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G.R. No.

175822
Republic of the Philippines
SUPREME COURT Manila

THIRD DIVISION

G.R. No. 175822 October 23, 2013

CALIFORNIA CLOTHING INC. and MICHELLE S. YBAÑEZ, Petitioners, vs.


SHIRLEY G. QUIÑONES, Respondent.

DECISION

PERALTA, J.:

Assailed in this petition for review on certiorari under Rule 45 of the ; Rules of Court are the Court of
1 2
Appeals Decision dated August 3, 2006 and Resolution dated November 14, 2006 in CA-G.R. CV
3
No. 80309. The assailed decision reversed and set aside the June 20, 2003 Decision of the Regional
Trial Court of Cebu City (RTC), Branch 58, in Civil Case No. CEB-26984; while the assailed
resolution denied the motion for reconsideration filed by petitioner Michelle Ybañez (Ybañez).

The facts of the case, as culled from the records, are as follows:

On July 25, 2001, respondent Shirley G. Quiñones, a Reservation Ticketing Agent of Cebu Pacific
Air in Lapu Lapu City, went inside the Guess USA Boutique at the second floor of Robinson’s
Department Store (Robinson’s) in Cebu City. She fitted four items: two jeans, a blouse and a shorts,
4
then decided to purchase the black jeans worth ₱2,098.00. Respondent allegedly paid to the
5 6
cashier evidenced by a receipt issued by the store.

While she was walking through the skywalk connecting Robinson’s and Mercury Drug Store
(Mercury) where she was heading next, a Guess employee approached and informed her that she
failed to pay the item she got. She, however, insisted that she paid and showed the employee the
7
receipt issued in her favor. She then suggested that they talk about it at the Cebu Pacific Office
located at the basement of the mall. She first went to Mercury then met the Guess employees as
8
agreed upon.

When she arrived at the Cebu Pacific Office, the Guess employees allegedly subjected her to
humiliation in front of the clients of Cebu Pacific and repeatedly demanded payment for the black
9
jeans. They supposedly even searched her wallet to check how much money she had, followed by
10
another argument. Respondent, thereafter, went home.
On the same day, the Guess employees allegedly gave a letter to the Director of Cebu Pacific Air
narrating the incident, but the latter refused to receive it as it did not concern the office and the same
11
took place while respondent was off duty. Another letter was allegedly prepared and was
supposed to be sent to the Cebu Pacific Office in Robinson’s, but the latter again refused to receive
12
it. Respondent also claimed that the Human Resource Department (HRD) of Robinson’s was
furnished said letter and the latter in fact conducted an investigation for purposes of canceling
respondent’s Robinson’s credit card. Respondent further claimed that she was not given a copy of
13
said damaging letter. With the above experience, respondent claimed to have suffered physical
anxiety, sleepless nights, mental anguish, fright, serious apprehension, besmirched reputation,
14 15
moral shock and social humiliation. She thus filed the Complaint for Damages before the RTC
against petitioners California Clothing, Inc. (California Clothing), Excelsis Villagonzalo (Villagonzalo),
Imelda Hawayon (Hawayon) and Ybañez. She demanded the payment of moral, nominal, and
16
exemplary damages, plus attorney’s fees and litigation expenses.

17
In their Answer, petitioners and the other defendants admitted the issuance of the receipt of
payment. They claimed, however, that instead of the cashier (Hawayon) issuing the official receipt, it
was the invoicer (Villagonzalo) who did it manually. They explained that there was
miscommunication between the employees at that time because prior to the issuance of the receipt,
Villagonzalo asked Hawayon " Ok na ?," and the latter replied " Ok na ," which the former believed to
18
mean that the item has already been paid. Realizing the mistake, Villagonzalo rushed outside to
look for respondent and when he saw the latter, he invited her to go back to the shop to make
clarifications as to whether or not payment was indeed made. Instead, however, of going back to the
shop, respondent suggested that they meet at the Cebu Pacific Office. Villagonzalo, Hawayon and
19
Ybañez thus went to the agreed venue where they talked to respondent. They pointed out that
it appeared in their conversation that respondent could not recall whom she gave the
20
payment. They emphasized that they were gentle and polite in talking to respondent and it was
21 the latter who was arrogant in
answering their questions. As counterclaim, petitioners and the other defendants sought the
payment of moral and exemplary damages, plus attorney’s fees and
22
litigation expenses.

