2. Globe Mackay vs CA
”) as well as against Tobias (“crook”,
Facts: Restituto Tobias, a purchasing agent and administrative assistant to the
engineering operations manager, discovered fictitious purchases and other fraudulent
transactions, which caused Globe Mackay Cable and Radio Corp loss of several
thousands of pesos. He reported it to his immediate superior Eduardo T. Ferraren and
to the Executive Vice President and General Manager Herbert Hendry. A day after the
report, Hendry told Tobias that he was number one suspect and ordered him one week
forced leave. When Tobias returned to work after said leave, Hendry called him a
“crook” and a “swindler”, ordered him to take a lie detector test, and to submit specimen
of his handwriting, signature and initials for police investigation. Moreover, petitioners
hired a private investigator. Private investigation was still incomplete; the lie detector
tests yielded negative results; reports from Manila police investigators and from the
Metro Manila Police Chief Document Examiner are in favor of Tobias. Petitioners filed
with the Fiscal’s Office of Manila a total of six (6) criminal cases against private
respondent Tobias, but were dismissed.
Tobias received a notice of termination of his employment from petitioners in January
1973, effective December 1972. He sought employment with the Republic Telephone
Company (RETELCO); but Hendry wrote a letter to RETELCO stating that Tobias was
dismissed by Globe Mackay due to dishonesty. Tobias, then, filed a civil case for
damages anchored on alleged unlawful, malicious, oppressive, and abusive acts of
petitioners. The Regional Trial Court of Manila, Branch IX, through Judge Manuel T.
Reyes rendered judgment in favor of private respondent, ordering petitioners to pay
him eighty thousand pesos (P80,000.00) as actual damages, two hundred thousand
pesos (P200,000.00) as moral damages, twenty thousand pesos (P20,000.00) as
exemplary damages, thirty thousand pesos (P30,000.00) as attorney’s fees, and costs;
hence, this petition for review on certiorari.
Issue: Whether petitioners are liable for damages to private respondent.
Held: Yes. The Court, after examining the record and considering certain significant
circumstances, finds that all petitioners have indeed abused the right that they invoke,
causing damage to private respondent and for which the latter must now be
indemnified: when Hendry told Tobias to just confess or else the company would file a
hundred more cases against him until he landed in jail; his (Hendry) scornful remarks
about Filipinos (“You Filipinos cannot be trusted.
and “swindler”); the writing of a letter to RETELCO stating that Tobias was dismissed
by Globe Mackay due to dishonesty; and the filing of six criminal cases by petitioners
against private respondent. All these reveal that petitioners are motivated by malicious
and unlawful intent to harass, oppress, and cause damage to private respondent. The
imputation of guilt without basis and the pattern of harassment during the investigations
of Tobias transgress the standards of human conduct set forth in Article 19 of the Civil
Code.
The Court has already ruled that the right of the employer to dismiss an employee
should not be confused with the manner in which the right is exercised and the effects
flowing therefrom. If the dismissal is done abusively, then the employer is liable for
damages to the employee. Under the circumstances of the instant case, the petitioners
clearly failed to exercise in a legitimate manner their right to dismiss Tobias, giving the
latter the right to recover damages under Article 19 in relation to Article 21 of the Civil
Code.
3. Barons vs CA
August 31, 1973. Phelps Dodge appointed Barons Marketing as one of its dealers of
electrical wires and cables effective Sept. 1, 1973. Defendant was given 60 days credit
for its purchases of Phelps Dodge’s electrical products
· Barons Marketing purchased, on credit, from Phelps Dodge’s electrical wires and
cable in the total amount of P4,102,483.30. This was then sold to MERALCO, Baron
Mktg being the accredited supplier of the electrical requirements of MERALCO.
· Under the sales invoices issued by Phelps Dodge to Barons Mktg for the subject
purchases, it is stipulated that interest at 12% on the amount of atty’s fees and
collection. Baron’s Mktg paid P300,000 out of its total purchases leaving an unpaid
account of P3,802,478.20. Phelps Dodge wrote Barons Mktg demanding payment of
its outstanding obligations due Phelps Dodge. Baron Mktg responded by requesting if
it could pay its outstanding account in monthly installments of P500,000 plus
1%interest per month until full payment, this request was rejected and Phelps Dodge
demanded full payment
· Phelps Dodge then filed a complaint before the Pasig Trial Court for the recovery of
P3,802,478.20 and it also prayed to be awarded with attorney’s fee at the rate of 25%
of the amount demanded, exemplary damages in the amount of P100,000, the
expenses of litigation and the costs of suit.
· The court ruled in favor of Phelps Dodge with the exemplary damages of P10,000
and recovery of P3,108,000
· Both parties appealed. Phelps Dodge claimed that court should have awarded the
sum of P3,802,478.20. It also said that the amount awarded was a result of a
typographical error.
· Barons Mktg claimed that Phelps Dodge’s claim for damages is a result of “creditor’s
abuse” and it also claimed that Phelps Dodge failed to prove its cause of action against
it.
· CoA ruled in favor of Phelps Dodge with the correct amount but only with the 5% for
the Atty’s fee. No costs.
· Barons Mktg then alleged that the Coa erred its decision

Issue: W/ON private respondent is guilty of abuse of right

Held: No. a creditor cannot be considered in delay if he refuses to accept partial

