ALFREDO M. VELAYO, ETC.

M. VELAYO, ETC., plaintiff, To begin with, the only remedy which appellants now seek in this appeal is the inclusion of the intervenors as appellants in the
vs. appeal from the decision rendered in the main case, but this remedy has already been denied twice by this Court, first, in its
SHELL COMPANY OF THE PHILIPPINES ISLANDS, LTD., defendant-appellee. resolution of November 12, 1954 denying their petition for correction of the record on appeal, and, second, in denying their
ALFONSO Z. SYCIP, ET. AL., intervenors-appellants. motion for reconsideration of said resolution. It should be noted that the grounds relied upon in this appeal are the same
grounds alleged in said petition for correction.
Sycip, Quisumbing, Salazar and Associates for appellants.
Ozaeta, Lichauco and Picazo for appellee. In the second place, the intervenors have no right or reason to appeal from the decision in the main case, it appearing that they
did not introduce any evidence during the trial in support of their complaint, which shows that their appeal would be merely pro-
BAUTISTA ANGELO, J.: forma. And, in any event, they made the attempt to amend the record on appeal seven (7) months after the decision had
become final against them.
On December 17, 1948, Alfredo M. Velayo as assignees of the insolvent Commercial Airlines, Inc., instituted an action against
Shell Company of the Philippine Islands, Ltd., in the Court of First Instance of Manila for injunction and damages (Civil Case No. In the third place, the intervenors have no right or reason to file a petition for relief under Rule 38 of the Rules of Court from the
6966). On October 26, 1951, a complaint in intervention was filed by Alfonso Sycip, Paul Sycip, and Yek Trading Corporation, and order of the lower court issued on December 27, 1954, for the reason that the same was entered upon a motion filed by them.
on November 14, 1951, by Mabasa & Company. Indeed they cannot reasonably assert that the order was entered against them through fraud, accident, mistake, or negligence.
The fraud mentioned in Rule 38 is the fraud committed by the adverse party and certainly the same cannot be attributed to the
Court.
After trial wherein plaintiff presented evidence in his behalf, but none in behalf of intervenors, the court rendered decision
dismissing plaintiff's complaint as well as those filed by the intervenors. On March 31, 1954, counsel for plaintiff filed a notice of
appeal, appeal bond, and record on appeal in behalf only of plaintiff even if they also represent the intervenors, which in due Finally, it appears that the main case has already been decided by this Court on the merits on October 31, 1956, reversing the
time were approved, the Court instructing its clerk to forward the record on appeal to the Supreme Court together with all the decision of the lower court and awarding damages to plaintiff, which apparently is the very purpose which the intervenors seek
evidence presented in the case. This instruction was actually complied with. to accomplish in joining the appeal as co-appellants. This appeal, therefore, has already become moot.

On August 31, 1954, the Deputy Clerk of the Supreme Court notified counsel of plaintiff that the record as well as the evidence Wherefore, the order appealed from is affirmed, with costs against appellants.
have already been received and that they should file their brief within 45 days from receipt of the notice. On November 2, 1954,
counsel filed their brief for appellants. On November 6, 1954, or 7 months after the judgment had become final as against the
intervenors, and 4 days after counsel for appellants had submitted the latter's brief, counsel for intervenors filed with the
Supreme Court a petition for correction of the record on appeal in order to enable them to insert therein the names of the
intervenors as appellants, the petition being based, among others, on the ground that the omission of the names of the
intervenors in said record on appeal was due to the mistake of the typist who prepared it while the attorney in charge was on
vacation. The petition was vigorously opposed by counsel for defendant, contending that the same would serve no purpose,
whatsoever considering that the intervenors had not presented any evidence in support of their claim, aside from the fact that
the alleged absence of the attorney of the intervenors cannot constitute a justification for the alleged omission of the
intervenors as appellants. On November 12, 1954, the Court denied the petition. Counsel intervenors moved for a
reconsideration of the order, but the same was denied.

On November 19, 1954, counsel for intervenors filed with the lower court a petition for relief under Rule 38 of the Rules of
Court, wherein he reiterated the same grounds they alleged in the petition for correction filed by them in the Supreme Court,
which petition was denied on November 27, 1954, for having been filed outside the reglementary period fixed in said Rule 38.
Counsel filed a motion for reconsideration, which was again denied, the Court stating that "no judgment or order has been
rendered, nor any other proceeding taken by this Court on the right of the intervenors to appeal."

On December 20, 1954, counsel filed once more a motion to amend the record on appeal based on grounds identical with those
alleged in the petition for correction filed before the Supreme Court. On December 27, 1954, the lower court denied the motion.
On January 6, 1955, counsel filed a petition for relief from this last order entered on December 27, 1954, to which counsel for
defendant filed an opposition. On February 5, 1955, hearing was had on both the petition for relief and the opposition, and on
February 9, 1955, the petition was denied on the ground that the case is already before the Supreme Court on appeal. It is from
this order that the counsel for intervenors has taken the appeal now before us.

The instant appeal has no merit.


.R. No. L-14628 September 30, 1960
FRANCISCO HERMOSISIMA, petitioner,
vs.
THE HON. COURT OF APPEALS, ET AL., respondents.
Regino Hermosisima for petitioner.
F.P. Gabriel, Jr. for respondents.
CONCEPCION, J.:
An appeal by certiorari, taken by petitioner Francisco Hermosisima, from a decision of Court of Appeals modifying that of the
Court of First Instance of Cebu.
On October 4, 1954, Soledad Cagigas, hereinafter referred to as complaint, filed with said of her child, Chris Hermosisima, as
natural child and moral damages for alleged breach of promise. Petitioner admitted the paternity of child and expressed
willingness to support the latter, but denied having ever promised to marry the complainant. Upon her motion, said court
ordered petitioner, on October 27, 1954, to pay, by way of alimony pendente lite, P50.00 a month, which was, on February 16,
1955, reduced to P30.00 a month. In due course, later on, said court rendered a decision the dispositive part of which reads:
WHEREFORE, judgment is hereby rendered, declaring the child, Chris Hermosisima, as the natural daughter of
defendant, and confirming the order pendente lite, ordering defendant to pay to the said child, through plaintiff, the
sum of thirty pesos (P30.00), payable on or before the fifth day of every month sentencing defendant to pay to plaintiff
the sum of FOUR THOUSAND FIVE HUNDRED PESOS (P4,500.00) for actual and compensatory damages; the sum of
FIVE THOUSAND PESOS (P5,000.00) as moral damages; and the further sum of FIVE HUNDRED PESOS (P500.00) as
attorney's fees for plaintiff, with costs against defendant.
On appeal taken by petitioner, the Court of Appeals affirmed this decision, except as to the actual and compensatory damages
and the moral damages, which were increased to P5,614.25 and P7,000.00, respectively.
The main issue before us is whether moral damages are recoverable, under our laws, for breach of promise to marry. The
pertinent facts are:
Complainant Soledad Cagigas, was born in July 1917. Since 1950, Soledad then a teacher in the Sibonga Provincial High School in
Cebu, and petitioner, who was almost ten (10) years younger than she, used to go around together and were regarded as
engaged, although he had made no promise of marriage prior thereto. In 1951, she gave up teaching and became a life insurance
underwriter in the City of Cebu, where intimacy developed among her and the petitioner, since one evening in 1953, when after
coming from the movies, they had sexual intercourse in his cabin on board M/V "Escaño," to which he was then attached as
apprentice pilot. In February 1954, Soledad advised petitioner that she was in the family way, whereupon he promised to marry
her. Their child, Chris Hermosisima, was born on June 17, 1954, in a private maternity and clinic. However, subsequently, or on
July 24, 1954, defendant married one Romanita Perez. Hence, the present action, which was commenced on or about October 4,
1954.
Referring now to the issue above referred to, it will be noted that the Civil Code of Spain permitted the recovery of damages for
breach to marry. Article 43 and 44 of said Code provides:
ART. 43. A mutual promise of marriage shall not give rise to an obligation to contract marriage. No court shall entertain
any complaint by which the enforcement of such promise is sought.
ART. 44. If the promise has been in a public or private instrument by an adult, or by a minor with the concurrence of
the person whose consent is necessary for the celebration of the marriage, or if the banns have been published, the
one who without just cause refuses to marry shall be obliged to reimburse the other for the expenses which he or she
may have incurred by reason of the promised marriage.
The action for reimbursement of expenses to which the foregoing article refers must be brought within one year,
computed from the day of the refusal to celebrate the marriage.
Inasmuch as these articles were never in force in the Philippines, this Court ruled in De Jesus vs. Syquia (58 Phil., 866), that "the
action for breach of promises to marry has no standing in the civil law, apart from the right to recover money or property
advanced . . . upon the faith of such promise". The Code Commission charged with the drafting of the Proposed Civil Code of the
Philippines deem it best, however, to change the law thereon. We quote from the report of the Code Commission on said
Proposed Civil Code:
Articles 43 and 44 the Civil Code of 1889 refer to the promise of marriage. But these articles are not enforced in the
Philippines. The subject is regulated in the Proposed Civil Code not only as to the aspect treated of in said articles but
also in other particulars. It is advisable to furnish legislative solutions to some questions that might arise relative to
betrothal. Among the provisions proposed are: That authorizing the adjudication of moral damages, in case of breach
of promise of marriage, and that creating liability for causing a marriage engagement to be broken.1awphîl.nèt
Accordingly, the following provisions were inserted in said Proposed Civil Code, under Chapter I, Title III, Book I thereof:
Art. 56. A mutual promise to marry may be made expressly or impliedly.
Art. 57. An engagement to be married must be agreed directly by the future spouses.
Art. 58. A contract for a future marriage cannot, without the consent of the parent or guardian, be entered into by a
male between the ages of sixteen and twenty years or by a female between the ages of sixteen and eighteen years.
Without such consent of the parents or guardian, the engagement to marry cannot be the basis of a civil action for
damages in case of breach of the promise.
Art. 59. A promise to marry when made by a female under the age of fourteen years is not civilly actionable, even
though approved by the parent or guardian.
Art. 60. In cases referred to in the proceeding articles, the criminal and civil responsibility of a male for seduction shall
not be affected.
Art. 61. No action for specific performance of a mutual promise to marry may be brought.
Art. 62. An action for breach of promise to marry may be brought by the aggrieved party even though a minor without
the assistance of his parent or guardian. Should the minor refuse to bring suit, the parent or guardian may institute the
action.
Art. 63. Damages for breach of promise to marry shall include not only material and pecuniary losses but also
compensation for mental and moral suffering.
Art. 64. Any person, other than a rival, the parents, guardians and grandparents, of the affianced parties, who cause a
marriage engagement to be broken shall be liable for damages, both material and moral, to the engaged person who is
rejected.
 Art. 65. In case of breach of promise to marry, the party breaking the engagement shall be obliged to return what he or
she has received from the other as gift on account of the promise of the marriage.
These article were, however, eliminated in Congress. The reason therefor are set forth in the report of the corresponding Senate
Committee, from which we quote:
The elimination of this Chapter is proposed. That breach of promise to marry is not actionable has been definitely decide in the
case of De Jesus vs. Syquia, 58 Phil., 866. The history of breach of promise suit 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 the rights of action in the so-called Balm suit in many of the American States.
The court of first instance sentenced petitioner to pay the following: (1) a monthly pension of P30.00 for the support of the child:
(2) P4,500, representing the income that complainant had allegedly failed to earn during her pregnancy and shortly after the
birth of the child, as actual and compensation damages; (3) P5,000, as moral damages; and (4) P500.00, as attorney's fees. The
Court of Appeals added to the second item the sum of P1,114.25 — consisting of P144.20, for hospitalization and medical
attendance, in connection with the parturiation, and the balance representing expenses incurred to support the child — and
increased the moral damages to P7,000.00.
With the elimination of this award for damages, the decision of the Court of Appeals is hereby affirmed, therefore, in all other
respects, without special pronouncement as to cost in this instance. It is so ordered.

See statutes of:

Florida 1945 — pp. 1342 — 1344

Maryland 1945 — pp. 1759 — 1762
Nevada 1943 — p. 75
Maine 1941 — pp. 140 — 141
New Hampshire 1941 — p. 223
California 1939 — p. 1245
Massachusetts 1938 — p. 326
Indiana 1936 — p. 1009
Michigan 1935 — p. 201
New York 1935
Pennsylvania p. 450

The Commission perhaps though that it has followed the more progression trend in legislation when it provided for
breach of promise to marry suits. But it is clear that the creation of such causes of action at a time when so many
States, in consequence of years of experience are doing away with them, may well prove to be a step in the wrong
direction. (Congressional Record, Vol. IV, No. 79, Thursday, May 19, 1949, p. 2352.)

The views thus expressed were accepted by both houses of Congress. In the light of the clear and manifest intent of our law
making body not to sanction actions for breach of promise to marry, the award of moral damages made by the lower courts is,
accordingly, untenable. The Court of Appeals said award:

Moreover, it appearing that because of defendant-appellant's seduction power, plaintiff-appellee, overwhelmed by

her love for him finally yielded to his sexual desires in spite of her age and self-control, she being a woman after all, we
hold that said defendant-appellant is liable for seduction and, therefore, moral damages may be recovered from him
under the provision of Article 2219, paragraph 3, of the new Civil Code.

Apart from the fact that the general tenor of said Article 2219, particularly the paragraphs preceding and those following the one
cited by the Court of Appeals, and the language used in said paragraph strongly indicates that the "seduction" therein
contemplated is the crime punished as such in Article as such in Article 337 and 338 of the Revised Penal Code, which admittedly
does not exist in the present case, 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 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" "by having a fruit of their engagement
even before they had the benefit of clergy."
PONCE VS. LEGASPI

PONCE VS. LEGASPI

FACTS: Petitioner Ponce and husband Manuel, owned 43% of the stockholdings of L'NOR Marine Services, Inc. (L'NOR). 48% of it

was owned by the spouses Porter.The allegations of petitioner states that during the time while respondent Legaspi is the legal

counsel of L’NOR, there occurred fraudulent manipulations by spouses Porter and other officers; that with the aid of Legaspi,

they incorporated the Yrasport Drydocks, Inc. which was done to compete with L’NOR but still used the office space, equipments

and goodwill of L’NOR. On account of flagrant frauds committed by Porter, a charge for estafa was filed where Legaspi appeared

as counsel for Porter; that complainant asked Legaspi to take steps to protect L’NOR but the latter refused. Complainant filed for

disbarment against Legaspi which was dismissed. Legaspi subsequently filed a complaint for damages against petitioner which

was granted by the lower court and affirmed by CA.

ISSUE: W/N the complaint for damages by Legaspi is justified.

RULING: Decision reversed and set aside.

RATIO: While generally, malicious prosecution refers to unfounded criminal actions and has been expanded to include

unfounded civil suits, the foundation of an action for malicious prosecution is an original proceeding, judicial in character. A

disbarment proceeding is, without doubt, judicial in character and therefore may be the basis for a subsequent action for

malicious prosecution. However, malice and want of probable cause must both exist in order to justify the action. In the case at

bar, in the mind of petitioner, the act of the respondent in appearing as counsel for Porter, who had allegedly swindled L'NOR,

the interest of which he was duty bound to protect, constituted grave misconduct and gross malpractice. Since the petitioner,

however, was of the honest perception that YRASPORT was actually organized to appropriate for itself some of L'NOR's business,

then we find that she had probable cause to file the disbarment suit.

Atty. Legaspi may have suffered injury as a consequence of the disbarment proceedings. But the adverse result of an action does

not per se make the action wrongful and subject the actor to make payment of damages for the law could not have meant to

impose a penalty on the right to litigate. One who exercises his rights does no injury. If damage results from a person's exercising

his legal rights, it is damnum absque injuri


G.R. No. 115814 May 26, 1995
PEDRO P. PECSON, petitioner,
vs.
COURT OF APPEALS, SPOUSES JUAN NUGUID and ERLINDA NUGUID, respondents.
DAVIDE, JR., J.:
This petition for review on certiorari seeks to set aside the decision1 of the Court of Appeals in CA-G.R. SP No. 32679 affirming in
part the order 2 of the Regional Trial Court (RTC) of Quezon City, Branch 101, in Civil Case No. Q-41470.
The factual and procedural antecedents of this case as gathered from the record are as follows:
Petitioner Pedro P. Pecson was the owner of a commercial lot located in Kamias Street, Quezon City, on which he built a four-
door two-storey apartment building. For his failure to pay realty taxes amounting to twelve thousand pesos (P12,000.00), the lot
was sold at public auction by the city Treasurer of Quezon City to Mamerto Nepomuceno who in turn sold it on 12 October 1983
to the private respondents, the spouses Juan Nuguid and Erlinda Tan-Nuguid, for one hundred three thousand pesos
(P103,000.00).
The petitioner challenged the validity of the auction sale in Civil Case No. Q-41470 before the RTC of Quezon City. In its decision
of 8 February 1989, the RTC dismissed the complaint, but as to the private respondents' claim that the sale included the
apartment building, it held that the issue concerning it was "not a subject of the . . . litigation." In resolving the private
respondents' motion to reconsider this issue, the trial court held that there was no legal basis for the contention that the
apartment building was included in the sale.3
Both parties then appealed the decision to the Court of Appeals. The case was docketed as CA-G.R. CV No. 2931. In its decision of
30 April 1992,4 the Court of Appeals affirmed in toto the assailed decision. It also agreed with the trial court that the apartment
building was not included in the auction sale of the commercial lot. Thus:
Indeed, examining the record we are fully convinced that it was only the land — without the apartment
building — which was sold at the auction sale, for plaintiff's failure to pay the taxes due thereon. Thus, in the
Certificate of Sale of Delinquent Property To Purchaser (Exh. K, p. 352, Record) the property subject of the
auction sale at which Mamerto Nepomuceno was the purchaser is referred to as Lot No. 21-A, Block No. K-
34, at Kamias, Barangay Piñahan, with an area of 256.3 sq. m., with no mention whatsoever, of the building
thereon. The same description of the subject property appears in the Final Notice To Exercise The Right of
Redemption (over subject property) dated September 14, 1981 (Exh. L, p. 353, Record) and in the Final Bill of
Sale over the same property dated April 19, 1982 (Exh. P, p. 357, Record). Needless to say, as it was only the
land without any building which Nepomuceno had acquired at the auction sale, it was also only that land
without any building which he could have legally sold to the Nuguids. Verily, in the Deed of Absolute Sale of
Registered Land executed by Mamerto Nepomuceno in favor of the Nuguids on October 25, 1983 (Exh. U, p.
366, Record) it clearly appears that the property subject of the sale for P103,000.00 was only the parcel of
land, Lot 21-A, Blk. K-34 containing an area of 256.3 sq. meters, without any mention of any improvement,
much less any building thereon. (emphases supplied)
The petition to review the said decision was subsequently denied by this Court.5 Entry of judgment was made on 23 June 1993.6
On November 1993, the private respondents filed with the trial court a motion for delivery of possession of the lot and the
apartment building, citing article 546 of the Civil Code.7 Acting thereon, the trial court issued on 15 November 1993 the
challenged order8 which reads as follows:
Submitted for resolution before this Court is an uncontroverted [sic] for the Delivery of Possession filed by
defendants Erlinda Tan, Juan Nuguid, et al. considering that despite personal service of the Order for plaintiff
to file within five (5) days his opposition to said motion, he did not file any.
In support of defendant's motion, movant cites the law in point as Article 546 of the Civil Code . . .
Movant agrees to comply with the provisions of the law considering that plaintiff is a builder in good faith
and he has in fact, opted to pay the cost of the construction spent by plaintiff. From the complaint itself the
plaintiff stated that the construction cost of the apartment is much more than the lot, which apartment he
constructed at a cost of P53,000.00 in 1965 (par. 8 complaint). This amount of P53,000.00 is what the
movant is supposed to pay under the law before a writ of possession placing him in possession of both the
lot and apartment would be issued.
However, the complaint alleges in paragraph 9 that three doors of the apartment are being leased. This is
further confirmed by the affidavit of the movant presented in support of the motion that said three doors
are being leased at a rental of P7,000.00 a month each. The movant further alleges in his said affidavit that
the present commercial value of the lot is P10,000.00 per square meter or P2,500,000.00 and the reasonable
rental value of said lot is no less than P21,000.00 per month.
The decision having become final as per Entry of Judgment dated June 23, 1993 and from this date on, being
the uncontested owner of the property, the rents should be paid to him instead of the plaintiff collecting
them. From June 23, 1993, the rents collected by plaintiff amounting to more than P53,000.00 from tenants
should be offset from the rents due to the lot which according to movant's affidavit is more than P21,000.00
a month.
WHEREFORE, finding merit in the Motion, the Court hereby grants the following prayer that:
1. The movant shall reimburse plaintiff the construction cost of P53,000.00.
2. The payment of P53,000.00 as reimbursement for the construction cost, movant Juan
Nuguid is hereby entitled to immediate issuance of a writ of possession over the Lot and
improvements thereon.
3. The movant having been declared as the uncontested owner of the Lot in question as
per Entry of Judgment of the Supreme Court dated June 23, 1993, the plaintiff should pay
rent to the movant of no less than P21,000.00 per month from said date as this is the
very same amount paid monthly by the tenants occupying the lot.
4. The amount of P53,000.00 due from the movant is hereby offset against the amount of
rents collected by the plaintiff from June 23, 1993, to September 23, 1993.
SO ORDERED.
The petitioner moved for the reconsideration of the order but it was not acted upon by the trial court. Instead, on 18 November
1993, it issued a writ of possession directing the deputy sheriff "to place said movant Juan Nuguid in possession of subject
property located at No. 79 Kamias Road, Quezon City, with all the improvements thereon and to eject therefrom all occupants
therein, their agents, assignees, heirs and representatives."9
The petitioner then filed with the Court of Appeals a special civil action for certiorari and prohibition assailing the order of 15
November 1993, which was docketed as CA-G.R. SP No. 32679. 10 In its decision of 7 June 1994, the Court of Appeals affirmed in
part the order of the trial court citing Article 448 of the Civil Code. In disposing of the issues, it stated:
As earlier pointed out, private respondent opted to appropriate the improvement introduced by petitioner
on the subject lot, giving rise to the right of petitioner to be reimbursed of the cost of constructing said
apartment building, in accordance with Article 546 of the . . . Civil Code, and of the right to retain the
improvements until he is reimbursed of the cost of the improvements, because, basically, the right to retain
the improvement while the corresponding indemnity is not paid implies the tenancy or possession in fact of
the land on which they are built . . . [2 TOLENTINO, CIVIL CODE OF THE PHILIPPINES (1992) p. 112]. With the
facts extant and the settled principle as guides, we agree with petitioner that respondent judge erred in
ordering that "the movant having been declared as the uncontested owner of the lot in question as per Entry
of Judgment of the Supreme Court dated June 23, 1993, the plaintiff should pay rent to the movant of no less
than P21,000 per month from said date as this is the very same amount paid monthly by the tenants
occupying the lot.
We, however, agree with the finding of respondent judge that the amount of P53,000.00 earlier admitted as
the cost of constructing the apartment building can be offset from the amount of rents collected by
petitioner from June 23, 1993 up to September 23, 1993 which was fixed at P7,000.00 per month for each of
the three doors. Our underlying reason is that during the period of retention, petitioner as such possessor
and receiving the fruits from the property, is obliged to account for such fruits, so that the amount thereof
may be deducted from the amount of indemnity to be paid to him by the owner of the land, in line with
Mendoza vs. De Guzman, 52 Phil. 164 . . . .
The Court of Appeals then ruled as follows:
WHEREFORE, while it appears that private respondents have not yet indemnified petitioner with the cost of
the improvements, since Annex I shows that the Deputy Sheriff has enforced the Writ of Possession and the
premises have been turned over to the possession of private respondents, the quest of petitioner that he be
restored in possession of the premises is rendered moot and academic, although it is but fair and just that
private respondents pay petitioner the construction cost of P53,000.00; and that petitioner be ordered to
account for any and all fruits of the improvements received by him starting on June 23, 1993, with the
amount of P53,000.00 to be offset therefrom.
IT IS SO ORDERED.11
Aggrieved by the Court of Appeals' decision, the petitioner filed the instant petition.
The parties agree that the petitioner was a builder in good faith of the apartment building on the theory that he constructed it at
the time when he was still the owner of the lot, and that the key issue in this case is the application of Articles 448 and 456 of
the Civil Code.
The trial court and the Court of Appeals, as well as the parties, concerned themselves with the application of Articles 448 and
546 of the Civil Code. These articles read as follows:
Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have
the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided
for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one
who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner
of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. (361a)
xxx xxx xxx
Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may
retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the
person who has defeated him in the possession having the option of refunding the amount of the expenses
or of paying the increase in value which the thing may have acquired by reason thereof. (453a)
By its clear language, Article 448 refers to a land whose ownership is claimed by two or more parties, one of whom has built
some works, or sown or planted something. The building, sowing or planting may have been made in good faith or in bad faith.
The rule on good faith laid down in Article 526 of the Civil Code shall be applied in determining whether a builder, sower or
planter had acted in good faith. 12
Article 448 does not apply to a case where the owner of the land is the builder, sower, or planter who then later loses ownership
of the land by sale or donation. This Court said so in Coleongco vs. Regalado: 13
Article 361 of the old Civil Code is not applicable in this case, for Regalado constructed the house on his own
land before he sold said land to Coleongco. Article 361 applies only in cases where a person constructs a
building on the land of another in good or in bad faith, as the case may be. It does not apply to a case where
a person constructs a building on his own land, for then there can be no question as to good or bad faith on
the part of the builder.
Elsewise stated, where the true owner himself is the builder of works on his own land, the issue of good faith or bad faith is
entirely irrelevant.
Thus in strict point of law, Article 448 is not apposite to the case at bar. Nevertheless, we believe that the provision therein on
indemnity may be applied by analogy considering that the primary intent of Article 448 is to avoid a state of forced co-ownership
and that the parties, including the two courts below, in the main agree that Articles 448 and 546 of the Civil Code are applicable
and indemnity for the improvements may be paid although they differ as to the basis of the indemnity.
Article 546 does not specifically state how the value of the useful improvements should be determined. The respondent court
and the private respondents espouse the belief that the cost of construction of the apartment building in 1965, and not its
current market value, is sufficient reimbursement for necessary and useful improvements made by the petitioner. This position
is, however, not in consonance with previous rulings of this Court in similar cases. In Javier vs. Concepcion, Jr., 14 this Court
pegged the value of the useful improvements consisting of various fruits, bamboos, a house and camarin made of strong
material based on the market value of the said improvements. In Sarmiento vs. Agana, 15 despite the finding that the useful
improvement, a residential house, was built in 1967 at a cost of between eight thousand pesos (P8,000.00) to ten thousand
pesos(P10,000.00), the landowner was ordered to reimburse the builder in the amount of forty thousand pesos (P40,000.00),
the value of the house at the time of the trial. In the same way, the landowner was required to pay the "present value" of the
house, a useful improvement, in the case of De Guzman vs. De la Fuente, 16 cited by the petitioner.
The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In this regard, this Court had
long ago stated in Rivera vs. Roman Catholic Archbishop of Manila 17 that the said provision was formulated in trying to adjust
the rights of the owner and possessor in good faith of a piece of land, to administer complete justice to both of them in such a
way as neither one nor the other may enrich himself of that which does not belong to him. Guided by this precept, it is therefore
the current market value of the improvements which should be made the basis of reimbursement. A contrary ruling would
unjustly enrich the private respondents who would otherwise be allowed to acquire a highly valued income-yielding four-unit
apartment building for a measly amount. Consequently, the parties should therefore be allowed to adduce evidence on the
present market value of the apartment building upon which the trial court should base its finding as to the amount of
reimbursement to be paid by the landowner.

