementioned powers; that by signing the lease contract, respondent AFIC
already agreed and gave its consent to any further increase in rental rates; as such, the provisions of the lease contract being cited by
the CA which provides that any amendment, alteration or modification [of the lease contract] shall not be valid and binding, unless
and until made in writing and signed by the parties thereto is deemed complied with because respondent already consented to having
any subsequent amendments to Administrative Order No. 1 automatically incorporated in the lease contract; that the above-quoted
provisions should not also be interpreted as having the effect of limiting the authority of MIAA to impose new rental rates in
accordance with its authority under its charter.

Petitioner also argues that it is not guilty of unjust enrichment when it denied respondent access to the leased premises, because there
is nothing unlawful in its act of imposing sanctions against respondent for the latter's failure to pay the increased rental.
Lastly, petitioner avers that respondent is not entitled to attorney's fees, considering that it was not compelled to litigate and incur
expenses to protect its interest by reason of any unjustified act on the part of petitioner. Petitioner reiterates that it was merely
exercising its right as the owner and administrator of the leased property and, as such, its acts may not be deemed unwarranted.

The petition lacks merit.

Article 1306 of the Civil Code provides that [t]he contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

Moreover, Article 1374 of the Civil Code clearly provides that [t]he various stipulations of a contract shall be interpreted together,
attributing to the doubtful ones that sense which may result from all of them taken jointly. Indeed, in construing a contract, the
provisions thereof should not be read in isolation, but in relation to each other and in their entirety so as to render them effective,
having in mind the intention of the parties and the purpose to be achieved. 7 In other words, the stipulations in a contract and other
contract documents should be interpreted together with the end in view of giving effect to all. 8
In the present case, the Court finds nothing repugnant to law with respect to the questioned provisions of the contract of lease
between petitioner and respondent. It is true that Article II, Paragraph 2.04 of the Contract of Lease states that [a]ny subsequent
amendment to Administrative Order No. 4, Series of 1982, which will effect a decrease or escalation of the monthly rental or impose
new and additional fees and charges, including but not limited to government/MIAA circulars, rules and regulation to this effect,
shall be deemed incorporated herein and shall automatically amend this Contract insofar as the monthly rental is concerned. 9
However, the Court agrees with the CA that the abovequoted provision of the lease contract should not be read in isolation. Rather, it
should be read together with the provisions of Article VIII, Paragraph 8.13, which provide that [a]ny amendment, alteration or
modification of th[e] Contract shall not be valid and binding, unless and until made in writing and signed by the parties thereto. 10 It is
clear from the foregoing that the intention of the parties is to subject such amendment to the conformity of both petitioner and
respondent. In the instant case, there is no showing that respondent gave his acquiescence to the said amendment or modification of
the contract.

The situation is different with respect to the payments of the increased rental fee made by respondent beginning October 1994
because by then the amendment to the contract was made in writing through a bill sent by petitioner to respondent.11 The fact that
respondent subsequently settled the said bill proves that he acceded to the increase in rental fee. The same may not be said with
respect to the questioned rental fees sought to be recovered by petitioner between September 1991 and September 1994 because no
bill was made and forwarded to respondent on the basis of which it could have given or withheld its conformity thereto.

It may not be amiss to point out that during the abovementioned period, respondent continued to pay and petitioner kept on receiving
the original rental fee of P6,580.00 without any reservations or protests from the latter. 12 Neither did petitioner indicate in the official
receipts it issued that the payments made by respondent constitute only partial fulfillment of the latter's obligations. Article 1235 of
the Civil Code clearly states that [w]hen the obligee accepts the performance knowing its incompleteness or irregularity, and without
expressing any protest or objection, the obligation is deemed fully complied with. For failing to make any protest or objection,
petitioner is already estopped from seeking recovery of the amount claimed.

Anent the second issue, since it has been established that petitioner has no legal basis in requiring respondent to pay additional rental
fees from September 1, 1991 to September 30, 1994, it, thus, follows that petitioner's act of denying respondent and its employees
access to the leased premises from July 1, 1997 until March 11, 1998, by reason of respondent's non-payment of the said additional
fees, is likewise unjustified.

Under Paragraph 3, Article 1654 of the Civil Code, the lessor is obliged [t]o maintain the lessee in the peaceful and adequate
enjoyment of the lease for the entire duration of the contract.

Moreover, Article 1658 of the same Code provides that [t]he lessee may suspend the payment of the rent in case the lessor fails to
make the necessary repairs or to maintain the lessee in peaceful and adequate enjoyment of the property leased.

Furthermore, as correctly cited by the RTC, Article 19 of the Civil Code provides that [e]very person must, in the exercise of his
rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

Article 22 of the same Code also states that [e]very person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.
In accordance with jurisprudence, there is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a
person retains money or property of another against the fundamental principles of justice, equity and good conscience. 13 The
principle of unjust enrichment essentially contemplates payment when there is no duty to pay, and the person who receives the
payment has no right to receive it.14

In the instant case, it is clear that petitioner failed to maintain respondent in the peaceful and adequate enjoyment of the leased
premises by unjustifiably preventing the latter access thereto. Consequently, in accordance with Article 1658 of the Civil Code,
respondent had no duty to make rent payments. Despite that, respondent still continued to pay the rental fees agreed upon in the
original contract. Thus, it would be the height of inequity and injustice as well as unjust enrichment on the part of petitioner if the
rental fees paid by respondent during the time that it was denied access to and prevented from using the leased premises be not
returned to it.

With respect to attorney's fees, the Court finds no error on the part of the CA in sustaining such award on the ground that petitioner's
act of denying respondent and its employees access to the leased premises has compelled respondent to litigate and incur expenses to
protect its interest.15 The Court likewise agrees with the CA that, under the circumstances prevailing in the present case, attorney's
fees may be granted on grounds of justice and equity. 16
Finally, the Court deems it proper to reiterate the provisions of Supreme Court Administrative Circular No. 10-2000 which enjoins
all judges of lower courts to observe utmost caution, prudence and judiciousness in the issuance of writs of execution to satisfy
money judgments against government agencies and local government units.

WHEREFORE, the petition is DENIED. The June 19, 2007 Decision and October 11, 2007 Resolution of the Court of
Appeals in CA-G.R. CV No. 79325 are AFFIRMED. The Regional Trial Court of Quezon City, Branch 224 is ORDERED to
comply with the directives of Supreme Court Administrative Circular No. 10-2000.

G.R. No. 183984 April 13, 2011

ARTURO SARTE FLORES, Petitioner,

vs.
SPOUSES ENRICO L. LINDO, JR. and EDNA C. LINDO, Respondents.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review1 assailing the 30 May 2008 Decision2 and the 4 August 2008 Resolution3 of the Court of
Appeals in CA-G.R. SP No. 94003.

The Antecedent Facts

The facts, as gleaned from the Court of Appeals Decision, are as follows:

On 31 October 1995, Edna Lindo (Edna) obtained a loan from Arturo Flores (petitioner) amounting to P400,000 payable on 1
December 1995 with 3% compounded monthly interest and 3% surcharge in case of late payment. To secure the loan, Edna executed
a Deed of Real Estate Mortgage4 (the Deed) covering a property in the name of Edna and her husband Enrico (Enrico) Lindo, Jr.
(collectively, respondents). Edna also signed a Promissory Note5 and the Deed for herself and for Enrico as his attorney-in-fact.

Edna issued three checks as partial payments for the loan. All checks were dishonored for insufficiency of funds, prompting
petitioner to file a Complaint for Foreclosure of Mortgage with Damages against respondents. The case was raffled to the Regional
Trial Court of Manila, Branch 33 (RTC, Branch 33) and docketed as Civil Case No. 00-97942.

In its 30 September 2003 Decision,6 the RTC, Branch 33 ruled that petitioner was not entitled to judicial foreclosure of the mortgage.
The RTC, Branch 33 found that the Deed was executed by Edna without the consent and authority of Enrico. The RTC, Branch 33
noted that the Deed was executed on 31 October 1995 while the Special Power of Attorney (SPA) executed by Enrico was only dated
4 November 1995.

The RTC, Branch 33 further ruled that petitioner was not precluded from recovering the loan from Edna as he could file a personal
action against her. However, the RTC, Branch 33 ruled that it had no jurisdiction over the personal action which should be filed in
the place where the plaintiff or the defendant resides in accordance with Section 2, Rule 4 of the Revised Rules on Civil Procedure.

Petitioner filed a motion for reconsideration. In its Order 7 dated 8 January 2004, the RTC, Branch 33 denied the motion for lack of
merit.