performance because, unless otherwise provided by law or stipulated by the parties, a
creditor cannot be compelled to accept
partial performance; however, if good faith necessitates acceptance or if the creditor
abuses his right in not accepting, the creditor will incur in delay if he does not accept
such partial performance.
4. MWSS vs Arts Theater
Before the Court is a petition for review on certiorari filed by the Metropolitan
Waterworks and Sewerage System (MWSS), seeking to reverse and set aside the
Decision[1]dated January 31, 2001 of the Court of Appeals in CA-G.R. CV No. 58581,
which affirmed the civil aspect of the Decision[2] dated May 5, 1997 of the Regional
Trial Court of Quezon City, Branch 77, directing the petitioner MWSS to pay the
respondent Act Theater, Inc. damages and attorneys fees.
The present case stemmed from the consolidated cases of Criminal Case No. Q-
89-2412 entitled People of the Philippines v. Rodolfo Tabian, et al., for violation of
Presidential Decree (P.D.) No. 401, as amended by Batas Pambansa Blg. 876, and
Civil Case No. Q-88-768 entitled Act Theater, Inc. v. Metropolitan Waterworks and
Sewerage System. The two cases were jointly tried in the court a quo as they arose
from the same factual circumstances, to wit:
On September 22, 1988, four employees of the respondent Act Theater, Inc.,
namely, Rodolfo Tabian, Armando Aguilar, Arnel Concha and Modesto Ruales, were
apprehended by members of the Quezon City police force for allegedly tampering a
water meter in violation of P.D. No. 401, as amended by B.P. Blg. 876. The
respondents employees were subsequently criminally charged (Criminal Case No. Q-
89-2412) before the court a quo. On account of the incident, the respondents water
service connection was cut off. Consequently, the respondent filed a complaint for
injunction with damages (Civil Case No. Q-88-768) against the petitioner MWSS.
In the civil case, the respondent alleged in its complaint filed with the court a
quo that the petitioner acted arbitrarily, whimsically and capriciously, in cutting off the
respondents water service connection without prior notice. Due to lack of water, the
health and sanitation, not only of the respondents patrons but in the surrounding
premises as well, were adversely affected. The respondent prayed that the petitioner
be directed to pay damages.
After due trial, the court a quo rendered its decision, the dispositive portion of
which reads:
In Criminal Case No. Q-89-2412
WHEREFORE, for failure of the prosecution to prove the guilt of the accused beyond
reasonable doubt, the four (4) above-named Accused are hereby ACQUITTED of the
crime charged.[3]
In Civil Case No. Q-88-768
...
1. Ordering defendant MWSS to pay plaintiff actual or compensatory
damages in the amount of P25,000.00; and to return the sum
of P200,000.00 deposited by the plaintiff for the restoration of its water
services after its disconnection on September 23, 1988;
2. Defendants counterclaim for undercollection of P530,759.96 is dismissed
for lack of merit;
3. Ordering defendant MWSS to pay costs of suit;
4. Ordering defendant MWSS to pay plaintiff the amount of P5,000.00 as
attorneys fees;
5. Making the mandatory injunction earlier issued to plaintiff Act Theater, Inc.
permanent.
SO ORDERED.[4]
Aggrieved, the petitioner appealed the civil aspect of the aforesaid decision to the
CA. The appellate court, however, dismissed the appeal. According to the CA, the
court a quo correctly found that the petitioners act of cutting off the respondents water
service connection without prior notice was arbitrary, injurious and prejudicial to the
latter justifying the award of damages under Article 19 of the Civil Code.
Undaunted, the petitioner now comes to this Court alleging as follows:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] VALIDLY
AFFIRMED THE DECISION OF THE REGIONAL TRIAL COURT IN RESOLVING
THE PETITIONERS APPEAL;
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS VALIDLY UPHELD
THE AWARD OF ATTORNEYS FEES;
III
WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] CORRECTLY
APPLIED THE PROVISION OF ARTICLE 19 OF THE NEW CIVIL CODE WITHOUT
CONSIDERING THE APPLICABLE PROVISION OF ARTICLE 429 OF THE SAME
CODE.[5]
Preliminarily, the petitioner harps on the fact that, in quoting the decretal portion
of the court a quos decision, the CA erroneously typed P500,000 as the attorneys fees
awarded in favor of the respondent when the same should only be P5,000. In any case,
according to the petitioner, whether the amount is P500,000 or P5,000, the award of
attorneys fees is improper considering that there was no discussion or statement in the
body of the assailed decision justifying such award. The petitioner insists that in cutting
off the respondents water service connection, the petitioner merely exercised its
proprietary right under Article 429 of the Civil Code.
The petition is devoid of merit.
Article 429 of the Civil Code, relied upon by the petitioner in justifying its act of
disconnecting the water supply of the respondent without prior notice, reads:
Art. 429. The owner or lawful possessor of a thing has the right to exclude any person
from the enjoyment and disposal thereof. For this purpose, he may use such force as
may be reasonable to repel or prevent an actual or threatened unlawful physical
invasion or usurpation of his property.
A right is a power, privilege, or immunity guaranteed under a constitution, statute
or decisional law, or recognized as a result of long usage, [6] constitutive of a legally
enforceable claim of one person against the other.[7]
Concededly, the petitioner, as the owner of the utility providing water supply to
certain consumers including the respondent, had the right to exclude any person from
the enjoyment and disposal thereof. However, the exercise of rights is not without
limitations. Having the right should not be confused with the manner by which such
right is to be exercised.[8]
Article 19 of the Civil Code precisely sets the norms for the exercise of ones rights:
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.
When a right is exercised in a manner which discards these norms resulting in
damage to another, a legal wrong is committed for which actor can be held
accountable.[9] In this case, the petitioner failed to act with justice and give the
respondent what is due to it when the petitioner unceremoniously cut off the
respondents water service connection.As correctly found by the appellate court:
While it is true that MWSS had sent a notice of investigation to plaintiff-appellee prior
to the disconnection of the latters water services, this was done only a few hours before
the actual disconnection. Upon receipt of the notice and in order to ascertain the
matter, Act sent its assistant manager Teodulo Gumalid, Jr. to the MWSS office but he
was treated badly on the flimsy excuse that he had no authority to represent Act. Acts
water services were cut at midnight of the day following the apprehension of the
employees. Clearly, the plaintiff-appellee was denied due process when it was
deprived of the water services. As a consequence thereof, Act had to contract another
source to provide water for a number of days. Plaintiff-appellee was also compelled to
deposit with MWSS the sum of P200,000.00 for the restoration of their water
services.[10]
There is, thus, no reason to deviate from the uniform findings and conclusion of
the court a quo and the appellate court that the petitioners act was arbitrary, injurious
and prejudicial to the respondent, justifying the award of damages under Article 19 of
the Civil Code.
Finally, the amount of P500,000 as attorneys fees in that portion of the assailed
decision which quoted the fallo of the court a quos decision was obviously a
typographical error. As attorneys fees, the court a quo awarded the amount of P5,000
only. It was this amount, as well as actual and compensatory damages of P25,000 and
the reimbursement of P200,000 deposited by the respondent for the restoration of its
water supply, that the CA affirmed, as it expressly stated in its dispositive portion that
finding no cogent reason to reverse the appealed Decision which is in conformity with
the law and evidence, the same is hereby AFFIRMED.[11]
The award of P5,000 as attorneys fees is reasonable and warranted. Attorneys
fees may be awarded when a party is compelled to litigate or incur expenses to protect
his interest by reason of an unjustified act of the other party. [12]
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals
dated January 31, 2001 in CA-G.R. CV No. 58581 is AFFIRMED in toto.
5. Carpio vs Valmonte
Assailed in the instant petition for review is the Decision of the Court of Appeals
in C.A.-G.R. CV No. 69537,[1] promulgated on 17 January 2002.[2] The appellate court
reversed the trial courts decision denying respondents claim for damages against
petitioner and ordered the latter to pay moral damages to the former in the amount
ofP100,000.00.
Respondent Leonora Valmonte is a wedding coordinator. Michelle del Rosario
and Jon Sierra engaged her services for their church wedding on 10 October 1996. At
about 4:30 p.m. on that day, Valmonte went to the Manila Hotel where the bride and
her family were billeted. When she arrived at Suite 326-A, several persons were
already there including the bride, the brides parents and relatives, the make-up artist
and his assistant, the official photographers, and the fashion designer. Among those
present was petitioner Soledad Carpio, an aunt of the bride who was preparing to dress
up for the occasion.
After reporting to the bride, Valmonte went out of the suite carrying the items
needed for the wedding rites and the gifts from the principal sponsors. She proceeded
to the Maynila Restaurant where the reception was to be held. She paid the suppliers,
gave the meal allowance to the band, and went back to the suite. Upon entering the
suite, Valmonte noticed the people staring at her. It was at this juncture that petitioner
allegedly uttered the following words to Valmonte: Ikaw lang ang lumabas ng kwarto,
nasaan ang dala mong bag? Saan ka pumunta? Ikaw lang and lumabas ng kwarto,
ikaw ang kumuha. Petitioner then ordered one of the ladies to search Valmontes bag. It
turned out that after Valmonte left the room to attend to her duties, petitioner
discovered that the pieces of jewelry which she placed inside the comfort room in a
paper bag were lost. The jewelry pieces consist of two (2) diamond rings, one (1) set
of diamond earrings, bracelet and necklace with a total value of about one million
pesos. The hotel security was called in to help in the search. The bags and personal
belongings of all the people inside the room were searched. Valmonte was allegedly
bodily searched, interrogated and trailed by a security guard throughout the
evening. Later, police officers arrived and interviewed all persons who had access to
the suite and fingerprinted them including Valmonte. During all the time Valmonte was
being interrogated by the police officers, petitioner kept on saying the words Siya lang
ang lumabas ng kwarto. Valmontes car which was parked at the hotel premises was
also searched but the search yielded nothing.
A few days after the incident, petitioner received a letter from Valmonte
demanding a formal letter of apology which she wanted to be circulated to the
newlyweds relatives and guests to redeem her smeared reputation as a result of
petitioners imputations against her. Petitioner did not respond to the letter. Thus, on
20 February 1997, Valmonte filed a suit for damages against her before the Regional
Trial Court (RTC) of Pasig City, Branch 268. In her complaint, Valmonte prayed that
petitioner be ordered to pay actual, moral and exemplary damages, as well as
attorneys fees.
Responding to the complaint, petitioner denied having uttered words or done any
act to confront or single out Valmonte during the investigation and claimed that
everything that transpired after the theft incident was purely a police matter in which
she had no participation. Petitioner prayed for the dismissal of the complaint and for
the court to adjudge Valmonte liable on her counterclaim.
The trial court rendered its Decision on 21 August 2000, dismissing Valmontes
complaint for damages. It ruled that when petitioner sought investigation for the loss of
her jewelry, she was merely exercising her right and if damage results from a person
exercising his legal right, it is damnum absque injuria. It added that no proof was
presented by Valmonte to show that petitioner acted maliciously and in bad faith in
pointing to her as the culprit. The court said that Valmonte failed to show that she
suffered serious anxiety, moral shock, social humiliation, or that her reputation was
besmirched due to petitioners wrongful act.
Respondent appealed to the Court of Appeals alleging that the trial court erred in
finding that petitioner did not slander her good name and reputation and in disregarding
the evidence she presented.
The Court of Appeals ruled differently. It opined that Valmonte has clearly
established that she was singled out by petitioner as the one responsible for the loss
of her jewelry. It cited the testimony of Serena Manding, corroborating Valmontes claim
that petitioner confronted her and uttered words to the effect that she was the only one
who went out of the room and that she was the one who took the jewelry. The appellate
court held that Valmontes claim for damages is not predicated on the fact that she was
subjected to body search and interrogation by the police but rather petitioners act of
publicly accusing her of taking the missing jewelry. It categorized petitioners utterance
defamatory considering that it imputed upon Valmonte the crime of theft. The court
concluded that petitioners verbal assault upon Valmonte was done with malice and in
bad faith since it was made in the presence of many people without any solid proof
except petitioners suspicion. Such unfounded accusation entitles Valmonte to an
award of moral damages in the amount of P100,000.00 for she was publicly humiliated,
deeply insulted, and embarrassed. However, the court found no sufficient evidence to
justify the award of actual damages.
Hence, this petition.
 Petitioner contends that the appellate courts conclusion that she publicly
humiliated respondent does not conform to the evidence presented. She adds that
even on the assumption that she uttered the words complained of, it was not shown
that she did so with malice and in bad faith.
In essence, petitioner would want this Court to review the factual conclusions
reached by the appellate court. The cardinal rule adhered to in this jurisdiction is that
a petition for review must raise only questions of law,[3] and judicial review under Rule
45 does not extend to an evaluation of the sufficiency of evidence unless there is a
showing that the findings complained of are totally devoid of support in the record or
that they are so glaringly erroneous as to constitute serious abuse of discretion. [4] This
Court, while not a trier of facts, may review the evidence in order to arrive at the correct
factual conclusion based on the record especially so when the findings of fact of the
Court of Appeals are at variance with those of the trial court, or when the inference
drawn by the Court of Appeals from the facts is manifestly mistaken.[5]
Contrary to the trial courts finding, we find sufficient evidence on record tending
to prove that petitioners imputations against respondent was made with malice and in
bad faith.
Petitioners testimony was shorn of substance and consists mainly of denials. She
claimed not to have uttered the words imputing the crime of theft to respondent or to
have mentioned the latters name to the authorities as the one responsible for the loss
of her jewelry. Well-settled is the rule that denials, if unsubstantiated by clear and
convincing evidence, are negative and self-serving which merit no weight in law and
cannot be given greater evidentiary value over the testimony of credible witnesses who
testify on affirmative matters.[6]
Respondent, however, has successfully refuted petitioners testimony. Quite
credibly, she has narrated in great detail her distressing experience on that fateful day.
She testified as to how rudely she was treated by petitioner right after she returned to
the room. Petitioner immediately confronted her and uttered the words Ikaw lang ang
lumabas ng kwarto. Nasaan ang dala mong bag? Saan ka pumunta? Ikaw ang
kumuha. Thereafter, her body was searched including her bag and her car. Worse,
during the reception, she was once more asked by the hotel security to go to the ladies
room and she was again bodily searched.[7]
Serea Manding, a make-up artist, corroborated respondents testimony. She
testified that petitioner confronted respondent in the presence of all the people inside
the suite accusing her of being the only one who went out of the comfort room before
the loss of the jewelry. Manding added that respondent was embarrassed because
everybody else in the room thought she was a thief.[8] If only to debunk petitioners
assertion that she did not utter the accusatory remarks in question publicly and with
malice, Mandings testimony on the point deserves to be reproduced. Thus,
Q After that what did she do?
A Then Leo came out from the other room she said, she is (sic) the one I only saw from the comfort room.
Q Now, what exact word (sic) were said by Mrs. Carpio on that matter?
A She said siya lang yung nakita kong galing sa C.R.
Q And who was Mrs. Carpio or the defendant referring to?
A Leo Valmonte.
Q Did she say anything else, the defendant?
A Her jewelry were lost and Leo was the only one she saw in the C.R. After that she get (sic) the paper bag then the jewelry
were already gone.
Q Did she confront the plaintiff Mrs. Valmonte regarding that fact?
A Yes.
Q What did the defendant Mrs. Carpio tell the plaintiff, Mrs. Valmonte?
A Ikaw yung nakita ko sa C.R. nawawala yung alahas ko.
Q When the defendant Mrs. Carpio said that to plaintiff Mrs. Valmonte were there other people inside the room?
A Yes, sir.
Q Were they able to hear what Mrs. Carpio said to Mrs. Valmonte?
A Yes, sir.
Q What was your thinking at that time that Mrs. Carpio said that to Mrs. Valmonte?
A Nakakahiya kasi akala ng iba doon na talagang magnanakaw siya. Kasi marami na kaming nandodoon, dumating na yung
couturier pati yung video man and we sir.
Q Who was the person you [were] alleging na nakakahiya whose (sic) being accused or being somebody who stole those item
of jewelry?
A Nakakahiya para kay Leo kasi pinagbibintangan siya. Sa dami namin doon siya yung napagbintangan.
Q And who is Leo, what is her full name?
A Leo Valmonte.
Q Did the defendant tell this matter to other people inside the room?
A Yes, the mother of the bride.
Q And who else did she talk to?
A The father of the bride also.
Q And what did the defendant tell the mother regarding this matter?
A Nawawala yung alahas ko. Sabi naman nung mother baka naman hindi mo dala tignan mo munang mabuti.
Q Who was that other person that she talked to?
A Father of the bride.[9]
Significantly, petitioners counsel elected not to pursue her cross-examination of the
witness on this point following her terse and firm declaration that she remembered
petitioners exact defamatory words in answer to the counsels question. [10]
Jaime Papio, Security Supervisor at Manila Hotel, likewise contradicted
petitioners allegation that she did not suspect or mention the name of respondent as
her suspect in the loss of the jewelry.[11]
To warrant recovery of damages, there must be both a right of action, for a wrong
inflicted by the defendant, and the damage resulting therefrom to the plaintiff. Wrong
without damage, or damage without wrong, does not constitute a cause of action. [12]
In the sphere of our law on human relations, the victim of a wrongful act or
omission, whether done willfully or negligently, is not left without any remedy or
recourse to obtain relief for the damage or injury he sustained. Incorporated into our
civil law are not only principles of equity but also universal moral precepts which are
designed to indicate certain norms that spring from the fountain of good conscience
and which are meant to serve as guides for human conduct. [13] First of these
fundamental precepts is the principle commonly known as abuse of rights under Article
19 of the Civil Code. It provides that Every person must, in the exercise of his rights
and in the performance of his duties, act with justice, give everyone his due and
observe honesty and good faith. To find the existence of an abuse of right, 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 or prejudicing or injuring another. [14] When a right is
exercised in a manner which discards these norms resulting in damage to another, a
legal wrong is committed for which the actor can be held accountable. [15] One is not
allowed to exercise his right in a manner which would cause unnecessary prejudice to
another or if he would thereby offend morals or good customs. Thus, a person should
be protected only when he acts in the legitimate exercise of his right, that is when he
acts with prudence and good faith; but not when he acts with negligence or abuse. [16]
Complementing the principle of abuse of rights are the provisions of Articles 20
and 21 of the Civil Code which read, thus:
Art. 20. Every person who, contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.
Art. 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals or good customs or public policy shall compensate the latter for the
damage.
The foregoing rules provide the legal bedrock for the award of damages to a party
who suffers damage whenever one commits an act in violation of some legal provision,
or an act which though not constituting a transgression of positive law, nevertheless
violates certain rudimentary rights of the party aggrieved.
In the case at bar, petitioners verbal reproach against respondent was certainly
uncalled for considering that by her own account nobody knew that she brought such
kind and amount of jewelry inside the paper bag. [17] This being the case, she had no
right to attack respondent with her innuendos which were not merely inquisitive but
outrightly accusatory. By openly accusing respondent as the only person who went out
of the room before the loss of the jewelry in the presence of all the guests therein, and
ordering that she be immediately bodily searched, petitioner virtually branded
respondent as the thief. True, petitioner had the right to ascertain the identity of the
malefactor, but to malign respondent without an iota of proof that she was the one who
actually stole the jewelry is an act which, by any standard or principle of law is
impermissible. Petitioner had willfully caused injury to respondent in a manner which
is contrary to morals and good customs. Her firmness and resolve to find her missing
jewelry cannot justify her acts toward respondent. She did not act with justice and good
faith for apparently, she had no other purpose in mind but to prejudice
respondent. Certainly, petitioner transgressed the provisions of Article 19 in relation to
Article 21 for which she should be held accountable.
Owing to the rule that great weight and even finality is given to factual conclusions
of the Court of Appeals which affirm those of the trial court,[18] we sustain the findings
of the trial court and the appellate court that respondents claim for actual damages has
not been substantiated with satisfactory evidence during the trial and must therefore
be denied. To be recoverable, actual damages must be duly proved with reasonable
degree of certainty and the courts cannot rely on speculation, conjecture or
guesswork.[19]
Respondent, however, is clearly entitled to an award of moral damages. Moral
damages may be awarded whenever the defendants wrongful act or omission is the
proximate cause of the plaintiffs physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injury[20] in the cases specified or analogous to those provided in Article 2219
of the Civil Code.[21] Though no proof of pecuniary loss is necessary in order that moral
damages may be adjudicated, courts are mandated to take into account all the
circumstances obtaining in the case and assess damages according to their
discretion.[22] Worthy of note is that moral damages are not awarded to penalize the
defendant,[23] or to enrich a complainant, but to enable the latter to obtain means,
diversions or amusements that will serve to alleviate the moral suffering he has
undergone, by reason of defendants culpable action. In any case, award of moral
damages must be proportionate to the sufferings inflicted.[24]
Based on the foregoing jurisprudential pronouncements, we rule that the appellate
court did not err in awarding moral damages. Considering respondents social standing,
and the fact that her profession is based primarily on trust reposed in her by her clients,
the seriousness of the imputations made by petitioner has greatly tarnished her
reputation and will in one way or the other, affect her future dealings with her clients,
the award of P100,000.00 as moral damages appears to be a fair and reasonable
assessment of respondents damages.
WHEREFORE, the instant Petition is DENIED. Costs against petitioner.
8. Custodio vs CA
This petition for review on certiorari assails the decision of respondent Court of
Appeals in CA-G.R. CV No. 29115, promulgated on November 10, 1993, which
affirmed with modification the decision of the trial court, as well as its resolution
dated July 8, 1994 denying petitioners motion for reconsideration.[1]
On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right
of way was filed by Pacifico Mabasa against Cristino Custodio, Brigida R. Custodio,
Rosalina R. Morato, Lito Santos and Maria Cristina C. Santos before the Regional Trial
Court of Pasig and assigned to Branch 22 thereof.[2]
The generative facts of the case, as synthesized by the trial court and adopted by
the Court of Appeals, are as follows:
Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa died
during the pendency of this case and was substituted by Ofelia Mabasa, his surviving
spouse [and children].
The plaintiff owns a parcel of land with a two-door apartment erected thereon situated
at Interior P. Burgos St., Palingon, Tipas, Taguig, Metro Manila. The plaintiff was able
to acquire said property through a contract of sale with spouses Mamerto Rayos and
Teodora Quintero as vendors last September 1981. Said property may be described
to be surrounded by other immovables pertaining to defendants herein. Taking P.
Burgos Street as the point of reference, on the left side, going to plaintiffs property, the
row of houses will be as follows: That of defendants Cristino and Brigido Custodio, then
that of Lito and Maria Cristina Santos and then that of Ofelia Mabasa. On the right side
(is) that of defendant Rosalina Morato and then a Septic Tank (Exhibit D). As an access
to P. Burgos Street from plaintiffs property, there are two possible passageways. The
first passageway is approximately one meter wide and is about 20 meters distan(t)
from Mabasas residence to P. Burgos Street. Such path is passing in between the
previously mentioned row of houses. The second passageway is about 3 meters in
width and length from plaintiff Mabasas residence to P. Burgos Street; it is about 26
meters. In passing thru said passageway, a less than a meter wide path through the
septic tank and with 5-6 meters in length has to be traversed.
When said property was purchased by Mabasa, there were tenants occupying the
premises and who were acknowledged by plaintiff Mabasa as tenants. However,
sometime in February, 1982. one of said tenants vacated the apartment and when
plaintiff Mabasa went to see the premises, he saw that there had been built an adobe
fence in the first passageway making it narrower in width.Said adobe fence was first
constructed by defendants Santoses along their property which is also along the first
passageway. Defendant Morato constructed her adobe fence and even extended said
fence in such a way that the entire passageway was enclosed (Exhibit 1-Santoses and
Custodios, Exh. D for plaintiff, Exhs. 1-C, 1-D and I -E) And it was then that the
remaining tenants of said apartment vacated the area. Defendant Ma. Cristina Santos
testified that she constructed said fence because there was an incident when her
daughter was dragged by a bicycle pedalled by a son of one of the tenants in said
apartment along the first passageway. She also mentioned some other inconveniences
of having (at) the front of her house a pathway such as when some of the tenants were
drunk and would bang their doors and windows. Some of their footwear were even lost.
x x x[3] (Italics in original text; corrections in parentheses supplied)
On February 27, 1990, a decision was rendered by the trial court, with this
dispositive part:
Accordingly, judgment is hereby rendered as follows:
1) Ordering defendants Custodios and Santoses to give plaintiff permanent access -
ingress and egress, to the public street;
2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of Eight
Thousand Pesos (P8,000) as indemnity for the permanent use of the passageway.
The parties to shoulder their respective litigation expenses.[4]
Not satisfied therewith, therein plaintiff represented by his heirs, herein private
respondents, went to the Court of Appeals raising the sole issue of whether or not the
lower court erred in not awarding damages in their favor. On November 10, 1993, as
earlier stated, the Court of Appeals rendered its decision affirming the judgment of the
trial court with modification, the decretal portion of which disposes as follows:
WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED WITH
MODIFICATION only insofar as the herein grant of damages to plaintiffs-appellants.
The Court hereby orders defendants-appellees to pay plaintiffs-appellants the sum of
Sixty Five Thousand (P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000)
Pesos as Moral Damages, and Ten Thousand (P10,000) Pesos as Exemplary
Damages. The rest of the appealed decision is affirmed to all respects. [5]
 On July 8, 1994, the Court of Appeals denied petitioners motion for
reconsideration.[6] Petitioners then took the present recourse to us, raising two issues,
namely, whether or not the grant of right of way to herein private respondents is proper,
and whether or not the award of damages is in order.
With respect to the first issue, herein petitioners are already barred from raising
the same. Petitioners did not appeal from the decision of the court a quo granting
private respondents the right of way, hence they are presumed to be satisfied with the
adjudication therein. With the finality of the judgment of the trial court as to petitioners,
the issue of propriety of the grant of right of way has already been laid to rest.
For failure to appeal the decision of the trial court to the Court of Appeals,
petitioners cannot obtain any affirmative relief other than those granted in the decision
of the trial court. That decision of the court below has become final as against them
and can no longer be reviewed, much less reversed, by this Court. The rule in this