The trial court also erred in ordering the petitioner to pay monthly rentals equal to the aggregate rentals paid by the lessees of
the apartment building. Since the private respondents have opted to appropriate the apartment building, the petitioner is thus
entitled to the possession and enjoyment of the apartment building, until he is paid the proper indemnity, as well as of the
portion of the lot where the building has been constructed. This is so because the right to retain the improvements while the
corresponding indemnity is not paid implies the tenancy or possession in fact of the land on which it is built, planted or
sown. 18 The petitioner not having been so paid, he was entitled to retain ownership of the building and, necessarily, the income
therefrom.

It follows, too, that the Court of Appeals erred not only in upholding the trial court's determination of the indemnity, but also in
ordering the petitioner to account for the rentals of the apartment building from 23 June 1993 to 23 September 1993.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No. 32679 and the Order of 15 November 1993 of the Regional
Trial Court, Branch 101, Quezon City in Civil Case No. Q-41470 are hereby SET ASIDE.

The case is hereby remanded to the trial court for it to determine the current market value of the apartment building on the lot.
For this purpose, the parties shall be allowed to adduce evidence on the current market value of the apartment building. The
value so determined shall be forthwith paid by the private respondents to the petitioner otherwise the petitioner shall be
restored to the possession of the apartment building until payment of the required indemnity.

No costs.

SO ORDERED.
G.R. No. 117009 October 11, 1995
SECURITY BANK & TRUST COMPANY and ROSITO C. MANHIT, petitioners,
vs.
COURT OF APPEALS and YSMAEL C. FERRER, respondents.
PADILLA, J.:
In this petition for review under Rule 45 of the Rules of Court, petitioners seek a review and reversal of the decision * of
respondent Court of Appeals in CA-G.R. CV No. 40450, entitled "Ysmael C. Ferrer v. Security Bank and Trust Company, et. al."
dated 31 August 1994, which affirmed the decision ** of the Regional Trial Court, Branch 63, Makati in Civil Case No. 42712, a
complaint for breach of contract with damages.
Private respondent Ysmael C. Ferrer was contracted by herein petitioners Security Bank and Trust Company (SBTC) and Rosito C.
Manhit to construct the building of SBTC in Davao City for the price of P1,760,000.00. The contract dated 4 February 1980
provided that Ferrer would finish the construction in two hundred (200) working days. Respondent Ferrer was able to complete
the construction of the building on 15 August 1980 (within the contracted period) but he was compelled by a drastic increase in
the cost of construction materials to incur expenses of about P300,000.00 on top of the original cost. The additional expenses
were made known to petitioner SBTC thru its Vice-President Fely Sebastian and Supervising Architect Rudy de la Rama as early as
March 1980. Respondent Ferrer made timely demands for payment of the increased cost. Said demands were supported by
receipts, invoices, payrolls and other documents proving the additional expenses.
In March 1981, SBTC thru Assistant Vice-President Susan Guanio and a representative of an architectural firm consulted by SBTC,
verified Ferrer's claims for additional cost. A recommendation was then made to settle Ferrer's claim but only for P200,000.00.
SBTC, instead of paying the recommended additional amount, denied ever authorizing payment of any amount beyond the
original contract price. SBTC likewise denied any liability for the additional cost based on Article IX of the building contract which
states:
If at any time prior to the completion of the work to be performed hereunder, increase in prices of
construction materials and/or labor shall supervene through no fault on the part of the contractor
whatsoever or any act of the government and its instrumentalities which directly or indirectly affects the
increase of the cost of the project, OWNER shall equitably make the appropriate adjustment on mutual
agreement of both parties.
Ysmael C. Ferrer then filed a complaint for breach of contract with damages. The trial court ruled for Ferrer and ordered
defendants SBTC and Rosito C. Manhit to pay:
a) P259,417.23 for the increase in price of labor and materials plus 12% interest thereon per annumfrom 15
August 1980 until fully paid;
b) P24,000.00 as actual damages;
c) P20,000.00 as moral damages;
d) P20,000.00 as exemplary damages;
e) attorney's fees equivalent to 25% of the principal amount due; and
f) costs of suit.
On appeal, the Court of Appeals affirmed the trial court decision.
In the present petition for review, petitioners assign the following errors to the appellate court:
. . . IN HOLDING THAT PLAINTIFF-APPELLEE HAS, BY PREPONDERANCE OF EVIDENCE SUFFICIENTLY PROVEN
HIS CLAIM AGAINST THE DEFENDANTS-APPELLANTS.
. . . IN INTERPRETING AN OTHERWISE CLEAR AND UNAMBIGUOUS PROVISION OF THE CONSTRUCTION
CONTRACT.
. . . IN DISREGARDING THE EXPRESS PROVISION OF THE CONSTRUCTION CONTRACT, THE LOWER COURT
VIOLATED DEFENDANTS-APPELLANTS' CONSTITUTIONAL GUARANTY OF NON IMPAIRMENT OF THE
OBLIGATION OF CONTRACT.1
Petitioners argue that under the aforequoted Article IX of the building contract, any increase in the price of labor and/or
materials resulting in an increase in construction cost above the stipulated contract price will not automatically make petitioners
liable to pay for such increased cost, as any payment above the stipulated contract price has been made subject to the condition
that the "appropriate adjustment" will be made "upon mutual agreement of both parties". It is contended that since there was
no mutual agreement between the parties, petitioners' obligation to pay amounts above the original contract price never
materialized.
Respondent Ysmael C. Ferrer, through counsel, on the other hand, opposed the arguments raised by petitioners. It is of note
however that the pleadings filed with this Court by counsel for Ferrer hardly refute the arguments raised by petitioners, as the
contents of said pleadings are mostly quoted portions of the decision of the Court of Appeals, devoid of adequate discussion of
the merits of respondent's case. The Court, to be sure, expects more diligence and legal know-how from lawyers than what has
been exhibited by counsel for respondent in the present case. Under these circumstances, the Court had to review the entire
records of this case to evaluate the merits of the issues raised by the contending parties.
Article 22 of the Civil Code which embodies the maxim, Nemo ex alterius incommodo debet lecupletari (no man ought to be
made rich out of another's injury) states:
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.
The above-quoted article is part of the chapter of the Civil Code on Human Relations, the provisions of which were formulated as
"basic principles to be observed for the rightful relationship between human beings and for the stability of the social order, . . .
designed to indicate certain norms that spring from the fountain of good conscience, . . . guides for human conduct [that] should
run as golden threads through society to the end that law may approach its supreme ideal which is the sway and dominance of
justice." 2
In the present case, petitioners' arguments to support absence of liability for the cost of construction beyond the original
contract price are not persuasive.
Under the previously quoted Article IX of the construction contract, petitioners would make the appropriate adjustment to the
contract price in case the cost of the project increases through no fault of the contractor (private respondent). Private
respondent informed petitioners of the drastic increase in construction cost as early as March 1980.
Petitioners in turn had the increased cost evaluated and audited. When private respondent demanded payment of P259,417.23,
petitioner bank's Vice-President Rosito C. Manhit and the bank's architectural consultant were directed by the bank to verify and
compute private respondent's claims of increased cost. A recommendation was then made to settle private respondent's claim
for P200,000.00. Despite this recommendation and several demands from private respondent, SBTC failed to make payment. It
denied authorizing anyone to make a settlement of private respondent's claim and likewise denied any liability, contending
that the absence of a mutual agreement made private respondent's demand premature and baseless.

Petitioners' arguments are specious.

It is not denied that private respondent incurred additional expenses in constructing petitioner bank's building due to a drastic
and unexpected increase in construction cost. In fact, petitioner bank admitted liability for increased cost when a
recommendation was made to settle private respondent's claim for P200,000.00. Private respondent's claim for the increased
amount was adequately proven during the trial by receipts, invoices and other supporting documents.

Under Article 1182 of the Civil Code, a conditional obligation shall be void if its fulfillment depends upon the sole will of the
debtor. In the present case, the mutual agreement, the absence of which petitioner bank relies upon to support its non-liability
for the increased construction cost, is in effect a condition dependent on petitioner bank's sole will, since private respondent
would naturally and logically give consent to such an agreement which would allow him recovery of the increased cost.

Further, it cannot be denied that petitioner bank derived benefits when private respondent completed the construction even at
an increased cost.

Hence, to allow petitioner bank to acquire the constructed building at a price far below its actual construction cost would
undoubtedly constitute unjust enrichment for the bank to the prejudice of private respondent. Such unjust enrichment, as
previously discussed, is not allowed by law.

Finally, with respect to the award of attorney's fees to respondent, the Court has previously held that, "even with the presence
of an agreement between the parties, the court may nevertheless reduce attorney's fees though fixed in the contract when the
amount thereof appears to be unconscionable or unreasonable."3 As previously noted, the diligence and legal know-how
exhibited by counsel for private respondent hardly justify an award of 25% of the principal amount due, which would be at least
P60,000.00. Besides, the issues in this case are far from complex and intricate. The award of attorney's fees is thus reduced to
P10,000.00.

WHEREFORE, with the above modification in respect of the amount of attorney's fees, the appealed decision of the Court of
Appeals in CA G.R. CV No. 40450 is AFFIRMED.

SO ORDERED.
VIOLA CRUZ, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION, NORKIS DISTRIBUTORS, INC., JOSE RAMIRO A. Thru: Jojo Cruz
CARPIO, JR., WESSIE QUISUMBING, and ELIZALDE AMPALAYO, Respondents.
From: P.I.R. Department
DECISION
Subject: RELIEVING OF DUTIES AND FUNCTIONS

PURISIMA, J.: Your present ill-health conditions has made you incapable of performing your assigned duties and functions effectively.

Because of the above reason, management has decided to relieve you of your present duties and responsibilities as
This is a petition for certiorari under Rule 65 of the Rules of Court ascribing grave abuse of discretion to the National Labor Bookkeeper/Cashier of NDC Valencia effective immediately.
Relations Commission (NLRC) in issuing its Resolution, dated November 19, 1993, dismissing for lack of merit petitioner’s
complaint against the respondents, Norkis Distributors, Inc., Jose Ramiro A. Carpio, Jr., Wessie Quisumbing, and Elizalde This is done to protect company interest and to avoid disruption of the normal business operations that may result to delay in
Ampalayo; and the subsequent Order, dated April 13, 1994, denying petitioner’s Motion for Reconsideration. the submission of reports affecting the entire organization, and to avoid occurrence of substantial losses. Further, this is to
protect you from any additional physical and mental burden that may result because of your incapable (sic) to work normally.
The antecedent facts are as follows:chanrob1es virtual 1aw library This will serve as your notice of termination for health reason which will take effect upon receipt of this letter.

Respondent Norkis Distributors, Inc., a domestic corporation with principal office and business address at A. S. Fortuna Street, For your information and compliance.
Mandaue City, Cebu, is engaged in the business of selling motorcycles and household appliances, with branches all over the
country, one of which branches is in Valencia, Bukidnon. Respondents Wessie Quisumbing, Jose Ramiro A. Carpio, Jr., and (Sgd.) Elenito P. Palang
Elizalde Ampalayo are its President, Vice-President and Manager, respectively.
HRD Manager
Petitioner Viola Cruz was hired and employed by respondent Norkis sometime in March 1997 as cashier/bookkeeper at its
branch in Cagayan de Oro City, and was later transferred to its Valencia, Bukidnon branch. For her loyalty and dedication to the Noted:chanrob1es virtual 1aw library
company, petitioner Cruz was given compensating salary adjustment of One Hundred (P100.00) Pesos, effective July 1, 1990. 1
(Sgd.) Ramiro A. Carpio
In October 1990, the Valencia branch of Norkis was scheduled to transfer its office to another place. On October 14, 1990, while
petitioner and her co-employees were busy packing up and making an inventory of the things to be moved preparatory to such Vice-President
transfer, the petitioner suddenly collapsed. She was rushed to the Monsanto General Hospital in Valencia, Bukidnon in the
evening of the same day but was able to report for work the following day. On March 18, 1991, petitioner lodged a complaint for illegal dismissal against the private respondents, praying for payment of
separation pay in lieu of reinstatement, service incentive, leave pay, maternity leave pay, 13th month pay, holiday pay and other
On October 17, 1990, petitioner was transferred to the Capitol College General Hospital in Cagayan de Oro City and was confined money claims, before the Arbitration Branch of the NLRC in Cagayan De Oro City.chanrobles.com : law library
and was confine thereat until October 25. She was diagnosed to be suffering from "CNS Infection: TB Meningitis v. Cryptococcal
Meningitis." She was later transferred to the Maria Reyna Hospital, where she was confined from October 25 to December 5, On May 28, 1993, Labor Arbiter Leon P. Murillo rendered a decision for complainant/petitioner, disposing as
1990, and treated for "Cryptococcal Meningitis, Pott’s Disease, and Diabetes Mellitus Type II" . follows:jgc:chanrobles.com.ph

Starting October 15, 1990, the petitioner stopped reporting for work. On October 19, 1990, respondent Norkis was informed by "WHEREFORE, in view of all the foregoing judgment is hereby entered ordering Norkis Distributors, Inc. to pay complainant Viola
petitioner’s co-employees of her condition, and it was able to recruit a replacement cashier/bookkeeper in the person of Cruz the following:chanrob1es virtual 1aw library
Hernando Juaman, two days after petitioner’s collapse.chanrobles.com : red
1) Separation pay P25,832.10
On December 28, 1990, petitioner sent a letter to respondent Norkis to verify the status of her employment. As an answer, she
received a termination letter, dated November 2, 1990, 2 citing health reasons as the cause for her dismissal, to 2) Service Incentive leave pay P1,819.80
wit:jgc:chanrobles.com.ph
3) Proportionate 13th month
"Norkis-VMNG
pay for 1990 P2,909.27
Mandaue City
and all the above-named respondents are hereby ordered to jointly and severally pay complainant Viola Cruz P100,000.00 in
November 2, 1990 moral damages and P20,000.00 in exemplary damages.

To: Viola Cruz Respondent Norkis Distributors, Inc. is likewise ordered to pay P15,056.11 as attorney’s fees." 3