On 8 September 2004, petitioner filed a Complaint for Sum of Money with Damages against respondents. It was raffled to Branch 42
(RTC, Branch 42) of the Regional Trial Court of Manila, and docketed as Civil Case No. 04-110858.

Respondents filed their Answer with Affirmative Defenses and Counterclaims where they admitted the loan but stated that it only
amounted to P340,000. Respondents further alleged that Enrico was not a party to the loan because it was contracted by Edna without
Enricos signature. Respondents prayed for the dismissal of the case on the grounds of improper venue, res judicata and forum-
shopping, invoking the Decision of the RTC, Branch 33. On 7 March 2005, respondents also filed a Motion to Dismiss on the
grounds of res judicata and lack of cause of action.

The Decision of the Trial Court

On 22 July 2005, the RTC, Branch 42 issued an Order 8 denying the motion to dismiss. The RTC, Branch 42 ruled that res judicata
will not apply to rights, claims or demands which, although growing out of the same subject matter, constitute separate or distinct
causes of action and were not put in issue in the former action. Respondents filed a motion for reconsideration. In its Order 9 dated 8
February 2006, the RTC, Branch 42 denied respondents motion. The RTC, Branch 42 ruled that the RTC, Branch 33 expressly
stated that its decision did not mean that petitioner could no longer recover the loan petitioner extended to Edna.

Respondents filed a Petition for Certiorari and Mandamus with Prayer for a Writ of Preliminary Injunction and/or Temporary
Restraining Order before the Court of Appeals.

The Decision of the Court of Appeals

In its 30 May 2008 Decision, the Court of Appeals set aside the 22 July 2005 and 8 February 2006 Orders of the RTC, Branch 42 for
having been issued with grave abuse of discretion.

The Court of Appeals ruled that while the general rule is that a motion to dismiss is interlocutory and not appealable, the rule admits
of exceptions. The Court of Appeals ruled that the RTC, Branch 42 acted with grave abuse of discretion in denying respondents
motion to dismiss.

The Court of Appeals ruled that under Section 3, Rule 2 of the 1997 Rules of Civil Procedure, a party may not institute more than
one suit for a single cause of action. If two or more suits are instituted on the basis of the same cause of action, the filing of one on a
judgment upon the merits in any one is available ground for the dismissal of the others. The Court of Appeals ruled that on a
nonpayment of a note secured by a mortgage, the creditor has a single cause of action against the debtor, that is recovery of the credit
with execution of the suit. Thus, the creditor may institute two alternative remedies: either a personal action for the collection of debt
or a real action to foreclose the mortgage, but not both. The Court of Appeals ruled that petitioner had only one cause of action
against Edna for her failure to pay her obligation and he could not split the single cause of action by filing separately a foreclosure
proceeding and a collection case. By filing a petition for foreclosure of the real estate mortgage, the Court of Appeals held that
petitioner had already waived his personal action to recover the amount covered by the promissory note.

Petitioner filed a motion for reconsideration. In its 4 August 2008 Resolution, the Court of Appeals denied the motion.

Hence, the petition before this Court.

The Issue

The sole issue in this case is whether the Court of Appeals committed a reversible error in dismissing the complaint for collection of
sum of money on the ground of multiplicity of suits.

The Ruling of this Court

The petition has merit.

The rule is that a mortgage-creditor has a single cause of action against a mortgagor-debtor, that is, to recover the debt.10 The
mortgage-creditor has the option of either filing a personal action for collection of sum of money or instituting a real action to
foreclose on the mortgage security.11 An election of the first bars recourse to the second, otherwise there would be multiplicity of
suits in which the debtor would be tossed from one venue to another depending on the location of the mortgaged properties and the
residence of the parties.12

The two remedies are alternative and each remedy is complete by itself. 13 If the mortgagee opts to foreclose the real estate mortgage,
he waives the action for the collection of the debt, and vice versa.14 The Court explained:

x x x in the absence of express statutory provisions, a mortgage creditor may institute against the mortgage debtor either a personal
action for debt or a real action to foreclose the mortgage. In other words, he may pursue either of the two remedies, but not both. By
such election, his cause of action can by no means be impaired, for each of the two remedies is complete in itself. Thus, an election to
bring a personal action will leave open to him all the properties of the debtor for attachment and execution, even including the
mortgaged property itself. And, if he waives such personal action and pursues his remedy against the mortgaged property, an
unsatisfied judgment thereon would still give him the right to sue for deficiency judgment, in which case, all the properties of the
defendant, other than the mortgaged property, are again open to him for the satisfaction of the deficiency. In either case, his remedy
is complete, his cause of action undiminished, and any advantages attendant to the pursuit of one or the other remedy are purely
accidental and are all under his right of election. On the other hand, a rule that would authorize the plaintiff to bring a personal action
against the debtor and simultaneously or successively another action against the mortgaged property, would result not only in
multiplicity of suits so offensive to justice (Soriano v. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio v. San
Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of being sued in the place of his residence or of the
residence of the plaintiff, and then again in the place where the property lies. 15
The Court has ruled that if a creditor is allowed to file his separate complaints simultaneously or successively, one to recover his
credit and another to foreclose his mortgage, he will, in effect, be authorized plural redress for a single breach of contract at so much
costs to the court and with so much vexation and oppressiveness to the debtor. 16

In this case, however, there are circumstances that the Court takes into consideration.

Petitioner filed an action for foreclosure of mortgage. The RTC, Branch 33 ruled that petitioner was not entitled to judicial
foreclosure because the Deed of Real Estate Mortgage was executed without Enricos consent. The RTC, Branch 33 stated:

All these circumstances certainly conspired against the plaintiff who has the burden of proving his cause of action. On the other hand,
said circumstances tend to support the claim of defendant Edna Lindo that her husband did not consent to the mortgage of their
conjugal property and that the loan application was her personal decision.

Accordingly, since the Deed of Real Estate Mortgage was executed by defendant Edna Lindo lacks the consent or authority of her
husband Enrico Lindo, the Deed of Real Estate Mortgage is void pursuant to Article 96 of the Family Code.

This does not mean, however, that the plaintiff cannot recover the P400,000 loan plus interest which he extended to defendant Edna
Lindo. He can institute a personal action against the defendant for the amount due which should be filed in the place where the
plaintiff resides, or where the defendant or any of the principal defendants resides at the election of the plaintiff in accordance with
Section 2, Rule 4 of the Revised Rules on Civil Procedure. This Court has no jurisdiction to try such personal action. 17

Edna did not deny before the RTC, Branch 33 that she obtained the loan. She claimed, however, that her husband did not give his
consent and that he was not aware of the transaction.18 Hence, the RTC, Branch 33 held that petitioner could still recover the amount
due from Edna through a personal action over which it had no jurisdiction.

Edna also filed an action for declaratory relief before the RTC, Branch 93 of San Pedro Laguna (RTC, Branch 93), which ruled:

At issue in this case is the validity of the promissory note and the Real Estate Mortgage executed by Edna Lindo without the consent
of her husband.

The real estate mortgage executed by petition Edna Lindo over their conjugal property is undoubtedly an act of strict dominion and
must be consented to by her husband to be effective. In the instant case, the real estate mortgage, absent the authority or consent of
the husband, is necessarily void. Indeed, the real estate mortgage is this case was executed on October 31, 1995 and the subsequent
special power of attorney dated November 4, 1995 cannot be made to retroact to October 31, 1995 to validate the mortgage
previously made by petitioner.

The liability of Edna Lindo on the principal contract of the loan however subsists notwithstanding the illegality of the mortgage.
Indeed, where a mortgage is not valid, the principal obligation which it guarantees is not thereby rendered null and void. That
obligation matures and becomes demandable in accordance with the stipulation pertaining to it. Under the foregoing circumstances,
what is lost is merely the right to foreclose the mortgage as a special remedy for satisfying or settling the indebtedness which is the
principal obligation. In case of nullity, the mortgage deed remains as evidence or proof of a personal obligation of the debtor and the
amount due to the creditor may be enforced in an ordinary action.

In view of the foregoing, judgment is hereby rendered declaring the deed of real estate mortgage as void in the absence of the
authority or consent of petitioners spouse therein. The liability of petitioner on the principal contract of loan however subsists
notwithstanding the illegality of the real estate mortgage. 19

The RTC, Branch 93 also ruled that Ednas liability is not affected by the illegality of the real estate mortgage.

Both the RTC, Branch 33 and the RTC, Branch 93 misapplied the rules.

Article 124 of the Family Code provides:

Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of
disagreement, the husbands decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be
availed of within five years from the date of contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the
other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority
of the court or the written consent of the other spouse. In the absence of such authority or consent the disposition or encumbrance
shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the
third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the
court before the offer is withdrawn by either or both offerors. (Emphasis supplied)

Article 124 of the Family Code of which applies to conjugal partnership property, is a reproduction of Article 96 of the Family Code
which applies to community property.