jurisdiction is that whenever an appeal is taken in a civil case, an appellee who has not
himself appealed may not obtain from the appellate court any affirmative relief other
than what was granted in the decision of the lower court. The appellee can only
advance any argument that he may deem necessary to defeat the appellants claim or
to uphold the decision that is being disputed, and he can assign errors in his brief if
such is required to strengthen the views expressed by the court a quo. These assigned
errors, in turn, may be considered by the appellate court solely to maintain the
appealed decision on other grounds, but not for the purpose of reversing or modifying
the judgment in the appellees favor and giving him other affirmative reliefs. [7]
However, with respect to the second issue, we agree with petitioners that the
Court of Appeals erred in awarding damages in favor of private respondents. The
award of damages has no substantial legal basis. A reading of the decision of the Court
of Appeals will show that the award of damages was based solely on the fact that the
original plaintiff, Pacifico Mabasa, incurred losses in the form of unrealized rentals
when the tenants vacated the leased premises by reason of the closure of the
passageway.
However, the mere fact that the plaintiff suffered losses does not give rise to a
right to recover damages. To warrant the recovery of damages, there must be both a
right of action for a legal wrong inflicted by the defendant, and damage resulting to the
plaintiff therefrom. Wrong without damage, or damage without wrong, does not
constitute a cause of action, since damages are merely part of the remedy allowed for
the injury caused by a breach or wrong.[8]
There is a material distinction between damages and injury. Injury is the illegal
invasion of a legal right; damage is the loss, hurt, or harm which results from the injury;
and damages are the recompense or compensation awarded for the damage
suffered. Thus, there can be damage without injury in those instances in which the loss
or harm was not the result of a violation of a legal duty. These situations are often
called damnum absque injuria.[9] in order that a plaintiff may maintain an action for the
injuries of which he complains, he must establish that such injuries resulted from a
breach of duty which the defendant owed to the plaintiff - a concurrence of injury to the
plaintiff and legal responsibility by the person causing it. [10] The underlying basis for the
award of tort damages is the premise that an individual was injured in contemplation
of law. Thus, there must first be the breach of some duty and the imposition of liability
for that breach before damages may be awarded; it is not sufficient to state that there
should be tort liability merely because the plaintiff suffered some pain and suffering) [11]
Many accidents occur and many injuries are inflicted by acts or omissions which
cause damage or loss to another but which violate no legal duty to such other person,
and consequently create no cause of action in his favor. In such cases, the
consequences must be borne by the injured person alone. The law affords no remedy
for damages resulting from an act which does not amount to a legal injury or wrong. [12]
In other words, in order that the law will give redress for an act causing damage,
that act must be not only hurtful, but wrongful. There must be damnum et injuria.[13] If,
as may happen in many cases, a person sustains actual damage, that is, harm or loss
to his person or property, without sustaining any legal injury, that is, an act or omission
which the law does not deem an injury, the damage is regarded as damnum absque
injuria.[14]
In the case at bar, although there was damage, there was no legal injury. Contrary
to the claim of private respondents, petitioners could not be said to have violated the
principle of abuse of right. In order that the principle of abuse of right provided in Article
21 of the Civil Code can be applied, it is essential that the following requisites concur:
(1) The defendant should have acted in a manner that is contrary to morals, good
customs or public policy; (2) The acts should be willful; and (3) There was damage or
injury to the plaintiff.[15]
The act of petitioners in constructing a fence within their lot is a valid exercise of
their right as owners, hence not contrary to morals, good customs or public policy. The
law recognizes in the owner the right to enjoy and dispose of a thing, without other
limitations than those established by law.[16] It is within the right of petitioners, as
owners, to enclose and fence their property. Article 430 of the Civil Code provides that
(e)very owner may enclose or fence his land or tenements by means of walls, ditches,
live or dead hedges, or by any other means without detriment to servitudes constituted
thereon.
 At the time of the construction of the fence, the lot was not subject to any
servitudes. There was no easement of way existing in favor of private respondents,
either by law or by contract. The fact that private respondents had no existing right over
the said passageway is confirmed by the very decision of the trial court granting a
compulsory right of way in their favor after payment of just compensation. It was only
that decision which gave private respondents the right to use the said passageway
after payment of the compensation and imposed a corresponding duty on petitioners
not to interfere in the exercise of said right.
Hence, prior to said decision, petitioners had an absolute right over their property
and their act of fencing and enclosing the same was an act which they may lawfully
perform in the employment and exercise of said right. To repeat, whatever injury or
damage may have been sustained by private respondents by reason of the rightful use
of the said land by petitioners is damnum absque injuria.[17]
A person has a right to the natural use and enjoyment of his own property,
according to his pleasure, for all the purposes to which such property is usually
applied. As a general rule, therefore, there is no cause of action for acts done by one
person upon his own property in a lawful and proper manner, although such acts
incidentally cause damage or an unavoidable loss to another, as such damage or loss
is damnum absque injuria.[18] When the owner of property makes use thereof in the
general and ordinary manner in which the property is used, such as fencing or
enclosing the same as in this case, nobody can complain of having been injured,
because the inconvenience arising from said use can be considered as a mere
consequence of community life.[19]
The proper exercise of a lawful right cannot constitute a legal wrong for which an
action will lie,[20] although the act may result in damage to another, for no legal right
has been invaded[21] One may use any lawful means to accomplish a lawful purpose
and though the means adopted may cause damage to another, no cause of action
arises in the latters favor. Any injury or damage occasioned thereby is damnum absque
injuria. The courts can give no redress for hardship to an individual resulting from action
reasonably calculated to achieve a lawful end by lawful means. [22]
WHEREFORE, under the compulsion of the foregoing premises, the appealed
decision of respondent Court of Appeals is hereby REVERSED and SET ASIDE and
the judgment of the trial court is correspondingly REINSTATED.
SO ORDERED.
9. Gasham vs VA
This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to review
and set aside the Decision1 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 complaint2 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 Bañaga, 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
Order4 embodying the stipulated facts which the parties had agreed upon, to wit:
1. That the plaintiff is single and resident (sic) of Bañaga, 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 decision5 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 Bañaga, 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
Bañaga, 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 Bañaga, 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 their marriage. It is the solemn duty of parents to protect the honor of their daughters
by a Filipina who honestly believed that by accepting his proffer of love and proposal and infuse upon them the higher values of morality and dignity.
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 WHEREFORE, finding no reversible error in the challenged decision, the instant
Filipinos have for their women. It can even be said that the petitioner committed such petition is hereby DENIED, with costs against the petitioner.
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
SO ORDERED.
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." 35At 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
10. Rellosa vs. Pellosis
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.[1] This provision in our law is not just a declaration of principle for it can in itself
constitute, when unduly ignored or violated, a valid source of a cause of action or
defense.
The case seeks to reverse the Court of Appeals in not countenancing an attempt
to abridge and render inutile a legal right to contest an adverse ruling of an agency of
government.
Respondents were lessees of a parcel of land, owned by one Marta Reyes,
located at San Pascual Street, Malate, Manila. Respondents had built their houses on
the land which, over the years, underwent continuous improvements. After the demise
of Marta, the land was inherited by her son Victor Reyes. Sometime in 1986, Victor
informed respondents that, for being lessees of the land for more than twenty (20)
years, they would have a right of first refusal to buy the land. Sometime in the early
part of 1989, without the knowledge of respondents, the land occupied by them was
sold to petitioner Cynthia Ortega who was able to ultimately secure title to the property
in her name.
On 25 May 1989, Cynthia Ortega, filed a petition for condemnation, docketed
Condemnation Case No. 89-05-007, with the Office of the Building Official, City of
Manila, of the structures on the land.
On 31 May 1989, respondents filed with the Regional Trial Court of Manila a suit
for the Declaration of Nullity of the Sale, docketed as Civil Case No. 89-49176, made
in favor of petitioner Cynthia Ortega predicated upon their right of first refusal which
was claimed to have been impinged upon the sale of the land to petitioner Ortega
without their knowledge.
After due hearing in the condemnation case, the Office of the Building Official
issued a resolution, dated 27 November 1989, ordering the demolition of the houses
of respondents. Copies of the resolution were served upon respondents and their
counsel on 07 December 1989. The following day, or on 08 December 1989, Cynthia
Ortega, together with her father and co-petitioner, Vicente Rellosa, hired workers to
commence the demolition of respondents' houses. Due to the timely intervention of a
mobile unit of the Western Police District, the intended demolition did not take place
following talks between petitioner Rellosa and counsel who pleaded that the demolition
be suspended since the order sought to be implemented was not yet final and
executory. On 11 December 1989, respondents filed their appeal contesting the order
of the Office of the Building Official. On 12 December 1989, petitioners once again
hired workers and proceeded with the demolition of respondents' houses.
Resultantly, respondents filed Civil Case No. 89-49176 before the Regional Trial
Court of Manila, Branch 54, praying that petitioners be ordered to pay moral and
exemplary damages, as well as attorneys fees, for the untimely demolition of the
houses. After trial, the court dismissed the complaint of respondents and instead
ordered them to pay petitioners moral damages. On appeal, the Court of Appeals, on
the basis of its findings and conclusions, reversed the decision of the trial court and
ordered petitioners to pay respondents the following sums:
"1) Seventy Five Thousand Pesos (P75,000.00) , or Twenty Five Thousand Pesos
(P25,000.00) for each appellant, by way of moral damages;"
"2) Seventy Five Thousand Pesos (P75,000.00), or Twenty Five thousand Pesos
(P25,000.00) for each appellant, by way of exemplary damages;"
"3) Fifteen Thousand Pesos (P15,000.00) as and for attorney's fees; and
"4) The costs of suit."[2]
The appellate court ruled:
"Thus, by the clear provisions of paragraph 23 of the Implementing Rules and
Regulations of PD 1096 (otherwise known as the Building Code), above, appellants,
being the parties adversely affected by the November 27, 1989 Resolution of the Office
of the Building Official, had fifteen (15) days from receipt of a copy of the same within
which to perfect an administrative appeal.Thus, since appellants received a copy of
the Resolution on December 7, 1989, they had until December 22, 1989 within which
to perfect an administrative appeal and until such time, the said Resolution was not yet
final and executory."
xxxxxxxxx
"It cannot be denied, therefore, that when appellees commenced to demolish
appellants' houses as early as December 8, 1989 and eventually on December 12,
1989, neither the Resolution of the Building Official nor the Demolition Order itself were
final and executory."[3]
 Petitioners filed the instant petition contending that the appellate court gravely WHEREFORE, the assailed decision of the Court of Appeals is MODIFIED by
erred in ruling that the premature demolition of respondents' houses entitled them to reducing the awards of P75,000.00 exemplary damages and of P75,000.00 moral
the award of damages.Petitioners pointed out that the order of the Office of the Building damages to each respondent reduced to P20,000.00 exemplary damages and
Official was eventually upheld on appeal by the Department of Public Works and P20,000.00 moral damages for each respondent. In all other respe
Highways in its decision of 14 March 1990.Furthermore, petitioners added, the
structures subject matter of the demolition order were declared to be dangerous
structures by the Office of the Building Official and, as such, could be abated to avoid
danger to the public.
The Court rules for affirmance of the assailed decision.
A right is a power, privilege, or immunity guaranteed under a constitution, statute
or decisional law, or recognized as a result of long usage, [4] constitutive of a legally
enforceable claim of one person against another.
Petitioner might verily be the owner of the land, with the right to enjoy[5] and to
exclude any person from the enjoyment and disposal thereof,[6] but the exercise of
these rights is not without limitations. The abuse of rights rule established in Article 19
of the Civil Code requires every person to act with justice, to give everyone his due; and
to observe honesty and good faith.[7] When a right is exercised in a manner which
discards these norms resulting in damage to another, a legal wrong is committed for
which the actor can be held accountable. In this instance, the issue is not so much
about the existence of the right or validity of the order of demolition as the question of
whether or not petitioners have acted in conformity with, and not in disregard of, the
standard set by Article 19 of the Civil Code.
At the time petitioners implemented the order of demolition, barely five days after
respondents received a copy thereof, the same was not yet final and executory. The
law provided for a fifteen-day appeal period in favor of a party aggrieved by an adverse
ruling of the Office of the Building Official but by the precipitate action of petitioners in
demolishing the houses of respondents (prior to the expiration of the period to appeal),
the latter were effectively deprived of this recourse. The fact that the order of demolition
was later affirmed by the Department of Public Works and Highways was of no
moment. The action of petitioners up to the point where they were able to secure an
order of demolition was not condemnable but implementing the order unmindful of the
right of respondents to contest the ruling was a different matter and could only be held
utterly indefensible.
The Court, however, finds the award of P75,000.00 exemplary damages and
another of P75,000.00 moral damages for each respondent to be rather excessive
given the circumstances; the awards must be reduced to the reasonable amounts of
P20,000.00 exemplary damages and P20,000.00 moral damages.
11. NPC vs Phillipp Bros
Where a person merely uses a right pertaining to him, without bad faith or intent
to injure, the fact that damages are thereby suffered by another will not make him
liable.[1]
This principle finds useful application to the present case.
Before us is a petition for review of the Decision[2] dated August 27, 1996 of the
Court of Appeals affirming in toto the Decision[3] dated January 16, 1992 of the
Regional Trial Court, Branch 57, Makati City.
The facts are:
On May 14, 1987, the National Power Corporation (NAPOCOR) issued invitations
to bid for the supply and delivery of 120,000 metric tons of imported coal for its
Batangas Coal-Fired Thermal Power Plant in Calaca, Batangas. The Philipp Brothers
Oceanic, Inc. (PHIBRO) prequalified and was allowed to participate as one of the
bidders. After the public bidding was conducted, PHIBROs bid was accepted.
NAPOCORs acceptance was conveyed in a letter dated July 8, 1987, which was
received by PHIBRO on July 15, 1987.
The Bidding Terms and Specifications[4] provide for the manner of shipment of
coals, thus:
SECTION V
SHIPMENT
The winning TENDERER who then becomes the SELLER shall arrange and provide
gearless bulk carrier for the shipment of coal to arrive at discharging port on or
before thirty (30) calendar days after receipt of the Letter of Credit by the SELLER
or its nominee as per Section XIV hereof to meet the vessel arrival schedules at
Calaca, Batangas, Philippines as follows:
60,000 +/ - 10 % July 20, 1987
60,000 +/ - 10% September 4, 1987[5]
On July 10, 1987, PHIBRO sent word to NAPOCOR that industrial disputes might
soon plague Australia, the shipments point of origin, which could seriously hamper
PHIBROs ability to supply the needed coal.[6] From July 23 to July 31, 1987, PHIBRO
again apprised NAPOCOR of the situation in Australia, particularly informing the latter
that the ship owners therein are not willing to load cargo unless a strike-free clause is
incorporated in the charter party or the contract of carriage. [7] In order to hasten the
transfer of coal, PHIBRO proposed to NAPOCOR that they equally share the burden
of a strike-free clause. NAPOCOR refused.
On August 6, 1987, PHIBRO received from NAPOCOR a confirmed and workable
letter of credit. Instead of delivering the coal on or before the thirtieth day after receipt
of the Letter of Credit, as agreed upon by the parties in the July contract, PHIBRO
effected its first shipment only on November 17, 1987.
Consequently, in October 1987, NAPOCOR once more advertised for the delivery
of coal to its Calaca thermal plant. PHIBRO participated anew in this subsequent
bidding. On November 24, 1987, NAPOCOR disapproved PHIBROs application for
pre-qualification to bid for not meeting the minimum requirements. [8] Upon further
inquiry, PHIBRO found that the real reason for the disapproval was its purported failure
to satisfy NAPOCORs demand for damages due to the delay in the delivery of the first
coal shipment.
This prompted PHIBRO to file an action for damages with application for injunction
against NAPOCOR with the Regional Trial Court, Branch 57, Makati City. [9] In its
complaint, PHIBRO alleged that NAPOCORs act of disqualifying it in the October 1987
bidding and in all subsequent biddings was tainted with malice and bad faith. PHIBRO
prayed for actual, moral and exemplary damages and attorneys fees.
In its answer, NAPOCOR averred that the strikes in Australia could not be invoked
as reason for the delay in the delivery of coal because PHIBRO itself admitted that as
of July 28, 1987 those strikes had already ceased. And, even assuming that the strikes
were still ongoing, PHIBRO should have shouldered the burden of a strike-free clause
because their contract was C and F Calaca, Batangas, Philippines, meaning,
the cost and freight from the point of origin until the point of destination would be for
the account of PHIBRO. Furthermore, NAPOCOR claimed that due to PHIBROs failure
to deliver the coal on time, it was compelled to purchase coal from ASEA at a higher
price. NAPOCOR claimed for actual damages in the amount of P12,436,185.73,
representing the increase in the price of coal, and a claim of P500,000.00 as litigation
expenses.[10]
Thereafter, trial on the merits ensued.
On January 16, 1992, the trial court rendered a decision in favor of PHIBRO, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff Philipp Brothers
Oceanic Inc. (PHIBRO) and against the defendant National Power Corporation
(NAPOCOR) ordering the said defendant NAPOCOR:
1. To reinstate Philipp Brothers Oceanic, Inc. (PHIBRO) in the defendant
National Power Corporations list of accredited bidders and allow PHIBRO
to participate in any and all future tenders of National Power Corporation
for the supply and delivery of imported steam coal;
2 To pay Philipp Brothers Oceanic, Inc. (PHIBRO);
a. The peso equivalent at the time of payment of $864,000 as actual
damages;
b. The peso equivalent at the time of payment of $100,000 as moral
damages;
c. The peso equivalent at the time of payment of $ 50,000 as exemplary
damages;
d. The peso equivalent at the time of payment of $73,231.91 as
reimbursement for expenses, cost of litigation and attorneys
fees;
3. To pay the costs of suit;
4. The counterclaims of defendant NAPOCOR are dismissed for lack of
merit.
SO ORDERED.[11]
Unsatisfied, NAPOCOR, through the Solicitor General, elevated the case to the
Court of Appeals. On August 27, 1996, the Court of Appeals rendered a Decision
affirming in toto the Decision of the Regional Trial Court. It ratiocinated that:
There is ample evidence to show that although PHIBROs delivery of the shipment of
coal was delayed, the delay was in fact caused by a) Napocors own delay in opening
a workable letter of credit; and b) the strikes which plaqued the Australian coal industry
from the first week of July to the third week of September 1987. Strikes are included in
the definition of force majeure in Section XVII of the Bidding Terms and Specifications,
(supra), so Phibro is not liable for any delay caused thereby.
Phibro was informed of the acceptance of its bid on July 8, 1987. Delivery of coal was
to be effected thirty (30) days from Napocors opening of a confirmed and workable
letter of credit. Napocor was only able to do so on August 6, 1987.
By that time, Australias coal industry was in the middle of a seething controversy and
unrest, occasioned by strikes, overtime bans, mine stoppages. The origin, the scope
and the effects of this industrial unrest are lucidly described in the uncontroverted
testimony of James Archibald, an employee of Phibro and member of the Export
Committee of the Australian Coal Association during the time these events transpired.
xxxxxx
The records also attest that Phibro periodically informed Napocor of these
developments as early as July 1, 1987, even before the bid was approved. Yet,
Napocor did not forthwith open the letter of credit in order to avoid delay which might
be caused by the strikes and their after-effects.
Strikes are undoubtedly included in the force majeure clause of the Bidding Terms and
Specifications (supra). The renowned civilist, Prof. Arturo Tolentino, defines
force majeure as an event which takes place by accident and could not have been
foreseen. (Civil Code of the Philippines, Volume IV, Obligations and Constracts, 126,
[1991]) He further states:
Fortuitous events may be produced by two general causes: (1) by Nature, such as
earthquakes, storms, floods, epidemics, fires, etc., and (2) by the act of man, such as
an armed invasion, attack by bandits, governmental prohibitions, robbery, etc.
Tolentino adds that the term generally applies, broadly speaking, to natural
accidents. In order that acts of man such as a strike, may constitute fortuitous event, it
is necessary that they have the force of an imposition which the debtor could not have
resisted. He cites a parallel example in the case of Philippine National Bank v. Court
of Appeals, 94 SCRA 357 (1979), wherein the Supreme Court said that the outbreak
of war which prevents performance exempts a party from liability.
Hence, by law and by stipulation of the parties, the strikes which took place in Australia
from the first week of July to the third week of September, 1987, exempted Phibro from
the effects of delay of the delivery of the shipment of coal.[12]
Twice thwarted, NAPOCOR comes to us via a petition for review ascribing to the
Court of Appeals the following errors:
I court.[20] Stated differently, the findings of the Court of Appeals, by itself, which are
Respondent Court of Appeals gravely and seriously erred in concluding and so
holding that PHIBROs delay in the delivery of imported coal was due to
NAPOCORs alleged delay in opening a letter of credit and to force majeure, and
not to PHIBROs own deliberate acts and faults.[13]
II
Respondent Court of Appeals gravely and seriously erred in concluding and so
holding that NAPOCOR acted maliciously and unjustifiably in disqualifying
PHIBRO from participating in the December 8, 1987 and future biddings for the
supply of imported coal despite the existence of valid grounds therefor such as
serious impairment of its track record.[14]
III
Respondent Court of Appeals gravely and seriously erred in concluding and so
holding that PHIBRO was entitled to injunctive relief, to actual or compensatory,
moral and exemplary damages, attorneys fees and litigation expenses despite
the clear absence of legal and factual bases for such award.[15]
IV
Respondent Court of Appeals gravely and seriously erred in absolving PHIBRO
from any liability for damages to NAPOCOR for its unjustified and deliberate
refusal and/or failure to deliver the contracted imported coal within the stipulated
period.[16]
V
Respondent Court of Appeals gravely and seriously erred in dismissing
NAPOCORs counterclaims for damages and litigation expenses.[17]
It is axiomatic that only questions of law, not questions of fact, may be raised
before this Court in a petition for review under Rule 45 of the Rules of Court. [18] The
findings of facts of the Court of Appeals are conclusive and binding on this Court [19] and
they carry even more weight when the said court affirms the factual findings of the trial
supported by substantial evidence, are almost beyond the power of review by this
Court.[21]
With the foregoing settled jurisprudence, we find it pointless to delve lengthily on
the factual issues raised by petitioner. The existence of strikes in Australia having been
duly established in the lower courts, we are left only with the burden of
determining whether or not NAPOCOR acted wrongfully or with bad faith in
disqualifying PHIBRO from participating in the subsequent public bidding.
Let us consider the case in its proper perspective.
The Court of Appeals is justified in sustaining the Regional Trial Courts decision
exonerating PHIBRO from any liability for damages to NAPOCOR as it was clearly
established from the evidence, testimonial and documentary, that what prevented
PHIBRO from complying with its obligation under the July 1987 contract was the
industrial disputes which besieged Australia during that time. Extant in our Civil Code
is the rule that no person shall be responsible for those events which could not be
foreseeen, or which, though foreseen, were inevitable.[22] This means that when an
obligor is unable to fulfill his obligation because of a fortuitous event or
force majeure, he cannot be held liable for damages for non-performance.[23]
In addition to the above legal precept, it is worthy to note that PHIBRO and
NAPOCOR explicitly agreed in Section XVII of the Bidding Terms and
Specifications[24] that neither seller (PHIBRO) nor buyer (NAPOCOR) shall be liable for
any delay in or failure of the performance of its obligations, other than the payment of
money due, if any such delay or failure is due to Force Majeure. Specifically,
they defined force majeure as any disabling cause beyond the control of and without
fault or negligence of the party, which causes may include but are not restricted to Acts
of God or of the public enemy; acts of the Government in either its sovereign or
contractual capacity; governmental restrictions; strikes, fires, floods, wars, typhoons,
storms, epidemics and quarantine restrictions.
The law is clear and so is the contract between NAPOCOR and
PHIBRO. Therefore, we have no reason to rule otherwise.
 However, proceeding from the premise that PHIBRO was prevented by
force majeure from complying with its obligation, does it necessarily follow that
NAPOCOR acted unjustly, capriciously, and unfairly in disapproving PHIBROs
application for pre-qualification to bid?
First, it must be stressed that NAPOCOR was not bound under any contract to
approve PHIBROs pre-qualification requirements. In fact, NAPOCOR had expressly
reserved its right to reject bids. The Instruction to Bidders found in the Post-
Qualification Documents/ Specifications for the Supply and Delivery of Coal for the
Batangas Coal-Fired Thermal Power Plant I at Calaca, Batangas Philippines,[25] is
explicit, thus:
IB-17 RESERVATION OF NAPOCOR TO REJECT BIDS
NAPOCOR reserves the right to reject any or all bids, to waive any
minor informality in the bids received. The right is also reserved to
reject the bids of any bidder who has previously failed to properly
perform or complete on time any and all contracts for delivery of
coal or any supply undertaken by a bidder.[26] (Emphasis supplied)
This Court has held that where the right to reject is so reserved, the lowest bid or
any bid for that matter may be rejected on a mere technicality. [27] And where the
government as advertiser, availing itself of that right, makes its choice in rejecting any
or all bids, the losing bidder has no cause to complain nor right to dispute that choice
unless an unfairness or injustice is shown. Accordingly, a bidder has no ground of
action to compel the Government to award the contract in his favor, nor to
compel it to accept his bid. Even the lowest bid or any bid may be
rejected.[28] In Celeste v. Court of Appeals,[29] we had the occasion to rule:
Moreover, paragraph 15 of the Instructions to Bidders states that the Government
hereby reserves the right to reject any or all bids submitted. In the case of A.C.
Esguerra and Sons v. Aytona, 4 SCRA 1245, 1249 (1962), we held:
x x x [I]n the invitation to bid, there is a condition imposed upon the bidders to the effect
that the bidders shall be subject to the right of the government to reject any and all bids
subject to its discretion. Here the government has made its choice, and unless an
unfairness or injustice is shown, the losing bidders have no cause to complain,
nor right to dispute that choice.
Since there is no evidence to prove bad faith and arbitrariness on the part of the