Bookkeeper/Cashier- NDC Valencia From the said decision both parties appealed to the NLRC; and on November 19, 1993, the Fifth Division of the NLRC reversed
and set aside the appealed decision of the Labor Arbiter, ruling thus:jgc:chanrobles.com.ph
 work.
"WHEREFORE, the decision appealed from is Reversed and Set Aside and a new one dismissing the complaint for lack of merit.
However, respondent company is ordered to pay complainant her unpaid service incentive leave pay and proportionate 13th The petition is meritorious.
month pay for 1990 in the aggregate sum of P4,729.07." 4
For unexplained absence to constitute abandonment, there must be a clear, deliberate and unjustified refusal on the part of the
After her receipt of the Resolution dated April 11, 1994 of NLRC denying her motion for reconsideration, petitioner found her employee to continue his employment, without any intention of returning. 7 The Court has repeatedly held that mere absence
way to this court via the present petition, imputing grave abuse of discretion to the NLRC, and posing as issues:chanrob1es does not suffice to constitute abandonment. The absence must be accompanied by overt acts unerringly showing that the
virtual 1aw library employee simply does not want to work anymore. In the case of Artemio Labor, Et. Al. v. NLRC and Gold City Commercial
Complex, Inc. and Rudy Uy, 8 it was held that to constitute abandonment, two elements must concur, to wit: (1) the failure to
I. WHETHER OR NOT PETITIONER WAS ILLEGALLY DISMISSED BY PRIVATE RESPONDENTS. report for work or absence without valid or justifiable reason, and (2) clear intention to sever the employer-employee
relationship, with the second element as the more determinative factor and being manifested by some overt acts.
II. WHETHER OR NOT PETITIONER IS ENTITLED TO RECOVER MORAL AND EXEMPLARY DAMAGES AND ATTORNEY’S FEES FROM
PRIVATE RESPONDENTS. In the case at bar, petitioner’s absence was explained by the undeniable fact that she was confined for treatment in several
hospitals for around three (3) months. The claim of respondent Norkis that it was not informed of the sickness of petitioner is
The petition is visited by merit. belied by the fact that on October 14, 1990, the day before petitioner stopped going to work, she collapsed within the office
premises and was immediately rushed to a hospital. Such fact should explain why petitioner deemed it unnecessary to inform
In its Comment sent in on April 19, 1995, respondent National Labor Relations Commission theorized that its factual findings respondent Norkis that she was sick. Moreover, private respondents were apparently told that the petitioner was ill because in
cannot be looked into and re-examined by this Court following the well-entrenched doctrine that factual findings of quasi- the letter of termination dated November 2, 1990, they advised petitioner that the company has decided to replace her as her
judicial agencies like the NLRC, which have acquired expertise because their jurisdiction is confined to specific matters, are "present ill-health condition has made you (her) incapable of performing your (her) assigned duties and functions effectively."
generally accorded not only respect but even finality, when such findings are supported by substantial evidence. That she did not file any sick leave was of no moment considering that there was no communication from the respondent
company regarding the status of petitioner’s employment. The said letter of termination, dated November 2, 1990, was only
The Court agrees with respondent NLRC on the validity of the aforecited doctrine. However, it is well-settled that there are received by petitioner in January 1991, after she wrote them (private respondents) on December 28, 1990, requesting financial
judicially recognized exceptions to the said doctrine, one of which is when the findings of fact of the Labor Arbiter and of the assistance.chanrobles.com : chanrobles.com.ph
National Labor Relations Commission are at variance, such as in the case under scrutiny, where the Court may cull its own finding
of facts on the basis of the evidence on record.chanroblesvirtuallawlibrary The additional ground cited by the private respondents for the dismissal of petitioner was loss of trust and confidence as a result
of alleged defalcation of company funds committed by petitioner. They theorized that during an audit and inventory conducted
In the said letter of termination, dated November 2, 1990, private respondents cited "health reasons" as the cause for by Mr. Hernando Juaman, who replaced petitioner as cashier/bookkeeper, unaccounted company funds in petitioner’s custody
petitioner’s dismissal from work:jgc:chanrobles.com.ph were discovered such that on October 19, 1990, a letter informing petitioner of such unaccounted funds, together with an
attached statement of account, was sent to petitioner and received by her husband Jojo Cruz. A follow-up letter was sent to
". . . This will therefore serve as your notice of termination for health reason which will take effect upon receipt of this letter. . . petitioner on October 24, 1990, but petitioner continued to ignore the same and failed to reply thereto. It is private
." 5 respondents’ submission that the discovery of the missing funds in petitioner’s custody, her unexplained disappearance and
prolonged absence militate against the protestation of innocence of petitioner and are inculpatory facts and circumstances of
Under Section 8, Rule I, Book VI of the Rules and Regulations Implementing the Labor Code, for a disease to be a valid ground for defalcation against her; private respondents concluded.
the dismissal of the employee, the continued employment of such employee is prohibited by law or prejudicial to his health or
the health of his co-employees, and there must be a certification by a competent public health authority that the disease is of For her part, petitioner countered that the allegations of private respondents are baseless. According to her, she was not present
such nature or at such a stage that it cannot be cured within a period of six (6) months, even with proper medical treatment. when the audit was allegedly conducted and she was neither informed of the charges against her nor given an opportunity to
Since the burden of proving the validity of the dismissal of the employee rests on the employer, the latter should likewise bear refute the same. She denied receiving the letters requiring her to explain the missing funds on the dates they were supposedly
the burden of showing that the requisites for a valid dismissal due to a disease have been complied with. In the absence of the sent. Moreover, Mr. Juaman, who allegedly conducted the audit, did not testify and neither was his affidavit presented before
required certification by a competent public health authority, this Court has ruled against the validity of the employee’s the Labor Arbiter. What was introduced as evidence of the alleged defalcation was the affidavit of a certain Mr. Elenito Palang,
dismissal. 6 which affidavit could not be given credence because the latter was not the one who conducted the audit and had no personal
knowledge of the defalcation. References were made to unaccounted company funds allegedly in the possession of petitioner
Considering that in the present case, the alleged reason for the dismissal of petitioner was her illness, the private respondents but there was no categorical statement as to how such shortages were caused, the audit procedure observed and it was
have to prove that their decision to terminate the services of petitioner was reached after compliance with the aforestated petitioner who was responsible for the said shortages; petitioner pointed out.
requisites under Section 8. Private respondents having failed to substantiate the same, the dismissal of petitioner on the ground
of illness cannot be upheld. Petitioner’s posture is sustainable. The letter dated October 19, 1990, allegedly sent to petitioner regarding the defalcation
charges, reads:jgc:chanrobles.com.ph
Respondent Norkis cited as another ground for the dismissal of petitioner, her alleged unexplained absence for almost three (3)
months, which they theorized upon as amounting to abandonment. It is argued that since petitioner did not inform the company "This is to formally informed (sic) you that due to your indisposition to discharge your duties and responsibilities as the
that she was sick, did not file a sick leave and did not also present a medical certificate to support her illness for a period of three Cashier/Bookkeeper of NDC Valencia, we have no other recourse but to have another person to take your place.
months, she was considered absent without leave, and to have abandoned her job.
In the turnover and conduct of investigation of Hernando Juaman, Accounting Field Staff sent by the management to take over
On the other hand, petitioner maintains that, contrary to private respondents’ allegation that she abandoned her work, her your place, the following things were uncovered:chanrob1es virtual 1aw library
serious illness which necessitated her confinement in a hospital for almost three (3) months, caused her inability to report for
1. Unaccounted cash from the collections of October 12 and 13, 1990 of P5,374 and P2,712, respectively, totaling to P8,086;
These unaccounted cash were determined from the official receipts copies of the branch. In the case of Artemio Labor, Et. Al. v. NLRC, Gold City Commercial Complex, Inc. and Rudy Uy, 12 this Court held that the right of
an employer to dismiss employees on the ground of loss of trust and confidence must not be exercised arbitrarily and without
2. Unaccounted unclaimed salaries and wages of CSRs Pedro Versales and Nilo Pamutungan of P896.15 and P700.00 respectively, just cause. For loss of trust and confidence to be a valid ground for dismissal of an employee, it must be substantial and founded
totaling to P1,596.15 on clearly established facts sufficient to warrant the employee’s separation from employment. Loss of confidence must not be
used as a subterfuge for causes which are improper, illegal or unjustified; it must be genuine, not a mere afterthought, to justify
Since it is indeterminable when you can report back to work and account the abovementioned unaccounted cash we will be earlier action taken in bad faith. 13 Because of its subjective nature, this Court has been very scrutinizing in cases of dismissal
forced to apply your provident fund to these accountabilities. Please refer to the attached summary of your partial based on loss of trust and confidence because the same can easily be concocted by an abusive employer. Thus, when the breach
accountabilities with the company." 9 of trust or loss of confidence theorized upon is not borne by clearly established facts, such dismissal on the ground of loss and
confidence cannot be allowed. In the case under consideration, evidence is utterly wanting as to the defalcation allegedly
The aforesaid letter made mention of the alleged unaccounted funds in petitioner’s custody but no receipts, documents and perpetrated by the petitioner. Consequently, her dismissal on the ground of loss of confidence cannot be countenanced.
other proofs were attached to prove the collection and receipt by petitioner of the amounts therein listed. The attached
statement of account is of no probative value because it was just a summary of petitioner’s alleged accountabilities. It does not What is more, as intimated by petitioner, private respondents were remiss in their duty to afford her due process. An employee
suffice to show that petitioner did receive, retain and convert funds in her custody. may only be dismissed for just or authorized causes and the legality of dismissal of an employee hinges on: (a) the legality of the
act of dismissal; that is dismissal on the grounds provided for under Article 283 (now 282) of the New Labor Code and (b) the
What is more, private respondents failed to prove that a copy of the October 19, 1990 letter was really sent to and received by legality in the manner of dismissal. 14 The law requires that an employee sought to be dismissed must be served two written
petitioner. The allegation that said letter as well as the follow-up letter dated October 24, 1990 were received by her husband notices before termination of his employment. The first notice is to apprise the employee of the particular acts or omissions by
cannot be relied upon because the private respondents did not adduce any evidence that petitioner’s husband did really receive reason of which his dismissal has been decided upon; and the second notice is to inform the employee of the employer’s
subject letters. It is also negated by the fact that in later communications of private respondents to the petitioner, no mention decision to dismiss him. Failure to comply with the requirement of two notices makes the dismissal illegal. The procedure is
was ever made about her alleged defalcation. In a letter dated February 4, 1991, or almost four (4) months after the petitioner mandatory. Non-observance thereof renders the dismissal of an employee illegal and void. 15
was reportedly informed of the defalcation charges against her on October 19, 1990, no mention was ever made of petitioner’s
alleged accountabilities. As a matter of fact, the letter just apprised petitioner of the amount of separation pay due her, and of Records on hand show that prior to the letter of termination aforementioned, petitioner was never notified, through a memo or
the decision of the company to deduct therefrom the amount owing from the vehicle she acquired from the company under a letter, of the missing funds alluded to. Neither was she required to give her side regarding the alleged misappropriation or
leasing unit plan:jgc:chanrobles.com.ph defalcation of company funds being imputed to her. As pointed out by the Solicitor General, petitioner was never served with
notices by the private respondents, verbally or in writing, to inform her of the charges against her and to require her to answer
". . . the net amount due you at Pesos: Twelve Thousand Two Hundred Twenty-Three and twenty centavos (P12,223.20). such charges. It bears stressing that the respondents failed to establish that subject letter of October 19, 1990 was received by
petitioner or her husband. As a matter of fact, from the evidence it can be gleaned that the said letter was antedated so as to
x x x feign compliance with legal requirements.

. . . we will deduct the corresponding fees including that for compulsory TPL from your separation pay. . . .
We will be preparing the separation pay after the registration has been renewed and this will be forwarded to you immediately
together with the quit claim which will serve as clearance for the branch to release your MC after you have signed the same.
x x x" 10
And in the following letter sent to petitioner on January 14, 1991, reiterating the company’s decision to terminate her for health
reasons, the company even assured her that she would still be considered for any future vacancy in the company, to
wit:jgc:chanrobles.com.ph
"We are glad that you have already recovered although partially, and rest assured that once you will become completely healed
in the future and certified by your doctor to be physically fit to return to work, we will still consider you for any vacancy in the
company.
There is merit in petitioner’s submission that the award of moral and exemplary damages in her favor is warranted by her
unjustified dismissal. Award of moral and exemplary damages for an illegally dismissed employee is proper where the employee
had been harassed and arbitrarily terminated by the employer. 16 Moral damages may be awarded to compensate one for
diverse injuries such as mental anguish, besmirched reputation, wounded feelings and social humiliation occasioned by the
employer’s unreasonable dismissal of the employee. This Court has consistently accorded the working class a right to recover
damages for unjust dismissals tainted with bad faith; where the motive of the employer in dismissing the employee is far from
noble. The award of such damages is based not on the Labor Code but on Article 220 of the Civil Code. However, under the
attendant facts and circumstances, the Court is of the sense that the amount of One Hundred Twenty Thousand (P120,000.00)
Pesos awarded by the Labor Arbiter for moral and exemplary damages is too much. Fifty Thousand (P50,000.00) Pesos of moral
damages and Ten Thousand (P10,000.00) Pesos of exemplary damages should suffice.
WHEREFORE, the petition is GRANTED; the resolution of National Labor Relations Commission in NLRC Case No. M-001458-93 is
SET ASIDE; and the resolution of the Labor Arbiter dated May 28, 1993, in NLRC RAB Case No. 10-03-00211-91 is hereby
REINSTATED, with the modification that the award of damages is reduced to Fifty Thousand (P50,000.00) Pesos, as moral
damages, and Ten Thousand (P10,000.00) Pesos, as exemplary damages. Costs against Norkis Distributors, Inc.

x x x" 11 SO ORDERED.

If it were true that petitioner was guilty of misappropriation of company funds and she was terminated for loss of trust and
confidence, why did respondent Norkis still promise petitioner a future employment in the company. Untenable is respondents’
contention that when they terminated petitioner for health reasons, they intentionally did not make mention of the alleged
defalcation because they wanted to give petitioner a graceful exit from the company. Defalcation or misappropriation of
company funds if true is too serious an offense and breach of trust not to be exposed at the first
opportunity.chanroblesvirtuallawlibrary
 frequent as the days passed. As of June, 1948 the newlyweds were already estranged (Exh. "2-Escaño"). Vicenta had gone to
G.R. No. L-19671 November 29, 1965 Jimenez, Misamis Occidental, to escape from the scandal that her marriage stirred in Cebu society. There, a lawyer filed for her a
petition, drafted by then Senator Emmanuel Pelaez, to annul her marriage. She did not sign the petition (Exh. "B-5"). The case
was dismissed without prejudice because of her non-appearance at the hearing (Exh. "B-4").
PASTOR B. TENCHAVEZ, plaintiff-appellant,
vs.
VICENTA F. ESCAÑO, ET AL., defendants-appellees. On 24 June 1950, without informing her husband, she applied for a passport, indicating in her application that she was single,
that her purpose was to study, and she was domiciled in Cebu City, and that she intended to return after two years. The
application was approved, and she left for the United States. On 22 August 1950, she filed a verified complaint for divorce
I. V. Binamira & F. B. Barria for plaintiff-appellant.
against the herein plaintiff in the Second Judicial District Court of the State of Nevada in and for the County of Washoe, on the
Jalandoni & Jarnir for defendants-appellees.
ground of "extreme cruelty, entirely mental in character." On 21 October 1950, a decree of divorce, "final and absolute", was
issued in open court by the said tribunal.
REYES, J.B.L., J.:
In 1951 Mamerto and Mena Escaño filed a petition with the Archbishop of Cebu to annul their daughter's marriage to Pastor
Direct appeal, on factual and legal questions, from the judgment of the Court of First Instance of Cebu, in its Civil Case No. R- (Exh. "D"). On 10 September 1954, Vicenta sought papal dispensation of her marriage (Exh. "D"-2).
4177, denying the claim of the plaintiff-appellant, Pastor B. Tenchavez, for legal separation and one million pesos in damages
against his wife and parents-in-law, the defendants-appellees, Vicente, Mamerto and Mena,1 all surnamed "Escaño,"
On 13 September 1954, Vicenta married an American, Russell Leo Moran, in Nevada. She now lives with him in California, and,
respectively.2
by him, has begotten children. She acquired American citizenship on 8 August 1958.

The facts, supported by the evidence of record, are the following:

But on 30 July 1955, Tenchavez had initiated the proceedings at bar by a complaint in the Court of First Instance of Cebu, and
amended on 31 May 1956, against Vicenta F. Escaño, her parents, Mamerto and Mena Escaño, whom he charged with having
Missing her late afternoon classes on 24 February 1948 in the University of San Carlos, Cebu City, where she was then enrolled as dissuaded and discouraged Vicenta from joining her husband, and alienating her affections, and against the Roman Catholic
a second year student of commerce, Vicenta Escaño, 27 years of age (scion of a well-to-do and socially prominent Filipino family Church, for having, through its Diocesan Tribunal, decreed the annulment of the marriage, and asked for legal separation and
of Spanish ancestry and a "sheltered colegiala"), exchanged marriage vows with Pastor Tenchavez, 32 years of age, an engineer, one million pesos in damages. Vicenta claimed a valid divorce from plaintiff and an equally valid marriage to her present
ex-army officer and of undistinguished stock, without the knowledge of her parents, before a Catholic chaplain, Lt. Moises husband, Russell Leo Moran; while her parents denied that they had in any way influenced their daughter's acts, and
Lavares, in the house of one Juan Alburo in the said city. The marriage was the culmination of a previous love affair and was duly counterclaimed for moral damages.
registered with the local civil register.
The appealed judgment did not decree a legal separation, but freed the plaintiff from supporting his wife and to acquire
Vicenta's letters to Pastor, and his to her, before the marriage, indicate that the couple were deeply in love. Together with a property to the exclusion of his wife. It allowed the counterclaim of Mamerto Escaño and Mena Escaño for moral and exemplary
friend, Pacita Noel, their matchmaker and go-between, they had planned out their marital future whereby Pacita would be the damages and attorney's fees against the plaintiff-appellant, to the extent of P45,000.00, and plaintiff resorted directly to this
governess of their first-born; they started saving money in a piggy bank. A few weeks before their secret marriage, their Court.
engagement was broken; Vicenta returned the engagement ring and accepted another suitor, Joseling Lao. Her love for Pastor
beckoned; she pleaded for his return, and they reconciled. This time they planned to get married and then elope. To facilitate
The appellant ascribes, as errors of the trial court, the following:
the elopement, Vicenta had brought some of her clothes to the room of Pacita Noel in St. Mary's Hall, which was their usual
trysting place.
1. In not declaring legal separation; in not holding defendant Vicenta F. Escaño liable for damages and in dismissing the
complaint;.
Although planned for the midnight following their marriage, the elopement did not, however, materialize because when Vicente
went back to her classes after the marriage, her mother, who got wind of the intended nuptials, was already waiting for her at
the college. Vicenta was taken home where she admitted that she had already married Pastor. Mamerto and Mena Escaño were 2. In not holding the defendant parents Mamerto Escano and the heirs of Doña Mena Escaño liable for damages;.
surprised, because Pastor never asked for the hand of Vicente, and were disgusted because of the great scandal that the
clandestine marriage would provoke (t.s.n., vol. III, pp. 1105-06). The following morning, the Escaño spouses sought priestly 3 In holding the plaintiff liable for and requiring him to pay the damages to the defendant parents on their
advice. Father Reynes suggested a recelebration to validate what he believed to be an invalid marriage, from the standpoint of counterclaims; and.
the Church, due to the lack of authority from the Archbishop or the parish priest for the officiating chaplain to celebrate the
marriage. The recelebration did not take place, because on 26 February 1948 Mamerto Escaño was handed by a maid, whose 4. In dismissing the complaint and in denying the relief sought by the plaintiff.
name he claims he does not remember, a letter purportedly coming from San Carlos college students and disclosing an amorous
relationship between Pastor Tenchavez and Pacita Noel; Vicenta translated the letter to her father, and thereafter would not
That on 24 February 1948 the plaintiff-appellant, Pastor Tenchavez, and the defendant-appellee, Vicenta Escaño, were validly
agree to a new marriage. Vicenta and Pastor met that day in the house of Mrs. Pilar Mendezona. Thereafter, Vicenta continued
married to each other, from the standpoint of our civil law, is clearly established by the record before us. Both parties were then
living with her parents while Pastor returned to his job in Manila. Her letter of 22 March 1948 (Exh. "M"), while still solicitous of
above the age of majority, and otherwise qualified; and both consented to the marriage, which was performed by a Catholic
her husband's welfare, was not as endearing as her previous letters when their love was aflame.
priest (army chaplain Lavares) in the presence of competent witnesses. It is nowhere shown that said priest was not duly
authorized under civil law to solemnize marriages.
Vicenta was bred in Catholic ways but is of a changeable disposition, and Pastor knew it. She fondly accepted her being called a
"jellyfish." She was not prevented by her parents from communicating with Pastor (Exh. "1-Escaño"), but her letters became less
The chaplain's alleged lack of ecclesiastical authorization from the parish priest and the Ordinary, as required by Canon law, is
irrelevant in our civil law, not only because of the separation of Church and State but also because Act 3613 of the Philippine
Legislature (which was the marriage law in force at the time) expressly provided that —
SEC. 1. Essential requisites. Essential requisites for marriage are the legal capacity of the contracting parties and
consent. (Emphasis supplied)
The actual authority of the solemnizing officer was thus only a formal requirement, and, therefore, not essential to give the
marriage civil effects,3 and this is emphasized by section 27 of said marriage act, which provided the following:
SEC. 27. Failure to comply with formal requirements. No marriage shall be declared invalid because of the absence of
one or several of the formal requirements of this Act if, when it was performed, the spouses or one of them believed in
good faith that the person who solemnized the marriage was actually empowered to do so, and that the marriage was
perfectly legal.
The good faith of all the parties to the marriage (and hence the validity of their marriage) will be presumed until the contrary is
positively proved (Lao vs. Dee Tim, 45 Phil. 739, 745; Francisco vs. Jason, 60 Phil. 442, 448). It is well to note here that in the case
at bar, doubts as to the authority of the solemnizing priest arose only after the marriage, when Vicenta's parents consulted
Father Reynes and the archbishop of Cebu. Moreover, the very act of Vicenta in abandoning her original action for annulment
and subsequently suing for divorce implies an admission that her marriage to plaintiff was valid and binding.
Defendant Vicenta Escaño argues that when she contracted the marriage she was under the undue influence of Pacita Noel,
whom she charges to have been in conspiracy with appellant Tenchavez. Even granting, for argument's sake, the truth of that
contention, and assuming that Vicenta's consent was vitiated by fraud and undue influence, such vices did not render her
marriage ab initio void, but merely voidable, and the marriage remained valid until annulled by a competent civil court. This was
never done, and admittedly, Vicenta's suit for annulment in the Court of First Instance of Misamis was dismissed for non-
prosecution.
It is equally clear from the record that the valid marriage between Pastor Tenchavez and Vicenta Escaño remained subsisting and
undissolved under Philippine law, notwithstanding the decree of absolute divorce that the wife sought and obtained on 21
October 1950 from the Second Judicial District Court of Washoe County, State of Nevada, on grounds of "extreme cruelty,
entirely mental in character." At the time the divorce decree was issued, Vicenta Escaño, like her husband, was still a Filipino
citizen.4 She was then subject to Philippine law, and Article 15 of the Civil Code of the Philippines (Rep. Act No. 386), already in
force at the time, expressly provided:
Laws relating to family rights and duties or to the status, condition and legal capacity of persons are binding upon the
citizens of the Philippines, even though living abroad.
The Civil Code of the Philippines, now in force, does not admit absolute divorce, quo ad vinculo matrimonii; and in fact does not
even use that term, to further emphasize its restrictive policy on the matter, in contrast to the preceding legislation that
admitted absolute divorce on grounds of adultery of the wife or concubinage of the husband (Act 2710). Instead of divorce, the
present Civil Code only provides for legal separation (Title IV, Book 1, Arts. 97 to 108), and, even in that case, it expressly
prescribes that "the marriage bonds shall not be severed" (Art. 106, subpar. 1).
For the Philippine courts to recognize and give recognition or effect to a foreign decree of absolute divorce betiveen Filipino
citizens could be a patent violation of the declared public policy of the state, specially in view of the third paragraph of Article 17
of the Civil Code that prescribes the following:
Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, policy
and good customs, shall not be rendered ineffective by laws or judgments promulgated, or by determinations or
conventions agreed upon in a foreign country.
Even more, the grant of effectivity in this jurisdiction to such foreign divorce decrees would, in effect, give rise to an irritating
and scandalous discrimination in favor of wealthy citizens, to the detriment of those members of our polity whose means do not
permit them to sojourn abroad and obtain absolute divorces outside the Philippines.
From this point of view, it is irrelevant that appellant Pastor Tenchavez should have appeared in the Nevada divorce court.
Primarily because the policy of our law cannot be nullified by acts of private parties (Civil Code,Art. 17, jam quot.); and
additionally, because the mere appearance of a non-resident consort cannot confer jurisdiction where the court originally had
none (Area vs. Javier, 95 Phil. 579).
From the preceding facts and considerations, there flows as a necessary consequence that in this jurisdiction Vicenta Escaño's
divorce and second marriage are not entitled to recognition as valid; for her previous union to plaintiff Tenchavez must be
declared to be existent and undissolved. It follows, likewise, that her refusal to perform her wifely duties, and her denial
of consortium and her desertion of her husband constitute in law a wrong caused through her fault, for which the husband is
entitled to the corresponding indemnity (Civil Code, Art. 2176). Neither an unsubstantiated charge of deceit nor an anonymous
letter charging immorality against the husband constitute, contrary to her claim, adequate excuse. Wherefore, her marriage and
cohabitation with Russell Leo Moran is technically "intercourse with a person not her husband" from the standpoint of Philippine
Law, and entitles plaintiff-appellant Tenchavez to a decree of "legal separation under our law, on the basis of adultery" (Revised
Penal Code, Art. 333).
The foregoing conclusions as to the untoward effect of a marriage after an invalid divorce are in accord with the previous
doctrines and rulings of this court on the subject, particularly those that were rendered under our laws prior to the approval of
the absolute divorce act (Act 2710 of the Philippine Legislature). As a matter of legal history, our statutes did not recognize
divorces a vinculo before 1917, when Act 2710 became effective; and the present Civil Code of the Philippines, in disregarding
absolute divorces, in effect merely reverted to the policies on the subject prevailing before Act 2710. The rulings, therefore,
under the Civil Code of 1889, prior to the Act above-mentioned, are now, fully applicable. Of these, the decision in Ramirez vs.
Gmur, 42 Phil. 855, is of particular interest. Said this Court in that case:
As the divorce granted by the French Court must be ignored, it results that the marriage of Dr. Mory and Leona Castro,
celebrated in London in 1905, could not legalize their relations; and the circumstance that they afterwards passed for
husband and wife in Switzerland until her death is wholly without legal significance. The claims of the very children to
participate in the estate of Samuel Bishop must therefore be rejected. The right to inherit is limited to legitimate,
legitimated and acknowledged natural children. The children of adulterous relations are wholly excluded. The word
"descendants" as used in Article 941 of the Civil Code cannot be interpreted to include illegitimates born
of adulterous relations. (Emphasis supplied)
Except for the fact that the successional rights of the children, begotten from Vicenta's marriage to Leo Moran after the invalid
divorce, are not involved in the case at bar, the Gmur case is authority for the proposition that such union is adulterous in this
jurisdiction, and, therefore, justifies an action for legal separation on the part of the innocent consort of the first marriage, that
stands undissolved in Philippine law. In not so declaring, the trial court committed error.
True it is that our ruling gives rise to anomalous situations where the status of a person (whether divorced or not) would depend
on the territory where the question arises. Anomalies of this kind are not new in the Philippines, and the answer to them was
given in Barretto vs. Gonzales, 58 Phil. 667:
 The hardship of the existing divorce laws in the Philippine Islands are well known to the members of the Legislature. It
is the duty of the Courts to enforce the laws of divorce as written by Legislature if they are constitutional. Courts have
no right to say that such laws are too strict or too liberal. (p. 72)
The appellant's first assignment of error is, therefore, sustained.
However, the plaintiff-appellant's charge that his wife's parents, Dr. Mamerto Escaño and his wife, the late Doña Mena Escaño,
alienated the affections of their daughter and influenced her conduct toward her husband are not supported by credible
evidence. The testimony of Pastor Tenchavez about the Escaño's animosity toward him strikes us to be merely conjecture and
exaggeration, and are belied by Pastor's own letters written before this suit was begun (Exh. "2-Escaño" and "Vicenta," Rec. on
App., pp. 270-274). In these letters he expressly apologized to the defendants for "misjudging them" and for the "great
unhappiness" caused by his "impulsive blunders" and "sinful pride," "effrontery and audacity" [sic]. Plaintiff was admitted to the
Escaño house to visit and court Vicenta, and the record shows nothing to prove that he would not have been accepted to marry
Vicente had he openly asked for her hand, as good manners and breeding demanded. Even after learning of the clandestine
marriage, and despite their shock at such unexpected event, the parents of Vicenta proposed and arranged that the marriage be
recelebrated in strict conformity with the canons of their religion upon advice that the previous one was canonically defective. If
no recelebration of the marriage ceremony was had it was not due to defendants Mamerto Escaño and his wife, but to the
refusal of Vicenta to proceed with it. That the spouses Escaño did not seek to compel or induce their daughter to assent to the
recelebration but respected her decision, or that they abided by her resolve, does not constitute in law an alienation of
affections. Neither does the fact that Vicenta's parents sent her money while she was in the United States; for it was natural that
they should not wish their daughter to live in penury even if they did not concur in her decision to divorce Tenchavez (27 Am.
Jur. 130-132).
There is no evidence that the parents of Vicenta, out of improper motives, aided and abetted her original suit for annulment, or
her subsequent divorce; she appears to have acted independently, and being of age, she was entitled to judge what was best for
her and ask that her decisions be respected. Her parents, in so doing, certainly cannot be charged with alienation of affections in
the absence of malice or unworthy motives, which have not been shown, good faith being always presumed until the contrary is
proved.
SEC. 529. Liability of Parents, Guardians or Kin. — The law distinguishes between the right of a parent to interest
himself in the marital affairs of his child and the absence of rights in a stranger to intermeddle in such affairs. However,
such distinction between the liability of parents and that of strangers is only in regard to what will justify interference.
A parent isliable for alienation of affections resulting from his own malicious conduct, as where he wrongfully entices
his son or daughter to leave his or her spouse, but he is not liable unless he acts maliciously, without justification and
from unworthy motives. He is not liable where he acts and advises his child in good faith with respect to his child's
marital relations in the interest of his child as he sees it, the marriage of his child not terminating his right and liberty
to interest himself in, and be extremely solicitous for, his child's welfare and happiness, even where his conduct and
advice suggest or result in the separation of the spouses or the obtaining of a divorce or annulment, or where he acts
under mistake or misinformation, or where his advice or interference are indiscreet or unfortunate, although it has
been held that the parent is liable for consequences resulting from recklessness. He may in good faith take his child
into his home and afford him or her protection and support, so long as he has not maliciously enticed his child away, or
does not maliciously entice or cause him or her to stay away, from his or her spouse. This rule has more frequently
been applied in the case of advice given to a married daughter, but it is equally applicable in the case of advice given to
a son.
In the assessment of the moral damages recoverable by appellant Pastor Tenchavez from defendant Vicente Escaño, it is proper
to take into account, against his patently unreasonable claim for a million pesos in damages, that (a) the marriage was
celebrated in secret, and its failure was not characterized by publicity or undue humiliation on appellant's part; (b) that the
parties never lived together; and (c) that there is evidence that appellant had originally agreed to the annulment of the marriage,
although such a promise was legally invalid, being against public policy (cf. Art. 88, Civ. Code). While appellant is unable to
remarry under our law, this fact is a consequence of the indissoluble character of the union that appellant entered into
voluntarily and with open eyes rather than of her divorce and her second marriage. All told, we are of the opinion that appellant
should recover P25,000 only by way of moral damages and attorney's fees.
With regard to the P45,000 damages awarded to the defendants, Dr. Mamerto Escaño and Mena Escaño, by the court below, we
opine that the same are excessive. While the filing of this unfounded suit must have wounded said defendants' feelings and
caused them anxiety, the same could in no way have seriously injured their reputation, or otherwise prejudiced them, lawsuits
having become a common occurrence in present society. What is important, and has been correctly established in the decision
of the court below, is that said defendants were not guilty of any improper conduct in the whole deplorable affair. This Court,
therefore, reduces the damages awarded to P5,000 only.
Summing up, the Court rules:
(1) That a foreign divorce between Filipino citizens, sought and decreed after the effectivity of the present Civil Code (Rep. Act
386), is not entitled to recognition as valid in this jurisdiction; and neither is the marriage contracted with another party by the
divorced consort, subsequently to the foreign decree of divorce, entitled to validity in the country;
(2) That the remarriage of divorced wife and her co-habitation with a person other than the lawful husband entitle the latter to a
decree of legal separation conformably to Philippine law;
(3) That the desertion and securing of an invalid divorce decree by one consort entitles the other to recover damages;
(4) That an action for alienation of affections against the parents of one consort does not lie in the absence of proof of malice or
unworthy motives on their part.
WHEREFORE, the decision under appeal is hereby modified as follows;
(1) Adjudging plaintiff-appellant Pastor Tenchavez entitled to a decree of legal separation from defendant Vicenta F. Escaño;
(2) Sentencing defendant-appellee Vicenta Escaño to pay plaintiff-appellant Tenchavez the amount of P25,000 for damages and
attorneys' fees;
(3) Sentencing appellant Pastor Tenchavez to pay the appellee, Mamerto Escaño and the estate of his wife, the deceased Mena
Escaño, P5,000 by way of damages and attorneys' fees.
Neither party to recover costs.