Both Article 96 and Article 127 of the Family Code provide that the powers do not include disposition or encumbrance without the
written consent of the other spouse. Any disposition or encumbrance without the written consent shall be void. However, both
provisions also state that "the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third
person, and may be perfected as a binding contract upon the acceptance by the other spouse x x x before the offer is withdrawn
by either or both offerors."

In this case, the Promissory Note and the Deed of Real Estate Mortgage were executed on 31 October 1995. The Special Power of
Attorney was executed on 4 November 1995. The execution of the SPA is the acceptance by the other spouse that perfected the
continuing offer as a binding contract between the parties, making the Deed of Real Estate Mortgage a valid contract.

However, as the Court of Appeals noted, petitioner allowed the decisions of the RTC, Branch 33 and the RTC, Branch 93 to become
final and executory without asking the courts for an alternative relief. The Court of Appeals stated that petitioner merely relied on the
declarations of these courts that he could file a separate personal action and thus failed to observe the rules and settled jurisprudence
on multiplicity of suits, closing petitioners avenue for recovery of the loan.

Nevertheless, petitioner still has a remedy under the law.

In Chieng v. Santos,20 this Court ruled that a mortgage-creditor may institute against the mortgage-debtor either a personal action for
debt or a real action to foreclose the mortgage. The Court ruled that the remedies are alternative and not cumulative and held that the
filing of a criminal action for violation of Batas Pambansa Blg. 22 was in effect a collection suit or a suit for the recovery of the
mortgage-debt.21 In that case, however, this Court pro hac vice, ruled that respondents could still be held liable for the balance of the
loan, applying the principle that no person may unjustly enrich himself at the expense of another. 22

The principle of unjust enrichment is provided under Article 22 of the Civil Code which provides:

Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the same to him.

There is unjust enrichment "when a person unjustly retains a benefit to the loss of another, or when a person retains money or
property of another against the fundamental principles of justice, equity and good conscience." 23 The principle of unjust enrichment
requires two conditions: (1) that a person is benefited without a valid basis or justification, and (2) that such benefit is derived at the
expense of another.241avvphi1

The main objective of the principle against unjust enrichment is to prevent one from enriching himself at the expense of another
without just cause or consideration.25 The principle is applicable in this case considering that Edna admitted obtaining a loan from
petitioners, and the same has not been fully paid without just cause. The Deed was declared void erroneously at the instance of Edna,
first when she raised it as a defense before the RTC, Branch 33 and second, when she filed an action for declaratory relief before the
RTC, Branch 93. Petitioner could not be expected to ask the RTC, Branch 33 for an alternative remedy, as what the Court of Appeals
ruled that he should have done, because the RTC, Branch 33 already stated that it had no jurisdiction over any personal action that
petitioner might have against Edna.

Considering the circumstances of this case, the principle against unjust enrichment, being a substantive law, should prevail over the
procedural rule on multiplicity of suits. The Court of Appeals, in the assailed decision, found that Edna admitted the loan, except that
she claimed it only amounted to P340,000. Edna should not be allowed to unjustly enrich herself because of the erroneous decisions
of the two trial courts when she questioned the validity of the Deed. Moreover, Edna still has an opportunity to submit her defenses
before the RTC, Branch 42 on her claim as to the amount of her indebtedness.

WHEREFORE, the 30 May 2008 Decision and the 4 August 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 94003 are
SET ASIDE. The Regional Trial Court of Manila, Branch 42 is directed to proceed with the trial of Civil Case No. 04-110858.

G.R. No. L-54598 April 15, 1988

JOSE B. LEDESMA, petitioner,

vs.
HON. COURT OF APPEALS, Spouses PACIFICO DELMO and SANCHA DELMO (as private respondents), respondents.

The Solicitor General for petitioner.

Luzel D. Demasu-ay for respondent.

GUTIERREZ, JR., J.:

This petition seeks to reverse the decision of the respondent Court of Appeals which afirmed the decision of the Court of First
Instance of Iloilo, adjudging the petitioner, who was then the President of the West Visayas College liable for damages under Article
27 of the Civil Code of the Philippines for failure to graduate a student with honors.

The facts are not disputed.

An organization named Student Leadership Club was formed by some students of the West Visayas College. They elected the late
Violets Delmo as the treasurer. In that capacity, Delmo extended loans from the funds of the club to some of the students of the
school. "the petitioner claims that the said act of extending loans was against school rules and regulations. Thus, the petitioner, as
President of the School, sent a letter to Delmo informing her that she was being dropped from the membership of the club and that
she would not be a candidate for any award or citation from the school.

Delmo asked for a reconsideration of the decision but the petitioner denied it. Delmo, thus, appealed to the Office of the Director of
the Bureau of Public Schools.

The Director after due investigation, rendered a decison on April 13, 1966 which provided:

Records of the preliminary investigation conducted by one of the legal officers of this Office disclosed the
following: That Violeta Delmo was the treasurer of the Student Leadership Club, an exclusive student organization;
that pursuant to Article IX of the of the Constitution and By-Laws of the club, it passed Resolution No. 2,
authorizing the treasurer to disburse funds of the Club to student for financial aid and other humanitarian purposes;
that in compliance with said resolution and as treasurer of the Club, Violeta Delmo extended loans to some officers
and members of the Club upon proper application duly approved by the majority of the members of the Executive
Board; and that upon receiving the report from Mr. Jesse Dagoon, adviser of the funds of the Club, that Office
conducted an investigation on the matter and having been convinced of the guilt of Violets Delmo and the other
officers and members of the Club, that Office rendered the order or decision in question. In justifying that Office's
order or decision, it is contended that approval by that Office of the Constitution and By-Laws of the Club is
necessary for its effectivity and validity and since it was never submitted to that Office, the Club had no valid
constitution and By-Laws and that as a consequence, Resolution No. 2 which was passed based on the Constitution
and By-Laws- is without any force and effect and the treasurer, Violeta Delmo, who extended loans to some
officers and members of the Club pursuant thereto are illegal (sic), hence, she and the other students involved are
deemed guilty of misappropriating the funds of the Club. On the other hand, Raclito Castaneda, Nestor Golez and
Violeta Delmo, President, Secretary and Treasurer of the Club, respectively, testified that the Club had adopted its
Constitution and By-Laws in a meeting held last October 3, 1965, and that pursuant to Article I of said Constitution
and By-Laws, the majority of the members of the Executive Board passed Resolution No. 2, which resolution
became the basis for the extension on of loans to some officers and members of the Club, that the Club honestly
believed that its Constitution and By-Laws has been approved by the superintendent because the adviser of the
Club, Mr. Jesse Dagoon, assured the President of the Club that he will cause the approval of the Constitution and
By-Laws by the Superintendent; the officers of the Club have been inducted to office on October 9,1965 by the
Superintendent and that the Club had been likewise allowed to cosponsor the Education Week Celebration.

After a careful study of the records, this Office sustains the action taken by the Superintendent in penalizing the
adviser of the Club as well as the officers and members thereof by dropping them from membership therein.
However, this Office is convinced that Violets M. Delmo had acted in good faith, in her capacity as Club Treasurer,
in extending loans to the officers and members of the Student partnership Club. Resolution No. 2 authorizing the
Club treasurer to discharge finds to students in need of financial assistance and other humanitarian purposes had
been approved by the Club adviser, Mr. Jesse Dagoon, with the notation that approval was given in his capacity as
adviser of the Club and extension of the Superintendent's personality. Aside from misleading the officers and
members of the Club, Mr. Dagoon, had unsatisfactorily explained why he failed to give the Constitution and By-
Laws of the Club to the Superintendent for approval despite his assurance to the Club president that he would do
so. With this finding of negligence on the part of the Club adviser, not to mention laxity in the performance of his
duties as such, this Office considers as too severe and unwarranted that portion of the questioned order stating that
Violeta Delmo "shall not be a candidate for any award or citation from this school or any organization in this
school." Violeta Delmo, it is noted, has been a consistent full scholar of the school and she alone has maintained
her scholarship. The decision in question would, therefore, set at naught all her sacrifice and frustrate her dreams of
graduating with honors in this year's commencement exercises.