On June 20, 2003, the RTC rendered a Decision dismissing both the complaint and counterclaim of
the parties. From the evidence presented, the trial court concluded that the petitioners and the other
defendants believed in good faith that respondent failed to make payment. Considering that no
motive to fabricate a lie could be attributed to the Guess employees, the court held that when they
demanded payment from respondent, they merely exercised a right under the honest belief that no
payment was made. The RTC likewise did not find it damaging for respondent when the
confrontation took place in front of Cebu Pacific clients, because it was respondent herself who put
herself in that situation by choosing the venue for discussion. As to the letter sent to Cebu Pacific Air,
the trial court also did not take it against the Guess employees, because they merely asked for
assistance and not to embarrass or humiliate respondent. In other words, the RTC found no
23
evidence to prove bad faith on the part of the Guess employees to warrant the award of damages.

On appeal, the CA reversed and set aside the RTC decision, the dispositive portion of which reads:
WHEREFORE, the instant appeal is GRANTED. The decision of the Regional Trial Court of Cebu
City, Branch 58, in Civil Case No. CEB-26984 (for: Damages) is hereby REVERSED and SET
ASIDE. Defendants Michelle Ybañez and California Clothing, Inc. are hereby ordered to pay
plaintiffappellant Shirley G. Quiñones jointly and solidarily moral damages in the amount of Fifty
Thousand Pesos (₱50,000.00) and attorney’s fees in the amount of Twenty Thousand Pesos
(₱20,000.00).

24
SO ORDERED.

While agreeing with the trial court that the Guess employees were in good faith when they
confronted respondent inside the Cebu Pacific Office about the alleged non-payment, the CA,
however, found preponderance of evidence showing that they acted in bad faith in sending the
demand letter to respondent’s employer. It found respondent’s possession of both the official receipt
25 and the subject black jeans as
evidence of payment. Contrary to the findings of the RTC, the CA opined that the letter
addressed to Cebu Pacific’s director was sent to respondent’s employer not merely to ask for
assistance for the collection of the disputed payment but to subject her to ridicule,
26 humiliation and similar injury such
that she would be pressured to pay. Considering that Guess already started its investigation on
the incident, there was a taint of bad faith and malice when it dragged respondent’s employer who
was not privy to the transaction. This is especially true in this case since the purported letter
contained not only a narrative of the incident but accusations as to
27 the alleged acts of respondent in
trying to evade payment. The appellate court thus held that petitioners are guilty of abuse of
right entitling respondent to collect moral damages and attorney’s fees. Petitioner California
Clothing Inc. was made liable for its failure to exercise extraordinary diligence in the hiring and
selection of its employees; while Ybañez’s liability stemmed from her act of signing the demand
letter sent to respondent’s employer. In view of Hawayon and Villagonzalo’s
28
good faith, however, they were exonerated from liability.

29
Ybañez moved for the reconsideration of the aforesaid decision, but the same was denied in the
assailed November 14, 2006 CA Resolution.

Petitioners now come before the Court in this petition for review on certiorari under Rule 45 of the
Rules of Court based on the following grounds:

I.

THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE LETTER SENT TO
THE CEBU PACIFIC OFFICE WAS MADE TO SUBJECT HEREIN RESPONDENT TO RIDICULE,
HUMILIATION AND SIMILAR INJURY.

II.

THE HONORABLE COURT OF APPEALS ERRED IN AWARDING MORAL DAMAGES AND


30
ATTORNEY’S FEES.
The petition is without merit.

Respondent’s complaint against petitioners stemmed from the principle of abuse of rights provided
for in the Civil Code on the chapter of human relations. Respondent cried foul when petitioners
allegedly embarrassed her when they insisted that she did not pay for the black jeans she purchased
from their shop despite the evidence of payment which is the official receipt issued by the shop. The
issuance of the receipt notwithstanding, petitioners had the right to verify from respondent whether
she indeed made payment if they had reason to believe that she did not. However, the exercise of
such right is not without limitations. Any abuse in the exercise of such right and in the performance of
duty causing damage or injury to another is actionable under the Civil Code. The Court’s
31
pronouncement in Carpio v. Valmonte is noteworthy:

In the sphere of our law on human relations, the victim of a wrongful act or omission, whether done
willfully or negligently, is not left without any remedy or recourse to obtain relief for the damage or
injury he sustained. Incorporated into our civil law are not only principles of equity but also universal
moral precepts which are designed to indicate certain norms that spring from the fountain of good
conscience and which are meant to serve as guides for human conduct. First of these fundamental
precepts is the principle commonly known as "abuse of rights" under Article 19 of the Civil Code. It
provides that " Every person must, in the exercise of his rights and in the performance of his duties,
32 act with
justice, give everyone his due and observe honesty and good faith."x x x
The elements of abuse of rights are as follows: (1) there is a legal right or
duty; (2) which is exercised in bad faith; (3)
33 for the
sole intent of prejudicing or injuring another.

In this case, petitioners claimed that there was a miscommunication between the cashier and the
invoicer leading to the erroneous issuance of the receipt to respondent. When they realized the
mistake, they made a cash count and discovered that the amount which is equivalent to the price of
the black jeans was missing. They, thus, concluded that it was respondent who failed to make such
payment. It was, therefore, within their right to verify from respondent whether she indeed paid or not
and collect from her if she did not. However, the question now is whether such right was exercised in
good faith or they went overboard giving respondent a cause of action against them.

Under the abuse of rights principle found in Article 19 of the Civil Code, a person must, in the
exercise of legal right or duty, act in good faith. He would be liable if he instead acted in bad faith,
34
with intent to prejudice another. Good faith refers to the state of mind which is manifested by
the acts of the individual concerned. It consists of the intention to abstain from taking an
unconscionable
35 and unscrupulous
advantage of another. Malice or bad faith, on the other hand, implies a
36 conscious and
intentional design to do a wrongful act for a dishonest purpose or moral obliquity.

Initially, there was nothing wrong with petitioners asking respondent whether she paid or not. The
Guess employees were able to talk to respondent at the Cebu Pacific Office. The confrontation
started well, but it eventually turned sour when voices were raised by both parties. As aptly held by
both the RTC and the CA, such was the natural consequence of two parties with conflicting views
insisting on their respective beliefs. Considering, however, that respondent was in possession of the
item purchased from the shop, together with the official receipt of payment issued by petitioners, the
latter cannot insist that no such payment was made on the basis of a mere speculation. Their claim
should have been proven by substantial evidence in the proper forum.
It is evident from the circumstances of the case that petitioners went overboard and tried to force
respondent to pay the amount they were demanding. In the guise of asking for assistance,
petitioners even sent a demand letter to respondent’s employer not only informing it of the incident
but obviously imputing bad acts on the part of respondent.1âwphi1 Petitioners claimed that after
receiving the receipt of payment and the item purchased, respondent "was noted to hurriedly left
(sic) the store." They also accused respondent that she was not completely being honest when she
was asked about the circumstances of payment, thus:

x x x After receiving the OR and the item, Ms. Gutierrez was noted to hurriedly left (sic) the store. x x
x

When I asked her about to whom she gave the money, she gave out a blank expression and told me,
"I can’t remember." Then I asked her how much money she gave, she answered, "₱2,100; 2 pcs
1,000 and 1 pc 100 bill." Then I told her that that would (sic) impossible since we have no such
denomination in our cash fund at that moment. Finally, I asked her if how much change and if she
received change from the cashier, she then answered, "I don’t remember." After asking these simple
questions, I am very certain that she is not completely being honest about this. In fact, we invited her
to come to our boutique to clear these matters but she vehemently refused saying that she’s in a
37
hurry and very busy.

Clearly, these statements are outrightly accusatory. Petitioners accused respondent that not only did
she fail to pay for the jeans she purchased but that she deliberately took the same without paying for
it and later hurriedly left the shop to evade payment. These accusations were made despite the
issuance of the receipt of payment and the release of the item purchased. There was, likewise, no
showing that respondent had the intention to evade payment. Contrary to petitioners’ claim,
respondent was not in a rush in leaving the shop or the mall. This is evidenced by the fact that the
Guess employees did not have a hard time looking for her when they realized the supposed
nonpayment.

It can be inferred from the foregoing that in sending the demand letter to respondent’s employer,
petitioners intended not only to ask for assistance in collecting the disputed amount but to tarnish
respondent’s reputation in the eyes of her employer. To malign respondent without substantial
evidence and despite the latter’s possession of enough evidence in her favor, is clearly
impermissible. A person should not use his right unjustly or contrary to honesty and good faith,
38
otherwise, he opens himself to liability.