Plaintiff Tenchavez, in falsely charging Vicenta's aged parents with racial or social discrimination and with having exerted efforts
and pressured her to seek annulment and divorce, unquestionably caused them unrest and anxiety, entitling them to recover
damages. While this suit may not have been impelled by actual malice, the charges were certainly reckless in the face of the
proven facts and circumstances. Court actions are not established for parties to give vent to their prejudices or spleen.

G.R. No. L-18919 December 29, 1962
ABELARDO JAVELLANA, TOMAS JONCO, RUDICO HABANA, EXEQUIEL GOLEZ, ALFREDO ANG, and FILIPINAS SOLEDAD, in their
capacities as Councilors of the Municipal Municipality of Buenavista, Province of Iloilo, petitioners appellees,
vs.
SUSANO TAYO, as Mayor of the Municipal Municipality of Buenavista, Iloilo, respondent-appellant.
Ramon A. Gonzales for petitioners-appellees.
Rico & Tiña for respondent-appellant.
BARRERA, J.:
This is a direct appeal taken by respondent Susano Tayo (Mayor of the Municipality of Buenavista, Iloilo) from the decision of the
Court of First Instance of Iloilo (in Civil Case No. 5558, for mandamus) declaring legal and validity the regular session held by
petitioners Abelardo Javellano Tomas Jonco, Rudico Habana, Exequiel Golez, Alfredo Ang, and Filipinas Soledad, constituting a
majority of the elected councilors of said municipality, and ordering respondent to give due course to the resolutions and or
ordinances passed thereat, and to sign the payrolls corresponding to the session days of June 1, June 15, July 6, July 20, August 3,
August 17, September 7, and September 21, 1960 for payment of the per diems of petitioner as councilors; to pay said Councilor
Golez the sum of P100.00 as moral damages; and to pay P100.00 as attorney' fees plus costs.
The case was submitted on the following Stipulation of Facts:
I That the petitioners made repeated demands for payment of their per diems for the of June 1, June 15, July 6, July 20,
That the petitioners are duly elected and qualified a members of the Municipal Council of the Municipality of
Buenavista, Province of Iloilo, Philippines; and that the respondent at the time the acts hereinbelow complained of
took place, was and still is the duly-elected and qualified Mayor of the Municipality of Buenavista, Province of Iloilo
Philippines where he resides and may be served with summons.
II
On February 8, 1960. the Municipal Council of the Municipality of Buenavista, Iloilo, unanimously approved Resolution
No. 5, Series of 1960, dated February 8, 1960, a copy of which is hereto attached to form an integral part hereon as
Annex 'A', which set the regular sessions of the Municipality Council of Buenavista on every first and third Wednesday
of every month, and which resolution was duly approved by the respondent, in his capacity as Mayor of the
Municipality of Buenavista.
III
That on June 1, 1960, at the time and place set for the regular session of the Municipal Council, the Mayor, Vice-
Mayor, No. 1 and No. 2 Councilors, and the Secretary were absent.
IV
That the six councilors, who are the petitioners in this case, were present and they proceeded to elect among
themselves a temporary presiding officer and Acting Secretary to take notes of the proceedings. Having thus elected a
temporary presiding officer and a secretary of the Council, they proceeded to do business.
V
That on June 15. 1960, at the time and place designated in Resolution No. 5, series of 1960, dated February 8, 1960
above referred to, the petitioners acting as duly elected and qualified councilors were present and again, in view of the
absence of the Mayor, Vice-Mayor said to councilor and the Secretary proceeded to elect a temporary presiding officer
and temporary secretary from among them, and did business as a Municipal Council of Buenavista.
VI
That again on July 6, and July 21, 1960, on August 3, and August 17, September 7, and on September 21, 1960, the
petitioners met at the place and time designated in Resolution No. 5, series of 1960, and proceeded to elect a
temporary Secretary among themselves, and did business as the Municipal Council of Buenavista, in view again of the
absence of the Mayor Vice-Mayor, 2 councilors, and the Secretary.
VII
That when the minutes of the proceedings of June 1, June 15. July 6, July 20, August 17, September 7, and September
21, 1960 of the Municipal Council were presented to the respondent for action, the respondent Mayor refused to act
upon said minutes, or particularly to approve or disapprove the resolution as approved by the municipal Council, the
Mayor declaring the sessions above referred to as null and void and not in accordance with.
VIII
August 3, August 17, September 7, 1960, by representing the payrolls; Provincial Forms No. 38(A) to the respondent
Mayor for the latter signature, but that the respondent refused to affix his signature to the payrolls thus presented,
covering the per diems of the petitioner alleging that the proceedings were illegal due to his absence.
IX
That the petitioners, acting through Atty. Bartolome T. Tina, addressed a letter dated August 8, 1960 to the Honorable
Provincial Fiscal of the Province of Iloilo, asking of the latter's opinion on the validity of the acts of the herein
petitioners, acting as the Municipal Council in the absence of the Mayor, Vice-Mayor, said two councilors and the
secretary, a copy which letter is herewith attached as Annex 'B' and made an integral part of this petition.
X
That on August 9, 1960, the Honorable Provincial Fiscal of the Province of Iloilo in his indorsement, rendered an
opinion upholding the validity of the controverted sessions of the Municipal Council, a copy, of which communication
is, likewise attached herein is Annex 'C' and made an integral part of this petition.
XI
That despite the opinion of the Provincial Fiscal, the respondent Mayor refused and still refuses to act upon the
resolution petitions presented to him and to sign the payrolls covering the per diems of the herein petitioners.
XII
 That the respondent brought the matter to the attention of the Provincial Board, of the Province of Iloilo, by means of
a letter questioning the legality of the minutes of the regular possession of the Municipal Council without his presence
individual that the Provincial Board resolved on September 23, 1960 to return the minutes of the regular session of the
Municipal Council of Buenavista, Iloilo, informing the Mayor that per the opinion of the Legal Assistant, said minutes is
legal.
XIII
That despite the resolution of the Provincial Board, the Mayor refused and still refuses to recognize the validity of the
acts of the Municipal Council and the legality of its regular session held in his absence.
On the basis of the foregoing Stipulation of Facts (plus the testimony of Councilor Exequiel Golez), the trial court (on July 26,
1961) rendered the decision above adverted to, partly stating:
This Court, after perusal of all the records of this case has reached the conclusion that the sessions held by the
petitioner during the absence of the respondent Mayor were perfectly valid and legal. The attendance of the Mayor is
not essential to the validity of the session as long as there is quorum constituted in accordance with law. To declare
that the proceedings of the petitioners were null and void, is to encourage recalcitrant public officials who would
frustrate valid session for political end or consideration. Public interest will immensely suffer, if a mayor who belongs
to one political group refuses to call or attend a session, because the Council is controlled by another political group. In
a democrats the minority should respect the majority and inasmuch as the petitioners constitute the majority political
group, it is but natural that they could validly hold a valid session, in order to devise means for public interest.
The respondent here as Municipal Mayor should have given good example, by calling and attending regular session on
the dates fixed by the Council. In the discharge of his of official duty, he should consider the Session Hall of the
Municipal Council as the sanctuary and depository of public interest and public welfare. Any member of the Council
should enter the Session Hall, not as a representative of any political part or group, but as a representative of the
people of the municipality whose interest and welfare should be safeguarded by the Council. In entering this Hall, he
must lay aside his political affiliation, interest, and consideration, because it is the sworn duty of every councilor to
perform his duty with justice and impartiality. Not to attend a meeting, constitutes an abandonment of the people's
welfare. One may be in the minority group, but he can discharge his duty with honor and prestige as a fiscalizer, to
fiscalize the doings and actuations of the majority. He may be overwhelmed in his plan or project by superior
numerical majority but if he could adduce good reasons and arguments in favor of the welfare of the people, his task
as a fiscalizer is thereby attained. There is no fear on attending any session because if your project is not carried out,
you may have the remedy, either by administrative or judicial relief, by questioning and ordinance or resolution passed
by the majority, which may be null and void because they are excessive and unreasonable. So, there is no reason why
the respondent in this case had refused to attend the session of the Council.
Petitioners here claim moral damages pursuant to the provisions of Article 2219, in connection with Article 21 and
Article 27 of the new Civil Code. Said Article 27 provides as follows:
'Any person suffering material or moral loss because a public servant or employee refuses or neglects,
without just cause, to perform his official duty may file an action for damages and other relief against the
latter, without prejudice to any disciplinary administrative action that my be taken.'lawphil.net
But in support of the allegations in the petition, only petitioner Exequiel Golez was presented as a witness who prove
moral damages he suffered as a consequence of the refusal the respondent Susano Tayo to perform his official duty.
such, of all the petitioners, only Exequiel Golez is entitled receive moral damages in the sum of P100.00.
IN VIEW OF THE FOREGOING, the petition for a writ of mandamus is hereby granted, and the respondent is here
ordered to give due course to the resolutions and ordinance passed by the petitioners in the regular sessions during
the absence of the respondent, to give due course and sign the payrolls covering the periods of June 1, June 15, July 6,
July 20, August 3, August 17, September 7, and September 21, 196 for the payment of per diems of the petitioners as
Municipal Councilors; to pay to said Exequiel Golez, the sum of P100.00 as moral damage, to pay the sum of P100.00 as
attorney's fee and to pay the costs of the proceeding.
SO ORDERED.
Respondent-appellant claims, in this appeal, that the trial court erred in holding that the sessions held by petitioners-appellees
during his absence and during the absence of his Vice-Mayor and the No. 1 and No. 2 Councilors the Municipal Council of
Buenavista, Iloilo were valid an legal.
The claim is untenable. In the first place, there is no question that the sessions at issue were held on the days set for regular
sessions of the council, as authorized an approved in a previous resolution. Secondly, it is not disputed that a majority of the
members of the council (six out of ten) were present in these sessions. Consequently, pursuant to Section 2221 of the Revised
Administrative Code which provides:
SEC. 2221. Quorum of council — Enforcing Attendance of absent members. — The majority of the council elected shall
constitute a quorum to do business; ....
there was a quorum to do business in all the sessions in question. The term "quorum" has been defined as that
number of members of the body which, when legally as assembled in their proper places, will enable the body to
transact its proper business, or, in other words, that number that makes a lawful body and gives it power to pass a law
or ordinance or do any other valid corporate act. (4 McQuillin, Municipal Corporation [3rd Ed 478]; see also State vs.
Wilkesville Tp., 20 Ohio St. 288).
Appellant, however asserts that while under Section 2221 of the Revised Administrative Code, the majority of the members of
the council constitutes a quorum to do business, the council "shall be presided by the Mayor and no one else", inasmuch as it is
one of the duties imposed upon him under Section 2194(d) of the Revised Administrative Code. 1 The argument would be
correct if the mayor (herein appellant) were present at the sessions in question and was prevented from presiding therein, but
not where, as in the instant case, he absented himself therefrom.
Appellant likewise invokes Section 7 (third paragraph) of Republic Act No. 9264, 2 in support of his view that the sessions in
question were null and void, as they were not presided by him or by his Vice-Mayor, or by the councilor who obtained the
largest number of votes.lawphil.net
It is true that this section mentions only the vice-mayor, or in his place, the councilor who obtained the largest number of votes
who could perform the duties of the mayor, in the event of the latter's temporary incapacity to do so, except the power to
appoint, suspend, or dismiss employees. Ordinarily, this enumeration would be in interpreted as exclusive, following the general
principle of inclusio unius, est exclusio alterius, but there are cogent reasons to disregard this rule in this case, since to adopt it
would cause inconvenience, hardship, and injury to public interest, as it would place in the hands of mayor, vice-mayor, and the
councilor receiving the highest number of votes an instrument to defeat the law investing the legislative power in the municipal
council, by simply boycotting, as they continuously did for 4 months, regular sessions of the council. It is to be noted that same
section 7 of Republic Act No. 2264 invoked by appellant provides, in case of permanent incapacity of mayor, vice-mayor, and the
councilor obtaining the largest number of votes, to assume and perform the duties of mayor, the councilor receiving the next
largest number of votes, and so on, can assume and perform such duties. We see no strong reason why the same procedure
should not be followed in case of temporary incapacity, there being no express prohibition against its observance. The legal
provision being therefore susceptible of two in interpretations, we adopt the one in consonance with the resumed intention of
the legislature to give its enactmentthe most reasonable and beneficial construction, the that will render them operative and
effective and harmonious with other provisions of law. This is imperative because, as already pointed out heretofore, under the
law "the majority of the council elected shall constitute a quorum to do business", and this would be defeated if adopt the literal
interpretation of appellant that only mayor, vice-mayor, or the councilor receiving the largest number of votes could preside the
council's meeting, to legal, irrespective of the presence of a quorum or majority of the councilors elected. Such an interpretation
would, indeed, be fraught with dangerous consequences. For it would, in effect, deprive the municipal council its function,
namely, the enactment of ordinances design for the general welfare of its inhabitants. As the trial court aptly observed, "To
declare that the proceedings of thepetitioners (herein appellees) were null and void, is to encourage recalcitrant public officials
who would frustrate valid sessions for political end or consideration. Public interest will immensely suffer, if a mayor who belong
to one political group refused to call or attend a session because the council is controlled by another political group."

Lastly, appellant contests the award of moral damage to appellee councilor Exequiel Golez. We find said award proper under
Article 27 of the new Civil Code, 3 considering that according to the trial court, he (Golez) was able to prove that he suffered the
same, as a consequence of appellant's refusal to perform his official duty, not withstanding the action taken by the Provincial
Fiscal an the Provincial Board upholding the validity of the session in question.

WHEREFORE, the decision appealed from is hereby affirmed with costs against respondent-appellant. So ordered.