In view of all the foregoing, this Office believes and so holds and hereby directs that appellant Violeta. M. Delmo,
and for that matter all other Club members or officers involved in this case, be not deprived of any award, citation
or honor from the school, if they are otherwise entitled thereto. (Rollo, pp. 28-30)

On April 27, 1966, the petitioner received by mail the decision of the Director and all the records of the case. On the same day,
petitioner received a telegram stating the following:

"AIRMAIL RECORDS DELMO CASE MISSENT THAT OFFICE"

The Director asked for the return only of the records but the petitioner allegedly mistook the telegram as ordering him to also send
the decision back. On the same day, he returned by mail all the records plus the decision of the Director to the Bureau of Public
Schools.

The next day, the petitioner received another telegram from the Director order him to furnish Delmo with a copy of the decision. The
petitioner, in turn, sent a night letter to the Director informing the latter that he had sent the decision back and that he had not retained
a copy thereof..

On May 3, 1966, the day of the graduation, the petitioner received another telegram from the Director ordering him not to deprive
Delmo of any honors due her. As it was impossible by this time to include Delmo's name in the program as one of the honor students,
the petitioner let her graduate as a plain student instead of being awarded the Latin honor of Magna Cum Laude.
To delay the matter further, the petitioner on May 5, 1966, wrote the Director for a reconsideration of the latters" decision because he
believed that Delmo should not be allowed to graduate with honors. The Director denied the petitioner's request.

On July 12, 1966, the petitioner finally instructed the Registrar of the school to enter into the scholastic records of Delmo the honor,
"Magna Cum Laude."

On July 30, 1966, Delmo, then a minor, was joined by her parents in flag action for damages against the petitioner. During the
pendency of the action, however, Delmo passed away, and thus, an Amended and Supplemental Complaint was filed by her parents
as her sole and only heirs.

The trial court after hearing rendered judgment against the petitioner and in favor of the spouses Delmo. The court said:

Let us go to specific badges of the defendants (now petitioners) bad faith. Per investigation of Violeta Delmo's
appeal to Director Vitaliano Bernardino of the Bureau of Public Schools (Exhibit L it was the defendant who
inducted the officers of the Student Leadership Club on October 9, 1965. In fact the Club was allowed to cosponsor
the Education Week Celebration. (Exh. "L"). If the defendant he not approve of the constitution and by-laws of the
Club, why did he induct the officers into office and allow the Club to sponsor the Education Week Celebration"? It
was through his own act that the students were misled to do as they did. Coupled with the defendants tacit
recognition of the Club was the assurance of Mr. Jemm Dagoon, Club Adviser, who made the students believe that
he was acting as an extension of Mr. Ledesma's personality. (Exhibit "L").

Another badge of the defendan'ts want of good faith is the fact that, although, he kaew as early as April 27,1966
that per on of r Bernardino, Exhibit "L," he was directed to give honors to Miss Delmo, he kept Id information to .
He told the Court that he knew that the letter of Director Bernardino directed him not to deprive Miss Delmo the
honors due her, but she (sic) says that he has not finished reading the letter-decision, Exhibit "L," of Director
Bernardino 0, him to give honors to Miss Delmo. (Tsn, Feb. 5, 1974, testimony of Mr. Ledesma, pp. .33-35). It
could not be true that he has not finished reading the letter-decision, Exh. "L," because said letter consisted of only
three pages, and the portion which directed that Miss Delmo "be not deprived of any award, citation or honor from
the school, if otherwise entitled thereto is found at the last paragraph of the same. How did he know the last
paragraph if he did not read the letter.

Defendants actuations regarding Miss Delmo's cam had been one of bias and prejudice. When his action would
favor him, he was deliberate and aspect to the utter prejudice and detriment of Miss Delmo. Thus, although, as
early as April 27, 1966, he knew of the exoneration of Miss Delino by Director Bernardino, he withheld the
information from Miss Delmo. This is eloquently dramatized by Exh. "11" and Exh. "13" On April 29,1966,
Director Bernardino cabled him to furnish Violeta Delmo copy of the Decision, Exh. "L," but instead of informing
Miss Delmo about the decision, since he said he mailed back the decision on April 28,1966, he sent a night letter
on April 29,1966, to Director Bernardino, informing the latter that he had returned the decision (Exh. "l3"),
together with the record. Why a night letter when the matter was of utmost urgency to the parties in the case,
because graduation day was only four days ahead? An examination of the telegrams sent by the defendant shows
that he had been sending ordinary telegram and not night letters. (Exh. "5", Exhibit "7"). At least, if the defendant
could not furnish a copy of the decision, (Exh. "L"), to Miss Delmo, he should have told her about it or that Miss
Delmo's honors and citation in the commencement be announced or indicated. But Mr. Ledesma is one who cannot
admit a mistake. Very ungentlemanly this is home out by his own testimony despite his knowledge that his
decision to deprive Miss Delmo of honors due to her was overturned by Director Bernardino, he on his wrong
belief. To quote the defendant,1 believed that she did not deserve those honors(Tsn Feb. 5, 1974, p. 43,Empasized
supplied). Despite the telegram of Director Bernardino which the defendant received hours before the
commencement executory on May 3-4,1966, he did not obey Director Bernardino because he said in his testimony
that he would be embarrassment . Tan Feb 5,1974, P. 46). Evidently, he knew only his embarrassment and not that
of r Bernardino whose order was being flagrantly and wantonly disregarded by bim And certainly, not the least of
Miss Delmo's embarrassment. His acts speak eloquently of ho bad faith and unjust of mindwarped by his delicate
sensitivity for having been challenged by Miss Delmo, a mere student.

xxx xxx xxx

Finally the defendant's behaviour relative to Miss s case smacks of contemptuous arrogance, oppression and abuse
of power. Come to think of it. He refused to obey the directive of Be o and instead, chose to feign ignorance of it."
(Reward on Appeal, p. 72-76).

The trial court awarded P20,000.00 to the estate of Violeta Delmo and P10,000.00 to her parents for moral damages; P5,000.00 for
nominal damages to Violeta's estate; exemplary damages of P10,000.00 and P2,000.00 attorney's fees.

On appeal, the Court of Appeals affirmed the decision. Hence, this petition.

The issues raised in this petition can be reduced to the sole question of whether or not the respondent Court of Appeals erred in
affirming the trial court's finding that petitioner is liable for damages under Article 27 of the New Civil Code.

We find no reason why the findings of the trial and appellate courts should be reversed. It cannot be disputed that Violeta Delmo
went through a painful ordeal which was brought about by the petitioner's neglect of duty and callousness. Thus, moral damages are
but proper. As we have affirmed in the case of (Prudenciado v. Alliance Transport System, Inc., 148 SCRA 440, 448):
 There is no argument that moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of defendant's wrongly
act or omission." (People v. Baylon, 129 SCRA 62 (1984).

The Solicitor-General tries to cover-up the petitioner's deliberate omission to inform Miss Delmo by stating that it was not the duty of
the petitioner to furnish her a copy of the Director's decision. Granting this to be true, it was nevertheless the petitioner's duty to
enforce the said decision. He could have done so considering that he received the decision on April 27, 1966 and even though he sent
it back with the records of the case, he undoubtedly read the whole of it which consisted of only three pages. Moreover, the petitioner
should have had the decency to meet with Mr. Delmo, the girl's father, and inform the latter, at the very least of the decision. This,
the petitioner likewise failed to do, and not without the attendant bad faith which the appellate court correctly pointed out in its
decision, to wit:

Third, assuming that defendant could not furnish Miss Delmo of a copy of the decision, he could have used his
discretion and plain common sense by informing her about it or he could have directed the inclusion of Miss
Delmo's honor in the printed commencement program or announced it during the commencement exercises.

Fourth, defendant despite receipt of the telegram of Director Benardino hours before the commencement exercises
on May 3-4, 1966, disobeyed his superior by refusing to give the honors due Miss Delmo with a lame excuse that
he would be embarrassed if he did so, to the prejudice of and in complete disregard of Miss Delmo's rights.

Fifth, defendant did not even extend the courtesy of meeting Mr. Pacifico Delmo, father of Miss Delmo, who tried
several times to see defendant in his office thus Mr. Delmo suffered extreme disappointment and humiliation.

xxx xxx xxx

Defendant, being a public officer should have acted with circumspection and due regard to the rights of Miss
Delmo. Inasmuch as he exceeded the scope of his authority by defiantly disobeying the lawful directive of his
superior, Director Bernardino, defendant is liable for damages in his personal capacity. . . . (Rollo, pp- 57-58)

Based on the undisputed facts, exemplary damages are also in order. In the same case of Prudenciado v. Alliance Transport System,
Inc., supra., at p. 450, we ruled:

The rationale behind exemplary or corrective damages is, as the name implies, to provide an example or correction
for the public good (Lopez, et al. v. Pan American World Airways, 16 SCRA 431).