The exercise of a right must be in accordance with the purpose for which it was established and
39
must not be excessive or unduly harsh. In this case, petitioners obviously abused their rights.

Complementing the principle of abuse of rights are the provisions of Articles 20 and 2 of the Civil
40 Code
which read:

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

Article 21. Any person who willfully causes loss or injury to another in a manner that is contrary to
morals or good customs, or public policy shall compensate the latter for the damage.

In view of the foregoing, respondent is entitled to an award of moral damages and attorney s fees.
Moral damages may be awarded whenever the defendant s wrongful act or omission is the
proximate cause of the plaintiffs physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury in the
41 cases
specified or analogous to those provided in Article 2219 of the
Civil Code. Moral damages
are not a bonanza. They are given to ease the defendant s grief and suffering. They should, thus,
42 reasonably
approximate the extent of hurt caused and the gravity of the wrong done. They are
awarded not to enrich the complainant but to enable the latter to obtain means, diversions, or
43 amusements
that will serve to alleviate the moral suffering he has undergone. We find that the amount of
₱50,000.00 as moral damages awarded by the CA is reasonable under the circumstances.
Considering that respondent was compelled to litigate to protect her interest, attorney s fees in the
amount of of₱20,000.00 is likewise just and proper.

WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals
Decision dated August 3, 2006 and Resolution dated November 14, 2006 in CA-G.R. CV No. 80309,
are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA Associate


Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.


Associate Justice
Chairperson

ROBERTO A. ABAD
Associate JusticeJOSE CATRAL MENDOZA
Associate Justice

MARVIC MARIO VICTOR F. LEONEN Associate


Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court s Division.

PRESBITERO J. VELASCO, JR.


Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the , Division Chairperson s Attestation, I
certify that the conclusions n the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court s Division.

MARIA LOURDES P. A. SERENO Chief


Justice
Footnotes
1
Penned by Associate Justice Agustin S. Dizon, with Associate Justices Isaias P. Dicdican and
Apolinario D. Bruselas, Jr., concurring; rollo pp. 52-62.

2
Penned by Associate Justice Agustin S. Dizon, with Associate Justices Isaias P. Dicdican and
Pampio A. Abarintos, concurring; rollo pp. 70-71.

3
Penned by Presiding Judge Gabriel T. Ingles; rollo pp. 40-51.

4
Rollo, pp. 52-53.

5
Records, p. 8.

6
Id. at 2.

7
Id.

8
Id.

9
Id.

10
Id. at 3.

11
Id.

12
Id.

13
Id. at 4.

14
Id. at 5.

15
Id. at 1-7.

16
Id. at 5.

17
Id. at 38-46.

18
Id. at 41-42.
19
Id. at 42.

20
Id. at 43.

21
Id.

22
Id. at 43-44.

23
Rollo, pp. 49-51.

24
Id. at 61. (Italics and emphasis in the original)

25
Id. at 56.

26
Id. at 57.

27
Id. at 58.

28
Id. at 61.

29
CA rollo, pp. 84-90.

30
Rollo, p. 14.

31
481 Phil. 352 (2004).

32
Carpio v. Valmonte, supra, at 361-362.

33
Dart Philippines, Inc. v. Calogcog, G.R. No. 149241, August 24, 2009, 596 SCRA 614, 624;
Carpio v. Valmonte, supra note 31, at 362.
34
Villanueva v. Rosqueta, G.R. No. 180764, January 19, 2010, 610 SCRA 334, 339.

35
Dart Philippines, Inc. v. Calogcog, supra note 33.

36
Gonzales v. Philippine Commercial and International Bank, G.R. No. 180257, February 23, 2011,
644 SCRA 180, 202.
37
Rollo, p. 59. (Emphasis and italics in the original)

38
Uypitching v. Quiamco, G.R. No. 146322, December 6, 2006, 510 SCRA 172, 179.

39
Dart Philippines, Inc. v. Calogcog, supra note 33; id.

40
Carpio v. Valmonte, supra note 31, at 362.

41
Id. at 364.

42
Villanueva v. Rosqueta, supra note 34, at 341.

43
Carpio v. Valmonte, supra note 31, at 365.

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Today is Saturday, September 14, 2019

Republic of the Philippines


SUPREME COURT Manila

THIRD DIVISION

G.R. No. 161921 July 17, 2013

JOYCE V. ARDIENTE, PETITIONER, vs.