G.R. No. 195549 September 3, 2014
WILLAWARE PRODUCTS CORPORATION, Petitioner,
vs.
JESICHRIS MANUFACTURING CORPORATION, Respondent.
DECISION
PERALTA, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to set aside the
Decision1 dated November 24, 2010 and Resolution2 dated February 10, 2011 of the Court of Appeals (CA) in CA-G.R. CV No.
86744.
The facts, as found by the Regional Trial Court (RTC), are as follows:
[Respondent] Jesichris Manufacturing Company ([respondent] for short) filed this present complaint for damages for unfair
competition with prayer for permanent injunction to enjoin [petitioner] Willaware Products Corporation ([petitioner] for short)
from manufacturing and distributing plastic-made automotive parts similar to those of [respondent].
[Respondent] alleged that it is a duly registeredpartnership engaged in the manufacture and distribution of plastic and metal
products, with principal office at No. 100 Mithi Street, Sampalukan, Caloocan City. Since its registration in 1992, [respondent]
has been manufacturing in its Caloocan plant and distributing throughout the Philippines plastic-made automotive parts.
[Petitioner], on the other hand, which is engaged in the manufacture and distribution of kitchenware items made of plastic and
metal has its office near that of [respondent]. [Respondent] further alleged that in view of the physical proximity of [petitioner’s]
office to [respondent’s] office, and in view of the fact that some of the [respondent’s] employeeshad transferred to [petitioner],
[petitioner] had developed familiarity with [respondent’s] products, especially its plastic-made automotive parts.
That sometime in November 2000, [respondent] discovered that [petitioner] had been manufacturing and distributing the same
automotive parts with exactly similar design, same material and colors but was selling these products at a lower price as
[respondent’s] plastic-made automotive parts and to the same customers.
[Respondent] alleged that it had originated the use of plastic in place of rubber in the manufacture ofautomotive underchassis
parts such as spring eye bushing, stabilizer bushing, shock absorberbushing, center bearing cushions, among others.
[Petitioner’s] manufacture of the same automotive parts with plastic materialwas taken from [respondent’s] idea of using plastic
for automotive parts. Also, [petitioner] deliberately copied [respondent’s] products all of which acts constitute unfair
competition, is and are contrary to law, morals, good customs and public policy and have caused [respondent] damages in terms
oflost and unrealizedprofits in the amount of TWO MILLION PESOS as of the date of [respondent’s] complaint.
Furthermore, [petitioner’s] tortuous conduct compelled [respondent] to institute this action and thereby to incur expenses in
the way of attorney’s fees and other litigation expenses in the amount of FIVE HUNDRED THOUSAND PESOS (₱500,000.00).
In its Answer, [petitioner] denies all the allegations of the [respondent] except for the following facts: that it is engaged in the
manufacture and distribution of kitchenware items made of plastic and metal and that there’s physical proximity of [petitioner’s]
office to [respondent]’s office, and that someof [respondent’s] employees had transferred to [petitioner] and that over the years
[petitioner] had developed familiarity with [respondent’s] products, especially its plastic made automotive parts.
As its Affirmative Defenses, [petitioner] claims that there can be no unfair competition as the plastic-made automotive parts are
mere reproductions of original parts and their construction and composition merely conforms to the specificationsof the original
parts of motor vehicles they intend to replace. Thus, [respondent] cannot claim that it "originated" the use of plastic for these
automotive parts. Even assuming for the sake of argument that [respondent] indeed originated the use of these plastic
automotive parts, it still has no exclusive right to use, manufacture and sell these as it has no patent over these products.
Furthermore, [respondent] is not the only exclusive manufacturer of these plastic-made automotive parts as there are other
establishments which were already openly selling them to the public.3
After trial on the merits, the RTC ruled in favor of respondent. It ruled that petitioner clearly invaded the rights or interest of
respondent by deliberately copying and performing acts amounting to unfair competition. The RTC further opined that under the
circumstances, in order for respondent’s property rights to be preserved, petitioner’s acts of manufacturing similar plastic-made
automotive parts such as those of respondent’s and the selling of the sameproducts to respondent’s customers, which it
cultivated over the years, will have to be enjoined. The dispositive portion of the decision reads:
WHEREFORE, premises considered, the court finds the defendant liable to plaintiff Two Million (₱2,000,000.00) Pesos, as actual
damages, One Hundred Thousand (₱100,000.00) Pesos as attorney’s fees and One Hundred Thousand (₱100,000.00) Pesos for
exemplary damages. The court hereby permanently [enjoins] defendant from manufacturing the plastic-made automotive parts
as those manufactured by plaintiffs.
SO ORDERED.4
Thus, petitioner appealed to the CA.
On appeal, petitioner asserts that ifthere is no intellectual property protecting a good belonging to another,the copying thereof
for production and selling does not add up to unfair competition as competition is promoted by law to benefit consumers.
Petitioner further contends that it did not lure away respondent’s employees to get trade secrets. It points out that the plastic
spare parts sold by respondent are traded in the market and the copying of these can be done by simplybuying a sample for a
mold to be made.
Conversely, respondent averred that copyright and patent registrations are immaterial for an unfair competition case to prosper
under Article 28 of the Civil Code. It stresses that the characteristics of unfair competition are present in the instant case as the
parties are trade rivals and petitioner’s acts are contrary to good conscience for deliberately copying its products and employing
its former employees.
In a Decision dated November 24,2010, the CA affirmed with modification the ruling of the RTC. Relevant portions of said
decision read:
Despite the evidence showing thatWillaware took dishonest steps in advancing its business interest against Jesichris, however,
the Court finds no basis for the award by the RTC of actual damages. One is entitled to actual damages as one has duly proven.
The testimony of Quejada, who was engaged by Jesichris in 2001 to audit its business, only revealed that there was a discrepancy
between the sales of Jesichris from 2001 to 2002. No amount was mentioned. As for Exhibit "Q," which is a copy of the
comparative income statement of Jesichris for 1999-2002, it shows the decline of the sales in 2002 in comparison with those
made in 2001 but it does not disclose if this pertains to the subject automotive parts or to the other products of Jesichris like
plates.
In any event, it was clearly shown that there was unfair competition on the part of Willaware that prejudiced Jesichris. It is only
proper that nominal damages be awarded in the amount of Two Hundred Thousand Pesos (₱200,000.00) in order to recognize
and vindicate Jesichris’ rights. The RTC’s award of attorney’s fees and exemplary damages is also maintained.
xxxx
WHEREFORE, premises considered, the Decision dated April 15, 2003 of the Regional Trial Court of Caloocan City, Branch 131, in
Civil Case No. C-19771 is hereby MODIFIED. The award of Two Million Pesos (₱2,000,000.00) actual damages is deleted and in its
place, Two Hundred Thousand Pesos nominal damages is awarded.
SO ORDERED.5
Dissatisfied, petitioner moved for reconsideration. However, the same was denied for lack of merit by the CA in a Resolution
dated February 10, 2011.
Hence, the present Petition for Review wherein petitioner raises the following issues for our resolution:
(1) Whether or not there is unfair competition under human relations when the parties are not competitors and there
is actually no damage on the part of Jesichris?
(2) Consequently, if there is no unfair competition, should there be moral damages and attorney’s fees?
(3) Whether or not the addition of nominal damages is proper although no rights have been established?
(4) If ever the right of Jesichris refersto its copyright on automotive parts, should it be considered in the light of the
said copyrights were considered to be void by no less than this Honorable Court in SC GR No. 161295?
(5) If the right involved is "goodwill" then the issue is: whether or not Jesichris has established "goodwill?"6
In essence, the issue for our resolution is: whether or not petitioner committed acts amounting to unfair competition under
Article 28 of the Civil Code.
Prefatorily, we would like to stress that the instant case falls under Article 28 of the Civil Code on humanrelations, and not unfair
competition under Republic Act No. 8293,7 as the present suit is a damage suit and the products are not covered by patent
registration. A fortiori, the existence of patent registration is immaterial in the present case.
The concept of "unfair competition"under Article 28 is very much broader than that covered by intellectual property laws. Under
the present article, which follows the extended concept of "unfair competition" in American jurisdictions, the term coverseven
cases of discovery of trade secrets of a competitor, bribery of his employees, misrepresentation of all kinds, interference with
the fulfillment of a competitor’s contracts, or any malicious interference with the latter’s business.8
With that settled, we now come to the issue of whether or not petitioner committed acts amounting tounfair competition under
Article 28 of the Civil Code.
We find the petition bereft of merit.
Article 28 of the Civil Code provides that "unfair competition in agricultural, commercial or industrial enterprises or in labor
through the use of force, intimidation, deceit, machination or any other unjust, oppressive or high-handed method shall give rise
to a right of action by the person who thereby suffers damage."
From the foregoing, it is clear thatwhat is being sought to be prevented is not competitionper sebut the use of unjust, oppressive
or high- handed methods which may deprive others of a fair chance to engage in business or to earn a living. Plainly,what the law
prohibits is unfair competition and not competition where the means usedare fair and legitimate.
In order to qualify the competition as "unfair," it must have two characteristics: (1) it must involve an injury to a competitor or
trade rival, and (2) it must involve acts which are characterized as "contrary to good conscience," or "shocking to judicial
sensibilities," or otherwise unlawful; in the language of our law, these include force, intimidation, deceit, machination or any
other unjust, oppressive or high-handed method. The public injury or interest is a minor factor; the essence of the matter
appears to be a private wrong perpetrated by unconscionable means.9
Here, both characteristics are present.
First, both parties are competitors or trade rivals, both being engaged in the manufacture of plastic-made automotive parts.
Second, the acts of the petitioner were clearly "contrary to good conscience" as petitioner admitted having employed
respondent’s formeremployees, deliberately copied respondent’s products and even went to the extent of selling these products
to respondent’s customers.10
To bolster this point, the CA correctly pointed out that petitioner’s hiring of the former employees of respondent and
petitioner’s act of copying the subject plastic parts of respondent were tantamount to unfair competition, viz.:
The testimonies of the witnesses indicate that [petitioner] was in bad faith in competing with the business of
[respondent].1âwphi1 [Petitioner’s] acts can be characterized as executed with mischievous subtle calculation. To illustrate, in
addition to the findings of the RTC, the Court observes that [petitioner] is engaged in the production of plastic kitchenware
previous to its manufacturing of plasticautomotive spare parts, it engaged the services of the then mold setter and maintenance
operator of [respondent], De Guzman, while he was employed by the latter. De Guzman was hired by [petitioner] in order to
adjust its machinery since quality plastic automotive spare parts were not being made. It baffles the Court why [petitioner]
cannot rely onits own mold setter and maintenance operator to remedy its problem. [Petitioner’s] engagement of De Guzman
indicates that it is banking on his experience gained from working for [respondent].
Another point we observe is that Yabut, who used to be a warehouse and delivery man of [respondent], was fired because he
was blamed of spying in favor of [petitioner]. Despite this accusation, he did not get angry. Later on, he applied for and was hired
by [petitioner] for the same position he occupied with [respondent]. These sequence of events relating to his employment by
[petitioner] is suspect too like the situation with De Guzman.11
Thus, it is evident that petitioner isengaged in unfair competition as shown by his act of suddenly shifting his business from
manufacturing kitchenware to plastic-made automotive parts; his luring the employees of the respondent to transfer to his
employ and trying to discover the trade secrets of the respondent.12
Moreover, when a person starts an opposing place of business, not for the sake of profit to himself, but regardless of loss and for
the sole purpose of driving his competitor out of business so that later on he can take advantage of the effects of his malevolent
purpose, he is guilty of wanton wrong.13 As aptly observed by the courta quo, the testimony of petitioner’s witnesses indicate
that it acted in bad faith in competing with the business of respondent, to wit: [Petitioner], thru its General Manager, William
Salinas, Jr., admitted that it was never engaged in the business of plastic-made automotive parts until recently, year 2000:
Atty. Bautista: The business name of Willaware Product Corporation is kitchenware, it is (sic) not? Manufacturer of kitchenware
and distributor ofkitchenware, is it not? Mr. Salinas: Yes, sir. Atty. Bautista: And you said you have known the [respondent]
Jesichris Manufacturing Co., you have known it to be manufacturing plastic automotive products, is it not? Mr. Salinas: Yes, sir.
Atty. Bautista: In fact, you have been (sic) physically become familiar with these products, plastic automotive products of
Jesichris? Mr. Salinas: Yes, sir.
How [petitioner] was able to manufacture the same products, in terms of color, size, shape and composition as those sold by
Jesichris was due largely to the sudden transfer ofJesichris’ employees to Willaware.
Atty. Bautista: Since when have you been familiar with Jesichris Manufacturing Company?
Mr. Salinas: Since they transferred there (sic) our place. A: William Salinas, sir.

Atty. Bautista: And that was in what year? Mr. Salinas: Maybe four (4) years. I don’t know the exact date. Q: And will you kindly inform us what happened when you spotted upon them drinking?

Atty. Bautista: And some of the employees of Jesichris Manufacturing Co. have transferred to your company, is it not? A: Jun Molina called me, sir.

Mr. Salinas: Yes, sir. Q: And what happened after that?

Atty. Bautista: How many, more or less? A: At that time, he offered mea glass of wine and before I was able to drink the wine, Mr. Salinas uttered something, sir.

Mr. Salinas: More or less, three (3). Q: And what were those words uttered by Mr. Salinas to you?

Atty. Bautista: And when, in what year or month did they transfer to you? A: "O, ano naapektuhan na kayo sa ginaya (sic) ko sa inyo?"

Mr. Salinas: First, November 1. Q: And what did you do after that, after hearing those words?

Atty. Bautista: Year 2000? A: And he added these words, sir. "sabihin mo sa amo mo, dalawang taon na lang pababagsakin ko na siya."

Mr. Salinas: Yes sir. And then the other maybe February, this year. And the other one, just one month ago. Q: Alright, hearing those words, will you kindly tell this court whom did you gather to be referred to as your "amo"?

That [petitioner] was clearly outto take [respondent] out of business was buttressed by the testimony of [petitioner’s] witness, A: Mr. Jessie Ching, sir.14
Joel Torres:
In sum, petitioner is guilty of unfair competition under Article 28 of the Civil Code.
Q: Are you familiar with the [petitioner], Willaware Product Corporation?
However, since the award of Two Million Pesos (₱2,000,000.00) in actual damages had been deleted and in its place Two
A: Yes, sir. Hundred Thousand Pesos (₱200,000.00) in nominal damages is awarded, the attorney's fees should concomitantly be modified
and lowered to Fifty Thousand Pesos (₱50,000.00).
Q: Will you kindly inform this court where is the office of this Willaware Product Corporation (sic)?
WHEREFORE, the instant petition is DENIED. The Decision dated November 24, 2010 and Resolution dated February 10, 2011 of
A: At Mithi Street, Caloocan City, sir. the Court of Appeals in CA-G.R. CV No. 86744 are hereby AFFIRMED with MODIFICATION that the award of attorney's fees be
lowered to Fifty Thousand Pesos (₱50,000.00).
Q: And Mr. Witness, sometime second Saturday of January 2001, will you kindly inform this court what unusual even (sic)
transpired between you and Mr. Salinas on said date? SO ORDERED.

A: There was, sir.

Q: What is that?

A: Sir, I was walking at that time together with my wife going to the market and then I passed by the place where they were
having a drinking spree, sir.

Q: You mentioned they, who were they who were drinking at that time?

A: I know one Jun Molina, sir.

Q: And who else was there?

 Answering the first proposition, the respondent points out, with quotations from the stenographic notes, that said motion for
G.R. No. L-7358 May 31, 1955 reinstatement was heard on December 1, 1951, witnesses having testified. And what is conclusive, respondent assert, without
contradiction, that when petitioner moved for reconsideration it never claimed such absence of proper hearing.
NATIONAL LABOR UNION, petitioner,
vs. As to the second proposition, the respondent suggests with some reason — that the National Labor Union has no right to assail
AGUINALDO'S ECHAGUE, INC., respondent. the validity of stipulations in a contract between respondent and the Agemas, especially because, intentionally or
unintentionally, the latter organization is not impleaded as party respondent in the proceeding. And the employees, formerly
belonging to Agemas, now affiliated to the Labor Union cannot pretend to represent the Agemas and question the validity,
Eulogio L. Lerum for petitioner.
because they are admittedly in the minority (34 out of 140).
V. E. Del Rosario for respondent.

Nevertheless, we may go into the validity of a closed-shop stipulation. To begin with,

BENGZON, J.:

"Closed-shop agreement is an agreement whereby an employer binds himself to hire only members of the contracting union
In August 1951, the National Labor Union, a legitimate labor organization duly registered in the Department of Labor, submitted
who must continue to remain members in good standing to keep their jobs." (Francisco, Labor Law, p. 180.).
to L. R. Aguinaldo Inc., and Aguinaldo's Echague Inc., two domestic corporations, on behalf of members of the Union employed
by said corporations, several demands for sick leave, vacation leave, Christmas bonus etc. .
Petitioner maintains that the herein closed-shop compact is invalid, because it violates sec. 5 Commonwealth Act No. 213, which
reads partly as follows:
As the companies yielded no assent, the dispute was submitted to the Court of Industrial Relations thru an amended petition
dated August 10, 1951.
Any person or persons, . . . who intimidate or coerce any employee or laborer or tenant under his or their employ, with
the intent of preventing such employee or laborer or tenant from joining any registered legitimate labor organization of
When the Court called a conference the next day, the Aguinaldo Employees' Association — AGEMAS — entered its appearance
his own choosing, or, who dismiss or threatened to dismiss such employee or laborer or tenant from his
and asked for permission to intervene, alleging it had a collective bargaining and closed-shop agreement with the respondents.
employment for having joined, or for being a member of, any registered legitimate labor organization, shall be guilty of
Over the objection of the Labor Union, the motion to intervene was granted; and then the intervenor filed a motion to dismiss,
a felony . . ." (Emphasis ours.)
on the ground that it had closed-shop agreement with the respondents, and therefore the petitioning Union had no personality
to negotiate for any of the workers of the respondents.
However, in this instance the employees were dismissed by the employer not for having joined but for having deserted or
forsaken, a labor organization (Agemas). They were no longer members of Agemas, therefore they lost their jobs. Here is no
The Labor Union replied that the permit given to the Agemas to operate, by the Secretary of Labor, had expired on May 17,
prevention of union affiliation — they were unionists already — but, at most, prevention of withdrawals from a union, divided
1951, and that it was a company-established labor association.
loyalties, or what is worse, disorganization.

Thereafter on September 13, 1951, a manifestation was filed by the respondent Aguinaldo's Echague Inc. informing the court
Again, the dismissal resulted from a contract with the organization to which the employee belonged, a situation to which the
that in compliance with its obligation under the closed-shop agreement, and upon demand of the Agemas, it discharged several
section should not apply.
employees found to have joined the petitioning Labor Union.

Petitioner apparently argues that the agreement prevents employees who joined the Agemas from later joining another labor
(The agreement, in short, says that any employee of Aguinaldo's Echague Inc., who joins any labor union other than the Agemas
organization. What is wrong about that? After marrying one girl, a man is prevented by law from marrying another; and yet no
shall be discharged from his employment.).
court would hold that his individual freedom is invalidly restricted.

Whereupon the Labor Union protested against such dismissal, and requested the reinstatement of the employees. After hearing
"The closed-shop contract" it is said "is the most prized achievement of unionism. It adds membership and compulsory dues. By
both sides, Presiding Judge Arsenio Roldan, in a well-reasoned opinion, upheld the dismissal pursuant to the bargaining
holding out to loyal members a promise of employment in the closed-shop, it welds group solidarity." (Handler, Notes, 48 Yale
agreement. On appeal to the court in banc, his opinion was sustained.
Law Journal 1053, 1059, Francisco, Labor Laws, p. 186.)

This petition for certiorari was given due course here in view of the following three propositions discussed by the Labor Union:
There are, we know, arguments in favor of, and against the closed-shop. Francisco's Labor Laws sets them in full (6p. cit. pp. 181-
184). Some may be mentioned. For the closed-shop:
a. The motion for reinstatement was decided without a proper hearing;
a Increase the strength and bargaining power of labor organizations.
b. The stipulation in the closed-shop agreement authorizing dismissal of any employee who joins another union is contrary to
law and therefore void; and.
b Prevents non-union workers from sharing in the benefits of the union's activities without also sharing its obligations.

c. The dismissal was unjustified because members of the Agemas had a right to join the Labor Union after the former's license to
c Prevents the weakening of labor organizations by discrimination against union members.
operate had expired in May 1951.
 d Eliminates the lowering of standards caused by competition with non-union workers.
e Enables labor organization effectively to enforce collective agreements.
h Facilitates the collection of dues and the enforcement of union rules.
i Creates harmonious relations between the employer and employees.".
Against the closed shop:
a Results in monopolistic domination of employment by labor organization.
b Interferes with the freedom of contract and personal liberty of the individual worker.
c Compels employers to discharge all non-union workers regardless of efficiency, length of service, etc.
d Facilitates the use of labor organizations by unscrupulous union leaders for the purpose of extortion, restraint of
trade, etc.
Agemas ceased to operate as a legitimate labor organization and its members had thereby lost protection against dismissal,
these were justified in joining the National Labor Union.
On the other hand it might be argued that the non-renewal of license did not ipso facto terminate the closed-shop agreement,
and the employees were still protected after May up to September 17, 1951; therefore they had no justification to go over to
another organization. It should be remembered that if the non-renewal terminates the agreement, that would be one way
whereby a labor organization could unilaterally shorten the life of its contractual undertaking. 1 Maybe, in like situations, the
employees should before seceeding exert within their organization efforts to renew the license, and only after failing in that
direction they will be justified in deserting their group. It might also be insisted that these employees were bound by the acts of
the majority of the Agemas (that chose not to seek immediate renewal) and they may not be permitted, precisely for the acts of
the majority, to violate the contract between Agemas and Aguinaldo's Echague Inc.
Anyway, withholding opinion on the issues outlined in the preceding two paragraphs, we have decided to rest our judgement on
the finding that petitioner had failed to prove that the dismissed employees had joined it only after May 17, 1951. Acts were
proven requiring prima facie dismissal from employment. Any excuses for such acts should be established by the employees.
All in all, the petitioner failed to make a case; and the petition should be, as it is hereby, dismissed with costs. So ordered.

e Denied to non-union workers equal opportunity for employment.

f Enables unions to charge exorbitant dues and initiation fees.".

Yet there is no need for us to take sides and give reasons, because our Congress, in the exercise of its policy-making power has
chosen to approve the closed-shop, when it legalized in sec. 4, sub-section (a) paragraph 4 of Republic Act No. 875 (The Magna
Carta of Labor) "any agreement of the employer with a labor organization requiring membership in such organization as a
condition of employment", provided such labor organization properly represents the employees.

All of which means: the petitioner loses on its second proposition.

Regarding the third proposition, (expiration of Agemas' permit) these dates must be borne in mind: (1) May 17, 1949 permit
granted Agemas to operate for two years; (2) October 7, 1950 closed-shop agreement effective for one year from September 17,
1950; (3) August 6, 1951, National Labor Union made demands upon Aguinaldo Corporation for vacation leave etc.; (4) August 8,
1951, Agemas applied for renewal of permit, and September 1, 1951, permit was renewed; (5) Dismissal of employees took place
September 11, 1951, upon demand of Agemas.

In the lower court the Labor Union, for the dismissed employees, contended in effect that inasmuch as the license of Agemas to
operate had expired on May 17, 1951 they were free to join the Labor Union without being subject to the dismissal stipulated in
the closed-shop agreement.

Such contention was overruled for two main reasons, namely, (a) the closed-shop agreement was in force up to September 17,
1951, and therefore the employee-members of Agemas had to respect it and (b) there was no proof that said employees
entered the Labor Union only after May 17, 1951. In our opinion, this last factual finding concludes the petitioner on this third
issue.