However, we do not deem it appropriate to award the spouses Delmo damages in the amount of P10,000.00 in their
individual capacity, separately from and in addition to what they are already entitled to as sole heirs of the deceased
Violeta Delmo. Thus, the decision is modified insofar as moral damages are awarded to the spouses in their own
behalf.

WHEREFORE, the petition is DISMISSED for lack of merit. The decision of the Court of Appeals is AFFIRMED with the slight
modification as stated in the preceding paragraph. This decision is immediately executory.

SO ORDERED.

Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.

G.R. No. 126746 November 29, 2000

ARTHUR TE, petitioner,

vs.
COURT OF APPEALS, and LILIANA CHOA, respondents.

DECISION

KAPUNAN, J.:

Before us is a petition for review on certiorari which seeks to reverse the Decision of the Court of Appeals Tenth Division, dated 31
August 1994 in CA-G.R. SP No. 239711 and CA-G.R. SP No. 261782 and the Resolution dated October 18, 1996 denying
petitioners motion for reconsideration.

The facts of the case are as follows:

Petitioner Arthur Te and private respondent Liliana Choa were married in civil rites on September 14, 1988. They did not live
together after the marriage although they would meet each other regularly. Not long after private respondent gave birth to a girl on
April 21, 1989, petitioner stopped visiting her. 3
On May 20, 1990, while his marriage with private respondent was subsisting, petitioner contracted a second marriage with a certain
Julieta Santella (Santella).4

On the basis of a complaint-affidavit filed by private respondent sometime in June 1990, when she learned about petitioners
marriage to Santella, an information charging petitioner with bigamy was filed with the Regional Trial Court (RTC) of Quezon City
on August 9, 1990.5 This case was docketed as Criminal Case No. Q-90-14409.6

Meanwhile, on July 20, 1990, petitioner filed in the RTC of Quezon City an action for the annulment of his marriage to private
respondent on the ground that he was forced to marry her. He alleged that private respondent concealed her pregnancy by another
man at the time of their marriage and that she was psychologically incapacitated to perform her essential marital obligations.7

On November 8, 1990, private respondent also filed with the Professional Regulation Commission (PRC) an administrative case
against petitioner and Santella for the revocation of their respective engineering licenses on the ground that they committed acts of
immorality by living together and subsequently marrying each other despite their knowledge that at the time of their marriage,
petitioner was already married to private respondent. With respect to petitioner, private respondent added that he committed an act of
falsification by stating in his marriage contract with Santella that he was still single. 8

After the prosecution rested its case in the criminal case for bigamy, petitioner filed a demurrer to evidence with leave of court and
motion to inhibit the trial court judge for showing antagonism and animosity towards petitioners counsel during the hearings of said
case.

The trial court denied petitioners demurrer to evidence in an Order dated November 28, 1990 which stated that the same could not
be granted because the prosecution had sufficiently established a prima facie case against the accused.9 The RTC also denied
petitioners motion to inhibit for lack of legal basis. 10

Petitioner then filed with the Court of Appeals a petition for certiorari, alleging grave abuse of discretion on the part of the trial court
judge, Judge Cezar C. Peralejo, for (1) exhibiting antagonism and animosity towards petitioners counsel; (2) violating the
requirements of due process by denying petitioners [motion for reconsideration and] demurrer to evidence even before the filing of
the same; (3) disregarding and failing to comply with the appropriate guidelines for judges promulgated by the Supreme Court; and
(4) ruling that in a criminal case only "prima facie evidence" is sufficient for conviction of an accused. This case was docketed as
CA-G.R. SP No. 23971.11

Petitioner also filed with the Board of Civil Engineering of the PRC (PRC Board), where the administrative case for the revocation of
his engineering license was pending, a motion to suspend the proceedings therein in view of the pendency of the civil case for
annulment of his marriage to private respondent and criminal case for bigamy in Branches 106 and 98, respectively of the RTC of
Quezon City.12 When the Board denied the said motion in its Order dated July 16, 1991, 13 petitioner filed with the Court of Appeals
another petition for certiorari, contending that the Board gravely abused its discretion in: (1) failing to hold that the resolution of the
annulment case is prejudicial to the outcome of the administrative case pending before it; (2) not holding that the continuation of
proceedings in the administrative case could render nugatory petitioners right against self-incrimination in this criminal case for
bigamy against him; and (3) making an overly-sweeping interpretation that Section 32 of the Rules and Regulations Governing the
Regulation and Practice of Professionals does not allow the suspension of the administrative proceeding before the PRC Board
despite the pendency of criminal and/or administrative proceedings against the same respondent involving the same set of facts in
other courts or tribunals. This petition was docketed as CA-G.R. SP No. 26178.14

The two petitions for certiorari were consolidated since they arose from the same set of facts.

On 31 August 1994, the Court of Appeals, Tenth Division, rendered the assailed decision in the consolidated petitions. The appellate
court upheld the RTCs denial of the motion to inhibit due to petitioners failure to show any concrete evidence that the trial court
judge exhibited partiality and had prejudged the case. It also ruled that the denial of petitioners motion to suspend the proceedings
on the ground of prejudicial question was in accord with law. 15 The Court of Appeals likewise affirmed the RTCs denial of the
demurrer to evidence filed by petitioner for his failure to set forth persuasive grounds to support the same, considering that the
prosecution was able to adduce evidence showing the existence of the elements of bigamy. 16

Neither did the appellate court find grave abuse of discretion on the part of the Boards Order denying petitioners motion to suspend
proceedings in the administrative case on the ground of prejudicial question. Respondent court held that no prejudicial question
existed since the action sought to be suspended is administrative in nature, and the other action involved is a civil case.17

Petitioner thereafter filed a motion for reconsideration of the decision of the Court of Appeals but the same was denied.18

Hence, petitioner filed the instant petition raising the following issues:

PUBLIC RESPONDENT COMMITTED A SERIOUS ERROR IN REFUSING TO SUSPEND THE LEGAL [CRIMINAL
AND ADMINISTRATIVE] PROCEEDINGS DESPITE THE PENDENCY OF THE CIVIL CASE FOR DECLARATION
OF NULLITY OF MARRIAGE.

II
 PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION AND COMMITTED AN ERROR OF LAW IN NOT
HOLDING THAT THE DEMURRER TO EVIDENCE SHOULD HAVE BEEN GIVEN DUE COURSE.

III

PUBLIC RESPONDENT COMMITTED A SERIOUS LEGAL ERROR IN NOT HOLDING THAT THE TRIAL JUDGE
A QUO SHOULD HAVE INHIBITED HIMSELF.19

The petition has no merit.

While the termination of Civil Case No. Q-90-6205 for annulment of petitioners marriage to private respondent has rendered the
issue of the propriety of suspending both the criminal case for bigamy before the RTC of Quezon City, Branch 98 and the
administrative case for revocation of petitioners engineering license before the PRC Board moot and academic, the Court shall
discuss the issue of prejudicial question to emphasize the guarding and controlling precepts and rules. 20

A prejudicial question has been defined as one based on a fact distinct and separate from the crime but so intimately connected with
it that it determines the guilt or innocence of the accused, and for it to suspend the criminal action, it must appear not only that said
case involves facts intimately related to those upon which the criminal prosecution would be based but also that in the resolution of
the issue or issues raised in the civil case, the guilt or innocence of the accused would necessarily be determined. 21 The rationale
behind the principle of suspending a criminal case in view of a prejudicial question is to avoid two conflicting decisions. 22

The Court of Appeals did not err when it ruled that the pendency of the civil case for annulment of marriage filed by petitioner
against private respondent did not pose a prejudicial question which would necessitate that the criminal case for bigamy be
suspended until said civil case is terminated.

The outcome of the civil case for annulment of petitioners marriage to private respondent had no bearing upon the determination of
petitioners innocence or guilt in the criminal case for bigamy, because all that is required for the charge of bigamy to prosper is that
the first marriage be subsisting at the time the second marriage is contracted. 23 Petitioners argument that the nullity of his marriage
to private respondent had to be resolved first in the civil case before the criminal proceedings could continue, because a declaration
that their marriage was void ab initio would necessarily absolve him from criminal liability, is untenable. The ruling in People vs.
Mendoza24 and People vs. Aragon25 cited by petitioner that no judicial decree is necessary to establish the invalidity of a marriage
which is void ab initio has been overturned. The prevailing rule is found in Article 40 of the Family Code, which was already in
effect at the time of petitioners marriage to private respondent in September 1988. Said article states that the absolute nullity of a
previous marriage may not be invoked for purposes of remarriage unless there is a final judgment declaring such previous marriage
void. Thus, under the law, a marriage, even one which is void or voidable, shall be deemed valid until declared otherwise in a judicial
proceeding.26 In Landicho vs. Relova,27 we held that:

Parties to a marriage should not be permitted to judge for themselves its nullity, for this must be submitted to the judgment of
competent courts and only when the nullity of a marriage is so declared can it be held as void, and so long as there is no such
declaration the presumption of marriage exists.28

It is clear from the foregoing that the pendency of the civil case for annulment of petitioners marriage to private respondent did not
give rise to a prejudicial question which warranted the suspension of the proceedings in the criminal case for bigamy since at the time
of the alleged commission of the crime, their marriage was, under the law, still valid and subsisting.