petitioners in evaluating the bids, we rule that the private respondents are not
entitled to damages representing lost profits. (Emphasis supplied)
Verily, a reservation of the government of its right to reject any bid, generally vests
in the authorities a wide discretion as to who is the best and most advantageous
bidder. The exercise of such discretion involves inquiry, investigation, comparison,
deliberation and decision, which are quasi-judicial functions, and when honestly
exercised, may not be reviewed by the court.[30] In Bureau Veritas v. Office of the
President,[31] we decreed:
The discretion to accept or reject a bid and award contracts is vested in the
Government agencies entrusted with that function. The discretion given to the
authorities on this matter is of such wide latitude that the Courts will not interfere
therewith, unless it is apparent that it is used as a shield to a fraudulent
award. (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x.The exercise of this
discretion is a policy decision that necessitates prior inquiry, investigation, comparison,
evaluation, and deliberation. This task can best be discharged by the Government
agencies concerned, not by the Courts. The role of the Courts is to ascertain whether
a branch or instrumentality of the Government has transgresses its constitutional
boundaries. But the Courts will not interfere with executive or legislative discretion
exercised within those boundaries. Otherwise, it strays into the realm of policy
decision-making. x x x. (Emphasis supplied)
Owing to the discretionary character of the right involved in this case, the propriety
of NAPOCORs act should therefore be judged on the basis of the general principles
regulating human relations, the forefront provision of which is Article 19 of the Civil
Code which provides that every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe honesty
and good faith.[32] Accordingly, 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;
but not when he acts with negligence or abuse.[33]
Did NAPOCOR abuse its right or act unjustly in disqualifying PHIBRO from the
public bidding?
We rule in the negative.
In practice, courts, in the sound exercise of their discretion, will have to determine
under all the facts and circumstances when the exercise of a right is unjust, or when
there has been an abuse of right.[34]
 We went over the record of the case with painstaking solicitude and we are
convinced that NAPOCORs act of disapproving PHIBRO's application for pre-
qualification to bid was without any intent to injure or a purposive motive to perpetrate
damage. Apparently, NAPOCOR acted on the strong conviction that PHIBRO had a
seriously-impaired track record. NAPOCOR cannot be faulted from believing so. At this
juncture, it is worth mentioning that at the time NAPOCOR issued its subsequent
Invitation to Bid, i.e., October 1987, PHIBRO had not yet delivered the first shipment
of coal under the July 1987 contract, which was due on or before September 5,
1987. Naturally, NAPOCOR is justified in entertaining doubts on PHIBROs qualification
or capability to assume an obligation under a new contract.
Moreover, PHIBROs actuation in 1987 raised doubts as to the real situation of the
coal industry in Australia. It appears from the records that when NAPOCOR was
constrained to consider an offer from another coal supplier (ASEA) at a price of
US$33.44 per metric ton, PHIBRO unexpectedly offered the immediate delivery of
60,000 metric tons of Ulan steam coal at US$31.00 per metric ton for arrival at Calaca,
Batangas on September 20-21, 1987.[35] Of course, NAPOCOR had reason to ponder-
- how come PHIBRO could assure the immediate delivery of 60,000 metric tons
of coal from the same source to arrive at Calaca not later than September 20/21,
1987 but it could not deliver the coal it had undertaken under its contract?
Significantly, one characteristic of a fortuitous event, in a legal sense, and
consequently in relations to contracts, is that the concurrence must be such as to
render it impossible for the debtor to fulfill his obligation in a normal manner. [36] Faced
with the above circumstance, NAPOCOR is justified in assuming that, may be, there
was really no fortuitous event or force majeure which could render it impossible for
PHIBRO to effect the delivery of coal. Correspondingly, it is also justified in treating
PHIBROs failure to deliver a serious impairment of its track record. That the trial court,
thereafter, found PHIBROs unexpected offer actually a result of its desire to minimize
losses on the part of NAPOCOR is inconsequential. In determining the existence of
good faith, the yardstick is the frame of mind of the actor at the time he committed the
act, disregarding actualities or facts outside his knowledge. We cannot fault
NAPOCOR if it mistook PHIBROs unexpected offer a mere attempt on the latters part
to undercut ASEA or an indication of PHIBROs inconsistency. The circumstances
warrant such contemplation.
That NAPOCOR believed all along that PHIBROs failure to deliver on time was
unfounded is manifest from its letters[37] reminding PHIBRO that it was bound to deliver
the coal within 30 days from its (PHIBROs) receipt of the Letter of Credit, otherwise it
would be constrained to take legal action. The same honest belief can be deduced
from NAPOCORs Board Resolution, thus:
On the legal aspect, Management stressed that failure of PBO to deliver under
the contract makes them liable for damages, considering that the reasons
invoked were not valid. The measure of the damages will be limited to actual and
compensatory damages. However, it was reported that Philipp Brothers advised they
would like to have continuous business relation with NPC so they are willing to sit down
or even proposed that the case be submitted to the Department of Justice as to avoid
a court action or arbitration.
xxxxxx
On the technical-economic aspect, Management claims that if PBO delivers in
November 1987 and January 1988, there are some advantages. If PBO reacts to any
legal action and fails to deliver, the options are: one, to use 100% Semirara and
second, to go into urgent coal order. The first option will result in a 75 MW derating and
oil will be needed as supplement. We will stand to lose around P30 M. On the other
hand, if NPC goes into an urgent coal order, there will be an additional expense of
$786,000 or P16.11 M, considering the price of the latest purchase with ASEA. On
both points, reliability is decreased. [38]
The very purpose of requiring a bidder to furnish the awarding authority its pre-
qualification documents is to ensure that only those responsible and qualified bidders
could bid and be awarded with government contracts. It bears stressing that the award
of a contract is measured not solely by the smallest amount of bid for its performance,
but also by the responsibility of the bidder. Consequently, the integrity, honesty, and
trustworthiness of the bidder is to be considered. An awarding official is justified in
considering a bidder not qualified or not responsible if he has previously defrauded the
public in such contracts or if, on the evidence before him, the official bona fide believes
the bidder has committed such fraud, despite the fact that there is yet no judicial
determination to that effect.[39] Otherwise stated, if the awarding body bona
fide believes that a bidder has seriously impaired its track record because of a
particular conduct, it is justified in disqualifying the bidder. This policy is necessary to
protect the interest of the awarding body against irresponsible bidders.
Thus, one who acted pursuant to the sincere belief that another willfully committed
an act prejudicial to the interest of the government cannot be considered to have acted
in bad faith. Bad faith has always been a question of intention. It is that corrupt motive
that operates in the mind. As understood in law, it contemplates a state of mind
affirmatively operating with furtive design or with some motive of self-interest or ill-will
or for ulterior purpose.[40] While confined in the realm of thought, its presence may be
ascertained through the partys actuation or through circumstantial evidence. [41] The
circumstances under which NAPOCOR disapproved PHIBRO's pre-qualification to bid
do not show an intention to cause damage to the latter. The measure it adopted was
one of self-protection. Consequently, we cannot penalize NAPOCOR for the course of
action it took. NAPOCOR cannot be made liable for actual, moral and exemplary
damages.
Corollarily, in awarding to PHIBRO actual damages in the amount of $864,000,
the Regional Trial Court computed what could have been the profits of PHIBRO had
NAPOCOR allowed it to participate in the subsequent public bidding. It ruled that
PHIBRO would have won the tenders for the supply of about 960,000 metric tons out
of at least 1,200,000 metric tons from the public bidding of December 1987 to 1990. We
quote the trial courts ruling, thus:
x x x. PHIBRO was unjustly excluded from participating in at least five (5) tenders
beginning December 1987 to 1990, for the supply and delivery of imported coal with a
total volume of about 1,200,000 metric tons valued at no less than US$32 Million.
(Exhs. AA, AA-1, to AA-2). The price of imported coal for delivery in 1988 was quoted
in June 1988 by bidders at US$ 41.35 to US $ 43.95 per metric ton (Exh. JJ); in
September 1988 at US$41.50 to US$49.50 per metric ton (Exh. J-1); in November
1988 at US$ 39.00 to US$ 48.50 per metric ton (Exh. J-2) and for the 1989 deliveries,
at US$ 44.35 to US$ 47.35 per metric ton (Exh. J-3) and US$38.00 to US$48.25 per
metric ton in September 1990 (Exh. JJ-6 and JJ-7). PHIBRO would have won the
tenders for the supply and delivery of about 960,000 metric tons of coal out of at least
1,200,000 metric tons awarded during said period based on its proven track record of
80%. The Court, therefore finds that as a result of its disqualification, PHIBRO
suffered damages equivalent to its standard 3% margin in 960,000 metric tons
of coal at the most conservative price of US$ 30.000 per metric ton, or the total
of US$ 864,000 which PHIBRO would have earned had it been allowed to
participate in biddings in which it was disqualified and in subsequent tenders
for supply and delivery of imported coal.
We find this to be erroneous.
Basic is the rule that to recover actual damages, the amount of loss must not only
be capable of proof but must actually be proven with reasonable degree of certainty,
premised upon competent proof or best evidence obtainable of the actual amount
thereof.[42] A court cannot merely rely on speculations, conjectures, or guesswork as
to the fact and amount of damages. Thus, while indemnification for damages shall
comprehend not only the value of the loss suffered, but also that of the profits which
the obligee failed to obtain,[43] it is imperative that the basis of the alleged unearned
profits is not too speculative and conjectural as to show the actual damages which may
be suffered on a future period.
In Pantranco North Express, Inc. v. Court of Appeals,[44] this Court denied the
plaintiffs claim for actual damages which was premised on a contract he was about to
negotiate on the ground that there was still the requisite public bidding to be complied
with, thus:
As to the alleged contract he was about to negotiate with Minister Hipolito, there is no
showing that the same has been awarded to him. If Tandoc was about to negotiate a
contract with Minister Hipolito, there was no assurance that the former would get it or
that the latter would award the contract to him since there was the requisite public
bidding. The claimed loss of profit arising out of that alleged contract which was
still to be negotiated is a mere expectancy. Tandocs claim that he could have
earned P2 million in profits is highly speculative and no concrete evidence was
presented to prove the same. The only unearned income to which Tandoc is entitled
to from the evidence presented is that for the one-month period, during which his
business was interrupted, which is P6,125.00, considering that his annual net income
was P73, 500.00.
In Lufthansa German Airlines v. Court of Appeals,[45] this Court likewise disallowed
the trial court's award of actual damages for unrealized profits in the amount of
US$75,000.00 for being highly speculative. It was held that the realization of profits by
respondent x x x was not a certainty, but depended on a number of factors, foremost
of which was his ability to invite investors and to win the bid. This Court went further
saying that actual or compensatory damages cannot be presumed, but must be duly
proved, and proved with reasonable degree of certainty.
And in National Power Corporation v. Court of Appeals,[46] the Court, in denying
the bidders claim for unrealized commissions, ruled that even if NAPOCOR does not
deny its (bidder's) claims for unrealized commissions, and that these claims have been
transmuted into judicial admissions, these admissions cannot prevail over the rules
and regulations governing the bidding for NAPOCOR contracts, which necessarily and
inherently include the reservation by the NAPOCOR of its right to reject any or all bids.
The award of moral damages is likewise improper. To reiterate, NAPOCOR did
not act in bad faith. Moreover, moral damages are not, as a general rule, granted to a
corporation.[47] While it is true that besmirched reputation is included in moral damages,
it cannot cause mental anguish to a corporation, unlike in the case of a natural person,
for a corporation has no reputation in the sense that an individual has, and besides, it
is inherently impossible for a corporation to suffer mental anguish.[48] In LBC Express, But before we dispose of this case, we take this occasion to remind PHIBRO of
Inc. v. Court of Appeals,[49] we ruled: the indispensability of coal to a coal-fired thermal plant. With households and
businesses being entirely dependent on the electricity supplied by NAPOCOR, the
Moral damages are granted in recompense for physical suffering, mental anguish, delivery of coal cannot be venturesome. Indeed, public interest demands that one who
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social offers to deliver coal at an appointed time must give a reasonable assurance that it can
humiliation, and similar injury. A corporation, being an artificial person and having carry through. With the deleterious possible consequences that may result from failure
existence only in legal contemplation, has no feelings, no emotions, no senses; to deliver the needed coal, we believe there is greater strain of commitment in this kind
therefore, it cannot experience physical suffering and mental anguish. Mental suffering of obligation.
can be experienced only by one having a nervous system and it flows from real ills, WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 126204
sorrows, and griefs of life all of which cannot be suffered by respondent bank as an dated August 27, 1996 is hereby MODIFIED. The award, in favor of PHIBRO, of actual,
artificial person. moral and exemplary damages, reimbursement for expenses, cost of litigation and
attorneys fees, and costs of suit, is DELETED.
Neither can we award exemplary damages under Article 2234 of the Civil Code.
Before the court may consider the question of whether or not exemplary damages SO ORDERED.
should be awarded, the plaintiff must show that he is entitled to moral, temperate, or
compensatory damages.
NAPOCOR, in this petition, likewise contests the judgment of the lower courts
awarding PHIBRO the amount of $73,231.91 as reimbursement for expenses, cost of
litigation and attorneys fees.
We agree with NAPOCOR.
This Court has laid down the rule that in the absence of stipulation, a winning
party may be awarded attorney's fees only in case plaintiff's action or defendant's stand
is so untenable as to amount to gross and evident bad faith. [50] This cannot be said of
the case at bar. NAPOCOR is justified in resisting PHIBROs claim for damages. As a
matter of fact, we partially grant the prayer of NAPOCOR as we find that it did not act
in bad faith in disapproving PHIBRO's pre-qualification to bid.
Trial courts must be reminded that attorney's fees may not be awarded to a party
simply because the judgment is favorable to him, for it may amount to imposing a
premium on the right to redress grievances in court. We adopt the same policy with
respect to the expenses of litigation. A winning party may be entitled to expenses of
litigation only where he, by reason of plaintiff's clearly unjustifiable claims or
defendant's unreasonable refusal to his demands, was compelled to incur said
expenditures. Evidently, the facts of this case do not warrant the granting of such
litigation expenses to PHIBRO.
At this point, we believe that, in the interest of fairness, NAPOCOR should give
PHIBRO another opportunity to participate in future public bidding. As earlier
mentioned, the delay on its part was due to a fortuitous event.
12. Frenzel vs Catito
Before us is a petition for review of the Decision[1] of the Court of Appeals in CA-
G.R. CV No. 53485 which affirmed the Decision[2] of the Regional Trial Court of Davao
City, Branch 14, in Civil Case No. 17,817 dismissing the petitioners complaint, and the
resolution of the Court of Appeals denying his motion for reconsideration of the said
decision.
The Antecedents[3]
As gleaned from the evidence of the petitioner, the case at bar stemmed from the
following factual backdrop:
Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He is
an electrical engineer by profession, but worked as a pilot with the New Guinea
Airlines. He arrived in the Philippines in 1974, started engaging in business in the
country two years thereafter, and married Teresita Santos, a Filipino citizen. In 1981,
Alfred and Teresita separated from bed and board without obtaining a divorce.
Sometime in February 1983, Alfred arrived in Sydney, Australia for a vacation. He
went to Kings Cross, a night spot in Sydney, for a massage where he met Ederlina
Catito, a Filipina and a native of Bajada, Davao City. Unknown to Alfred, she resided
for a time in Germany and was married to Klaus Muller, a German national. She left
Germany and tried her luck in Sydney, Australia, where she found employment as
a masseuse in the Kings Cross nightclub. She was fluent in German, and Alfred
enjoyed talking with her. The two saw each other again; this time Ederlina ended up
staying in Alfreds hotel for three days. Alfred gave Ederlina sums of money for her
services.[4]
Alfred was so enamored with Ederlina that he persuaded her to stop working at
Kings Cross, return to the Philippines, and engage in a wholesome business of her
own. He also proposed that they meet in Manila, to which she assented. Alfred gave
her money for her plane fare to the Philippines. Within two weeks of Ederlinas arrival
in Manila, Alfred joined her. Alfred reiterated his proposal for Ederlina to stay in the
Philippines and engage in business, even offering to finance her business
venture. Ederlina was delighted at the idea and proposed to put up a beauty
parlor. Alfred happily agreed.
Alfred told Ederlina that he was married but that he was eager to divorce his wife
in Australia. Alfred proposed marriage to Ederlina, but she replied that they should wait
a little bit longer.
Ederlina found a building at No. 444 M.H. del Pilar corner Arquiza Street, Ermita,
Manila, owned by one Atty. Jose Hidalgo who offered to convey his rights over the
property for P18,000.00. Alfred and Ederlina accepted the offer. Ederlina put up a
beauty parlor on the property under the business name Edorial Beauty Salon, and had
it registered with the Department of Trade and Industry under her name. Alfred paid
Atty. Hidalgo P20,000.00 for his right over the property and gave P300,000.00 to
Ederlina for the purchase of equipment and furnitures for the parlor. As Ederlina was
going to Germany, she executed a special power of attorney on December 13,
1983[5] appointing her brother, Aser Catito, as her attorney-in-fact in managing the
beauty parlor business. She stated in the said deed that she was married to Klaus
Muller. Alfred went back to Papua New Guinea to resume his work as a pilot.
When Alfred returned to the Philippines, he visited Ederlina in her Manila
residence and found it unsuitable for her. He decided to purchase a house and lot
owned byVictoria Binuya Steckel in San Francisco del Monte, Quezon City, covered
by Transfer Certificate of Title No. 218429 for US$20,000.00. Since Alfred knew that
as an alien he was disqualified from owning lands in the Philippines, he agreed that
only Ederlinas name would appear in the deed of sale as the buyer of the property, as
well as in the title covering the same. After all, he was planning to marry Ederlina and
he believed that after their marriage, the two of them would jointly own the property.
On January 23, 1984, a Contract to Sell was entered into between Victoria Binuya
Steckel as the vendor and Ederlina as the sole vendee. Alfred signed therein as a
witness.[6] Victoria received from Alfred, for and in behalf of Ederlina, the amount of
US$10,000.00 as partial payment, for which Victoria issued a receipt. [7] When Victoria
executed the deed of absolute sale over the property on March 6, 1984,[8] she received
from Alfred, for and in behalf of Ederlina, the amount of US$10,000.00 as final and full
payment. Victoria likewise issued a receipt for the said amount.[9] After Victoria had
vacated the property, Ederlina moved into her new house. When she left for Germany
to visit Klaus, she had her father Narciso Catito and her two sisters occupy the
property.
Alfred decided to stay in the Philippines for good and live with Ederlina. He
returned to Australia and sold his fiber glass pleasure boat to John Reid for $7,500.00
on May 4, 1984.[10] He also sold his television and video business in Papua New
Guinea for K135,000.00 to Tekeraoi Pty. Ltd.[11] He had his personal properties shipped
to the Philippines and stored at No. 14 Fernandez Street, San Francisco del Monte,
Quezon City. The proceeds of the sale were deposited in Alfreds account with the
Hong Kong Shanghai Banking Corporation (HSBC), Kowloon Branch under Bank
Account No. 018-2-807016.[12] When Alfred was in Papua New Guinea selling his other
properties, the bank sent telegraphic letters updating him of his account.[13] Several
checks were credited to his HSBC bank account from Papua New Guinea Banking
Corporation, Westpac Bank of Australia and New Zealand Banking Group Limited and
Westpac BankPNG-Limited. Alfred also had a peso savings account with HSBC,
Manila, under Savings Account No. 01-725-183-01.[14]
Once, when Alfred and Ederlina were in Hong Kong, they opened another account
with HSBC, Kowloon, this time in the name of Ederlina, under Savings Account No.
018-0-807950.[15] Alfred transferred his deposits in Savings Account No. 018-2-807016
with the said bank to this new account. Ederlina also opened a savings account with
the Bank of America Kowloon Main Office under Account No. 30069016. [16]
On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letter
dated December 7, 1983 from Klaus Muller who was then residing in Berlin, Germany.
Klaus informed Alfred that he and Ederlina had been married on October 16, 1978 and
had a blissful married life until Alfred intruded therein. Klaus stated that he knew of
Alfred and Ederlinas amorous relationship, and discovered the same sometime in
November 1983 when he arrived in Manila. He also begged Alfred to leave Ederlina
alone and to return her to him, saying that Alfred could not possibly build his future on
his (Klaus) misfortune.[17]
Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He
inquired if there was any truth to Klaus statements and Sally confirmed that Klaus was
married to Ederlina. When Alfred confronted Ederlina, she admitted that she and Klaus
were, indeed, married. But she assured Alfred that she would divorce Klaus. Alfred
was appeased. He agreed to continue the amorous relationship and wait for the
outcome of Ederlinas petition for divorce. After all, he intended to marry her. He
retained the services of Rechtsanwltin Banzhaf with offices in Berlin, as her counsel
who informed her of the progress of the proceedings.[18] Alfred paid for the services of
the lawyer.
In the meantime, Alfred decided to purchase another house and lot, owned by
Rodolfo Morelos covered by TCT No. 92456 located in Pea Street, Bajada, Davao
City.[19]Alfred again agreed to have the deed of sale made out in the name of Ederlina.
On September 7, 1984, Rodolfo Morelos executed a deed of absolute sale over the
said property in favor of Ederlina as the sole vendee for the amount
of P80,000.00.[20] Alfred paid US$12,500.00 for the property.
Alfred purchased another parcel of land from one Atty. Mardoecheo
Camporedondo, located in Moncado, Babak, Davao, covered by TCT No. 35251.
Alfred once more agreed for the name of Ederlina to appear as the sole vendee in the
deed of sale. On December 31, 1984, Atty. Camporedondo executed a deed of sale
over the property for P65,000.00 in favor of Ederlina as the sole vendee.[21] Alfred,
through Ederlina, paid the lot at the cost of P33,682.00 and US$7,000.00, respectively,
for which the vendor signed receipts.[22] On August 14, 1985, TCT No. 47246 was
issued to Ederlina as the sole owner of the said property.[23]
Meanwhile, Ederlina deposited on December 27, 1985, the total amount of
US$250,000 with the HSBC Kowloon under Joint Deposit Account No. 018-462341-
145.[24]
The couple decided to put up a beach resort on a four-hectare land in Camudmud,
Babak, Davao, owned by spouses Enrique and Rosela Serrano. Alfred purchased the
property from the spouses for P90,000.00, and the latter issued a receipt therefor.[25] A
draftsman commissioned by the couple submitted a sketch of the beach
resort.[26] Beach houses were forthwith constructed on a portion of the property and
were eventually rented out by Ederlinas father, Narciso Catito. The rentals were
collected by Narciso, while Ederlina kept the proceeds of the sale of copra from the
coconut trees in the property. By this time, Alfred had already spent P200,000.00 for
the purchase, construction and upkeep of the property.
Ederlina often wrote letters to her family informing them of her life with Alfred. In
a Letter dated January 21, 1985, she wrote about how Alfred had financed the
purchases of some real properties, the establishment of her beauty parlor business,
and her petition to divorce Klaus.[27]
Because Ederlina was preoccupied with her business in Manila, she executed on
July 8, 1985, two special powers of attorney[28] appointing Alfred as attorney-in-fact to
receive in her behalf the title and the deed of sale over the property sold by the spouses
Enrique Serrano.
In the meantime, Ederlinas petition for divorce was denied because Klaus
opposed the same. A second petition filed by her met the same fate. Klaus wanted half
of all the properties owned by Ederlina in the Philippines before he would agree to a
divorce. Worse, Klaus threatened to file a bigamy case against Ederlina.[29]
Alfred proposed the creation of a partnership to Ederlina, or as an alternative, the
establishment of a corporation, with Ederlina owning 30% of the equity thereof. She
initially agreed to put up a corporation and contacted Atty. Armando Dominguez to
prepare the necessary documents. Ederlina changed her mind at the last minute when
she was advised to insist on claiming ownership over the properties acquired by them
during their coverture.
 Alfred and Ederlinas relationship started deteriorating. Ederlina had not been able partner did not contribute anything financially to the acquisition of the said real and
to secure a divorce from Klaus. The latter could charge her for bigamy and could even personal properties. These properties are as follows:
involve Alfred, who himself was still married. To avoid complications, Alfred decided to
live separately from Ederlina and cut off all contacts with her. In one of her letters to
Alfred, Ederlina complained that he had ruined her life. She admitted that the money
I. Real Properties
used for the purchase of the properties in Davao were his. She offered to convey the
properties deeded to her by Atty. Mardoecheo Camporedondo and Rodolfo Morelos,
asking Alfred to prepare her affidavit for the said purpose and send it to her for her a. TCT No. T-92456 located at Bajada, Davao City, consisting of 286 square
signature.[30] The last straw for Alfred came on September 2, 1985, when someone meters, (with residential house) registered in the name of the original title
smashed the front and rear windshields of Alfreds car and damaged the windows. owner Rodolfo M. Morelos but already fully paid by plaintiff. Valued
Alfred thereafter executed an affidavit-complaint charging Ederlina and Sally at P342,000.00;
MacCarron with malicious mischief.[31]
b. TCT No. T-47246 (with residential house) located at Babak, Samal,
On October 15, 1985, Alfred wrote to Ederlinas father, complaining that Ederlina Davao, consisting of 600 square meters, registered in the name of
had taken all his life savings and because of this, he was virtually penniless. He further Ederlina Catito, with the Register of Deeds of Tagum, Davao del Norte
accused the Catito family of acquiring for themselves the properties he had purchased valued at P144,000.00;
with his own money. He demanded the return of all the amounts that Ederlina and her
family had stolen and turn over all the properties acquired by him and Ederlina during c. A parcel of agricultural land located at Camudmud, Babak, Samal, Davao
their coverture.[32] del Norte, consisting of 4.2936 hectares purchased from Enrique Serrano
and Rosela B. Serrano. Already paid in full by plaintiff. Valued at
Shortly thereafter, Alfred filed a Complaint[33] dated October 28, 1985, against P228,608.32;
Ederlina, with the Regional Trial Court of Quezon City, for recovery of real and personal
properties located in Quezon City and Manila. In his complaint, Alfred alleged, inter
alia, that Ederlina, without his knowledge and consent, managed to transfer funds from
their joint account in HSBC Hong Kong, to her own account with the same bank. Using II. Personal Properties:
the said funds, Ederlina was able to purchase the properties subject of the complaints.
He also alleged that the beauty parlor in Ermita was established with his own funds,
and that the Quezon City property was likewise acquired by him with his personal a. Furniture valued at P10,000.00.
funds.[34]
...
Ederlina failed to file her answer and was declared in default. Alfred adduced his
evidence ex-parte.
5. That defendant made no contribution at all to the acquisition of the above-mentioned
In the meantime, on November 7, 1985, Alfred also filed a complaint [35] against properties as all the monies (sic) used in acquiring said properties belonged solely to
Ederlina with the Regional Trial Court, Davao City, for specific performance, plaintiff;[36]
declaration of ownership of real and personal properties, sum of money, and damages.
He alleged, inter alia, in his complaint: Alfred prayed that after hearing, judgment be rendered in his favor:

4. That during the period of their common-law relationship, plaintiff solely through his WHEREFORE, in view of the foregoing premises, it is respectfully prayed that
own efforts and resources acquired in the Philippines real and personal properties judgment be rendered in favor of plaintiff and against defendant:
valued more or less at P724,000.00; The defendants common-law wife or live-in
 a) Ordering the defendant to execute the corresponding deeds of transfer
and/or conveyances in favor of plaintiff over those real and personal
properties enumerated in Paragraph 4 of this complaint;
b) Ordering the defendant to deliver to the plaintiff all the above real and
personal properties or their money value, which are in defendants name
and custody because these were acquired solely with plaintiffs money
and resources during the duration of the common-law relationship
between plaintiff and defendant, the description of which are as follows:
(1) TCT No. T-92456 (with residential house) located at Bajada, Davao City,
consisting of 286 square meters, registered in the name of the original
title owner Rodolfo Morelos but already fully paid by plaintiff. Valued at
P342,000.00;
(2) TCT No. T-47246 (with residential house) located at Babak, Samal,
Davao, consisting of 600 square meters, registered in the name of
Ederlina Catito, with the Register of Deeds of Tagum, Davao del Norte,
valued at P144,000.00;
(3) A parcel of agricultural land located at Camudmud, Babak, Samal, Davao
del Norte, consisting of 4.2936 hectares purchased from Enrique Serrano
and Rosela B. Serrano. Already fully paid by plaintiff. Valued at
P228,608.32;
c) Declaring the plaintiff to be the sole and absolute owner of the above-
mentioned real and personal properties;
d) Awarding moral damages to plaintiff in an amount deemed reasonable by
the trial court;
e) To reimburse plaintiff the sum of P12,000.00 as attorneys fees for having
compelled the plaintiff to litigate;
f) To reimburse plaintiff the sum of P5,000.00 incurred as litigation expenses
also for having compelled the plaintiff to litigate; and
g) To pay the costs of this suit;
Plaintiff prays for other reliefs just and equitable in the premises.[37]
In her answer, Ederlina denied all the material allegations in the complaint,
insisting that she acquired the said properties with her personal funds, and as
such, Alfred had no right to the same. She alleged that the deeds of sale, the receipts,
and certificates of titles of the subject properties were all made out in her name. [38] By
way of special and affirmative defense, she alleged that Alfred had no cause of action
against her. She interposed counterclaims against the petitioner. [39]
In the meantime, the petitioner filed a Complaint dated August 25, 1987, against
the HSBC in the Regional Trial Court of Davao City[40] for recovery of bank deposits
and damages.[41] He prayed that after due proceedings, judgment be rendered in his
favor, thus:
WHEREFORE, plaintiff respectfully prays that the Honorable Court adjudge defendant
bank, upon hearing the evidence that the parties might present, to pay plaintiff:
1. ONE HUNDRED TWENTY SIX THOUSAND TWO HUNDRED AND THIRTY U.S. DOLLARS AND NINETY EIGHT CENTS (US$126,230.98)
plus legal interests, either of Hong Kong or of the Philippines, from 20 December 1984 up to the date of execution or satisfaction of judgment,
as actual damages or in restoration of plaintiffs lost dollar savings;
2.The same amount in (1) above as moral damages;
3. Attorneys fees in the amount equivalent to TWENTY FIVE PER CENT (25%) of (1) and (2) above;
4. Litigation expenses in the amount equivalent to TEN PER CENT (10%) of the amount in (1) above; and
5. For such other reliefs as are just and equitable under the circumstances.[42]
On April 28, 1986, the RTC of Quezon City rendered its decision in Civil Case No. Q-46350, in favor of Alfred, the decretal portion of
which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered ordering the defendant to perform the following:
(1) To execute a document waiving her claim to the house and lot in No. 14 Fernandez St., San Francisco Del Monte, Quezon City in favor of
plaintiff or to return to the plaintiff the acquisition cost of the same in the amount of $20,000.00, or to sell the said property and turn over the
proceeds thereof to the plaintiff;
(2) To deliver to the plaintiff the rights of ownership and management of the beauty parlor located at 444 Arquiza St., Ermita, Manila, including
the equipment and fixtures therein;
(3) To account for the earnings of rental of the house and lot in No. 14 Fernandez St., San Francisco Del Monte, Quezon City, as well as the
earnings in the beauty parlor at 444 Arquiza St., Ermita, Manila and turn over one-half of the net earnings of both properties to the plaintiff;
(4) To surrender or return to the plaintiff the personal properties of the latter left in the house at San Francisco Del Monte, to wit:
(1) Mamya automatic camera
(1) 12 inch Sonny T.V. set, colored with remote control.
(1) Micro oven
(1) Electric fan (tall, adjustable stand)
(1) Office safe with (2) drawers and safe
 (1) Electric Washing Machine
(1) Office desk and chair
On March 8, 2000, the CA rendered a decision affirming in toto the decision of the
(1) Double bed suits RTC. The appellate court ruled that the petitioner knowingly violated the Constitution;
(1) Mirror/dresser
(1) Heavy duty voice/working mechanic hence, was barred from recovering the money used in the purchase of the three
(1) Sony Beta-Movie camera
(1) Suitcase with personal belongings
parcels of land. It held that to allow the petitioner to recover the money used for the
(1) Cardboard box with belongings purchase of the properties would embolden aliens to violate the Constitution, and
(1) Guitar Amplifier
(1) Hanger with mens suit (white). defeat, rather than enhance, the public policy.[46]