In this connection, if it were true that the dismissed employees became members of the Labor Union only after May 17, 1951, a
doubtful question would perhaps be presented. On the one hand it might be contended, as petitioner does, that because
 REGISTERED
G.R. No. L-31380 January 13, 1930 No. 50,275.

E. SPINNER and COMPANY, plaintiff-appellant,
vs.
NEUSS HESSLEIN CORPORATION, defendant-appellee.
Benj. S. Ohnick and John R. McFie, jr., for appellant.
Camus and Delgado for appellee.
STREET, J.:
This action was instituted in the Court of First Instance of Manila on November 23, 1926, by E. Spinner & Co., of Manchester,
England, for the purpose of restraining the defendant, the Neuss Hesslein Corporation, organized under the laws of the
Philippine Islands, from using the word "Wigan," as applied to khaki textiles sold by the defendant in the Philippine Islands, and
to recover damages for violation of the plaintiff's trade-mark right in the word "Wigan" and for alleged unfair competition
committed by the defendant in the use of the same. Upon hearing the cause the trial court absolved the defendant from the
complaint, with costs against the plaintiff, and the plaintiff appealed.
There is little or no dispute upon the determinative facts of the case which are subtantially these: E. Spinner & Co. is a
copartnership with head offices in Manchester, England, and Bombay, India, being represented in the Philippine Islands by Wise
& Co., a domestic corporation with principal office in the City of Manila; while the defendant is a corporation organized in
December, 1922, under the laws of the Philippine Islands, with its principal office in the City of Manila. The defendant is a
subsidiary of Neuss Hesslein & Co., Inc., of New York, U. S. A., for whom it acts as selling agent in the Philippine Islands. The
plaintiff, E. Spinner & Co., has long been engaged in the manufacture and sale of textile fabrics, including khaki cloth, with
distributing business connection in different parts of the world. Soon after the American occupation of the Philippine Islands, or
about 1900, the plaintiff began exporting its khaki into the Philippine Islands through local firms, notable Holliday, Wise & Co.,
(now Wise & Co.), Smith, Bell & co., Ltd., and others. Because of the superior qualities of its goods, such as the fastness of its
color, the consistency of its texture, and its proven durability, the plaintiff's khaki made favorable impression in the Philippine
market, enjoying a popular favor and preference which resulted in a lucrative trade. Among the brands of khaki enjoying such
favor was the grade indicated by the manufacturer as "Wigan." A higher grade was marketed by the plaintiff under the brand
"Stockport;" while still other grades were put upon the market under the brands "Jackton" and "Ashford."
All of these different grades of khaki were marketed by the plaintiff under a common trade-mark, which was first registered in
the Bureau of Patents, Copyrights, and Trade-Marks of the Philippine Government in the year 1905. This trade-mark consists of a
large label representing the profiles of two elephant heads placed close to each other in the upper middle center of the label and
looking in opposite directions, with trunks extending respectively to the right and left. This device has for its rectangular border a
garland of leaves; while over the point of union between the two heads appear several flags. Inside the space formed by the
trunks of the elephants and the garland of leaves appears a label consisting of the following words:
LEEMANN & GATTY'S
ORIGINAL
PATENTED FAST
KHAKI DRILL
This label was pasted on the outside of each bolt of khaki sold by the plaintiff, the different grades being indicated by the words
"Wigan," "Stockport," etc., inserted with stencil in the blank space following the word "Quality." The trade-mark proper, as thus
used, was a general mark covering various brands. This practice was followed for more than twenty years, but the plaintiff
learned in 1924 that the defendant, the Neuss Hesslein Corporation, was selling a brand of khaki in the Philippine Islands with
the word "Wigan" stenciled on the bolts below the defendant's own trade-mark. As thus employed by the defendant, the word
"Wigan" purports to show the color of the defendant's khaki, but the proof shows that the word was thus used by the defendant
upon khaki of different shades. After discovering this fact, the plaintiff, in April, 1925, caused its trade-mark, consisting of the
two elephant heads, to be again registered in the Bureau of Commerce and Industry, as per certificate No. 4807. In its essential
features, this trade-mark is identical with the trade-mark registered by the plaintiff in 1905, but in the latter trade-mark the
word "Wigan" is inserted after the word "Quality." The purpose of this registration was of course to incorporate the word
"Wigan" as an integral part of the registered trade-mark.
As already stated, the defendant, the Neuss Hesslein Corporation, was organized in the Philippine Islands in December, 1922, as
subsidiary of Neuss Hesslein & Co., Inc., of New York; and beginning with 1923, the defendant has been marketing khaki in the
Philippine Islands for the New York house. But before the organization of the defendant the New York house had, for several
years, been selling its khaki in the Philippine Islands, under two different brands. These were known respectively as the "Five
Soldiers" and the "Four Soldiers," the last named being also known as the "Wide Awake" brand. The "Five Soldiers" trade-mark
was registered in the Bureau of Commerce and Industry in 1916, and the "Four Soldiers" trade-mark in February, 1923. These
two grades of khaki are marketed at a much lower price than plaintiff's "Wigan," since it appears that the plaintiff's "Wigan" is
sold in the Philippine market by Wise & Co. for 71 centavos per yard, and by other firms at 70 centavos a yard, while defendant's
"Five Soldiers" sells at from 54 centavos to 55 centavos, and its "Four Soldiers" from 35 centavos to 40 centavos a yard.
After the defendant corporation had assumed the agency in the Philippine Islands for the products of the New York house, the
manger of the defendant, at the request of Chinese customers, began to give orders to the New York house for the printing of
the word "Wigan" conspicuously upon the bolts of khaki intended for sale in Philippine Islands; and in the latter part of 1923 or
in the early part of the year 1924, the defendant's khaki began to be marketed here with the word "Wigan" thereon.
It appears that the words "Wigan," "Stockport," "Jackton," and "Ashford," adopted by the plaintiff to indicate different qualities
of khaki, are the names of manufacturing towns of minor importance in England; but the brand of khaki with which the
defendant associates the name "Wigan" does not appear to be manufactured in the town of Wigan. It also appears that the term
"Wigan" is used in commercial parlance as the name of a canvass-like cotton fabric used to stiffen parts of garments. But it is
clear that in adopting the word "Wigan" to indicate a brand of khaki, the plaintiff did not use the word "Wigan" either in its
geographical sense or in the trade sense of a material for stiffening. The use made by the plaintiff of the term "Wigan" is
therefore arbitrary and artificial, in that it departs from any previously accepted sense.
It will be noted that the plaintiff uses the word "Wigan" to indicate quality, while the defendant purports to use the term to
indicate color, though the defendant's practice in this usage is somewhat loose. There is some proof in the record tending to
show that American dealers are accustomed to use the word "Wigan" to indicate a color or certain shades of color of khaki cloth.
But it is evident that the plaintiff first adopted the word "Wigan" in connection with khaki cloth, and this was done for the
purpose of indicating quality. In this sense the word "Wigan" has accompanied the plaintiff's khaki for years in the different
markets of the world, and the term has become associated in the minds of merchants who deal in this material with the
standard of quality maintained by the plaintiff in the "Wigan" brand.

Agents: Messrs. E. SPINNER & CO. This action involves a question of trade-mark right and a further question of unfair competition, and the problem is to determine
MANCHESTER & BOMBAY whether, upon the facts above stated, the defendant corporation has a right to use the word "Wigan" on khaki sold by it in the
Quality:................................Yds. Philippine Islands. The law governing trade-mark rights as well as unfair competition in this jurisdiction is found in Act No. 666 of
the Philippine Commission, which is a reduction to statutory form of the jurisprudence developed by the courts of England and
the United States in connection with the subjects mentioned; and to the summary of substantive law expressed in the statute
are added the provisions relative to the registration of trade-marks. Act No. 666 has been from time to time amended, but none
of the amendatory provisions adopted prior to the beginning of this lawsuit have any bearing on the problem before us.
Though the law concerning infringement of trade-marks and that concerning unfair competition have a common conception at
their root, which is that one person shall not be permitted to misrepresent that his goods or his business are the goods or the
business of another, the law concerning unfair competition is broader and more inclusive. On the other hand, the law concerning
the infringement of trade-mark is of more limited range, but within its narrower range recognizes a more exclusive right derived
from the adoption and registration of the trade-mark by the person whose goods or business are first associated therewith. One
who has identified a peculiar symbol or mark with his goods thereby acquires a property right in such symbol or mark, and if
another infringes the trade-mark he thereby invades this property right. Unfair competition cannot be placed on the plane of
invasion of property right. The tort is strictly one of fraud. It results that the law of trade-marks is specialized subject distinct
from the law of unfair competition, though, as stated above, the two subjects are entwined with each other and are dealt with
together in Act No. 666. Inasmuch as the principles applicable to trade-marks were precisely defined at an earlier date than the
principles applicable to unfair competition, it is not surprising that confusion should be found in the earlier decisions between
the legal doctrines relating to the two subjects. Of late years, however, the term "trade-mark" has been restricted to its proper
technical meaning and the term "unfair competition" is used to include wrongful acts of competition not involving any violation
of trade-mark right proper. As the tort of unfair competition is broader than the wrong involved in the infringement of a trade-
mark, one who fails to establish the exclusive property right which is essential to the validity of a trade-mark, may yet frequently
obtain relief on the ground of his competitor's unfairness or fraud. Any conduct may be said to constitute unfair competition if
the effect is to pass off on the public the goods of one man as the goods of another. It is not necessary that any particular means
should be used to this end. The most usual devices are the simulation of labels and the reproduction of the form, color and
general appearance of the package used by the pioneer manufacturer or dealer. But unfair competition is not limited to these
forms. The general principle underlying the law of unfair competition is that a competitor in business cannot be permitted to do
acts which have deceived, or are reasonably designed to deceive, the public into buying his goods as those of another.
As stated in section 7 of Act No. 666, a person is guilty of unfair competition who "in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either in the wrapping of the packages in which they are contained, or
the devices or words thereon, or in any other feature of their appearance, which would be likely to influence purchasers to
believe that the goods offered are those of a manufacturer or dealer other than the actual manufacturer or dealer," etc. This
language is very broad; and as applied to the case before us it is evident that, in using the word "Wigan" on the khaki cloth sold
by it, the defendant has appropriated a word likely to lead purchasers to believe that the goods sold by the defendant are those
of the plaintiff. The representation that the khaki sold by the defendant is of the kind known to the trade as "Wigan" directly
tends to deceive the purchaser and, therefore, constitutes unfair competition as against the plaintiff.
It is no doubt true that the adoption of the word "Wigan" by the defendant does not deceive merchants or tailors buying from
the defendant. But the person most to be considered in this connection is the consumer, and when the word "Wigan" is found
upon a bolt of khaki, the ultimate buyer, or consumer, would naturally be led to suppose that the goods sold under this name is
the goods sold by the plaintiff. In the case before us it is revealed that the word "Wigan" was first stamped upon the khaki sold
by the defendant at the suggestion or request of a Chinese customer, presumably a tailor or merchant, and the purpose behind
the suggestion undoubtedly was that, if this term were found stamped upon the khaki thus sold it could be represented to the
ultimate purchaser that the khaki thus sold was the plaintiff's "Wigan." In this connection it should be noted that, in the action to
enjoin unfair competition, the fraudulent intention on the part of the defendant may be inferred from the similarity of the goods
offered for sale by him to the goods of the plaintiff (Act No. 666, sec. 7, end). In the case before us the use of the word "Wigan,"
stamped by the defendant upon the bolts of khaki sold by it, sufficiently discloses an intention to mislead the consumer.
Moreover, as was observed by the Court of Appeals of the Third Circuit in Barton vs. Rex-Oil Co., (40 A. L. R., 424), it makes no
difference that dealers in the article are not deceived. They are informed and usually know what they are buying. The law
concerns itself with the casual purchaser who knows the commodity only by its name. In obtaining what he asks for he is entitled
to protection against unfair dealing. (Citing National Biscuit Co. vs. Baker, 95 Fed., 135; Eli Lilly & Co., vs. Wm. R. Warner & Co.,
275 Fed., 752; William R. Warner & Co. vs. Eli Lilly & Co., 265 U. S., 526.)
With respect to the question of infringement of trade-mark right, it is clear that the appropriation by the defendant of the word
"Wigan" for use in the sale of its khaki did not constitute a violation of trade-mark prior to April, 1925, when the word "Wigan"
was first incorporated in the plaintiff's registered trade-mark; but after that date it was certainly illegal for the defendant to use
the word "Wigan" stamped upon the khaki sold by it; and this act was an infringement of trade-mark right. It is true that the
plaintiff's trade-mark proper consisted of a pictorial representation of the heads of two elephants, embelished by leaves, and the
word "Wigan" was only a part of said trade-mark. Nevertheless, the misappropriation of this word by the competitor was a
violation of the plaintiff's right. It has been held in the Supreme Court of the United States that the use of only one of the words
constituting a trade-mark may be sufficient to constitute an infringement, and it is not necessary to this end that all of the words
comprising the trade-mark should be appropriated (Saxlehner vs. Eisner & Mendelson Co., 179 U.S., 20; 45 Law. ed., 60).
In section 2 of Act No. 666 it is declared that a designation or part of a designation which relates only to the name, quality, or
description of the merchandise, or geographical place of its production or origin, cannot be made the subject of a trade-mark;
and it seems to be supposed by the defendant that this provision disables the plaintiff from complaining of the use made of the
word "Wigan" by the defendant. But it will be noted that the word "Wigan" as applied to quality, is not an English word in
common use for describing quality. The word "Wigan" is here used in an entirely artificial sense and its association with quality
had the origin exclusively in the use which the plaintiff has made of it. The designation of name, quality, or description, as used
in the statute, has reference to linguistic terms in common use. In words of this character no particular manufacturer can acquire
an exclusive property right. Again, it will be noted that, although "Wigan," being the name of a town, was an original
geographical term, it is not used upon the plaintiff's khaki to indicate the geographical place of production of the product. Even
geographical terms can be used in an arbitrary and artificial sense, and when so used by one manufacturer the improper
appropriation of the same term by another may be enjoined as an invasion of trade-mark right. Of course, if the defendant were
manufacturing its khaki in the town of "Wigan," it would be entitled to use that name to indicate the place of manufacture of its
goods. But such is not the case here.
From what has been said it follows that the plaintiff is entitled to an injunction for the purpose of restraining the defendant from
using the word "Wigan" upon the bolts of khaki sold by it, whether the wrongful act of the defendant be considered as an act of
unfair competition or as an infringement of the trade-mark registered by the plaintiff in April, 1925. But the plaintiff further
seeks to recover damages in the estimated amount of P15,000 for the injury sustained by the plaintiff. As in Forbes, Munn &
Co., vs. Ang San To (43 Phil., 724), the provision in the complaint referring to damages should, we think, be interpreted as a
prayer for an assessment of the compensation to which the plaintiff might be entitled for the damage done to its business. The
proof, however, shows that the plaintiff's business has shown a healthy growth during the period covered by the wrongful acts
which are the subject of this action, and it is not proved that any assessable damage has been inflicted upon the plaintiff by the
wrongful acts of the defendant, though the infringement of legal right is clear. We are therefore of the opinion that no damages
should be awarded to the plaintiff. It will be noted that Act No. 666 gives the plaintiff a right to elect between the recovery of
damages for the harm done to the plaintiff's business and the enforcement of an accounting against the defendant for the
profits which may be shown to have accrued to it by reason of the sales made in violation of the plaintiff's right. But these two
remedies are different and, where the plaintiff has elected to sue for damages and no damages are proved, none can be
awarded. This makes it unnecessary to analyze the proof with a view to discovering the profits which the defendant may have
earned by the illegitimate sales.
The judgment appealed from will therefore be modified, and the defendant and its agents will be enjoined, as they are hereby
enjoined, from using the word "Wigan" upon the khaki sold by it in the Philippine Islands, and from otherwise representing its
khaki to be of the "Wigan" brand. In absolving the defendant from the claim for damages, the judgment will be affirmed. So
ordered, without costs.