Neither did the filing of said civil case for annulment necessitate the suspension of the administrative proceedings before the PRC
Board. As discussed above, the concept of prejudicial question involves a civil and a criminal case. We have previously ruled that
there is no prejudicial question where one case is administrative and the other is civil. 29

Furthermore, Section 32 of the Rules and Regulations Governing the Regulation and Practice of Professionals of the PRC Board
expressly provides that the administrative proceedings before it shall not be suspended notwithstanding the existence of a criminal
and/or civil case against the respondent involving the same facts as the administrative case:

The filing or pendency of a criminal and/or civil cases in the courts or an administrative case in another judicial body against an
examinee or registered professional involving the same facts as in the administrative case filed or to be filed before the Board shall
neither suspend nor bar the proceeding of the latter case. The Board shall proceed independently with the investigation of the case
and shall render therein its decision without awaiting for the final decision of the courts or quasi-judicial body.

It must also be noted that the allegations in the administrative complaint before the PRC Board are not confined to the issue of the
alleged bigamous marriage contracted by petitioner and Santella. Petitioner is also charged with immoral conduct for continued
failure to perform his obligations as husband to private respondent and as father to their child, and for cohabiting with Santella
without the benefit of marriage.30 The existence of these other charges justified the continuation of the proceedings before the PRC
Board.

Petitioner also contends that the Court of Appeals erred in upholding the trial courts denial of his demurrer to evidence in the
criminal case for bigamy, arguing that the prosecution failed to establish the existence of both the first and second marriages beyond
reasonable doubt. Petitioner claims that the original copy of marriage contract between him and private respondent was not
presented, the signatures therein were not properly identified and there was no showing that the requisites of a valid marriage were
complied with. He alleges further that the original copy of the marriage contract between him and Santella was not presented, that no
proof that he signed said contract was adduced, and that there was no witness presented to show that a second marriage ceremony
participated in by him ever took place.31

We are not persuaded. The grant or denial of a demurrer to evidence is left to the sound discretion of the trial court, and its ruling on
the matter shall not be disturbed in the absence of a grave abuse of such discretion. 32 In this case, the Court of Appeals did not find
any grave abuse of discretion on the part of the trial court, which based its denial of the demurrer on two grounds: first, the
prosecution established a prima facie case for bigamy against the petitioner; and second, petitioners allegations in the demurrer were
insufficient to justify the grant of the same. It has been held that the appellate court will not review in a special civil action for
certiorari the prosecutions evidence and decide in advance that such evidence has or has not yet established the guilt of the accused
beyond reasonable doubt.33 In view of the trial courts finding that a prima facie case against petitioner exists, his proper recourse is
to adduce evidence in his defense.34

The Court also finds it necessary to correct petitioners misimpression that by denying his demurrer to evidence in view of the
existence of a prima facie case against him, the trial court was already making a pronouncement that he is liable for the offense
charged. As correctly held by the Court of Appeals, the order of the RTC denying the demurrer was not an adjudication on the merits
but merely an evaluation of the sufficiency of the prosecutions evidence to determine whether or not a full-blown trial would be
necessary to resolve the case.35 The RTCs observation that there was a prima facie case against petitioner only meant that the
prosecution had presented sufficient evidence to sustain its proposition that petitioner had committed the offense of bigamy, and
unless petitioner presents evidence to rebut the same, such would be the conclusion. 36 Said declaration by the RTC should not be
construed as a pronouncement of petitioners guilt. It was precisely because of such finding that the trial court denied the demurrer,
in order that petitioner may present evidence in his defense and allow said court to resolve the case based on the evidence adduced by
both parties.

Lastly, petitioner contends that his motion to inhibit Judge Peralejo in Criminal Case No. Q-90-14409 should have been granted since
said judge exhibited partiality and bias against him in several instances. First, when petitioner manifested that he would file a motion
for reconsideration of the denial of his motion to suspend the proceedings in said case, the judge said such motion was dilatory and
would be denied even though the motion for reconsideration had not yet been filed. Second, when petitioners counsel manifested
that he had just recovered from an accident and was not physically fit for trial, the judge commented that counsel was merely trying
to delay the case and required said counsel to produce a medical certificate to support his statement. Third, when petitioner
manifested that he was going to file a demurrer to evidence, the judge characterized the same as dilatory and declared that he would
deny the same. According to petitioner, the judges hostile attitude towards petitioners counsel as shown in the foregoing instances
justified the grant of his motion to inhibit.

We agree with the appellate court that the grounds raised by petitioner against Judge Peralejo did not conclusively show that the
latter was biased and had prejudged the case.37 In People of the Philippines vs. Court of Appeals,38 this Court held that while bias and
prejudice have been recognized as valid reasons for the voluntary inhibition of a judge under Section 1, Rule 137, the rudimentary
rule is that the mere suspicion that a judge is partial is not enough. There should be clear and convincing evidence to prove the charge
of bias and partiality.39

Furthermore, since the grounds raised by petitioner in his motion to inhibit are not among those expressly mentioned in Section 1,
Rule 137 of the Revised Rules of Court, the decision to inhibit himself lay within the sound discretion of Judge Peralejo. Said
provision of law states:

Section 1. Disqualification of judges. No judge or judicial officer shall sit in any case in which he, or his wife or child, is
pecuniarily interested as heir, legatee, creditor or otherwise, or in which he is related to either party within the sixth degree of
consanguinity or affinity, or to counsel within the fourth degree, computed according to the rules of the civil law, or in which he has
been executor, administrator, guardian, trustee or counsel, or in which he has presided in any inferior court when his ruling or
decision is the subject of review, without the written consent of all parties in interest, signed by them and entered upon the record.

A judge may, in the exercise of his sound discretion, disqualify himself from sitting in the case, for just and valid reasons other than
those mentioned above.

Thus, it was not mandatory that the judge inhibit himself from hearing and deciding the case.

This Court does not find any abuse of discretion by respondent judge in denying petitioners motion to inhibit. The test for
determining the propriety of the denial of said motion is whether petitioner was deprived a fair and impartial trial. 40 The instances
when Judge Peralejo allegedly exhibited antagonism and partiality against petitioner and/or his counsel did not deprive him of a fair
and impartial trial. As discussed earlier, the denial by the judge of petitioners motion to suspend the criminal proceeding and the
demurrer to evidence are in accord with law and jurisprudence. Neither was there anything unreasonable in the requirement that
petitioners counsel submit a medical certificate to support his claim that he suffered an accident which rendered him unprepared for
trial. Such requirement was evidently imposed upon petitioners counsel to ensure that the resolution of the case was not hampered
by unnecessary and unjustified delays, in keeping with the judges duty to disposing of the courts business promptly. 41

WHEREFORE, the petition is hereby DENIED for lack of merit.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.
G.R. No. 172060 September 13, 2010

JOSELITO R. PIMENTEL, Petitioner,

vs.
MARIA CHRYSANTINE L. PIMENTEL and PEOPLE OF THE PHILIPPINES, Respondents.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review1 assailing the Decision2 of the Court of Appeals, promulgated on 20 March 2006, in CA-
G.R. SP No. 91867.

The Antecedent Facts

The facts are stated in the Court of Appeals decision:

On 25 October 2004, Maria Chrysantine Pimentel y Lacap (private respondent) filed an action for frustrated parricide against Joselito
R. Pimentel (petitioner), docketed as Criminal Case No. Q-04-130415, before the Regional Trial Court of Quezon City, which was
raffled to Branch 223 (RTC Quezon City).

On 7 February 2005, petitioner received summons to appear before the Regional Trial Court of Antipolo City, Branch 72 (RTC
Antipolo) for the pre-trial and trial of Civil Case No. 04-7392 (Maria Chrysantine Lorenza L. Pimentel v. Joselito Pimentel) for
Declaration of Nullity of Marriage under Section 36 of the Family Code on the ground of psychological incapacity.

On 11 February 2005, petitioner filed an urgent motion to suspend the proceedings before the RTC Quezon City on the ground of the
existence of a prejudicial question. Petitioner asserted that since the relationship between the offender and the victim is a key element
in parricide, the outcome of Civil Case No. 04-7392 would have a bearing in the criminal case filed against him before the RTC
Quezon City.