To return to the plaintiff, (1) Hi-Fi Stereo equipment left at 444 Arquiza Street, Ermita, Manila, as well as the Fronte Suzuki car. Hence, the petition at bar.
The petitioner assails the decision of the court contending that:
(4) To account for the monies (sic) deposited with the joint account of the plaintiff and defendant (Account No. 018-0-807950); and to restore to
the plaintiff all the monies (sic) spent by the defendant without proper authority;

THE HONORABLE COURT OF APPEALS ERRED IN APPLYING THE RULE OF IN

(5) To pay the amount of P5,000.00 by way of attorneys fees, and the costs of suit.
PARI DELICTO IN THE INSTANT CASE BECAUSE BY THE FACTS AS NARRATED
IN THE DECISION IT IS APPARENT THAT THE PARTIES ARE NOT EQUALLY
SO ORDERED.[43]
GUILTY BUT RATHER IT WAS THE RESPONDENT WHO EMPLOYED FRAUD AS
WHEN SHE DID NOT INFORM PETITIONER THAT SHE WAS ALREADY MARRIED
However, after due proceedings in the RTC of Davao City, in Civil Case No. TO ANOTHER GERMAN NATIONAL AND WITHOUT SUCH FRAUDULENT DESIGN
17,817, the trial court rendered judgment on September 28, 1995 in favor of Ederlina, PETITIONER COULD NOT HAVE PARTED WITH HIS MONEY FOR THE
the dispositive portion of which reads: PURCHASE OF THE PROPERTIES.[47]