G.R. No. L-22554 August 29, 1975
DELFIN LIM and JIKIL TAHA, plaintiffs-appellants,
vs.
FRANCISCO PONCE DE LEON AND ORLANDO MADDELA, defendants-appellees.
Ricardo L. Manalilig for plaintiffs-appellants.
Iñigo R. Peña for defendants-appellees.
MARTIN, J.:
Appeal on a question of law from the decision of the Court of First Instance of Palawan in Civil Case No. 416, entitled "Delfin Lim
and Jikil Taha vs. Francisco Ponce de Leon and Orlando Maddela", dismissing the complaint of the plaintiffs and ordering them to
pay each of the defendants jointly and severally the sum of P500.00 by way of actual damages; P500.00 by way of attorney's
fees; and P1,000.00 by way of exemplary damages.
On April 29, 1961, plaintiff-appellant Jikil Taha sold to a certain Alberto Timbangcaya of Brooke's Point, Palawan a motor launch
named M/L "SAN RAFAEL". A year later or on April 9, 1962 Alberto Timbangcaya filed a complaint with the Office of the
Provincial Fiscal of Palawan alleging that after the sale Jikil Taha forcibly took away the motor launch from him.
On May 14, 1962, after conducting a preliminary investigation, Fiscal Francisco Ponce de Leon in his capacity as Acting Provincial
Fiscal of Palawan, filed with the Court of First Instance of Palawan the corresponding information for Robbery the Force and
Intimidation upon Persons against Jikil Taha. The case was docketed as Criminal Case No. 2719.
On June 15, 1962, Fiscal Francisco Ponce de Leon, upon being informed that the motor launch was in Balabac, Palawan, wrote
the Provincial Commander of Palawan requesting him to direct the detachment commander-in Balabac to impound and take
custody of the motor launch.1
On June 26, 1962, Fiscal Ponce de Leon reiterated his request to the Provincial Commander to impound the motor launch,
explaining that its subsequent sale to a third party, plaintiff-appellant Delfin Lim, cannot prevent the court from taking custody
of the same.2 So, on July 6, 1962 upon order of the Provincial Commander, defendant-appellee Orlando Maddela, Detachment
Commander of Balabac, Palawan, seized the motor launch "SAN RAFAEL" from plaintiff-appellant Delfin Lim and impounded it.
On July 15, 1962 plaintiff-appellant Delfin Lim pleaded with Orlando Maddela to return the motor launch but the latter refused.
Likewise, on September 20, 1962, Jikil Taha through his counsel made representations with Fiscal Ponce de Leon to return the
seized property to plaintiff-appellant Delfin Lim but Fiscal Ponce de Leon refused, on the ground that the same was the subject
of a criminal offense.
All efforts to recover the motor launch going to naught, plaintiffs-appellants Delfin Lim and Jikil Taha, on November 19, 1962,
filed with the Court of First Instance of Palawan a complaint for damages against defendants-appellees Fiscal Francisco Ponce de
Leon and Orlando Maddela, alleging that on July 6, 1962 Orlando Maddela entered the premises of Delfin Lim without a search
warrant and then and there took away the hull of the motor launch without his consent; that he effected the seizure upon order
of Fiscal Ponce de Leon who knew fully well that his office was not vested with authority to order the seizure of a private
property; that said motor launch was purchased by Delfin Lim from Jikil Taha in consideration of Three Thousand Pesos
(P3,000.00), Two Thousand Pesos (P2,000.00) of which has been given to Jikil Taha as advance payment; that as a consequence
of the unlawful seizure of the motor launch, its sale did not materialize; and that since July 6, 1962, the said motor launch had
been moored at the Balabac Bay, Palawan and because of exposure to the elements it had become worthless and beyond repair.
For the alleged violation of their constitutional rights, plaintiffs-appellants prayed that defendants-appellees be ordered to pay
jointly and severally each of them the sum of P5,750.00 representing actual, moral and exemplary damages and attorney's fees.
In their answer, defendants-appellees denied the material allegations of the complaint and as affirmative defenses alleged that
the motor launch in question which was sold by Jikil Taha to Alberto Timbangcaya on April 29, 1961 was sometime in April 1962,
forcibly taken with violence upon persons and with intent to gain by Jikil Taha from Alfredo Timbangcaya without the latter's
knowledge and consent, thus giving rise to the filing of a criminal charge of robbery against Jikil Taha; that Fiscal Ponce de Leon,
in his capacity as Acting Provincial Fiscal of Palawan ordered Orlando Maddela to seize and impound the motor launch "SAN
RAFAEL", for being the corpus delicti of the robbery; and that Orlando Maddela merely obeyed the orders of his superior officer
to impound said launch. By way of counterclaim, defendants-appellees alleged that because of the malicious and groundless
filing of the complaint by plaintiffs-appellants, they were constrained to engage the services of lawyers, each of them paying
P500.00 as attorney's fees; and that they suffered moral damages in the amount of P5,000.00 each and actual damages in the
amount of P500.00 each. They also prayed that each of them awarded exemplary damages in the amount of P1,000.00.
On September 13, 1965, the trial court rendered its decision, upholding the validity of the seizure of the motor launch on the
ground that "the authority to impound evidences or exhibits or corpus delicti in a case pending investigation is inherent in the
Provincial Fiscal who controls the prosecution and who introduces those exhibits in the court." Accordingly, the trial court
dismissed the complaint of plaintiffs-appellants and ordered them to pay jointly and severally each of the defendants-appellees
the amount of P500.00 by way of actual damages another amount of P500.00 for attorney's fees and P1,000.00 as exemplary
damages.
Hence, this appeal.
Two vital issues call for resolution by this Court. First, whether or not defendant-appellee Fiscal Ponce de Leon had the power to
order the seizure of the motor launch in question without a warrant of search and seizure even if the same was admittedly
the corpus delicti of the crime. Second, whether or not defendants-appellees are civilly liable to plaintiffs-appellants for damages
allegedly suffered by them granting that the seizure of the motor launch was unlawful.
The gravamen of plaintiffs-appellants' argument is that the taking of the motor launch on July 6, 1962 by Orlando Maddela upon
the order of Fiscal Ponce de Loon was in violation of the constitutional guarantee against unreasonable searches and seizures
since it was done without a warrant.
The pertinent provision of the Constitution then in force reads:
3) The right of the people to be secure in their persons, houses, papers and effects against unreasonable
searches and seizures shall not be violated, and no warrants shall issue but upon probable cause, to be
determined by the judge after examination under oath or affirmation of the complainant and the witnesses
he may produce, and particularly describing the place to be searched, and the persons or things to be
seized.3
A cursory reading of the above provision easily brings into focus the unreasonableness of the seizure of the aforementioned
motor launch. A search and seizure to be reasonable, must be effected by means of a valid search warrant. And for a search
warrant to be valid: (1) it must be issued upon probable cause; (2) the probable cause must be determined by the judge himself
and not by the applicant or any other person; (3) in the determination of probable cause, the judge must examine, under oath or
affirmation, the complainant and such witnesses as the latter may produce; and (4) the warrant issued must particularly describe
the place to be searched and persons or things to be seized.4 Thus in a long line of decisions, this Court has declared invalid
search warrants which were issued in utter disregard of the constitutional injunction. 5
Defendants-appellees admitted that when Orlando Maddela entered the premises of Delfin Lim and impounded the motor
launch he was not armed with a search warrant; that he effected the seizure of the motor launch in the absence of and without
the consent of Delfin Lim. There can be no question that without the proper search warrant, no public official has the right to
enter the premises of another without his consent for the purpose of search and seizure.6 And since in the present case
defendants-appellees seized the motor launch without a warrant, they have violated the constitutional right of plaintiffs-
appellants against unreasonable search and seizure.
Defendants-appellees however would want to justify the seizure of the motor launch even without a warrant because of Fiscal
Ponce de Leon's alleged inherent power to order the seizure of a personal property which is the corpus delicti of a crime, he
being a quasi judicial officer who has the control of the prosecution and the presentation of the evidence in the criminal case.
They argue that inasmuch as the motor launch in question was allegedly stolen by Jikil Taha from Timbangcaya, Fiscal Ponce de
Leon could order its seizure even without a search warrant. We cannot agree. Under the old Constitution 7 the power to issue a
search warrant is vested in a judge or magistrate and in no other officer and no search and seizure can be made without a proper
warrant. At the time the act complained of was committed, there was no law or rule that recognized the authority of Provincial
Fiscals to issue a search warrant. In his vain attempt to justify the seizure of the motor launch in question without a warrant
Fiscal Ponce de Leon invoked the provisions of Republic Act No. 732, which amended Sections 1674 and 1687 of the Revised
Administrative Code. But there is nothing in said law which confers upon the provincial fiscal; the authority to issue warrants,
much less to order without warrant the seizure of a personal property even if it is the corpus delicti of a crime. True, Republic Act
No. 732 has broadened the power of provincial fiscals to conduct preliminary investigations, but said law did not divest the judge
or magistrate of its power to determine, before issuing the corresponding warrant, whether or not probable cause exists
therefor.8
Moreover, under Sections 2 and 3 of Rule 122 of the Rules of Court 9 which complement the constitutional provision earlier
cited, two principles are made clear, namely: (1) that in the seizure of a stolen property search warrant is still necessary; and (2)
that in issuing a search warrant the judge alone determines whether or not there is a probable cause. The fact that a thing is
a corpus delicti of a crime does not justify its seizure without a warrant. As held in U.S. v. de los
Reyes and Esguerra, 10 citing McClurg v. Brenton: 11
The mere fact that a man is an officer, whether of high or low degree, gives him no more right than is
possessed by the ordinary private citizen to break in upon the privacy of a home and subject its occupant to
the indignity of a search for the evidence of crime, without a legal warrant procured for that purpose. No
amount of incriminating evidence whatever its source, will supply the place of such warrant. At the closed
door of the home be it palace or hovel even bloodhounds must wait till the law, by authoritative process,
bids it open. (Emphasis supplied.)
Defendant-appellee Fiscal Ponce de Leon would also invoke lack of time to procure a search warrant as an excuse for the seizure
of the motor launch without one. He claimed that the motor launch had to be seized immediately in order to preserve it and to
prevent its removal out of the locality, since Balabac, Palawan, where the motor launch was at the time, could only be reached
after three to four days' travel by boat. 12 The claim cannot be sustained. The records show that on June 15, 1962 13 Fiscal Ponce
de Leon made the first request to the Provincial Commander for the impounding of the motor launch; and on June 26,
1962 14 another request was made. The seizure was not effected until July 6, 1962. In short, Fiscal Ponce de Leon had all the time
to procure a search warrant had he wanted to and which he could have taken in less than a day, but he did not. Besides, there is
no basis for the apprehension that the motor launch might be moved out of Balabac because even prior to its seizure the motor
launch was already without its engine. 15 In sum, the fact that there was no time to secure a search warrant would not legally
justify a search without one. 16
As to whether or not they are entitled to damages, plaintiffs-appellants anchor their claim for damages on Articles 32 and 2219
of the New Civil Code which provide in part as follows:
ART. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs,
defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another
person shall be liable to the latter for damages.
xxx xxx xxx
(9) The rights to be secure in one's person, house, papers, and effects against unreasonable searches and
seizures.
xxx xxx xxx
The indemnity shall include moral damages. Exemplary damages may also be adjudicated.
ART. 2219. Moral damages may be recovered in the following and analogous cases:
xxx xxx xxx
(6) Illegal search;
xxx xxx xxx
(1) Acts and action referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.
Pursuant to the foregoing provisions, a person whose constitutional rights have been violated or impaired is entitled to actual
and moral damages from the public officer or employee responsible therefor. In addition, exemplary damages may also be
awarded. In the instant case, plaintiff-appellant Delfin Lim claimed that he purchased the motor launch from Jikil Taha in
consideration of P3,000.00, having given P2,000.00 as advanced payment; that since or seizure on July 6, 1962 the motor launch
had been moored at Balabac Bay and because of exposure to the elements it has become worthless at the time of the filing of
the present action; that because of the illegality of the seizure of the motor launch, he suffered moral damages in the sum of
P1,000.00; and that because of the violation of their constitutional rights they were constrained to engage the services of a
lawyer whom they have paid P1,500.00 for attorney's fees. We find these claims of Delfin Lim amply supported by the evidence
and therefore should be awarded the sum of P3,000.00 as actual damages; P1,000.00 as moral damages and P750.00 for
attorney's fees. However, with respect co plaintiff Jikil Taha, he is not entitled to recover any damage which he alleged he had
suffered from the unlawful seizure of the motor launch inasmuch as he had already transferred the ownership and possession of
the motor launch to Delfin Lim at the time it was seized and therefore, he has no legal standing to question the validity of the
seizure. Well settled is the rule that the legality of a seizure can be contested only by the party whose rights have been impaired
thereby, and that the objection to an unlawful search and seizure is purely personal and cannot be availed of by third
parties. 17 Consequently, one who is not the owner, lessee, or lawful occupant of the premise searched cannot raise the question
of validity of the search and seizure. 18 Jikil Taha is not without recourse though. He can still collect from his co-plaintiff, Delfin
Lim the unpaid balance of P1,000.00.
Defendant-appellee Fiscal Ponce de Leon wanted to wash his hands of the incident by claiming that "he was in good faith,
without malice and without the slightest intention of inflicting injury to plaintiff-appellant, Jikil Taha" 19when he ordered the
seizure of the motor launch. We are not prepared to sustain his defense of good faith. To be liable under Article 32 of the New
Civil Code it is enough that there was a violation of the constitutional rights of the plaintiffs and it is not required that defendants
should have acted with malice or bad faith. Dr. Jorge Bocobo, Chairman of the Code Commission, gave the following reasons
during the public hearings of the Joint Senate and House Committees, why good faith on the part of the public officer or
employee is immaterial. Thus:
 DEAN BOCOBO. Article 32, regarding individual rights; Attorney Cirilo Paredes proposes that Article 32 be so
amended as to make a public official liable for violation of another person's constitutional rights only if the
public official acted maliciously or in bad faith. The Code Commission opposes this suggestion for these
reasons:

The very nature of Article 32 is that the wrong may be civil or criminal. It is not necessary therefore that
there should be malice or bad faith. To make such a requisite would defeat the main purpose of Article 32
which is the effective protection of individual rights. Public officials in the past have abused their powers on
the pretext of justifiable motives or good faith in the performance of their duties. Precisely, the object of the
Article is to put an end to official abuse by the plea of good faith. In the United States this remedy is in he
nature of a tort.

Mr. Chairman, this article is firmly one of the fundamental articles introduced in the New Civil Code to
implement democracy. There is no real democracy if a public official is abusing, and we made the article so
strong and so comprehensive that it concludes an abuse of individual rights even if done in good faith, that
official is liable. As a matter of fact, we know that there are very few public officials who openly and
definitely abuse the individual rights of the citizens. In most cases, the abuse is justified on a plea of desire to
enforce the law to comply with one's duty. And so, if we should limit the scope of this article, that would
practically nullify the object of the article. Precisely, the opening object of the article is to put an end to
abuses which are justified by a plea of good faith, which is in most cases the plea of officials abusing
individual rights. 20

But defendant-appellee Orlando Maddela cannot be held accountable because he impounded the motor launch upon the order
of his superior officer. While a subordinate officer may be held liable for executing unlawful orders of his superior officer, there
are certain circumstances which would warrant Maddela's exculpation from liability. The records show that after Fiscal Ponce de
Leon made his first request to the Provincial Commander on June 15, 1962 Maddela was reluctant to impound the motor launch
despite repeated orders from his superior officer. 21 It was only after he was furnished a copy of the reply of Fiscal Ponce de
Leon, dated June 26, 1962, to the letter of the Provincial Commander, justifying the necessity of the seizure of the motor launch
on the ground that the subsequent sale of the launch to Delfin Lim could not prevent the court from taking custody of the
same, 22 that he impounded the motor launch on July 6, 1962. With said letter coming from the legal officer of the province,
Maddela was led to believe that there was a legal basis and authority to impound the launch. Then came the order of his
superior officer to explain for the delay in the seizure of the motor launch. 23 Faced with a possible disciplinary action from his
Commander, Maddela was left with no alternative but to seize the vessel. In the light of the above circumstances. We are not
disposed to hold Maddela answerable for damages.

IN VIEW OF THE FOREGOING, the decision appealed from is hereby reversed and another one entered declaring the seizure
illegal and ordering defendant-appellee Fiscal Francisco Ponce de Leon to pay to plaintiff-appellant Delfin Lim the sum of
P3,000.00 as actual damages, plus P1,000.00 moral damages, and, in addition, P750.00 for attorney's fees. With costs against
defendant-appellee Fiscal Ponce de Leon.

SO ORDERED.

G.R. No. 86720 September 2, 1994
MHP GARMENTS, INC., and LARRY C. DE GUZMAN, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, AGNES VILLA CRUZ, MIRASOL LUGATIMAN, and GERTRUDES GONZALES, respondents.
Benjamin M. Dacanay for petitioners.
Emmanuel O. Tansingco for private respondents.
PUNO, J.:
The constitutional protection of our people against unreasonable search and seizure is not merely a pleasing platitude. It
vouchsafes our right to privacy and dignity against undesirable intrusions committed by any public officer or private individual.
An infringement of this right justifies an award for damages.
On February 22, 1983, petitioner MHP Garments, Inc., was awarded by the Boy Scouts of the Philippines, the exclusive franchise
to sell and distribute official Boy Scouts uniforms, supplies, badges, and insignias. In their Memorandum Agreement, petitioner
corporation was given the authority to "undertake or cause to be undertaken the prosecution in court of all illegal sources of
scout uniforms and other scouting supplies." 1
Sometime in October 1983, petitioner corporation received information that private respondents Agnes Villa Cruz, Mirasol
Lugatiman, and Gertrudes Gonzales were selling Boy Scouts items and paraphernalia without any authority. Petitioner de
Guzman, an employee of petitioner corporation, was tasked to undertake the necessary surveillance and to make a report to the
Philippine Constabulary (PC).
On October 25, 1983, at about 10:30 A.M., petitioner de Guzman, Captain Renato M. Peñafiel, and two (2) other constabulary
men of the Reaction Force Battalion, Sikatuna Village, Diliman, Quezon City went to the stores of respondents at the Marikina
Public Market. Without any warrant, they seized the boy and girl scouts pants, dresses, and suits on display at respondents'
stalls. The seizure caused a commotion and embarrassed private respondents. Receipts were issued for the seized items. The
items were then turned over by Captain Peñafiel to petitioner corporation for safekeeping.
A criminal complaint for unfair competition was then filed against private respondents. 2 During its pendency, petitioner de
Guzman exacted from private respondent Lugatiman the sum of THREE THOUSAND ONE HUNDRED PESOS (P3,100.00) in order
to be dropped from the complaint. On December 6, 1983, after a preliminary investigation, the Provincial Fiscal of Rizal
dismissed the complaint against all the private respondents. On February 6, 1984, he also ordered the return of the seized items.
The seized items were not immediately returned despite demands. 3 Private respondents had to go personally to petitioners'
place of business to recover their goods. Even then, not all the seized items were returned. The other items returned were of
inferior quality.
Private respondents then filed Civil Case No. 51144 against the petitioners for sums of money and damages. 4 In its Decision
dated January 9, 1987, the trial court ruled for the private respondents, thus:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendants, ordering the latter
jointly and severally:
1. To return the amount of P3,100.00 to plaintiff Mirasol Lugatiman with interest at 12% per annum from
January 12, 1984, the date of the last receipt issued, until fully paid;
2. To pay plaintiff Agnes Villa Cruz the sum of P2,000.00 for the 26 pieces of girl scout items not returned;
3. To pay plaintiffs the amount of P50,000.00 for and as moral damages and P15,000.00 for and as exemplary
damages; and
4. P5,000.00 for and as attorney's fees and litigation expenses.
Costs against the defendants.
SO ORDERED.
The decision was appealed to the respondent court. On January 18, 1989, its Fifth Division, 5 affirmed the Decision with
modification, thus:
WHEREFORE, the decision appealed from is AFFIRMED with MODIFICATION; and, as modified, the dispositive
portion thereof now reads as follows:
Judgment is hereby rendered in favor of plaintiffs (private respondents) and against defendants (petitioners),
ordering the latter jointly and severally;
1. To return the amount of P3,100.00 to plaintiff (respondent) Mirasol Lugatiman and cancel her application
for distributor's license;
2. To pay plaintiff (respondent) Agnes Villa Cruz the sum of P2,000.00 for the unreturned 26 pieces of girl
scouts items with interest at 12% per annum from June 4, 1984 (date the complaint was filed) until it is fully
paid;
3. To pay plaintiffs (respondents) the amount of P10,000.00 each, or a total of P30,000.00, for and as moral
damages; and P5,000.00 each, or a total of P15,000.00, for and as exemplary damages; and
4. To pay plaintiffs (respondents) P5,000.00 for and as attorney's fees and litigation expenses.
Costs of the case a quo and the instant appeal are assessed jointly and severally against defendants-
appellants (petitioners) MHP Garments, Inc. and Larry de Guzman.
SO ORDERED.
In this petition for certiorari, petitioners contend:
FIRST ASSIGNMENT OF ERROR
THE COURT OF APPEALS ERRED IN IMPUTING LIABILITY FOR DAMAGES TO THE PETITIONERS WHO DID NOT
EFFECT THE SEIZURE OF THE SUBJECT MERCHANDISE.
SECOND ASSIGNMENT OF ERROR
 THE COURT OF APPEALS ERRED WHEN IT MADE A FINDING THAT THE MANNER WITH WHICH THE
CONFISCATION OF PRIVATE RESPONDENTS WAS TORTIOUS BUT PENALIZED INSTEAD THE PETITIONERS WHO
DID NOT COMMIT THE ACT OF CONFISCATION.
THIRD ASSIGNMENT OF ERROR
THE COURT OF APPEALS ERRED WHEN IT FOUND FOR THE PRIVATE RESPONDENTS AND AGAINST THE
PETITIONERS.
We affirm.
Article III, section 2, of the Constitution protects our people from unreasonable search and seizure. It provides:
The right of the people to be secure in their persons, houses, papers, and effects against unreasonable
searches and seizures of whatever nature for any purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the persons or things to be seized.
This provision protects not only those who appear to be innocent but also those who appear to be guilty but are nevertheless to
be presumed innocent until the contrary is proved. 6 In the case at bench, the seizure was made without any warrant. Under the
Rules of Court, 7 a warrantless search can only be undertaken under the following circumstance:
Sec. 12. Search incident to a lawful arrest. - A person lawfully arrested may be searched for dangerous
weapons or anything which may be used as proof of the commission of an offense, without a search warrant.
We hold that the evidence did not justify the warrantless search and seizure of private respondents' goods. Petitioner
corporation received information that private respondents were illegally selling Boy Scouts items and paraphernalia in October
1983. The specific date and time are not established in the evidence adduced by the parties. Petitioner de Guzman then made a
surveillance of the stores of private respondents. They reported to the Philippine Constabulary and on October 25, 1983, the raid
was made on the stores of private respondents and the supposed illicit goods were seized. The progression of time between the
receipt of the information and the raid of the stores of private respondents shows there was sufficient time for petitioners and
the PC raiding party to apply for a judicial warrant. Despite the sufficiency of time, they did not apply for a warrant and seized
the goods of private respondents. In doing so, they took the risk of a suit for damages in case the seizure would be proved to
violate the right of private respondents against unreasonable search and seizure. In the case at bench, the search and seizure
were clearly illegal. There was no probable cause for the seizure. Probable cause for a search has been defined as "such facts and
circumstances which would lead a reasonably discreet and prudent man to believe that an offense has been committed and that
the objects sought in connection with the offense are in the place sought to be searched." 8 These facts and circumstances were
not in any way shown by the petitioners to justify their warrantless search and seizure. Indeed, after a preliminary investigation,
the Provincial Fiscal of Rizal dismissed their complaint for unfair competition and later ordered the return of the seized goods.
Petitioners would deflect their liability with the argument that it was the Philippine Constabulary that conducted the raid and
their participation was only to report the alleged illegal activity of private respondents.
While undoubtedly, the members of the PC raiding team should have been included in the complaint for violation of the private
respondents' constitutional rights, still, the omission will not exculpate petitioners.
In the case of Lim vs. Ponce de Leon, 9 we ruled for the recovery of damages for violation of constitutional rights and liberties
from public officer or private individual, thus:
Art. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats,
violates or in any manner impedes or impairs any of the following rights and liberties of another person shall
be liable to the latter for damages.
xxx xxx xxx
(9) The rights to be secure in one's person, house, papers, and effects against unreasonable searches and
seizures.
xxx xxx xxx
The indemnity shall include moral damages. Exemplary damages may also be adjudged.
Art. 2219. Moral damages may be recovered in the following and analogous cases:
xxx xxx xxx
(6) Illegal search;
(1) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
Pursuant to the foregoing provisions, a person whose constitutional rights have been violated or impaired is
entitled to actual and moral damages from the public officer or employee responsible therefor. In addition,
exemplary damages may also be awarded.
xxx xxx xxx
The very nature of Article 32 is that the wrong may be civil or criminal. It is not necessary therefore that
there should be malice or bad faith. To make such a requisite would defeat the main purpose of Article 32
which is the effective protection of individual rights. Public officials in the past have abused their powers on
the pretext of justifiable motives or good faith in the performance of their duties. Precisely, the object of the
Article is to put an end to official abuse by plea of the good faith. In the United States this remedy is in the
nature of a tort. (emphasis supplied)
In the subsequent case of Aberca vs. Ver, 10 the Court En Banc explained the liability of persons indirectly responsible, viz:
[T]he decisive factor in this case, in our view, is the language of Article 32. The law speaks of an officer
or employee or person "directly or indirectly" responsible for the violation of the constitutional rights and
liberties of another. Thus, it is not the actor alone (i.e., the one directly responsible) who must answer for
damages under Article 32; the person indirectly responsible has also to answer for the damages or injury
caused to the aggrieved party.
xxx xxx xxx
While it would certainly be too naive to expect that violators of human rights would easily be deterred by the
prospect of facing damages suits, it should nonetheless be made clear in no uncertain terms that Article 32 of
the Civil Code makes the persons who are directly, as well as indirectly, responsible for the transgression joint
tortfeasors.
 xxx xxx xxx
[N]either can it be said that only those shown to have participated "directly" should be held liable. Article 32
of the Civil Code encompasses within the ambit of its provisions those directly, as well as indirectly,
responsible for its violations. (emphasis supplied)
Applying the aforecited provisions and leading cases, the respondent court correctly granted damages to private respondents.
Petitioners were indirectly involved in transgressing the right of private respondents against unreasonable search and seizure.
Firstly, they instigated the raid pursuant to their covenant in the Memorandum Agreement to undertake the prosecution in
court of all illegal sources of scouting supplies. 11 As correctly observed by respondent court:
Indeed, the acts committed by the PC soldiers of unlawfully seizing appellees' (respondents') merchandise
and of filing the criminal complaint for unfair competition against appellees (respondents) were for the
protection and benefit of appellant (petitioner) corporation. Such being the case, it is, thus, reasonably fair to
infer from those acts that it was upon appellant (petitioner) corporation's instance that the PC soldiers
conducted the raid and effected the illegal seizure. These circumstances should answer the trial court's query
— posed in its decision now under consideration — as to why the PC soldiers immediately turned over the
seized merchandise to appellant (petitioner) corporation. 12
The raid was conducted with the active participation of their employee. Larry de Guzman did not lift a finger to stop the seizure
of the boy and girl scouts items. By standing by and apparently assenting thereto, he was liable to the same extent as the officers
themselves. 13 So with the petitioner corporation which even received for safekeeping the goods unreasonably seized by the PC
raiding team and de Guzman, and refused to surrender them for quite a time despite the dismissal of its complaint for unfair
competition.
Secondly, Letter of Instruction No. 1299 was precisely crafted on March 9, 1983 to safeguard not only the privilege of franchise
holder of scouting items but also the citizen's constitutional rights, to wit:
TITLE: APPREHENSION OF UNAUTHORIZED MANUFACTURERS AND
DISTRIBUTORS OF SCOUT PARAPHERNALIA AND IMPOUNDING OF SAID
PARAPHERNALIA.
ABSTRACT:
Directs all law enforcement agencies of the Republic of the Philippines, to apprehend immediately
unauthorized manufacturers and distributors of Scout paraphernalia, upon proper application by the Boy
Scouts of the Philippines and/or Girl Scouts of the Philippines for warrant of arrest and/or search warrant
with a judge, or such other responsible officer as may be authorized by law; and to impound the said
paraphernalia to be used as evidence in court or other appropriate administrative body. Orders
the immediate and strict compliance with the Instructions. 14
Under the above provision and as aforediscussed, petitioners miserably failed to report the unlawful peddling of scouting goods
to the Boy Scouts of the Philippines for the proper application of a warrant. Private respondents' rights are immutable and
cannot be sacrificed to transient needs. 15 Petitioners did not have the unbridled license to cause the seizure of respondents'
goods without any warrant.
And thirdly, if petitioners did not have a hand in the raid, they should have filed a third-party complaint against the raiding team
for contribution or any other relief, 16 in respect of respondents' claim for Recovery of Sum of Money with Damages. Again, they
did not.
We have consistently ruled that moral damages are not awarded to penalize the defendant but to compensate the plaintiff for
the injuries he may have suffered. 17 Conformably with our ruling in Lim vs. Ponce de Leon, op. cit., moral damages can be
awarded in the case at bench. There can be no doubt that petitioners must have suffered sleepless nights, serious anxiety, and
wounded feelings due the tortious raid caused by petitioners. Private respondents' avowals of embarrassment and humiliation
during the seizure of their merchandise were supported by their testimonies. Respondent Cruz declared:
I felt very nervous. I was crying to loss (sic) my goods and capital because I am doing business with borrowed
money only, there was commotion created by the raiding team and they even stepped on some of the pants
and dresses on display for sale. All passersby stopped to watch and stared at me with accusing expressions. I
was trembling and terribly ashamed, sir. 18
Respondent Lugatiman testified:
I felt very nervous. I was crying and I was very much ashamed because many people have been watching the
PC soldiers hauling my items, and many/I (sic) heard say "nakaw pala ang mga iyan" for which I am claiming
P25,000.00 for damages.19
While respondent Gonzalez stated thus:
I do not like the way the raid was conducted by the team sir because it looked like that what I have been
selling were stolen items that they should be confiscated by uniformed soldiers. Many people were around
and the more the confiscation was made in a scandalous manner; every clothes, T-shirts, pants and dresses
even those not wrapped dropped to the ground. I was terribly shamed in the presence of market goers that
morning.20
Needles to state, the wantonness of the wrongful seizure justifies the award of exemplary damages. 21 It will also serve as a stern
reminder to all and sundry that the constitutional protection against unreasonable search and seizure is a virile reality and not a
mere burst of rhetoric. The all encompassing protection extends against intrusions directly done both by government and
indirectly by private entities.
IN VIEW WHEREOF, the appealed decision is AFFIRMED WITH MODIFICATION. We impose a SIX PERCENT (6%) interest from
January 9, 1987 on the TWO THOUSAND PESOS (P2,000.00) for the unreturned twenty-six (26) pieces of girl scouts items and a
TWELVE PERCENT (12%) interest, in lieu of SIX PERCENT (6%), on the said amount upon finality of this Decision until the payment
thereof. 22 Costs against petitioners.
SO ORDERED.
PHILIP S. YU, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, THE HONORABLE PRESIDING JUDGE, RTC OF MANILA, BRANCH XXXIV (34) and UNISIA
MERCHANDISING CO., INC., respondents.
Oscar M. Manahan for petitioner.
Ruben L. Pasamonte collaborating counsel for petitioner.
Alfredo G. De Guzman for private respondent.
MELO, J.:
Petitioner, the exclusive distributor of the House of Mayfair wallcovering products in the Philippines, cried foul when his former
dealer of the same goods, herein private respondent, purchased the merchandise from the House of Mayfair in England through
FNF Trading in West Germany and sold said merchandise in the Philippines. Both the court of origin and the appellate court
rejected petitioner's thesis that private respondent was engaged in a sinister form of unfair competition within the context of
Article 28 of the New Civil Code (pp. 23 and 64, Rollo). Hence, the petition at bar.
There is no dispute that petitioner has had an exclusive sales agency agreement with the House of Mayfair since 1987 to
promote and procure orders for Mayfair wallcovering products from customers in the Philippines (Annex "B", Petition; p.
30, Rollo). Even as petitioner was such exclusive distributor, private respondent, which was then petitioner's dealer, imported
the some goods via the FNF Trading which eventually sold the merchandise in the domestic market (TSN, September 20, 1988, p.
9; p. 117, Rollo). In the suit for injunction which petitioner filed before the Regional Trial Court of the National Capital Judicial
Region stationed at Manila, petitioner pressed the idea that he was practically by-passed and that private respondent acted in
concert with the FNF Trading in misleading Mayfair into believing that the goods ordered by the trading firm were intended for
shipment to Nigeria although they were actually shipped to and sold in the Philippines (Paragraph 5, Complaint: p. 34, Rollo).
Private respondent professed ignorance of the exclusive contract in favor of petitioner. Even then, private respondent
responded by asserting that petitioner's understanding with Mayfair is binding only between the parties thereto (Paragraph 5,
Answer; p. 50, Rollo).
In the course of hearing the arguments for and against the issuance of the requested writ of preliminary injunction, petitioner
impressed before the lower court that he is seeking to enjoin the sale and distribution by private respondent of the same goods
in the market (TSN, September 20, 1988, p. 35; p. 142, Rollo) but the Honorable Cesar V. Alejandria, Presiding Judge of Branch 34
was unperturbed, thusly:
Resolving plaintiff's motion embodied in the complaint for the issuance of a writ of preliminary injunction
after hearing, but without prejudging the merits of the case, and finding from the evidences adduced by the
plaintiff, that the terms and conditions of the agency agreement, Exhibit "A-inj." between the plaintiff and
The House of Mayfair of England for the exclusive distributorship by the plaintiff of the latter's goods,
apertain to them; that there is no privity of contract between the plaintiff and the defendant; that the
controversy in this case arose from a breach of contract by the FNF Trading of Germany, for having shipped
goods it had purchased from The House of Mayfair to the Philippines: that as shown in Exh. "J-inj.", the
House of Mayfair was demanding payment of 4,500.00 from the FNF Trading for restitution of plaintiff's
alleged loss on account of the shipment of the goods in question here in the Philippines and now in the
possession of the defendant; it appears to the Court that to restrain the defendant from selling the goods it
has ordered from the FNF Trading of Germany, would be without legal justification.
WHEREFORE, the motion for the issuance of a writ of preliminary injunction to restrain the defendant from
selling the goods it has ordered from the FNF Trading of Germany is hereby DENIED. (p. 64, Rollo.)
The indifference of the trial court towards petitioner's supplication occasioned the filing of a petition for review
on certiorari with the Court of Appeals but Justice Ordoñez-Benitez, with whom Justices Bellosillo and Kalalo concurred, reacted
in the same nonchalant fashion. According to the appellate court, petitioner was not able to demonstrate the unequivocal right
which he sought to protect and that private respondent is a complete stranger vis-a-vis the covenant between petitioner and
Mayfair. Apart from these considerations, the reviewing authority noted that petitioner could be fully compensated for the
prejudice he suffered judging from the tenor of Mayfair's correspondence to FNF Trading wherein Mayfair took the cudgels for
petitioner in seeking compensation for the latter's loss as a consequence of private respondent's scheme (p. 79, Rollo; pp. 23-
29, Rollo).
In the petition at hand, petitioner anchors his plea for redress on his perception that private respondent has distributed and
continues to sell Mayfair covering products in contravention of petitioner's exclusive right conferred by the covenant with the
House of Mayfair.
On March 13, 1989, a temporary restraining order was issued to last until further notice from this Court directed against private
respondent (p. 188, Rollo). Notwithstanding such proscription, private respondent persisted in the distribution and sole (p. 208;
228-229, Rollo), triggering petitioner's motion to cite private respondent's manager in contempt of court (p. 223, Rollo).
Considering that private respondent's manager, Frank Sia, admitted the acts complained of, a fine of P500.00 was imposed on
him but he failed to pay the same within the five-day period provided in Our Resolution of June 21, 1989
(p. 236, Rollo).
Did respondent appellate court correctly agree with the lower court in disallowing the writ solicited by herein petitioner?
That the exclusive sales contract which links petitioner and the House of Mayfair is solely the concern of the privies thereto and
cannot thus extend its chain as to bind private respondent herein is, We believe, beside the point. Verily, injunction is the
appropriate remedy to prevent a wrongful interference with contracts by strangers to such contracts where the legal remedy is
insufficient and the resulting injury is irreparable (Gilchrist vs. Cuddy, 29 Phil. 542 [1915]; 4-A Padilla, Civil Code Annotated, 1988
Ed., p. 90). The liability of private respondent, if any, does not emanate from the four corners of the contract for undoubtedly,
Unisia Merchandising Co., Inc. is not a party thereto but its accountability is "an independent act generative of civil liability"
(Daywalt vs. Corporacion de PP. Agustinos Recoletos, 39 Phil. 587 [1919]; 4 Paras, Civil Code of the Philippines Annotated, 1981
10th Ed., p. 439; 4 Tolentino, Commentaries and Jurisprudence on the Civil Code, 1986 Ed.,
p. 439). These observations, however, do not in the least convey the message that We have placed the cart ahead of the horse,
so to speak, by pronouncing private respondent's liability at this stage in view of the pendency of the main suit for injunction
below. We are simply rectifying certain misperceptions entertained by the appellate court as regards the feasibility of requesting
a preliminary injunction to enjoin a stranger to an agreement.
To Our mind, the right to perform an exclusive distributorship agreement and to reap the profits resulting from such
performance are proprietary rights which a party may protect (30 Am. Jur. Section 19, pp. 71-72: Jurado, Comments and
Jurisprudence on Obligations and Contracts, 1983 8th Rev. Ed., p. 336) which may otherwise not be diminished, nay, rendered
illusory by the expedient act of utilizing or interposing a person or firm to obtain goods from the supplier to defeat the very
purpose for which the exclusive distributorship was conceptualized, at the expense of the sole authorized distributor (43 C.J.S.
597).
Another circumstance which respondent court overlooked was petitioner's suggestion, which was not disputed by herein private
respondent in its comment, that the House of Mayfair in England was duped into believing that the goods ordered through the
FNF Trading were to be shipped to Nigeria only, but the goods were actually sent to and sold in the Philippines. A ploy of this
character is akin to the scenario of a third person who induces a party to renege on or violate his undertaking under a contract,
thereby entitling the other contracting party to relief therefrom (Article 1314, New Civil Code). The breach caused by private
respondent was even aggravated by the consequent diversion of trade from the business of petitioner to that of private
respondent caused by the latter's species of unfair competition as demonstrated no less by the sales effected inspite of this
Court's restraining order. This brings Us to the irreparable mischief which respondent court misappreciated when it refused to
grant the relief simply because of the observation that petitioner can be fully compensated for the damage. A contrario, the
injury is irreparable where it is continuous and repeated since from its constant and frequent recurrence, no fair and reasonable
redress can be had therefor by petitioner insofar as his goodwill and business reputation as sole distributor are concerned.
Withal, to expect petitioner to file a complaint for every sale effected by private respondent will certainly court multiplicity of
suits (3 Francisco, Revised Rules of Court, 1985 Edition, p. 261).