The Decision of the Trial Court

The RTC Quezon City issued an Order dated 13 May 20053 holding that the pendency of the case before the RTC Antipolo is not a
prejudicial question that warrants the suspension of the criminal case before it. The RTC Quezon City held that the issues in Criminal
Case No. Q-04-130415 are the injuries sustained by respondent and whether the case could be tried even if the validity of petitioners
marriage with respondent is in question. The RTC Quezon City ruled:

WHEREFORE, on the basis of the foregoing, the Motion to Suspend Proceedings On the [Ground] of the Existence of a Prejudicial
Question is, for lack of merit, DENIED.

SO ORDERED.4

Petitioner filed a motion for reconsideration. In its 22 August 2005 Order, 5 the RTC Quezon City denied the motion.

Petitioner filed a petition for certiorari with application for a writ of preliminary injunction and/or temporary restraining order before
the Court of Appeals, assailing the 13 May 2005 and 22 August 2005 Orders of the RTC Quezon City.

The Decision of the Court of Appeals

In its 20 March 2006 Decision, the Court of Appeals dismissed the petition. The Court of Appeals ruled that in the criminal case for
frustrated parricide, the issue is whether the offender commenced the commission of the crime of parricide directly by overt acts and
did not perform all the acts of execution by reason of some cause or accident other than his own spontaneous desistance. On the other
hand, the issue in the civil action for annulment of marriage is whether petitioner is psychologically incapacitated to comply with the
essential marital obligations. The Court of Appeals ruled that even if the marriage between petitioner and respondent would be
declared void, it would be immaterial to the criminal case because prior to the declaration of nullity, the alleged acts constituting the
crime of frustrated parricide had already been committed. The Court of Appeals ruled that all that is required for the charge of
frustrated parricide is that at the time of the commission of the crime, the marriage is still subsisting.

Petitioner filed a petition for review before this Court assailing the Court of Appeals decision.

The Issue

The only issue in this case is whether the resolution of the action for annulment of marriage is a prejudicial question that warrants the
suspension of the criminal case for frustrated parricide against petitioner.

The Ruling of this Court

The petition has no merit.

Civil Case Must be Instituted

Before the Criminal Case

Section 7, Rule 111 of the 2000 Rules on Criminal Procedure 6 provides:

Section 7. Elements of Prejudicial Question. - The elements of a prejudicial question are: (a) the previously instituted civil action
involves an issue similar or intimately related to the issue raised in the subsequent criminal action and (b) the resolution of such issue
determines whether or not the criminal action may proceed.

The rule is clear that the civil action must be instituted first before the filing of the criminal action. In this case, the Information7 for
Frustrated Parricide was dated 30 August 2004. It was raffled to RTC Quezon City on 25 October 2004 as per the stamped date of
receipt on the Information. The RTC Quezon City set Criminal Case No. Q-04-130415 for pre-trial and trial on 14 February 2005.
Petitioner was served summons in Civil Case No. 04-7392 on 7 February 2005.8 Respondents petition9 in Civil Case No. 04-7392
was dated 4 November 2004 and was filed on 5 November 2004. Clearly, the civil case for annulment was filed after the filing of the
criminal case for frustrated parricide. As such, the requirement of Section 7, Rule 111 of the 2000 Rules on Criminal Procedure was
not met since the civil action was filed subsequent to the filing of the criminal action.

Annulment of Marriage is not a Prejudicial Question

in Criminal Case for Parricide

Further, the resolution of the civil action is not a prejudicial question that would warrant the suspension of the criminal action.

There is a prejudicial question when a civil action and a criminal action are both pending, and there exists in the civil action an issue
which must be preemptively resolved before the criminal action may proceed because howsoever the issue raised in the civil action is
resolved would be determinative of the guilt or innocence of the accused in the criminal case.10 A prejudicial question is defined as:

x x x one that arises in a case the resolution of which is a logical antecedent of the issue involved therein, and the cognizance of
which pertains to another tribunal. It is a question based on a fact distinct and separate from the crime but so intimately connected
with it that it determines the guilt or innocence of the accused, and for it to suspend the criminal action, it must appear not only that
said case involves facts intimately related to those upon which the criminal prosecution would be based but also that in the resolution
of the issue or issues raised in the civil case, the guilt or innocence of the accused would necessarily be determined.11

The relationship between the offender and the victim is a key element in the crime of parricide, 12 which punishes any person "who
shall kill his father, mother, or child, whether legitimate or illegitimate, or any of his ascendants or descendants, or his spouse."13 The
relationship between the offender and the victim distinguishes the crime of parricide from murder 14 or homicide.15 However, the
issue in the annulment of marriage is not similar or intimately related to the issue in the criminal case for parricide. Further, the
relationship between the offender and the victim is not determinative of the guilt or innocence of the accused.

The issue in the civil case for annulment of marriage under Article 36 of the Family Code is whether petitioner is psychologically
incapacitated to comply with the essential marital obligations. The issue in parricide is whether the accused killed the victim. In this
case, since petitioner was charged with frustrated parricide, the issue is whether he performed all the acts of execution which would
have killed respondent as a consequence but which, nevertheless, did not produce it by reason of causes independent of petitioners
will.16 At the time of the commission of the alleged crime, petitioner and respondent were married. The subsequent dissolution of
their marriage, in case the petition in Civil Case No. 04-7392 is granted, will have no effect on the alleged crime that was committed
at the time of the subsistence of the marriage. In short, even if the marriage between petitioner and respondent is annulled, petitioner
could still be held criminally liable since at the time of the commission of the alleged crime, he was still married to
respondent.1avvphi1

We cannot accept petitioners reliance on Tenebro v. Court of Appeals17 that "the judicial declaration of the nullity of a marriage on
the ground of psychological incapacity retroacts to the date of the celebration of the marriage insofar as the vinculum between the
spouses is concerned x x x." First, the issue in Tenebro is the effect of the judicial declaration of nullity of a second or subsequent
marriage on the ground of psychological incapacity on a criminal liability for bigamy. There was no issue of prejudicial question in
that case. Second, the Court ruled in Tenebro that "[t]here is x x x a recognition written into the law itself that such a marriage,
although void ab initio, may still produce legal consequences." 18 In fact, the Court declared in that case that "a declaration of the
nullity of the second marriage on the ground of psychological incapacity is of absolutely no moment insofar as the States penal laws
are concerned."19

In view of the foregoing, the Court upholds the decision of the Court of Appeals. The trial in Criminal Case No. Q-04-130415 may
proceed as the resolution of the issue in Civil Case No. 04-7392 is not determinative of the guilt or innocence of petitioner in the
criminal case.

WHEREFORE, we DENY the petition. We AFFIRM the 20 March 2006 Decision of the Court of Appeals in CA-G.R. SP No.
91867.
G.R. No. L-5930 February 17, 1954

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
ABELO ARAGON, defendant-appellant.

Amadeo D. Seno for appellant.

Assistant Solicitor General Francisco Carreon and Solicitor Ramon L. Avancea for appellee.

LABRADOR, J.:

The defendant in the above-entitled case is charged in the Court of First Instance of Cebu with the crime of bigamy, for having
contracted a second marriage with one Efigenia C. Palomer on September 21, 1947, while his previous valid marriage with Martina
Godinez was still subsisting and had not been dissolved. The information is dated May 22, 1951. On October 11, 1951, while the
case was pending trial, Efigenia C. Palomer filed a civil action in the same Court of First Instance of Cebu against the defendant -
appellant, alleging that the latter "by means of force, threats and intimidation of bodily harm, forced plaintiff to marry him", and
praying that their marriage on September 21, 1947 be annulled (Annex A). Thereupon and on April 30, 1952, defendant-appellant
filed a motion in the criminal case for bigamy, praying that the criminal charge be provisionally dismissed, on the ground that the
civil action for annulment of the second marriage is a prejudicial question. The court denied this motion on the ground that the
validity of the second marriage may be determined in the very criminal action for bigamy. Against this order this appeal has been
presented to this court.

It is contended that as the marriage between the defendant-appellant and Efigenia C. Palomer is merely a voidable marriage, and not
an absolutely valid marriage, it can not be attacked in the criminal action and, therefore, it may not be considered therein;
consequently, that the civil action to annul the second marriage should first be decided and the criminal action, dismissed. It is not
necessary to pass upon this question because we believe that the order of denial must be sustained on another ground.