WHEREFORE, the Court cannot give due course to the complaint and hereby orders
its dismissal. The counterclaims of the defendant are likewise dismissed.
SO ORDERED.[44]
The trial court ruled that based on documentary evidence, the purchaser of the
three parcels of land subject of the complaint was Ederlina. The court further stated
that even if Alfred was the buyer of the properties, he had no cause of action against
Ederlina for the recovery of the same because as an alien, he was disqualified from
acquiring and owning lands in the Philippines. The sale of the three parcels of land to
the petitioner was null and void ab initio. Applying the pari delicto doctrine, the
petitioner was precluded from recovering the properties from the respondent.
Alfred appealed the decision to the Court of Appeals [45] in which the petitioner
posited the view that although he prayed in his complaint in the court a quo that he be
declared the owner of the three parcels of land, he had no intention of owning the same
permanently. His principal intention therein was to be declared the transient owner for
the purpose of selling the properties at public auction, ultimately enabling him to
recover the money he had spent for the purchase thereof.
and
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
INTENTION OF THE PETITIONER IS NOT TO OWN REAL PROPERTIES IN THE
PHILIPPINES BUT TO SELL THEM AT PUBLIC AUCTION TO BE ABLE TO
RECOVER HIS MONEY USED IN PURCHASING THEM.[48]
Since the assignment of errors are intertwined with each other, the Court shall
resolve the same simultaneously.
The petitioner contends that he purchased the three parcels of land subject of his
complaint because of his desire to marry the respondent, and not to violate the
Philippine Constitution. He was, however, deceived by the respondent when the latter
failed to disclose her previous marriage to Klaus Muller. It cannot, thus, be said that he
and the respondent are equally guilty; as such, the pari delicto doctrine is not applicable
to him. He acted in good faith, on the advice of the respondents uncle, Atty.
Mardoecheo Camporedondo. There is no evidence on record that he was aware of the
constitutional prohibition against aliens acquiring real property in the Philippines when
he purchased the real properties subject of his complaint with his own funds. The
transactions were not illegal per se but merely prohibited, and under Article 1416 of
the New Civil Code, he is entitled to recover the money used for the purchase of the
properties. At any rate, the petitioner avers, he filed his complaint in the court a
quo merely for the purpose of having him declared as the owner of the properties, to
enable him to sell the same at public auction. Applying by analogy Republic Act No.
133[49] as amended by Rep. Act No. 4381 and Rep. Act No. 4882, the proceeds of the
sale would be remitted to him, by way of refund for the money he used to purchase the
said properties. To bar the petitioner from recovering the subject properties, or at the
very least, the money used for the purchase thereof, is to allow the respondent to
enrich herself at the expense of the petitioner in violation of Article 22 of the New Civil
Code.
The petition is bereft of merit.
Section 14, Article XIV of the 1973 Constitution provides, as follows:
Save in cases of hereditary succession, no private land shall be transferred or
conveyed except to individuals, corporations, or associations qualified to acquire or
hold lands in the public domain.[50]
Lands of the public domain, which include private lands, may be transferred or
conveyed only to individuals or entities qualified to acquire or hold private lands or
lands of the public domain. Aliens, whether individuals or corporations, have been
disqualified from acquiring lands of the public domain. Hence, they have also been
disqualified from acquiring private lands.[51]
Even if, as claimed by the petitioner, the sales in question were entered into by
him as the real vendee, the said transactions are in violation of the Constitution; hence,
are null and void ab initio.[52] A contract that violates the Constitution and the law, is
null and void and vests no rights and creates no obligations. It produces no legal effect
at all.[53]The petitioner, being a party to an illegal contract, cannot come into a court of
law and ask to have his illegal objective carried out. One who loses his money or
property by knowingly engaging in a contract or transaction which involves his own
moral turpitude may not maintain an action for his losses. To him who moves in
deliberation and premeditation, the law is unyielding.[54] The law will not aid either party
to an illegal contract or agreement; it leaves the parties where it finds them.[55] Under
Article 1412 of the New Civil Code, the petitioner cannot have the subject properties
deeded to him or allow him to recover the money he had spent for the purchase
thereof.[56] Equity as a rule will follow the law and will not permit that to be
done indirectly which, because of public policy, cannot be done directly.[57] Where the
wrong of one party equals that of the other, the defendant is in the stronger position ...
it signifies that in such a situation, neither a court of equity nor a court of law will
administer a remedy.[58] The rule is expressed in the maxims: EX DOLO MALO NON
ORITUR ACTIO and IN PARI DELICTO POTIOR EST CONDITIO DEFENDENTIS.[59]
The petitioner cannot feign ignorance of the constitutional proscription, nor claim
that he acted in good faith, let alone assert that he is less guilty than the respondent.
The petitioner is charged with knowledge of the constitutional prohibition.[60] As can be
gleaned from the decision of the trial court, the petitioner was fully aware that he was
disqualified from acquiring and owning lands under Philippine law even before he
purchased the properties in question; and, to skirt the constitutional prohibition, the
petitioner had the deed of sale placed under the respondents name as the sole vendee
thereof:
Such being the case, the plaintiff is subject to the constitutional restrictions governing
the acquisition of real properties in the Philippines by aliens.
From the plaintiffs complaint before the Regional Trial Court, National Capital Judicial
Region, Branch 84, Quezon City in Civil Case No. Q-46350 he alleged:
xxx That on account that foreigners are not allowed by the Philippine laws to acquire
real properties in their name as in the case of my vendor Miss Victoria Vinuya (sic)
although married to a foreigner, we agreed and I consented in having the title to subject
property placed in defendants name alone although I paid for the whole price out of my
own exclusive funds. (paragraph IV, Exhibit W.)
and his testimony before this Court which is hereby quoted:
ATTY. ABARQUEZ:
Q. In whose name the said house and lot placed, by the way, where is his house and lot located?
A. In 14 Fernandez St., San Francisco, del Monte, Manila.
Q. In whose name was the house placed?
A. Ederlina Catito because I was informed being not a Filipino, I cannot own the property. (tsn, p. 11, August 27, 1986).
xxx xxx xxx
COURT:
Q. So you understand that you are a foreigner that you cannot buy land in the Philippines?
A. That is correct but as she would eventually be my wife that would be owned by us later on. (tsn, p. 5, September 3, 1986)
xxx xxx xxx
Q. What happened after that?
 A. She said you foreigner you are using Filipinos to buy property.
Q. And what did you answer?
A. I said thank you very much for the property I bought because I gave you a lot of money (tsn., p. 14, ibid).
It is evident that the plaintiff was fully aware that as a non-citizen of the Philippines, he was disqualified from validly
purchasing any land within the country.[61]
The petitioners claim that he acquired the subject properties because of his desire
to marry the respondent, believing that both of them would thereafter jointly own the
said properties, is belied by his own evidence. It is merely an afterthought to salvage
a lost cause. The petitioner admitted on cross-examination that he was all along legally
married to Teresita Santos Frenzel, while he was having an amorous relationship with
the respondent:
ATTY. YAP:
Q When you were asked to identify yourself on direct examination you claimed before this Honorable Court that your status is
that of being married, do you confirm that?
A Yes, sir.
Q To whom are you married?
A To a Filipina, since 1976.
Q Would you tell us who is that particular person you are married since 1976?
A Teresita Santos Frenzel.
Q Where is she now?
A In Australia.
Q Is this not the person of Teresita Frenzel who became an Australian citizen?
A I am not sure, since 1981 we were separated.
Q You were only separated, in fact, but not legally separated?
A Thru my counsel in Australia I filed a separation case.
Q As of the present you are not legally divorce[d]?
A I am still legally married.[62]
The respondent was herself married to Klaus Muller, a German citizen. Thus, the
petitioner and the respondent could not lawfully join in wedlock. The evidence on
record shows that the petitioner in fact knew of the respondents marriage to another
man, but nonetheless purchased the subject properties under the name of the
respondent and paid the purchase prices therefor. Even if it is assumed gratia
arguendi that the respondent and the petitioner were capacitated to marry, the
petitioner is still disqualified to own the properties in tandem with the respondent. [63]
The petitioner cannot find solace in Article 1416 of the New Civil Code which
reads:
Art. 1416. When the agreement is not illegal per se but is merely prohibited, and the
prohibition by the law is designed for the protection of the plaintiff, he may, if public
policy is thereby enhanced, recover what he has paid or delivered.[64]
The provision applies only to those contracts which are merely prohibited, in order
to benefit private interests. It does not apply to contracts void ab initio. The sales of
three parcels of land in favor of the petitioner who is a foreigner is illegal per se. The
transactions are void ab initio because they were entered into in violation of the
Constitution. Thus, to allow the petitioner to recover the properties or the money used
in the purchase of the parcels of land would be subversive of public policy.
Neither may the petitioner find solace in Rep. Act No. 133, as amended by Rep.
Act No. 4882, which reads:
SEC. 1. Any provision of law to the contrary notwithstanding, private real property may
be mortgaged in favor of any individual, corporation, or association, but the mortgagee
or his successor-in- interest, if disqualified to acquire or hold lands of the public domain
in the Philippines, shall not take possession of the mortgaged property during the
existence of the mortgage and shall not take possession of mortgaged property except
after default and for the sole purpose of foreclosure, receivership, enforcement or other
proceedings and in no case for a period of more than five years from actual possession
and shall not bid or take part in any sale of such real property in case of
foreclosure: Provided, That said mortgagee or successor-in-interest may take
possession of said property after default in accordance with the prescribed judicial
procedures for foreclosure and receivership and in no case exceeding five years from
actual possession.[65]
From the evidence on record, the three parcels of land subject of the complaint
were not mortgaged to the petitioner by the owners thereof but were sold to the
respondent as the vendee, albeit with the use of the petitioners personal funds.
Futile, too, is petitioners reliance on Article 22 of the New Civil Code which reads:
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.[66]
 The provision is expressed in the maxim: MEMO CUM ALTERIUS DETER
DETREMENTO PROTEST (No person should unjustly enrich himself at the expense
of another). An action for recovery of what has been paid without just cause has been
designated as an accion in rem verso.[67] This provision does not apply if, as in this
case, the action is proscribed by the Constitution or by the application of the pari
delicto doctrine.[68] It may be unfair and unjust to bar the petitioner from filing an accion
in rem verso over the subject properties, or from recovering the money he paid for the
said properties, but, as Lord Mansfield stated in the early case of Holman vs.
Johnson:[69] The objection that a contract is immoral or illegal as between the plaintiff
and the defendant, sounds at all times very ill in the mouth of the defendant. It is not
for his sake, however, that the objection is ever allowed; but it is founded in general
principles of policy, which the defendant has the advantage of, contrary to the real
justice, as between him and the plaintiff.
IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The decision
of the Court of Appeals is AFFIRMED in toto.
Costs against the petitioner.
SO ORDERED.
13. Reyes vs Lim
On 23 March 1995, petitioner David Reyes (Reyes) filed before the trial court a
complaint for annulment of contract and damages against respondents Jose Lim (Lim),
Chuy Cheng Keng (Keng) and Harrison Lumber, Inc. (Harrison Lumber).
The complaint[3] alleged that on 7 November 1994, Reyes as seller and Lim as
buyer entered into a contract to sell (Contract to Sell) a parcel of land (Property) located
along F.B. Harrison Street, Pasay City. Harrison Lumber occupied the Property as
lessee with a monthly rental of P35,000. The Contract to Sell provided for the following
terms and conditions:
1. The total consideration for the purchase of the aforedescribed parcel of land together
with the perimeter walls found therein is TWENTY EIGHT MILLION (P28,000,000.00)
PESOS payable as follows:
(a) TEN MILLION (P10,000,000.00) PESOS upon signing of this Contract to Sell;
(b) The balance of EIGHTEEN MILLION (P18,000,000.00) PESOS shall be paid on or
before March 8, 1995 at 9:30 A.M. at a bank to be designated by the Buyer but upon
the complete vacation of all the tenants or occupants of the property and execution of
the Deed of Absolute Sale. However, if the tenants or occupants have vacated the
premises earlier than March 8, 1995, the VENDOR shall give the VENDEE at least one
week advance notice for the payment of the balance and execution of the Deed of
Absolute Sale.
2. That in the event, the tenants or occupants of the premises subject of this sale shall
not vacate the premises on March 8, 1995 as stated above, the VENDEE shall withhold
the payment of the balance of P18,000,000.00 and the VENDOR agrees to pay a
penalty of Four percent (4%) per month to the herein VENDEE based on the amount
of the downpayment of TEN MILLION (P10,000,000.00) PESOS until the complete
vacation of the premises by the tenants therein.[4]
The complaint claimed that Reyes had informed Harrison Lumber to vacate the
Property before the end of January 1995. Reyes also informed Keng [5] and Harrison
Lumber that if they failed to vacate by 8 March 1995, he would hold them liable for the
penalty of P400,000 a month as provided in the Contract to Sell. The complaint further
alleged that Lim connived with Harrison Lumber not to vacate the Property until the
P400,000 monthly penalty would have accumulated and equaled the unpaid purchase
price of P18,000,000.
On 3 May 1995, Keng and Harrison Lumber filed their Answer [6] denying they
connived with Lim to defraud Reyes. Keng and Harrison Lumber alleged that Reyes
approved their request for an extension of time to vacate the Property due to their
difficulty in finding a new location for their business. Harrison Lumber claimed that as
of March 1995, it had already started transferring some of its merchandise to its new
business location in Malabon.[7]
On 31 May 1995, Lim filed his Answer[8] stating that he was ready and willing to
pay the balance of the purchase price on or before 8 March 1995. Lim requested a
meeting with Reyes through the latters daughter on the signing of the Deed of Absolute
Sale and the payment of the balance but Reyes kept postponing their meeting. On 9
March 1995, Reyes offered to return the P10 million down payment to Lim because
Reyes was having problems in removing the lessee from the Property. Lim rejected
Reyes offer and proceeded to verify the status of Reyes title to the Property. Lim
learned that Reyes had already sold the Property to Line One Foods Corporation (Line
One) on 1 March 1995 for P16,782,840. After the registration of the Deed of Absolute
Sale, the Register of Deeds issued to Line One TCT No. 134767 covering the Property.
Lim denied conniving with Keng and Harrison Lumber to defraud Reyes.
On 2 November 1995, Reyes filed a Motion for Leave to File Amended Complaint
due to supervening facts. These included the filing by Lim of a complaint for estafa
against Reyes as well as an action for specific performance and nullification of sale
and title plus damages before another trial court.[9] The trial court granted the motion
in an Order dated 23 November 1995.
In his Amended Answer dated 18 January 1996,[10] Lim prayed for the cancellation
of the Contract to Sell and for the issuance of a writ of preliminary attachment against
Reyes. The trial court denied the prayer for a writ of preliminary attachment in an Order
dated 7 October 1996.
On 6 March 1997, Lim requested in open court that Reyes be ordered to deposit
the P10 million down payment with the cashier of the Regional Trial Court of Paraaque.
The trial court granted this motion.
On 25 March 1997, Reyes filed a Motion to Set Aside the Order dated 6 March
1997 on the ground the Order practically granted the reliefs Lim prayed for in his
Amended Answer.[11] The trial court denied Reyes motion in an Order [12] dated 3 July
1997. Citing Article 1385 of the Civil Code, the trial court ruled that an action for
rescission could prosper only if the party demanding rescission can return whatever
he may be obliged to restore should the court grant the rescission.
 The trial court denied Reyes Motion for Reconsideration in its Order [13] dated 3
October 1997. In the same order, the trial court directed Reyes to deposit the P10
million down payment with the Clerk of Court on or before 30 October 1997.
On 8 December 1997, Reyes[14] filed a Petition for Certiorari[15] with the Court of
Appeals. Reyes prayed that the Orders of the trial court dated 6 March 1997, 3 July
1997 and 3 October 1997 be set aside for having been issued with grave abuse of
discretion amounting to lack of jurisdiction. On 12 May 1998, the Court of Appeals
dismissed the petition for lack of merit.
Hence, this petition for review.
The Ruling of the Court of Appeals
The Court of Appeals ruled the trial court could validly issue the assailed orders
in the exercise of its equity jurisdiction. The court may grant equitable reliefs to breathe
life and force to substantive law such as Article 1385 [16] of the Civil Code since the
provisional remedies under the Rules of Court do not apply to this case.
The Court of Appeals held the assailed orders merely directed Reyes to deposit
the P10 million to the custody of the trial court to protect the interest of Lim who paid
the amount to Reyes as down payment. This did not mean the money would be
returned automatically to Lim.
The Issues
Reyes raises the following issues:
1. Whether the Court of Appeals erred in holding the trial court could issue
the questioned Orders dated March 6, 1997, July 3, 1997 and October
3, 1997, requiring petitioner David Reyes to deposit the amount of Ten
Million Pesos (P10,000,000.00) during the pendency of the action,
when deposit is not among the provisional remedies enumerated in
Rule 57 to 61 of the 1997 Rules on Civil Procedure.
2. Whether the Court of Appeals erred in finding the trial court could issue
the questioned Orders on grounds of equity when there is an
applicable law on the matter, that is, Rules 57 to 61 of the 1997 Rules
on Civil Procedure.[17]
The Courts Ruling
Reyes contentions are without merit.
Reyes points out that deposit is not among the provisional remedies enumerated
in the 1997 Rules of Civil Procedure. Reyes stresses the enumeration in the Rules is
exclusive. Not one of the provisional remedies in Rules 57 to 61[18] applies to this case.
Reyes argues that a court cannot apply equity and require deposit if the law already
prescribes the specific provisional remedies which do not include deposit. Reyes
invokes the principle that equity is applied only in the absence of, and never against,
statutory law or x x x judicial rules of procedure.[19] Reyes adds the fact that the
provisional remedies do not include deposit is a matter of dura lex sed lex.[20]
The instant case, however, is precisely one where there is a hiatus in the law and
in the Rules of Court. If left alone, the hiatus will result in unjust enrichment to Reyes
at the expense of Lim. The hiatus may also imperil restitution, which is a precondition
to the rescission of the Contract to Sell that Reyes himself seeks. This is not a case of
equity overruling a positive provision of law or judicial rule for there is none that governs
this particular case. This is a case of silence or insufficiency of the law and the Rules
of Court. In this case, Article 9 of the Civil Code expressly mandates the courts to make
a ruling despite the silence, obscurity or insufficiency of the laws.[21] This calls for the
application of equity,[22] which fills the open spaces in the law.[23]
Thus, the trial court in the exercise of its equity jurisdiction may validly order the
deposit of the P10 million down payment in court. The purpose of the exercise of equity
jurisdiction in this case is to prevent unjust enrichment and to ensure restitution. Equity
jurisdiction aims to do complete justice in cases where a court of law is unable to adapt
its judgments to the special circumstances of a case because of the inflexibility of its
statutory or legal jurisdiction.[24] Equity is the principle by which substantial justice may
be attained in cases where the prescribed or customary forms of ordinary law are
inadequate.[25]
Reyes is seeking rescission of the Contract to Sell. In his amended answer, Lim
is also seeking cancellation of the Contract to Sell. The trial court then ordered Reyes
to deposit in court the P10 million down payment that Lim made under the Contract to
Sell. Reyes admits receipt of the P10 million down payment but opposes the order to
deposit the amount in court. Reyes contends that prior to a judgment annulling the
Contract to Sell, he has the right to use, possess and enjoy[26] the P10 million as its
owner[27] unless the court orders its preliminary attachment.[28]
To subscribe to Reyes contention will unjustly enrich Reyes at the expense of
Lim. Reyes sold to Line One the Property even before the balance of P18 million under
the Contract to Sell with Lim became due on 8 March 1995. On 1 March 1995, Reyes
signed a Deed of Absolute Sale[29] in favor of Line One. On 3 March 1995, the Register
of Deeds issued TCT No. 134767[30] in the name of Line One.[31] Reyes cannot claim
ownership of the P10 million down payment because Reyes had already sold to
another buyer the Property for which Lim made the down payment. In fact, in his
Comment[32] dated 20 March 1996, Reyes reiterated his offer to return to Lim the P10
million down payment.
On balance, it is unreasonable and unjust for Reyes to object to the deposit of the
P10 million down payment. The application of equity always involves a balancing of
the equities in a particular case, a matter addressed to the sound discretion of the
court. Here, we find the equities weigh heavily in favor of Lim, who paid the P10 million
down payment in good faith only to discover later that Reyes had subsequently sold
the Property to another buyer.
In Eternal Gardens Memorial Parks Corp. v. IAC,[33] this Court held the plaintiff
could not continue to benefit from the property or funds in litigation during the pendency
of the suit at the expense of whomever the court might ultimately adjudge as the lawful
owner. The Court declared:
In the case at bar, a careful analysis of the records will show that petitioner admitted
among others in its complaint in Interpleader that it is still obligated to pay certain
amounts to private respondent; that it claims no interest in such amounts due and is
willing to pay whoever is declared entitled to said amounts. x x x
Under the circumstances, there appears to be no plausible reason for petitioners
objections to the deposit of the amounts in litigation after having asked for the
assistance of the lower court by filing a complaint for interpleader where the deposit of
aforesaid amounts is not only required by the nature of the action but is a contractual
obligation of the petitioner under the Land Development Program (Rollo, p. 252).
There is also no plausible or justifiable reason for Reyes to object to the deposit
of the P10 million down payment in court. The Contract to Sell can no longer be
enforced because Reyes himself subsequently sold the Property to Line One. Both
Reyes and Lim are now seeking rescission of the Contract to Sell. Under Article 1385
of the Civil Code, rescission creates the obligation to return the things that are the
object of the contract. Rescission is possible only when the person demanding
rescission can return whatever he may be obliged to restore. A court of equity will not
rescind a contract unless there is restitution, that is, the parties are restored to
the status quo ante.[34]
Thus, since Reyes is demanding to rescind the Contract to Sell, he cannot refuse
to deposit the P10 million down payment in court.[35] Such deposit will ensure restitution
of the P10 million to its rightful owner. Lim, on the other hand, has nothing to refund,
as he has not received anything under the Contract to Sell.[36]
In Government of the Philippine Islands v. Wagner and Cleland
Wagner,[37] the Court ruled the refund of amounts received under a contract is a
precondition to the rescission of the contract. The Court declared:
The Government, having asked for rescission, must restore to the defendants
whatever it has received under the contract. It will only be just if, as a condition to
rescission, the Government be required to refund to the defendants an amount equal
to the purchase price, plus the sums expended by them in improving the land. (Civil
Code, art. 1295.)
The principle that no person may unjustly enrich himself at the expense of another
is embodied in Article 22[38] of the Civil Code. This principle applies not only to
substantive rights but also to procedural remedies. One condition for invoking this
principle is that the aggrieved party has no other action based on contract, quasi-
contract, crime, quasi-delict or any other provision of law.[39] Courts can extend this
condition to the hiatus in the Rules of Court where the aggrieved party, during the
pendency of the case, has no other recourse based on the provisional remedies of the
Rules of Court.
Thus, a court may not permit a seller to retain, pendente lite, money paid by a
buyer if the seller himself seeks rescission of the sale because he has subsequently
sold the same property to another buyer.[40] By seeking rescission, a seller necessarily
offers to return what he has received from the buyer. Such a seller may not take back
his offer if the court deems it equitable, to prevent unjust enrichment and ensure
restitution, to put the money in judicial deposit.
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. [41] In this case, it was
just, equitable and proper for the trial court to order the deposit of the P10 million down
payment to prevent unjust enrichment by Reyes at the expense of Lim. [42]
WHEREFORE, we AFFIRM the Decision of the Court of Appeals.
SO ORDERED.
14. NDC vs Madrigal
Before us is a petition for review on certiorari[1] assailing the Decision of the Court
of Appeals dated May 21, 2001 in CA-G.R. CV No. 66026, affirming with modification
the Decision dated August 6, 1999 of the Regional Trial Court, Branch 62, Makati City,
in Civil Case No. 96-558 for sum of money and damages.
The factual antecedents are:
The National Development Company, petitioner, is a government-owned and
controlled corporation created and existing under Commonwealth Act No. 182, as
amended by Presidential Decree No. 1648. The National Shipping Corporation of the
Philippines (NSCP) is a wholly-owned subsidiary of petitioner offering shipping
services for containerized cargo between the Far East ports and the U.S. West Coast. [2]
On March 1, 1993, petitioners Board of Directors approved the privatization plan
of the NSCP.[3] In May 1993, the Board offered for sale to the public its one hundred
percent (100%) stock ownership in NSCP worth P150,000.00, as well as its three (3)
ocean-going vessels (M/V National Honor, M/V National Pride and M/V National
Dignity).[4]
Consequently, petitioner released to the public an Information
Package[5] containing NSCPs background, assets, operational and financial
status. Attached thereto is NSCPs Financial Statements covering the period from
December 1990 up to 1992.
The Information Package likewise contained the Negotiated Sale
Guidelines which embodied the terms and conditions of the proposed
sale. Attached thereto is a Proposal Letter Form[6] wherein bidders were advised to
submit their bids to be specified in the same form. Petitioners desired price for the
NSCP shares of stock and the vessels was Twenty-Six Million Seven Hundred Fifty
Thousand US Dollars ($26,750,000.00).[7]
During the public bidding on May 7, 1993, the lone bidder was herein respondent,
Madrigal Wan Hai Lines Corporation, a domestic private corporation duly organized
and existing under the Philippine laws with principal office in Manila. Mr. Willie J. Uy,
respondents Consultant, submitted a bid of $15 million through the Proposal Letter
Form.[8]
The respondents bid was rejected by petitioner and the Commission on Audit.
But since there was no other bidder, petitioner entered into a negotiated sale with
respondent.[9] After several negotiations, respondent increased its offer to $18.5 million
which was accepted by petitioner. The negotiated sale was then approved by
petitioners Board of Directors on August 26, 1993, the President of the Philippines on
September 28, 1993, the Committee on Privatization on October 7, 1993, and the
Commission on Audit on February 2, 1994.[10]
Accordingly, on February 11, 1994, petitioner issued a Notice of Award to
respondent of the sale of the NSCP shares and vessels for $18.5 million.[11] On March
14, 1994, petitioner and respondent executed the corresponding Contract of
Sale,[12] and the latter acquired NSCP, its assets, personnel, records and its three
(3) vessels.[13]
On September 22, 1994, respondent was surprised to receive from the US
Department of Treasury, Internal Revenue Service (US IRS), a Notice of Final
Assessment against NSCP for deficiency taxes on gross transportation income
derived from US sources for the years ending 1990, 1991 and 1992.[14] The tax
assessment was based on Section 887 of the US Internal Revenue Code imposing a
4% tax on gross transportation income of any foreign corporation derived from US
sources.[15]
Anxious that the delay in the payment of the deficiency taxes may hamper its
shipping operations overseas, respondent, on October 14, 1994, assumed and paid
petitioners tax liabilities, including the tax due for the year 1993, in the total
amount of $671,653.00. These taxes were incurred prior to respondents take-
over of NSCPs management.[16] Respondent likewise paid the additional amount
of $16,533.10 as penalty for late payment.[17]
Eventually, respondent demanded from petitioner reimbursement for the amounts
it paid to the US IRS. But petitioner refused despite repeated demands. Hence, on
March 20, 1996, respondent filed with the Regional Trial Court (RTC), Branch 62,
Makati City a complaint[18] against petitioner for reimbursement and damages,
docketed as Civil Case No. 96-558.
On August 6, 1999, the RTC rendered a Decision[19] in favor of respondent and
against petitioner. The trial court found, among others, that even before the sale,
petitioner knew that NSCP had tax liabilities with the US IRS, yet it did not inform
respondent about it. The dispositive portion of the RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
(1) defendant (now petitioner) to pay plaintiff (now respondent), to wit:
 a. US $671,653, US $14,415.87, and US $2,117.23 or their peso
equivalent at the time of payment;
b. 6% interest of the above-mentioned amounts per annum from the
time of the filing of the complaint until the same shall have
been fully paid;
c. P100,000.00 as exemplary damages;
d. P100,000.00 as attorneys fees;
(2) The Counterclaims of the defendant dated August 20, 1996 is DISMISSED. [20]
Upon appeal, the Court of Appeals rendered a Decision[21] on May 21, 2001
affirming the trial courts judgment with modification, thus:
WHEREFORE, upon the premises, the Decision appealed from is AFFIRMED with
the MODIFICATION that the award of exemplary damages is DELETED and the award
of attorneys fees is REDUCED to P20,000.00.
SO ORDERED.[22]
The Court of Appeals held:
We concur with the trial court in ordering defendant-appellant (now petitioner) to
reimburse plaintiff-appellee (now respondent) the deficiency taxes it paid to the US
IRS, and quote with favor its well-written ratiocination as follows:
In its effort to extricate itself from liability, defendant further argues that the sale with
the plaintiff was on CASH, AS-WHERE-IS basis and that plaintiff, as an offeror, was
responsible for informing itself with respect to any and all conditions regarding the
NSCP shares and vessels which may in any manner affect the offer price or the nature
of offerors proposal (Exhs. 8, 8-A to A-B).
The above-mentioned contracts form part of the NSCPs Negotiated Sale Guidelines
dated March 1993 prepared by NSCP and required by NDC (now petitioner) to be
attached with the Proposal Letter Form, which was also prepared by NSCP, and
submitted to NDC by bidders. These contracts are ready-made form of contracts, the
preparation of which was left entirely to the NSCP.Their nature is that of a contract of
adhesion. A contract of adhesion may be struck down as void and unenforceable, for
being subversive of public policy, when the weaker party is imposed upon in dealing
with the dominant bargaining party and is reduced to the alternative of taking it or
leaving it, completely deprived of the opportunity to bargain on equal footing (Saludo,
Jr. vs. Court of Appeals, 207 SCRA 498 [1992]). In the case at bar, the acceptance of
the Negotiated Sale Guidelines and submission thereof together with the Proposal
Letter Form by a prospective buyer is a required formality of the bidding. Under the
circumstance, the plaintiff, in taking such contracts, may not be deemed to have been
given the opportunity to bargain on equal footing.[23]
Petitioner now comes to us via the instant petition, ascribing to the Court of
Appeals the following error:
THE COURT OF APPEALS ERRED IN CONCURRING WITH THE TRIAL COURT IN
ORDERING HEREIN PETITIONER TO REIMBURSE RESPONDENT THE
DEFICIENCY TAXES IT PAID TO THE US IRS.[24]
Petitioner contends that contrary to the findings of both lower courts, the
Negotiated Sale Guidelines and the Proposal Letter Form are mere invitations to
bid. As such, they are not contracts and should be treated as mere offer or proposal to
prospective buyers of the NSCP shares and marine vessels.[25]
Petitioner further stresses that the sale was on an AS IS, WHERE IS basis.[26] By
accepting the terms and conditions of the sale, respondent, in effect, accepted the risk
of an AS IS, WHERE IS arrangement wherein the latter is charged with caution under
the principle of caveat emptor.[27] Pursuant to the Negotiated Sale Guidelines and the
Proposal Letter Form, respondent should have apprised itself of the financial status
and liabilities of NSCP and its marine vessels. Therefore, for its predicament,
respondent should not fault petitioner.[28]
For its part, respondent maintains that the Court of Appeals did not commit any
error in its challenged Decision. The Negotiated Sale Guidelines and the Proposal
Letter Form constitute a contract of adhesion because the buyer was required to submit
its bid through a pro-forma proposal letter.[29] The offer to bidders was on a take it, or
leave it basis, leaving no room for argument or negotiation, except as to the
price.[30] Being a contract of adhesion, it should be strictly construed against the seller,
herein petitioner.[31]
Respondent also contends that under Articles 19,[32] 20[33] and 21[34] of the Civil
Code, petitioner had then the legal duty to disclose its tax liabilities. Records show that
respondent repeatedly inquired from petitioner about such matter. [35] Instead of telling
the truth, petitioner made several assurances that the NSCP was a clean, lien-free
going concern and profitable entity.[36] In fact, under Section 7.01 of the Negotiated
Sale Guidelines, petitioner made a warranty against any lien or encumbrance.[37]
In this petition, the issues for our resolution are:
(1) Whether the Negotiated Sale Guidelines and the Proposal Letter Form constitute a
contract of adhesion; and
(2) Whether petitioner is legally bound to reimburse respondent for the amounts it paid
corresponding to the formers tax liabilities to the US IRS.
On the first issue, we agree with both lower courts that the Negotiated Sale
Guidelines and the Proposal Letter Form constitute a contract of adhesion.
A contract of adhesion is one in which one of the parties imposes a ready-made
form of contract, which the other party may accept or reject, but which the latter cannot
modify. In other words, in such contract, the terms therein are fixed by one party, and
the other party has merely to take it, or leave it.[38] Thus, it can be struck down as void
and unenforceable for being subversive of public policy, especially when the will of the
dominant party is imposed upon the weaker party and the latter is denied the
opportunity to bargain on equal footing.[39]
It must be stressed, however, that contracts of adhesion are not strictly against
the law. In Ong Yiu vs. Court of Appeals[40] and Pan American World Airways, Inc. vs.
Intermediate Appellate Court,[41] we held that contracts of adhesion wherein one party
imposes a ready-made form of contract on the other are not entirely prohibited. The
other party is free to reject it entirely; if he adheres, he gives his consent.
Nevertheless, the inequality of bargaining positions and the resulting impairment
of the other partys freedom to contract necessarily call upon us to exercise our
mandate as a court of justice and equity. Indeed, we have ruled that contracts of such
nature obviously call for greater strictness and vigilance on the part of the courts of
justice with a view to protecting the weaker party from abuses and imposition and
prevent their becoming traps for the unwary.[42]
In the case at bar, the Negotiated Sale Guidelines and Proposal Letter Form fit
the characteristics of a contract of adhesion. On their very face, these documents show
that petitioner NDC had control over the terms and conditions of the sale. The
Negotiated Sale Guidelines provides:
4.0 PREPARATION OF OFFERS
4.01 Offerors shall use the Proposal Letter Form for Sale of NSCP
and Vessels provided herein.
4.02 All offers should be accompanied by: x x x (b) the Negotiated
Sale Guidelines duly signed by the offeror or authorized
representative in every page thereof x x x.
xxxxxxxxx
14.0 OTHER PROVISIONS
14.01 NDC and APT reserve the right in their discretion to reject any
and all offers, to waive any formality therein and of these
guidelines, and to consider only such offer as may be
advantageous to the National Government.
NDC and APT may, at their discretion require additional
information and/or documents from any offeror.
14.02 NDC and APT reserve the right to amend the Guidelines prior
to the submission of offers x x x.
xxxxxxxxx
14.05 Violation of any of these terms and conditions shall cause
the cancellation of the award and the automatic forfeiture
of the deposit.[43] (Underscoring ours)
The Proposal Letter Form provides that the bidder is bound by the Negotiated
Sale Guidelines, thus:
It is understood that:
1. We accept and undertake without any reservations whatsoever that, if this
offer to purchase the vessels and NSCP shares is accepted, we shall be
subjected to all the terms and conditions issued by the NDC and APT including
those outlined in the March, 1993 Information Memorandum and the Negotiated
Sale Guidelines for the sale of NSCP and the three vessels.
xxxxxxxxx
5. We represent and warrant that: (i) we have examined and understood the
Information Package, (ii) we accept the conditions of the March, 1993 Negotiated
Sale Guidelines, including the right of NDC and APT to reject any and all offers
without thereby creating any liability in our favor x x x.[44] (Underscoring ours)
Clearly, respondent had hardly any say in the terms and conditions expressed in
the Negotiated Sale Guidelines. Other than the price of the offer, respondent was left
with little or no alternative at all but to comply with its terms. Thus, the trial court
correctly found:
The above-mentioned contracts form part of NSCPs Negotiated Sale Guidelines dated
March 1993 prepared by NSCP and required by NDC to be attached with the Proposal
Letter Form, which was also prepared by NSCP, and submitted to NDC by
bidders. These contracts are ready-made form of contracts, the preparation of
which was left entirely to the NSCP. Their nature is that of a contract of
adhesion. x x x. In the case at bar, the acceptance of the Negotiated Sale Guidelines
and submission thereof together with the Proposal Letter Form by a prospective buyer
is a required formality of the bidding. Under this circumstance, the plaintiff, in taking
such contracts, may not be deemed to have been given the opportunity to bargain on
equal footing.[45](Underscoring ours)
Being a contract of adhesion, we reiterate that it is our duty to apply a strict
construction of its terms upon the party who made the same [46] and to construe any
ambiguity in such contract against its author.[47] It is public policy to protect a party
(herein respondent) against oppressive and onerous conditions.[48]
We are not impressed by petitioners argument that the Negotiated Sale
Guidelines was a mere invitation to bid.[49] On the contrary, the Contract of Sale itself
provides that it is an integral part or applicable to this Contract, thus:
8. All of the terms and conditions of (a) the March 1993 NDC Information
Memorandum and Negotiated Sale Guidelines, including the amendments thereto,
more particularly those contained in NDCs letter to A. P. Madrigal Steamship Co. Inc.
dated May 4, 1993, and (b) the Notice of Award dated February 11, 1993 are hereby
incorporated herein by reference and shall insofar as they are not inconsistent
with the terms and conditions hereof, be applicable to this
Contract.[50] (Underscoring ours)
We now determine whether petitioner is obliged under the law and the contract to
reimburse respondent for the amounts it paid corresponding to the formers US tax
liabilities. We quote with approval the trial courts findings affirmed by the Court of
Appeals, thus:
From the foregoing facts, there is no doubt that during the negotiation for the sale of
defendants (now petitioners) shares of stocks and three (3) ocean-going vessels,
NSCP was already aware of an impending assessment by the US government on
NSCPs gross transportation income derived from US sources. The exchanges of
communications (Exhibits D, E, F, G, H and I) between NSCP and US IRS are
glaring proof of NSCPs prior knowledge of a possible assessment or additional
taxes. Moreover, in the Partial Printout of NSCPs Unaudited Financial
Statements for the Year ending December 31, 1993 (Exhibit V), NSCP made
provisions for US taxes as follows: for the year ending 1993, US $3,919,018.81 (Exh.
V-2), and for the years ending 1990-1992, US $11,736,192.64 (Exh. V-3). Exhibit V is
a clear indication that, indeed, NSCP had prior knowledge of such deficiency taxes,
and in fact, recognized the same even though there was no final assessment yet from
the US IRS.[51]
xxxxxxxxx
The Partial Printout of NSCPs Unaudited Financial Statements for the Year ending
December 1993 (Exhs. 2, 2-A to 2-B or Exhs. V, V-2 to V-3), true to the word of the
defendant (now petitioner), carries provisions for US taxes. The problem, however,
with this evidence is there is no showing that this had been furnished the
plaintiff (now respondent). On the contrary, plaintiff vehemently asserts having been
denied by defendant access to the latters accounting books and financial
statements. Basic in the law of evidence that he who asserts the affirmative of the
allegation has the burden of proving it (Geraldez vs. CA, 230 SCRA 320). The
defendant has failed to prove that the pertinent statement made in this document
or the document itself had been disclosed to the plaintiff.
The Unaudited Financial Statements of NSCP (Exhs. 3, 3-A and 3-B), which allegedly
includes the subject US taxes among NSCPs Trade Payable and Accrued Expenses
and Dividends, does not clearly indicate the said taxes. The Trade Payable and
Accrued Expenses and Dividends as including the said taxes is vague or
unequivocal on the matter. By mere reading of it, one would not have the
slightest inkling or suspicion that such taxes exist as among NSCPs
liabilities.[52] (Underscoring ours)
There is no dispute that petitioner was aware of its US tax liabilities considering
its numerous communications with the agents of the United States Internal Revenue
Service, just prior to the sale of NSCP and the marine vessels to respondent. [53] The
NSCP itself made an ambiguous contingent provision in its Unaudited Financial
Statements for the year ending December 1993, thereby indicating its awareness of a
possible US tax assessment.[54] It bears stressing that petitioner did not convey such
information to respondent despite its inquiries.[55] Obviously, such concealment
constitutes bad faith on its part. Bad faith implies a conscious and intentional design to
do a wrongful act for a dishonest purpose or moral obliquity; it x x x contemplates a
state of mind affirmatively operating with furtive design or ill will.[56]
We see no reason to disturb the factual findings of both the trial court and Court
of Appeals which petitioner does not dispute. Absent any showing that such findings
were reached arbitrarily or without sufficient basis, the same must be respected and
binding upon us.[57]
That petitioner has the obligation to reimburse respondent is likewise clear under
the Negotiated Sale Guidelines, which provides:
7.0 OFFERORS RESPONSIBILITY
7.01 x x x. Seller gives no warranty regarding the sale of the shares
and assets except for a warranty on ownership and against any
liens or encumbrances, and the offeror shall not be relieved of his
obligation to make the aforesaid examinations and
verifications.[58] (Underscoring ours)
The terms of the parties contract are clear and unequivocal. The seller (petitioner
NDC) gives a warranty as to the ownership of the object of sale and against any lien
and encumbrance. A tax liability of $688,186.10 was then a potential lien upon NSCPs
marine vessels. Being in bad faith for having failed to inform the buyer, herein
respondent, of such potential lien, petitioner breached its warranty and should,
therefore, be held liable for the resulting damage, i.e., reimbursement for the amounts
paid by petitioner to the US IRS.
The Negotiated Sale Guidelines further provides:
2.0 TERMS OF SALE
2.01 The sale of the NSCP and the three vessels shall be strictly on
CASH, AS IS-WHERE IS basis.[59] (Underscoring ours)
In Hian vs. Court of Tax Appeals,[60] we had the occasion to construe the phrase as is,
where is basis, thus:
We cannot accept the contention in the Governments Memorandum of March 31, 1976
that Condition No. 5 in the Notice of Sale to the effect that The above-mentioned
articles (the tobacco) are offered for sale AS IS and the Bureau of Customs gives no
warranty as to their condition relieves the Bureau of Customs of liability for the storage
fees in dispute. As we understand said Condition No. 5, it refers to the physical
condition of the tobacco and not to the legal situation in which it was at the time
of the sale, as could be implied from the right of inspection to prospective bidders
under Condition No. 1. x x x. (Underscoring ours)
The phrase as is, where is basis pertains solely to the physical condition of the
thing sold, not to its legal situation. In the case at bar, the US tax liabilities constitute
a potential lien which applies to NSCPs legal situation, not to its physical aspect. Thus,
respondent as a buyer, has no obligation to shoulder the same.
The case at bar calls to mind the principle of unjust enrichment Nemo cum alterius
detrimento locupletari potest. No person shall be allowed to enrich himself unjustly at
the expense of others. This principle of equity has been enshrined in our Civil Code,
Article 22 of which provides:
Art. 22. Every person who through an act or performance by another or by 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.
Justice and equity thus oblige that petitioner be held liable for NSCPs tax liabilities
and reimburse respondent for the amounts it paid. It would be unjust enrichment on
the part of petitioner to be relieved of that obligation.
 The deletion of the award of exemplary damages and reduction of the attorneys
fees by the Court of Appeals are not challenged by either of the parties. At any rate,
we find no error in its ruling quoted hereunder:

However, we find no basis for the grant of exemplary damages which can be granted
only in addition to moral, temperate, liquidated or compensatory damages (Art. 2229,
Civil Code of the Philippines), none of which was awarded or deserved in this case.
The trial court merely granted plaintiffs prayer in its main cause of action for
reimbursement of taxes plaintiff paid to the U.S.Since no actual or moral damages was
awarded, there is no legal basis for the award of exemplary damages which may only
be granted in addition thereto (Scott Consultants and Resources Development Corp.
Inc. vs. CA, 242 SCRA 393).

xxxxxxxxx

Anent the award of attorneys fees, we find it excessive, considering that the instant
case is a simple action for reimbursement and did not involve extensive litigation.
Nothing precludes the appellate courts from reducing the award of attorneys fees when
it is found to be unconscionable or excessive under the circumstances (Brahm
Industries Inc. vs. NLRC, 280 SCRA 828). Thus, the award of attorneys fees is reduced
to P20,000.00.[61]

WHEREFORE, the petition is DENIED and the assailed Decision of the Court of
Appeals is AFFIRMED.
SO ORDERED.

15. Padilla vs CA
On October 26, 1992, high-powered firearms with live ammunitions were found in
the possession of petitioner Robin Padilla @ Robinhood Padilla, i.e.:
"(1) One .357 Caliber revolver, Smith and Wesson, SN-32919 with six (6) live
ammunitions;
"(2) One M-16 Baby Armalite rifle, SN-RP 131120 with four (4) long and
one (1) short magazine with ammunitions;
"(3) One .380 Pietro Beretta, SN-A 35723 Y with clip and eight (8)
ammunitions; and
"(4) Six additional live double action ammunitions of .38 caliber revolver."[1]
Petitioner was correspondingly charged on December 3, 1992, before the
Regional Trial Court (RTC) of Angeles City with illegal possession of firearms and
ammunitions under P.D. 1866[2] thru the following Information:[3]
"That on or about the 26th day of October, 1992, in the City of Angeles,
Philippines, and within the jurisdiction of this Honorable Court, the above-
named accused, did then and there willfully, unlawfully and feloniously have
in his possession and under his custody and control one (1) M-16 Baby
Armalite rifle, SN-RP 131120 with four (4) long and one (1) short magazines
with ammunitions, one (1) .357 caliber revolver Smith and Wesson, SN-
32919 with six (6) live ammunitions and one (1) .380 Pietro Beretta, SN-
A35723Y with clip and eight (8) ammunitions, without having the necessary
authority and permit to carry and possess the same.
ALL CONTRARY TO LAW."[4]
The lower court then ordered the arrest of petitioner,[5] but granted his application for
bail.[6] During the arraignment on January 20, 1993, a plea of not guilty was entered for
petitioner after he refused,[7] upon advice of counsel,[8] to make any plea.[9] Petitioner
waived in writing his right to be present in any and all stages of the case.[10]
After trial, Angeles City RTC Judge David Rosete rendered judgment dated April
25, 1994 convicting petitioner of the crime charged and sentenced him to an
"indeterminate penalty from 17 years, 4 months and 1 day of reclusion temporal as
minimum, to 21 years of reclusion perpetua, as maximum".[11] Petitioner filed his notice
of appeal on April 28, 1994.[12] Pending the appeal in the respondent Court of
Appeals,[13] the Solicitor-General, convinced that the conviction shows strong evidence
of guilt, filed on December 2, 1994 a motion to cancel petitioner's bail bond. The
resolution of this motion was incorporated in the now assailed respondent court's
decision sustaining petitioner's conviction,[14] the dispositive portion of which reads:
"WHEREFORE, the foregoing circumstances considered, the appealed
decision is hereby AFFIRMED, and furthermore, the P200,000.00 bailbond
posted by accused-appellant for his provisional liberty, FGU Insurance
Corporation Bond No. JCR (2) 6523, is hereby cancelled. The Regional Trial
Court, Branch 61, Angeles City, is directed to issue the Order of Arrest of
accused-appellant and thereafter his transmittal to the National Bureau of
Prisons thru the Philippine National Police where the said accused-appellant
shall remain under confinement pending resolution of his appeal, should he
appeal to the Supreme Court. This shall be immediately executory. The
Regional Trial Court is further directed to submit a report of compliance
herewith.
SO ORDERED."[15]
Petitioner received a copy of this decision on July 26, 1995. [16] On August 9, 1995 he
filed a "motion for reconsideration (and to recall the warrant of arrest)"[17] but the same
was denied by respondent court in its September 20, 1995 Resolution, [18] copy of which
was received by petitioner on September 27, 1995. The next day, September 28,
petitioner filed the instant petition for review on certiorari with application for
bail[19] followed by two "supplemental petitions" filed by different counsels, [20] a "second
supplemental petition"[21] and an urgent motion for the separate resolution of
his application for bail. Again, the Solicitor-General[22] sought the denial of the
application for bail, to which the Court agreed in a Resolution promulgated on July 31,
1996.[23] The Court also granted the Solicitor-General's motion to file a consolidated
comment on the petitions and thereafter required the petitioner to file his
reply.[24] However, after his vigorous resistance and success on the intramural of bail
(both in the respondent court and this Court) and thorough exposition of petitioner's
guilt in his 55-page Brief in the respondent court, the Solicitor-General now makes a
complete turnabout by filing a "Manifestation In Lieu Of Comment" praying for
petitioner's acquittal.[25]
The People's detailed narration of facts, well-supported by evidence on record
and given credence by respondent court, is as follows:[26]
"At about 8:00 o'clock in the evening of October 26, 1992, Enrique Manarang
and his compadre Danny Perez were inside the Manukan sa Highway
Restaurant in Sto. Kristo, Angeles City where they took shelter from the
heavy downpour (pp. 5-6, TSN, February 15, 1993) that had interrupted their
ride on motorcycles (pp. 5-6, ibid.) along McArthur Highway (ibid). While
inside the restaurant, Manarang noticed a vehicle, a Mitsubishi Pajero,
running fast down the highway prompting him to remark that the vehicle might
get into an accident considering the inclement weather. (p. 7, Ibid) In the local
vernacular, he said thus: 'Ka bilis na, mumuran pa naman pota
makaaksidente ya.' (p. 7, ibid). True enough, immediately after the vehicle
had passed the restaurant, Manarang and Perez heard a screeching sound
produced by the sudden and hard braking of a vehicle running very fast (pp.
7-8, ibid) followed by a sickening sound of the vehicle hitting something (p.
8, ibid). Danny Cruz, quite sure of what had happened, remarked 'oy ta na'
signifying that Manarang had been right in his observation (pp. 8-9, ibid).
"Manarang and Cruz went out to investigate and immediately saw the vehicle
occupying the edge or shoulder of the highway giving it a slight tilt to its side
(pp. 9-10, ibid). Manarang, being a member of both the Spectrum, a civic
group and the Barangay Disaster Coordinating Council, decided to report the
incident to the Philippine National Police of Angeles City (p. 10, ibid). He took
out his radio and called the Viper, the radio controller of the Philippine
National Police of Angeles City (p. 10, ibid). By the time Manarang completed
the call, the vehicle had started to leave the place of the accident taking the
general direction to the north (p. 11, ibid).
"Manarang went to the location of the accident and found out that the vehicle
had hit somebody (p. 11, ibid).
"He asked Cruz to look after the victim while he went back to the restaurant,
rode on his motorcycle and chased the vehicle (p. 11 ibid). During the chase
he was able to make out the plate number of the vehicle as PMA 777 (p. 33,
TSN, February 15, 1993). He called the Viper through the radio once again
(p. 34, ibid) reporting that a vehicle heading north with plate number PMA
777 was involved in a hit and run accident (p. 20, TSN, June 8, 1993). The
Viper, in the person of SPO2 Ruby Buan, upon receipt of the second radio
call flashed the message to all units of PNP Angeles City with the order to
apprehend the vehicle (p. 20, ibid). One of the units of the PNP Angeles City
reached by the alarm was its Patrol Division at Jake Gonzales Street near
the Traffic Division (pp. 5-7, TSN, February 23, 1993). SPO2 Juan C. Borja
III and SPO2 Emerlito Miranda immediately borded a mobile patrol vehicle
(Mobile No. 3) and positioned themselves near the south approach of
Abacan bridge since it was the only passable way going to the north (pp. 8-
9, ibid). It took them about ten (10) seconds to cover the distance between
their office and the Abacan bridge (p. 9, ibid).
"Another PNP mobile patrol vehicle that responded to the flash message
from SPO2 Buan was Mobile No. 7 of the Pulongmaragal Detachment which
was then conducting patrol along Don Juico Avenue (pp. 8-9, TSN, March 8,
1993). On board were SPO Ruben Mercado and SPO3 Tan and SPO2
Odejar (p. 8, ibid). SPO Ruben Mercado immediately told SPO3 Tan to
proceed to the MacArthur Highway to intercept the vehicle with plate number
PMA 777 (p. 10, ibid).
"In the meantime, Manarang continued to chase the vehicle which figured in
the hit and run incident, even passing through a flooded portion of the
MacArthur Highway two (2) feet deep in front of the Iglesia ni Kristo church
but he could not catch up with the same vehicle (pp. 11-12, February 15,
1993). When he saw that the car he was chasing went towards Magalang,
he proceeded to Abacan bridge because he knew Pulongmaragal was not
passable (pp. 12-14, ibid). When he reached the Abacan bridge, he found
Mobile No. 3 and SPO2 Borja and SPO2 Miranda watching all vehicles
coming their way (p. 10, TSN, February 23, 1993). He approached them and
informed them that there was a hit and run incident (p. 10,ibid). Upon learning
that the two police officers already knew about the incident, Manarang went
back to where he came from (pp. 10-11; ibid). When Manarang was in front
of Tina's Restaurant, he saw the vehicle that had figured in the hit and run
incident emerging from the corner adjoining Tina's Restaurant (p. 15, TSN,
February 15, 1993). He saw that the license plate hanging in front of the
vehicle bore the identifying number PMA 777 and he followed it (p. 15, ibid)
towards the Abacan bridge.
"Soon the vehicle was within sight of SPO2 Borja and SPO2 Miranda of
Mobile No. 3 (p. 10, TSN, February 23, 1993). When the vehicle was about
twelve (12) meters away from their position, the two police officers boarded
their Mobile car, switched on the engine, operated the siren and strobe light
and drove out to intercept the vehicle (p. 11, ibid). They cut into the path of
the vehicle forcing it to stop (p. 11, ibid).
"SPO2 Borja and SPO2 Miranda alighted from Mobile No. 3 (P. 12, TSN,
February 23, 1993). SPO2 Miranda went to the vehicle with plate number
PMA 777 and instructed its driver to alight (p. 12, ibid). The driver rolled down
the window and put his head out while raising both his hands. They
recognized the driver as Robin C. Padilla, appellant in this case (p.
13, ibid). There was no one else with him inside the vehicle (p. 24). At that
moment, Borja noticed that Manarang arrived and stopped his motorcycle
behind the vehicle of appellant (p. 14, ibid). SPO2 Miranda told appellant to
alight to which appellant complied. Appellant was wearing a short leather
jacket (p. 16, TSN, March 8, 1993) such that when he alighted with both his
hands raised, a gun (Exhibit 'C') tucked on the left side of his waist was
revealed (p. 15, TSN, February 23, 1993), its butt protruding (p.
15, ibid). SPO2 Borja made the move to confiscate the gun but appellant held
the former's hand alleging that the gun was covered by legal papers (p.
16, ibid). SPO2 Borja, however, insisted that if the gun really was covered by
legal papers, it would have to be shown in the office (p. 16, ibid). After
disarming appellant, SPO2 Borja told him about the hit and run incident which
was angrily denied by appellant (p. 17, ibid). By that time, a crowd had formed
at the place (p. 19, ibid). SPO2 Borja checked the cylinder of the gun and
find six (6) live bullets inside (p. 20, ibid).
"While SPO2 Borja and appellant were arguing, Mobile No. 7 with SPO
Ruben Mercado, SPO3 Tan and SPO2 Odejar on board arrived (pp. 11-12,
TSN, March 8, 1993). As the most senior police officer in the group, SPO
Mercado took over the matter and informed appellant that he was being
arrested for the hit and run incident (p. 13, ibid). He pointed out to appellant
the fact that the plate number of his vehicle was dangling and the railing and
the hood were dented (p. 12, ibid). Appellant, however, arrogantly denied his
misdeed and, instead, played with the crowd by holding their hands with one
hand and pointing to SPO3 Borja with his right hand saying 'iyan, kinuha ang
baril ko' (pp. 13-15, ibid). Because appellant's jacket was short, his gesture
exposed a long magazine of an armalite rifle tucked in appellant's back right
pocket (p. 16, ibid). SPO Mercado saw this and so when appellant turned
around as he was talking and proceeding to his vehicle, Mercado confiscated
the magazine from appellant (pp. 16-17, ibid). Suspecting that appellant
could also be carrying a rifle inside the vehicle since he had a magazine,
SPO2 Mercado prevented appellant from going back to his vehicle by
opening himself the door of appellant's vehicle (16-17, ibid). He saw a baby
armalite rifle (Exhibit D) lying horizontally at the front by the driver's seat. It
had a long magazine filled with live bullets in a semi-automatic mode (pp. 17-
21, ibid). He asked appellant for the papers covering the rifle and appellant
answered angrily that they were at his home (pp. 26-27, ibid). SPO Mercado
modified the arrest of appellant by including as its ground illegal possession
of firearms (p. 28, ibid). SPO Mercado then read to appellant his
constitutional rights (pp. 28-29, ibid).
"The police officers brought appellant to the Traffic Division at Jake Gonzales
Boulevard (pp. 31-32, ibid) where appellant voluntarily surrendered a third
firearm, a pietro berreta pistol(Exhibit 'L') with a single round in its chamber
and a magazine (pp. 33-35, ibid) loaded with seven (7) other live
bullets. Appellant also voluntarily surrendered a black bag containing two
additional long magazines and one short magazine (Exhibits M, N, and O,
pp. 36-37, ibid). After appellant had been interrogated by the Chief of the
Traffic Division, he was transferred to the Police Investigation Division at Sto.
Rosario Street beside the City Hall Building where he and the firearms and
ammunitions were turned over to SPO2 Rene Jesus Gregorio (pp. 5-10,
TSN, July 13, 1993). During the investigation, appellant admitted possession
of the firearms stating that he used them for shooting (p. 14, ibid). He was
not able to produce any permit to carry or memorandum receipt to cover the
three firearms (pp. 16-18, TSN, January 25, 1994).
"On November 28, 1992, a certification (Exhibit 'F') was issued by Captain,
Senior Inspector Mario Espino, PNP, Chief, Record Branch of the Firearms
and Explosives Office (pp. 7-8, TSN, March 4, 1993). The Certification stated
that the three firearms confiscated from appellant, an M-16 Baby armalite
rifle SN-RP 131280, a .357 caliber revolver Smith and Wesson SN 32919
and a .380 Pietro Beretta SN-A35720, were not registered in the name of
Robin C. Padilla (p. 6, ibid). A second Certification dated December 11, 1992
issued by Captain Espino stated that the three firearms were not also
registered in the name of Robinhood C. Padilla (p. 10, ibid)."
Petitioner's defenses are as follows: (1) that his arrest was illegal and
consequently, the firearms and ammunitions taken in the course thereof are
inadmissible in evidence under the exclusionary rule; (2) that he is a confidential agent
authorized, under a Mission Order and Memorandum Receipt, to carry the subject
firearms; and (3) that the penalty for simple illegal possession constitutes excessive
and cruel punishment proscribed by the 1987 Constitution.
After a careful review of the records[27]of this case, the Court is convinced that
petitioner's guilt of the crime charged stands on terra firma, notwithstanding the
Solicitor-General's change of heart.
Anent the first defense, petitioner questions the legality of his arrest. There is no
dispute that no warrant was issued for the arrest of petitioner, but that per se did not
make his apprehension at the Abacan bridge illegal.
Warrantless arrests are sanctioned in the following instances:[28]
 "Sec. 5. Arrest without warrant; when lawful. - A peace officer or a private
person may, without a warrant, arrest a person:
(a) When, in his presence, the person to be arrested has committed,
is actually committing, or is attempting to commit an offense;
(b) When an offense has in fact just been committed, and he has
personal knowledge of facts indicating that the person to be arrested
has committed it.
(c) When the person to be arrested is a prisoner who has escaped
from a penal establishment or place where he is serving final
judgment or temporarily confined while his case is pending, or has
escaped while being transferred from one confinement to another.
Paragraph (a) requires that the person be arrested (i) after he has committed or while
he is actually committing or is at least attempting to commit an offense, (ii) in the
presence of the arresting officer or private person.[29] Both elements concurred here,
as it has been established that petitioner's vehicle figured in a hit and run - an offense
committed in the "presence" of Manarang, a private person, who then sought to arrest
petitioner. It must be stressed at this point that "presence" does not only require that
the arresting person sees the offense, but also when he "hears the disturbance created
thereby AND proceeds at once to the scene."[30] As testified to by Manarang, he heard
the screeching of tires followed by a thud, saw the sideswiped victim (balut vendor),
reported the incident to the police and thereafter gave chase to the erring Pajero
vehicle using his motorcycle in order to apprehend its driver. After having sent a radio
report to the PNP for assistance, Manarang proceeded to the Abacan bridge where he
found responding policemen SPO2 Borja and SPO2 Miranda already positioned near
the bridge who effected the actual arrest of petitioner.[31]
Petitioner would nonetheless insist on the illegality of his arrest by arguing that
the policemen who actually arrested him were not at the scene of the hit and run.[32] We
beg to disagree. That Manarang decided to seek the aid of the policemen (who
admittedly were nowhere in the vicinity of the hit and run) in effecting petitioner's arrest,
did not in any way affect the propriety of the apprehension. It was in fact the most
prudent action Manarang could have taken rather than collaring petitioner by himself,
inasmuch as policemen are unquestionably better trained and well-equipped in
effecting an arrest of a suspect (like herein petitioner) who , in all probability, could
have put up a degree of resistance which an untrained civilian may not be able to
contain without endangering his own life. Moreover, it is a reality that curbing
lawlessness gains more success when law enforcers function in collaboration with
private citizens. It is precisely through this cooperation, that the offense herein involved
fortunately did not become an additional entry to the long list of unreported and
unsolved crimes.
It is appropriate to state at this juncture that a suspect, like petitioner herein,
cannot defeat the arrest which has been set in motion in a public place for want of a
warrant as the police was confronted by an urgent need to render aid or take
action.[33] The exigent circumstances of - hot pursuit,[34] a fleeing suspect, a moving
vehicle, the public place and the raining nighttime - all created a situation in which
speed is essential and delay improvident. [35] The Court acknowledges police authority
to make the forcible stop since they had more than mere "reasonable and
articulable" suspicion that the occupant of the vehicle has been engaged in criminal
activity.[36] Moreover, when caught in flagrante delicto with possession of an unlicensed
firearm (Smith & Wesson) and ammunition (M-16 magazine), petitioner's warrantless
arrest was proper as he was again actually committing another offense (illegal
possession of firearm and ammunitions) and this time in the presence of a peace
officer.[37]
Besides, the policemen's warrantless arrest of petitioner could likewise be justified
under paragraph (b) as he had in fact just committed an offense. There was no
supervening event or a considerable lapse of time between the hit and run and the
actual apprehension. Moreover, after having stationed themselves at the Abacan
bridge in response to Manarang's report, the policemen saw for themselves the fast
approaching Pajero of petitioner,[38] its dangling plate number (PMA 777 as reported
by Manarang), and the dented hood and railings thereof. [39] These formed part of the
arresting police officer's personal knowledge of the facts indicating that petitioner's
Pajero was indeed the vehicle involved in the hit and run incident. Verily then, the
arresting police officers acted upon verified personal knowledge and not on unreliable
hearsay information.[40]
Furthermore, in accordance with settled jurisprudence, any objection, defect or
irregularity attending an arrest must be made before the accused enters his
plea.[41]Petitioner's belated challenge thereto aside from his failure to quash the
information, his participation in the trial and by presenting his evidence, placed him
in estoppel to assail the legality of his arrest.[42] Likewise, by applying for bail, petitioner
patently waived such irregularities and defects.[43]
We now go to the firearms and ammunitions seized from petitioner without a
search warrant, the admissibility in evidence of which, we uphold.
The five (5) well-settled instances when a warrantless search and seizure of
property is valid,[44] are as follows:
 1. warrantless search incidental to a lawful arrest recognized under
Section 12, Rule 126 of the Rules of Court [45] and by prevailing
jurisprudence[46],
2. Seizure of evidence in "plain view", the elements of which are:[47]
(a). a prior valid intrusion based on the valid warrantless
arrest in which the police are legally present in the pursuit of
their official duties;
(b). the evidence was inadvertently discovered by the police
who had the right to be where they are;
(c). the evidence must be immediately apparent, and
(d). "plain view" justified mere seizure of evidence without
further search.[48]
3. search of a moving vehicle.[49] Highly regulated by the government,
the vehicle's inherent mobility reduces expectation of privacy especially
when its transit in public thoroughfares furnishes a highly reasonable
suspicion amounting to probable cause that the occupant committed a
criminal activity.[50]
4. consented warrantless search, and
5. customs search.
In conformity with respondent court's observation, it indeed appears that the
authorities stumbled upon petitioner's firearms and ammunitions without even
undertaking any active search which, as it is commonly understood, is a prying into
hidden places for that which is concealed.[51] The seizure of the Smith & Wesson
revolver and an M-16 rifle magazine was justified for they came within "plain view" of
the policemen who inadvertently discovered the revolver and magazine tucked in
petitioner's waist and back pocket respectively, when he raised his hands after
alighting from his Pajero. The same justification applies to the confiscation of the M-16
armalite rifle which was immediately apparent to the policemen as they took a casual
glance at the Pajero and saw said rifle lying horizontally near the driver's seat.[52] Thus
it has been held that:
"(W)hen in pursuing an illegal action or in the commission of a criminal
offense, the . . . police officers should happen to discover a criminal offense
being committed by any person, they are not precluded from performing their
duties as police officers for the apprehension of the guilty person and the
taking of the corpus delicti."[53]
"Objects whose possession are prohibited by law inadvertently found in plain
view are subject to seizure even without a warrant."[54]
With respect to the Berreta pistol and a black bag containing assorted magazines,
petitioner voluntarily surrendered them to the police.[55] This latter gesture of petitioner
indicated a waiver of his right against the alleged search and seizure[56], and that his
failure to quash the information estopped him from assailing any purported defect. [57]
Even assuming that the firearms and ammunitions were products of an active
search done by the authorities on the person and vehicle of petitioner, their seizure
without a search warrant nonetheless can still be justified under a search incidental to
a lawful arrest (first instance). Once the lawful arrest was effected, the police may
undertake a protective search[58] of the passenger compartment and containers in the
vehicle[59] which are within petitioner's grabbing distance regardless of the nature of
the offense.[60] This satisfied the two-tiered test of an incidental search: (i) the item to
be searched (vehicle) was within the arrestee's custody or area of immediate
control[61] and (ii) the search was contemporaneous with the arrest.[62] The products of
that search are admissible evidence not excluded by the exclusionary rule. Another
justification is a search of a moving vehicle (third instance). In connection therewith, a
warrantless search is constitutionally permissible when, as in this case, the officers
conducting the search have reasonable or probable cause to believe, before the
search, that either the motorist is a law-offender (like herein petitioner with respect to
the hit and run) or the contents or cargo of the vehicle are or have been instruments or
the subject matter or the proceeds of some criminal offense.[63]
Anent his second defense, petitioner contends that he could not be convicted of
violating P.D. 1866 because he is an appointed civilian agent authorized to possess
and carry the subject firearms and ammunition as evidenced by a Mission Order [64] and
Memorandum Receipt duly issued by PNP Supt. Rodialo Gumtang, the deputy
commander of Task Force Aguila, Lianga, Surigao del Sur. The contention lacks merit.
In crimes involving illegal possession of firearm, two requisites must be
established, viz.: (1) the existence of the subject firearm and, (2) the fact that the
accused who owned or possessed the firearm does not have the corresponding license
or permit to possess.[65] The first element is beyond dispute as the subject firearms and
ammunitions[66] were seized from petitioner's possession via a valid warrantless
search, identified and offered in evidence during trial. As to the second element, the
same was convincingly proven by the prosecution. Indeed, petitioner's purported
Mission Order and Memorandum Receipt are inferior in the face of the more formidable
evidence for the prosecution as our meticulous review of the records reveals that the
Mission Order and Memorandum Receipt were mere afterthoughts contrived and
issued under suspicious circumstances. On this score, we lift from respondent court's
incisive observation. Thus:
"Appellant's contention is predicated on the assumption that the
Memorandum Receipts and Mission Order were issued before the subject
firearms were seized and confiscated from him by the police officers in
Angeles City. That is not so. The evidence adduced indicate that the
Memorandum Receipts and Mission Order were prepared and executed long
after appellant had been apprehended on October 26, 1992.
"Appellant, when apprehended, could not show any document as proof of his
authority to possess and carry the subject firearms. During the preliminary
investigation of the charge against him for illegal possession of firearms and
ammunitions he could not, despite the ample time given him, present any
proper document showing his authority. If he had, in actuality, the
Memorandum Receipts and Missions Order, he could have produced those
documents easily, if not at the time of apprehension, at least during the
preliminary investigation. But neither appellant nor his counsel inform the
prosecutor that appellant is authorized to possess and carry the subject
firearms under Memorandum Receipt and Mission Order. At the initial
presentation of his evidence in court, appellant could have produced these
documents to belie the charged against him. Appellant did not. He did not
even take the witness stand to explain his possession of the subject firearms.
"Even in appellant's Demurrer to Evidence filed after the prosecution rested
contain no allegation of a Memorandum Receipts and Mission Order
authorizing appellant to possess and carry the subject firearms.
"At the initial presentation of appellant's evidence, the witness cited was one
James Neneng to whom a subpoena was issued. Superintendent Gumtang
was not even mentioned. James Neneng appeared in court but was not
presented by the defense. Subsequent hearings were reset until the defense
found Superintendent Gumtang who appeared in court without subpoena on
January 13, 1994."[67]
The Court is baffled why petitioner failed to produce and present the Mission
Order and Memorandum Receipt if they were really issued and existing before his
apprehension. Petitioner's alternative excuses that the subject firearms were intended
for theatrical purposes, or that they were owned by the Presidential Security Group, or
that his Mission Order and Memorandum Receipt were left at home, further compound
their irregularity. As to be reasonably expected, an accused claiming innocence, like
herein petitioner, would grab the earliest opportunity to present the Mission Order and
Memorandum Receipt in question and save himself from the long and agonizing public
trial and spare him from proffering inconsistent excuses. In fact, the Mission Order
itself, as well as the Letter-Directive of the AFP Chief of Staff, is explicit in providing
that:
"VIII. c. When a Mission Order is requested for verification by
enforcement units/personnels such as PNP, Military Brigade and other
Military Police Units of AFP, the Mission Order should be shown without
resentment to avoid embarrassment and/or misunderstanding.
"IX. d. Implicit to this Mission Order is the injunction that the confidential
instruction will be carried out through all legal means and do not cover
an actuation in violation of laws. In the latter event, this Mission Order
is rendered inoperative in respect to such violation."[68]
which directive petitioner failed to heed without cogent explanation.
The authenticity and validity of the Mission Order and Memorandum Receipt,
moreover, were ably controverted. Witness for the prosecution Police Supt. Durendes
denied under oath his signature on the dorsal side of the Mission Order and declared
further that he did not authorize anyone to sign in his behalf. [69] His surname thereon,
we note, was glaringly misspelled as "Durembes."[70] In addition, only Unit
Commanders and Chief of Offices have the authority to issue Mission Orders and
Memorandum Receipts under the Guidelines on the Issuance of MOs, MRs, &
PCFORs.[71] PNP Supt. Rodialo Gumtang who issued petitioner's Mission Order and
Memorandum Receipt is neither a Unit Commander nor the Chief of Office, but a mere
deputy commander. Having emanated from an unauthorized source, petitioner's
Mission Order and Memorandum Receipt are infirm and lacking in force and
effect. Besides, the Mission Order covers "Recom 1-12-Baguio City,"[72] areas outside
Supt. Gumtang's area of responsibility thereby needing prior approval "by next higher
Headquarters"[73] which is absent in this case. The Memorandum Receipt is also
unsupported by a certification as required by the March 5, 1988 Memorandum of the
Secretary of Defense which pertinently provides that:
"No memorandum receipt shall be issued for a CCS firearms without
corresponding certification from the corresponding Responsible
Supply Officer of the appropriate AFP unit that such firearm has been
officially taken up in that units property book, and that report of such
action has been reported to higher AFP authority."
Had petitioner's Memorandum Receipt been authentic, we see no reason why he same as that licensed and/or registered in the name of one Albert
cannot present the corresponding certification as well. Villanueva Fallorina.
What is even more peculiar is that petitioner's name, as certified to by the Director "Q. So in short, the only licensed firearms in the name of accused Robin
for Personnel of the PNP, does not even appear in the Plantilla of Non-Uniform C. Padilla is a pistol, Smith and Wesson, caliber 9 mm with Serial
Personnel or in the list of Civilian Agents or Employees of the PNP which could justify No. TCT 8214?
the issuance of a Mission Order, a fact admitted by petitioner's counsel. [74] The
implementing rules of P.D. 1866 issued by the then PC-INP Chief and Director-General "A. Yes, sir.
Lt. Gen. Fidel V. Ramos are clear and unambiguous, thus: "Q. And the firearms that were the subject of this case are not listed in
"No Mission Order shall be issued to any civilian agent authorizing the the names of the accused in this case?
same to carry firearms outside residence unless he/she is included in "A. Yes, sir.[77]
the regular plantilla of the government agency involved in law
enforcement and is receiving regular compensation for the services xxx xxx xxx
he/she is rendering in the agency. Further, the civilian agent must be
And the certification which provides as follows:
included in a specific law enforcement/police/intelligence project proposal or
special project which specifically required the use of firearms(s) to insure its
accomplishment and that the project is duly approved at the PC Regional Republic of the Philippines
Command level or its equivalent level in other major services of the AFP, INP Department of the Interior and Local Government
and NBI, or at higher levels of command."[75] GENERAL HEADQUARTERS PHILIPPINE NATIONAL POLICE
FIREARMS AND EXPLOSIVES OFFICE
Circular No. 1, dated January 6, 1986, of the then Ministry of Justice likewise provides Camp Crame, Quezon City
as follows:
"If mission orders are issued to civilians (not members of the uniformed "PNPFEO5 28 November 1992
service), they must be civilian agents included in the regular plantilla of the
government agency involved in law enforcement and are receiving regular "C E R T I F I C A T I O N
compensation for the service they are rendering."
"TO WHOM IT MAY CONCERN:
That petitioner's Mission Order and Memorandum Receipt were fabricated pieces of
evidence is accentuated all the more by the testimony and certification of the Chief of
the Records Branch of the firearms and Explosives Office of the PNP declaring that "THIS IS TO CERTIFY that Robin C. Padilla of 59 Labo St., Quezon City is a
petitioner's confiscated firearms are not licensed or registered in the name of the licensed/registered holder of Pistol Smith and Wesson Cal 9mm with serial number
petitioner.[76]Thus: TCT8214 covered by License No. RL M76C4476687.

"Q. In all these files that you have just mentioned Mr. Witness, what did you "Further certify that the following firearms are not registered with this Office per
find, if any? verification from available records on file this Office as of this date:
"A. I found that a certain Robin C. Padilla is a licensed registered owner of
one 9 mm pistol, Smith and Wesson with Serial No. TCT 8214 and the M16 Baby Armalite SN-RP131120
following firearms being asked whether it is registered or not, I did Revolver Cal 357 SN-3219
not find any records, the M-16 and the caliber .357 and the caliber Pistol Cal 380 Pietro Beretta SN-35723
.380 but there is a firearm with the same serial number which is the
"However, we have on file one Pistol Cal 380, Beretta with serial number 35723Y,
licensed/registered to one Albert Villanueva Fallorina of 29 San Juan St., Capitol Pasig,
MM under Re-Registered License.
"This certification is issued pursuant to Subpoena from City of Angeles.
"FOR THE CHIEF, FEO:
In several occasions, the Court has ruled that either the testimony of a
representative of, or a certification from, the PNP Firearms and Explosives Office
(FEO) attesting that a person is not a licensee of any firearm would suffice to prove
beyond reasonable doubt the second element of illegal possession of
firearm.[79] In People vs. Tobias,[80] we reiterated that such certification is sufficient to
show that a person has in fact no license. From the foregoing discussion, the fact that
petitioner does not have the license or permit to possess was overwhelmingly proven
by the prosecution. The certification may even be dispensed with in the light of the
evidence[81] that an M-16 rifle and any short firearm higher than a .38 caliber pistol,
akin to the confiscated firearms, cannot be licensed to a civilian, [82] as in the case of
petitioner. The Court, therefore, entertains no doubt in affirming petitioner's conviction
especially as we find no plausible reason, and none was presented, to depart from the
factual findings of both the trial court and respondent court which, as a rule, are
accorded by the Court with respect and finality.[83]
Anent his third defense, petitioner faults respondent court "in applying P.D. 1866
in a democratic ambience (sic) and a non-subversive context" and adds that
respondent court should have applied instead the previous laws on illegal possession
of firearms since the reason for the penalty imposed under P.D. 1866 no longer
exists.[84] He stresses that the penalty of 17 years and 4 months to 21 years for simple
illegal possession of firearm is cruel and excessive in contravention of the
Constitution.[85]
The contentions do not merit serious consideration. The trial court and the
respondent court are bound to apply the governing law at the time of appellant's
commission of the offense for it is a rule that laws are repealed only by subsequent
ones.[86] Indeed, it is the duty of judicial officers to respect and apply the law as it
stands.[87] And until its repeal, respondent court can not be faulted for applying P.D.
1866 which abrogated the previous statutes adverted to by petitioner.
Equally lacking in merit is appellant's allegation that the penalty for simple illegal
possession is unconstitutional. The penalty for simple possession of firearm, it should
be stressed, ranges from reclusion temporal maximum to reclusion perpetua contrary
to appellant's erroneous averment. The severity of a penalty does not ipso facto make
the same cruel and excessive.
"It takes more than merely being harsh, excessive, out of proportion, or severe for a
penalty to be obnoxious to the Constitution. 'The fact that the punishment authorized
by the statute is severe does not make it cruel and unusual.' (24 C.J.S., 1187-
1188). Expressed in other terms, it has been held that to come under the ban, the
punishment must be 'flagrantly and plainly oppressive','wholly disproportionate to the
nature of the offense as to shock the moral sense of the community' "[88]
It is well-settled that as far as the constitutional prohibition goes, it is not so much the
extent as the nature of the punishment that determines whether it is, or is not, cruel
and unusual and that sentences of imprisonment, though perceived to be harsh, are
not cruel or unusual if within statutory limits.[89]
Moreover, every law has in its favor the presumption of constitutionality. The
burden of proving the invalidity of the statute in question lies with the appellant which
burden, we note, was not convincingly discharged. To justify nullification of the law,
there must be a clear and unequivocal breach of the Constitution, not a doubtful and
argumentative implication,[90] as in this case. In fact, the constitutionality of P.D. 1866
has been upheld twice by this Court.[91] Just recently, the Court declared that "the
pertinent laws on illegalpossession of firearms [are not] contrary to any provision of
the Constitution. . ."[92] Appellant's grievance on the wisdom of the prescribed penalty
should not be addressed to us. Courts are not concerned with the wisdom, efficacy or
morality of laws. That question falls exclusively within the province of Congress which
enacts them and the Chief Executive who approves or vetoes them. The only function
of the courts, we reiterate, is to interpret and apply the laws.
With respect to the penalty imposed by the trial court as affirmed by respondent
court (17 years 4 months and 1 day of reclusion temporal, as minimum, to 21 years
of reclusion perpetua, as maximum), we reduce the same in line with the fairly recent
case of People v. Lian[93] where the Court en banc provided that the indeterminate
penalty imposable for simple illegal possession of firearm, without any mitigating or
aggravating circumstance, should be within the range of ten (10) years and one (1)
day to twelve years (12) of prision mayor, as minimum, to eighteen (18) years, eight
(8) months and one (1) day to twenty (20) of reclusion temporal, as maximum. This is
discernible from the following explanation by the Court:
"In the case at bar, no mitigating or aggravating circumstances have been alleged or
proved, In accordance with the doctrine regarding special laws explained in People v.
Simon,[94] although Presidential Decree No. 1866 is a special law, the penalties therein
were taken from the Revised Penal Code, hence the rules in said Code for graduating
by degrees or determining the proper period should be applied. Consequently, the
penalty for the offense of simple illegal possession of firearm is the medium period of
the complex penalty in said Section 1, that is, 18 years, 8 months and 1 day to 20
years.

"This penalty, being that which is to be actually imposed in accordance with the rules
therefor and not merely imposable as a general prescription under the law, shall be the
maximum of the range of the indeterminate sentence. The minimum thereof shall be
taken, as aforesaid, from any period of the penalty next lower in degree, which
is, prision mayor in its maximum period to reclusion temporal in its medium period.[95]

WHEREFORE, premises considered, the decision of the Court of Appeals

sustaining petitioner's conviction by the lower court of the crime of simple illegal
possession of firearms and ammunitions is AFFIRMED EXCEPT that petitioner's
indeterminate penalty is MODIFIED to ten (10) years and one (1) day, as minimum, to
eighteen (18) years, eight (8) months and one (1) day, as maximum.
SO ORDERED