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated January 13, 1989 in CA-G.R. SP No.
16019 and the Order dated October 16, 1988 issued by the magistrate at the court of origin are hereby REVERSED and SET
ASIDE. Let this case be remanded to the court of origin for issuance of a writ of preliminary injunction upon petitioner's posting
of a bond in the sum of Fifty Thousand (P50,000.00) Pesos to be approved by said court, to remain effective during the trial on
the merits until final determination of the case. The manager of private respondent. Frank Sia, is hereby ordered to pay to the
Clerk of Court within five (5) days from notice hereof the fine of P500.00, as previously imposed on him, with a warning that
failure to do so will be dealt with more severely.

Upon issuance of the writ of preliminary injunction, the restraining order issued on March 13, 1989 by this Court shall be
deemed automatically lifted.

SO ORDERED.
SO PING BUN, petitioner, Due to my closed (sic) business associate (sic) for three decades with your late grandfather Mr. So Pek Giok
vs. and late father, Mr. So Chong Bon, I allowed you temporarily to use the warehouse of Tek Hua Enterprising
COURT OF APPEALS, TEK HUA ENTERPRISES CORP. and MANUEL C. TIONG, respondents. Corp. for several years to generate your personal business.

QUISUMBING, J.:
This petition for certiorari challenges the Decision 1 of the Court of Appeals dated October 10, 1994, and the Resolution 2dated
June 5, 1995, in CA-G.R. CV No. 38784. The appellate court affirmed the decision of the Regional Trial Court of Manila, Branch 35,
except for the award of attorney's fees, as follows:
WHEREFORE, foregoing considered, the appeal of respondent-appellant So Ping Bun for lack of merit is
DISMISSED. The appealed decision dated April 20, 1992 of the court a quo is modified by reducing the
attorney's fees awarded to plaintiff Tek Hua Enterprising Corporation from P500,000.00 to P200,000.00. 3
The facts are as follows:
In 1963, Tek Hua Trading Co, through its managing partner, So Pek Giok, entered into lease agreements with lessor Dee C. Chuan
& Sons Inc. (DCCSI). Subjects of four (4) lease contracts were premises located at Nos. 930, 930-Int., 924-B and 924-C, Soler
Street, Binondo, Manila. Tek Hua used the areas to store its textiles. The contracts each had a one-year term. They provided that
should the lessee continue to occupy the premises after the term, the lease shall be on a month-to-month basis.
When the contracts expired, the parties did not renew the contracts, but Tek Hua continued to occupy the premises. In 1976,
Tek Hua Trading Co. was dissolved. Later, the original members of Tek Hua Trading Co. including Manuel C. Tiong, formed Tek
Hua Enterprising Corp., herein respondent corporation.
Since I decided to go back into textile business, I need a warehouse immediately for my stocks. Therefore,
please be advised to vacate all your stocks in Tek Hua Enterprising Corp. Warehouse. You are hereby given 14
days to vacate the premises unless you have good reasons that you have the right to stay. Otherwise, I will
be constrained to take measure to protect my interest.
Please give this urgent matter your preferential attention to avoid inconvenience on your part.
Very truly yours,
(Sgd) Manuel C. Tiong
MANUEL C. TIONG
President 4
Petitioner refused to vacate. On March 4, 1992, petitioner requested formal contracts of lease with DCCSI in favor Trendsetter
Marketing. So Ping Bun claimed that after the death of his grandfather, So Pek Giok, he had been occupying the premises for his
textile business and religiously paid rent. DCCSI acceded to petitioner's request. The lease contracts in favor of Trendsetter were
executed.
In the suit for injunction, private respondents pressed for the nullification of the lease contracts between DCCSI and petitioner.
They also claimed damages.

So Pek Giok, managing partner of Tek Hua Trading, died in 1986. So Pek Giok's grandson, petitioner So Ping Bun, occupied the After trial, the trial court ruled:
warehouse for his own textile business, Trendsetter Marketing.
WHEREFORE, judgment is rendered:
On August 1, 1989, lessor DCCSI sent letters addressed to Tek Hua Enterprises, informing the latter of the 25% increase in rent
effective September 1, 1989. The rent increase was later on reduced to 20% effective January 1, 1990, upon other lessees'
1. Annulling the four Contracts of Lease (Exhibits A, A-1 to A-3,
demand. Again on December 1, 1990, the lessor implemented a 30% rent increase. Enclosed in these letters were new lease
inclusive) all dated March 11, 1991, between defendant So Ping Bun,
contracts for signing. DCCSI warned that failure of the lessee to accomplish the contracts shall be deemed as lack of interest on
doing business under the name and style of "Trendsetter Marketing",
the lessee's part, and agreement to the termination of the lease. Private respondents did not answer any of these letters. Still,
and defendant Dee C. Chuan & Sons, Inc. over the premises located at
the lease contracts were not rescinded.
Nos. 924-B, 924-C, 930 and 930, Int., respectively, Soler Street,
Binondo Manila;
On March 1, 1991, private respondent Tiong sent a letter to petitioner which reads as follows:
2. Making permanent the writ of preliminary injunction issued by this
March 1, 1991 Court on June 21, 1991;

Mr. So Ping Bun 3. Ordering defendant So Ping Bun to pay the aggrieved party,
plaintiff Tek Hua Enterprising Corporation, the sum of P500,000.00,
930 Soler Street for attorney's fees;

Binondo, Manila 4. Dismissing the complaint, insofar as plaintiff Manuel C. Tiong is

concerned, and the respective counterclaims of the defendant;
Dear Mr. So,
5. Ordering defendant So Ping Bun to pay the costs of this lawsuit;
 This judgment is without prejudice to the rights of plaintiff Tek Hua Enterprising Corporation and defendant
Dee C. Chuan & Sons, Inc. to negotiate for the renewal of their lease contracts over the premises located at
Nos. 930, 930-Int., 924-B and 924-C Soler Street, Binondo, Manila, under such terms and conditions as they
agree upon, provided they are not contrary to law, public policy, public order, and morals.
SO ORDERED. 5
Petitioner's motion for reconsideration of the above decision was denied.
On appeal by So Ping Bun, the Court of Appeals upheld the trial court. On motion for reconsideration, the appellate court
modified the decision by reducing the award of attorney's fees from five hundred thousand (P500,000.00) pesos to two hundred
thousand (P200,000.00) pesos.
Petitioner is now before the Court raising the following issues:
I. WHETHER THE APPELLATE COURT ERRED IN AFFIRMING THE TRIAL COURT'S
DECISION FINDING SO PING BUN GUILTY OF TORTUOUS INTERFERENCE OF
CONTRACT?
II. WHETHER THE APPELLATE COURT ERRED IN AWARDING ATTORNEY'S FEES
OF P200,000.00 IN FAVOR OF PRIVATE RESPONDENTS.
The foregoing issues involve, essentially, the correct interpretation of the applicable law on tortuous conduct, particularly
unlawful interference with contract. We have to begin, obviously, with certain fundamental principles on torts and damages.
Damage is the loss, hurt, or harm which results from injury, and damages are the recompense or compensation awarded for the
damage suffered. 6 One becomes liable in an action for damages for a nontrespassory invasion of another's interest in the
private use and enjoyment of asset if (a) the other has property rights and privileges with respect to the use or enjoyment
interfered with, (b) the invasion is substantial, (c) the defendant's conduct is a legal cause of the invasion, and (d) the invasion is
either intentional and unreasonable or unintentional and actionable under general negligence rules. 7
The elements of tort interference are: (1) existence of a valid contract; (2) knowledge on the part of the third person of the
existence of contract; and (3) interference of the third person is without legal justification or excuse. 8
A duty which the law of torts is concerned with is respect for the property of others, and a cause of action ex delicto may be
predicated upon an unlawful interference by one person of the enjoyment by the other of his private
property.9 This may pertain to a situation where a third person induces a party to renege on or violate his undertaking under a
contract. In the case before us, petitioner's Trendsetter Marketing asked DCCSI to execute lease contracts in its favor, and as a
result petitioner deprived respondent corporation of the latter's property right. Clearly, and as correctly viewed by the appellate
court, the three elements of tort interference above-mentioned are present in the instant case.
Authorities debate on whether interference may be justified where the defendant acts for the sole purpose of furthering his own
financial or economic interest. 10 One view is that, as a general rule, justification for interfering with the business relations of
another exists where the actor's motive is to benefit himself. Such justification does not exist where his sole motive is to cause
harm to the other. Added to this, some authorities believe that it is not necessary that the interferer's interest outweigh that of
the party whose rights are invaded, and that an individual acts under an economic interest that is substantial, not merely de
minimis, such that wrongful and malicious motives are negatived, for he acts in self-protection. 11Moreover justification for
protecting one's financial position should not be made to depend on a comparison of his economic interest in the subject matter
with that of others. 12 It is sufficient if the impetus of his conduct lies in a proper business interest rather than in wrongful
motives. 13
As early as Gilchrist vs. Cuddy, 14 we held that where there was no malice in the interference of a contract, and the impulse
behind one's conduct lies in a proper business interest rather than in wrongful motives, a party cannot be a malicious interferer.
Where the alleged interferer is financially interested, and such interest motivates his conduct, it cannot be said that he is an
officious or malicious intermeddler. 15
In the instant case, it is clear that petitioner So Ping Bun prevailed upon DCCSI to lease the warehouse to his enterprise at the
expense of respondent corporation. Though petitioner took interest in the property of respondent corporation and benefited
from it, nothing on record imputes deliberate wrongful motives or malice on him.
Sec. 1314 of the Civil Code categorically provides also that, "Any third person who induces another to violate his contract shall be
liable for damages to the other contracting party." Petitioner argues that damage is an essential element of tort interference,
and since the trial court and the appellate court ruled that private respondents were not entitled to actual, moral or exemplary
damages, it follows that he ought to be absolved of any liability, including attorney's fees.
It is true that the lower courts did not award damages, but this was only because the extent of damages was not quantifiable.
We had a similar situation in Gilchrist, where it was difficult or impossible to determine the extent of damage and there was
nothing on record to serve as basis thereof. In that case we refrained from awarding damages. We believe the same conclusion
applies in this case.
While we do not encourage tort interferers seeking their economic interest to intrude into existing contracts at the expense of
others, however, we find that the conduct herein complained of did not transcend the limits forbidding an obligatory award for
damages in the absence of any malice. The business desire is there to make some gain to the detriment of the contracting
parties. Lack of malice, however, precludes damages. But it does not relieve petitioner of the legal liability for entering into
contracts and causing breach of existing ones. The respondent appellate court correctly confirmed the permanent injunction and
nullification of the lease contracts between DCCSI and Trendsetter Marketing, without awarding damages. The injunction saved
the respondents from further damage or injury caused by petitioner's interference.
Lastly, the recovery of attorney's fees in the concept of actual or compensatory damages, is allowed under the circumstances
provided for in Article 2208 of the Civil Code. 16 One such occasion is when the defendant's act or omission has compelled the
plaintiff to litigate with third persons or to incur expenses to protect his interest. 17 But we have consistently held that the award
of considerable damages should have clear factual and legal bases. 18 In connection with attorney's fees, the award should be
commensurate to the benefits that would have been derived from a favorable judgment. Settled is the rule that fairness of the
award of damages by the trial court calls for appellate review such that the award if far too excessive can be reduced. 19 This
ruling applies with equal force on the award of attorney's fees. In a long line of cases we said, "It is not sound policy to place in
penalty on the right to litigate. To compel the defeated party to pay the fees of counsel for his successful opponent would throw
wide open the door of temptation to the opposing party and his counsel to swell the fees to undue proportions."20
Considering that the respondent corporation's lease contract, at the time when the cause of action accrued, ran only on a
month-to-month basis whence before it was on a yearly basis, we find even the reduced amount of attorney's fees ordered by
the Court of Appeals still exorbitant in the light of prevailing jurisprudence. 21 Consequently, the amount of two hundred
thousand (P200,000.00) awarded by respondent appellate court should be reduced to one hundred thousand (P100,000.00)
pesos as the reasonable award or attorney's fees in favor of private respondent corporation.
WHEREFORE, the petition is hereby DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No.
38784 are hereby AFFIRMED, with MODIFICATION that the award of attorney's fees is reduced from two hundred thousand
(P200,000.00) to one hundred thousand (P100,000.00) pesos. No pronouncement as to costs.1âwphi1.nêt
SO ORDERED.