Prejudicial question has been defined to be that which arises in a case, the resolution of which (question) is a logical antecedent of the
issue involved in said case, and the cognizance of which pertains to another tribunal (Cuestion prejudicial, es la que surge en un
pleito o causa, cuya resolucion sea antecedente logico de la cuestion objeto del pleito o causa y cuyo conocimiento corresponda a los
Tribunales de otro orden o jurisdiccion X Enciclopedia Juridica Espaola, p. 228). The prejudicial question must be determinative
of the case before the court; this is first element. Jurisdiction to try said question must be lodged in another tribunal; this is the second
element. In an action for bigamy, for example, if the accused claims that the first marriage is null and void and the right to decide
such validity is vested in another tribunal, the civil action for nullity must first be decided before the action for bigamy can proceed;
hence, the validity of the first marriage is a prejudicial question.

There is no question that if the allegations of the complaint on time the marriage contracted by defendant-appellant with Efigenia C.
Palomer is illegal and void (Sec. 29, Act 3613 otherwise known as the Marriage Law). Its nullity, however, is no defense to the
criminal action for bigamy filed against him. The supposed use of force and intimidation against the woman, Palomer, even if it were
true, is not a bar or defense to said action. Palomer, were she the one charged with bigamy, could perhaps raise said force or
intimidation as a defense, because she may not be considered as having freely and voluntarily committed the act if she was forced to
the marriage by intimidation. But not the other party, who used the force or intimidation. The latter may not use his own malfeasance
to defeat the action based on his criminal act.

It follows that the pendency of the civil action for the annulment of the marriage filed by Efigenia C. Palomer, is absolutely
immaterial to the criminal action filed against defendant-appellant. This civil action does not decide that defendant-appellant did not
enter the marriage against his will and consent, because the complaint does not allege that he was the victim of force and intimidation
in the second marriage; it does not determine the existence of any of the elements of the charge of bigamy. A decision thereon is not
essential to the determination of the criminal charge. It is, therefore, not a prejudicial question.

There is another reason for dismissing the appeal. The order appealed from is one denying a motion to dismiss and is not a final
judgment. It is, therefore, not appealable (Rule 118, secs. 1 and 2).

The order appealed from is hereby affirmed, with costs against defendant-appellant. So ordered.

G.R. No. L-22579 February 23, 1968

ROLANDO LANDICHO, petitioner,

vs.
HON. LORENZO RELOVA, in his capacity as Judge of the Court of First Instance of Batangas, Branch I, and PEOPLE OF
THE PHILIPPINES, respondents.

FERNANDO, J.:

In this petition for certiorari and prohibition with preliminary injunction, the question before the Court is whether or not the
existence of a civil suit for the annulment of marriage at the instance of the second wife against petitioner, with the latter in turn
filing a third party complaint against the first spouse for the annulment of the first marriage, constitutes a prejudicial question in a
pending suit for bigamy against him. Respondent, Judge Relova answered in the negative. We sustain him.
 The pertinent facts as set forth in the petition follow. On February 27, 1963, petitioner was charged before the Court of First
Instance of Batangas, Branch I, presided over by respondent Judge, with the offense, of bigamy. It was alleged in the information that
petitioner "being then lawfully married to Elvira Makatangay, which marriage has not been legally dissolved, did then and there
wilfully, unlawfully and feloniously contract a second marriage with Fe Lourdes Pasia." On March 15, 1963, an action was filed
before the Court of First Instance ofBatangas, likewise presided plaintiff respondent Judge Fe Lourdes Pasia, seeking to declare her
marriage to petitioner as null and void ab initio because of the alleged use of force, threats and intimidation allegedly employed by
petitioner and because of its allegedly bigamous character. On June 15, 1963, petitioner as defendant in said case, filed a third-party
complaint, against the third-party defendant Elvira Makatangay, the first spouse, praying that his marriage with the said third-party
defendant be declared null and void, on the ground that by means of threats, force and intimidation, she compelled him to appear and
contract marriage with her before the Justice of the Peace of Makati, Rizal.

Thereafter, on October 7, 1963, petitioner moved to suspend the hearing of the criminal case pending the decision on the
question of the validity of the two marriages involved in the pending civil suit. Respondent Judge on November 19, 1963 denied the
motion for lack of merit. Then came a motion for reconsideration to set aside the above order, which was likewise denied on March
2, 1964. Hence this petition, filed on March 13, 1964.

In a resolution of this Court of March 17, 1964, respondent Judge was required to answer within ten (10) days, with a
preliminary injunction being issued to restrain him from further proceeding with the prosecution of the bigamy case. In the
meanwhile, before the answer was filed there was an amended petition for certiorari, the amendment consisting solely in the
inclusion of the People of the Philippines as another respondent. This Court admitted such amended petition in a resolution of April
3, 1964.

Then came the answer to the amended petition on May 14 of that year where the statement of facts as above detailed was
admitted, with the qualifications that the bigamy charge was filed upon the complaint of the first spouse Elvira Makatangay. It
alleged as one of its special and affirmative defenses that the mere fact that "there are actions to annul the marriages entered into by
the accused in a bigamy case does not mean that 'prejudicial questions are automatically raised in said civil actions as to warrant the
suspension of the criminal case for bigamy." 1 The answer stressed that even on the assumption that the first marriage was null and
void on the ground alleged by petitioner, the fact would not be material to the outcome of the criminal case. It continued, referring to
Viada, that "parties to the marriage should not be permitted to judge for themselves its nullity, for this must be submitted to the
judgment of competent courts and only when the nullity of a marriage is so declared can it be held as void, and so long as there is no
such declaration the presumption is that the marriage exists. Therefore, according to Viada, he who contracts a second marriage
before the judicial declaration of nullity of the first marriage incurs the penalty provided for in this Article. . . ." 2

This defense is in accordance with the principle implicit in authoritative decisions of this Court. In Merced v. Diez, 3 what was
in issue was the validity of the second marriage, "which must be determined before hand in the civil action before the criminal action
can proceed." According to the opinion of Justice Labrador: "We have a situation where the issue of the validity of the second
marriage can be determined or must first be determined in the civil action before the criminal action for bigamy can be prosecuted.
The question of the validity of the second marriage is, therefore, a prejudicial question because determination of the validity of the
second marriage is determinable in the civil action and must precede the criminal action for bigamy." It was the conclusion of this
Court then that for petitioner Merced to be found guilty of bigamy, the second marriage which he contracted "must first be declared
valid." Its validity having been questioned in the civil action, there must be a decision in such a case "before the prosecution for
bigamy can proceed."

To the same effect is the doctrine announced in Zapanta v. Mendoza. 4 As explained in the opinion of Justice Dizon: "We have
heretofore defined a prejudicial question as that which arises in a case, the resolution of which is a logical antecedent of the issue
involved therein, and the cognizance of which pertains to another tribunal. . . . The prejudicial question we further said must be
determinative of the case before the court, and jurisdiction to try the same must be lodged in another court. . . . These requisites are
present in the case at bar. Should the question for annulment of the second marriage pending in the Court of First Instance of
Pampanga prosper on the ground that, according to the evidence, petitioner's consent thereto was obtained by means of duress, force
and intimidation, it is obvious that his act was involuntary and can not be the basis of his conviction for the crime of bigamy with
which he was charged in the Court of First Instance of Bulacan. Thus the issue involved in the action for the annulment of the second
marriage is determinative of petitioner's guilt or innocence of the crime of bigamy. . . ."

The situation in this case is markedly different. At the time the petitioner was indicted for bigamy on February 27, 1963, the
fact that two marriage ceremonies had been contracted appeared to be indisputable. Then on March 15, 1963, it was the second
spouse, not petitioner who filed an action for nullity on the ground of force, threats and intimidation. It was sometime later, on June
15, 1963, to be precise, when petitioner, as defendant in the civil action, filed a third-party complaint against the first spouse alleging
that his marriage with her should be declared null and void on the ground of force, threats and intimidation. As was correctly stressed
in the answer of respondent Judge relying on Viada, parties to a marriage should not be permitted to judge for themselves its nullity,
only competent courts having such authority. Prior to such declaration of nullity, the validity of the first marriage is beyond question.
A party who contracts a second marriage then assumes the risk of being prosecuted for bigamy.

Such was the situation of petitioner. There is no occasion to indulge in the probability that the third-party complaint against the
first wife brought almost five months after the prosecution for bigamy was started could have been inspired by the thought that he
could thus give color to a defense based on an alleged prejudicial question. The above judicial decisions as well as the opinion of
Viada preclude a finding that respondent Judge abused, much less gravely abused, his discretion in failing to suspend the hearing as
sought by petitioner.

WHEREFORE, the petition for certiorari is denied and the writ of preliminary injunction issued dissolved. With costs.