SPOUSES JAVIER AND MA. THERESA PASTORFIDE, CAGAYAN DE ORO WATER DISTRICT AND GASPAR
GONZALEZ,* JR., RESPONDENTS.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and
a
set
Decision1 and Resolution2 of the Court of Appeals (CA), dated August 28, 2003 and December 17, 2003, respectively
CV No. 73000. The CA Decision affirmed with modification the August 15, 2001 Decision3 of the Regional Trial Court
Cagayan de Oro City, Branch 24, while the CA Resolution denied petitioner's Motion for Reconsideration.

The facts, as summarized by the CA, are as follows:

[Herein petitioner] Joyce V. Ardiente and her husband Dr. Roberto S. Ardiente are owners of a housing unit at Emily H
Balulang, Cagayan de Oro City with a lot area of one hundred fifty-three (153) square meters and covered by Transfe
of Title No. 69905.

On June 2, 1994, Joyce Ardiente entered into a Memorandum of Agreement (Exh. "B", pp. 470-473, Records)
selling transferring and conveying in favor of [respondent] Ma. Theresa Pastorfide all their rights and interests in the
housing Emily Homes in consideration of ₱70,000.00. The Memorandum of Agreement carries a stipulation:

"4. That the water and power bill of the subject property shall be for the account of the Second Party (Ma. Theresa Pa
effective June 1, 1994." (Records, p. 47)

vis-a-vis Ma. Theresa Pastorfide's assumption of the payment of the mortgage loan secured by Joyce Ardiente from
t Home Mortgage (Records, Exh. "A", pp. 468-469)

For four (4) years, Ma. Theresa's use of the water connection in the name of Joyce Ardiente was never questioned n
(T.S.N., October 31, 2000, pp. 7-8) until on March 12, 1999, without notice, the water connection of Ma. Theresa was
Proceeding to the office of the Cagayan de Oro Water District (COWD) to complain, a certain Mrs. Madjos told Ma. T
she was delinquent for three (3) months corresponding to the months of December 1998, January 1999, and Februar
Theresa argued that the due date of her payment was March 18, 1999 yet (T.S.N., October 31, 2000, pp. 11-12).
Mrs later told her that it was at the instance of Joyce Ardiente that the water line was cut off (T.S.N., February 5,
2001, p.

On March 15, 1999, Ma. Theresa paid the delinquent bills (T.S.N., October 31, 2000, p. 12). On the same date, throu
lawyer, Ma. Theresa wrote a letter to the COWD to explain who authorized the cutting of the water line (Records, p. 1

On March 18, 1999, COWD, through the general manager, [respondent] Gaspar Gonzalez, Jr., answered the letter d
15, 1999 and reiterated that it was at the instance of Joyce Ardiente that the water line was cut off (Records, p. 161).

Aggrieved, on April 14, 1999, Ma. Theresa Pastorfide [and her husband] filed [a] complaint for damages [against peti
COWD and its manager Gaspar Gonzalez] (Records, pp. 2-6).

In the meantime, Ma. Theresa Pastorfide's water line was only restored and reconnected when the [trial] court
issued preliminary mandatory injunction on December 14, 1999 (Records, p. 237).4

After trial, the RTC rendered judgment holding as follows: x

xxx

In the exercise of their rights and performance of their duties, defendants did not act with justice, gave plaintiffs their d
observe honesty and good faith. Before disconnecting the water supply, defendants COWD and Engr. Gaspar Gonza
even send a disconnection notice to plaintiffs as testified to by Engr. Bienvenido Batar, in-charge of the Commercial D
of defendant COWD. There was one though, but only three (3) days after the actual disconnection on March 12, 1999
date for payment was yet on March 15. Clearly, they did not act with justice. Neither did they observe honesty.

They should not have been swayed by the prodding of Joyce V. Ardiente. They should have investigated first as to
th ownership of the house. For doing the act because Ardiente told them, they were negligent. Defendant Joyce
Ardient have requested before the cutting off of the water supply, plaintiffs to pay. While she attempted to tell
plaintiffs but sh have the patience of seeing them. She knew that it was plaintiffs who had been using the water four
(4) years ago an She should have been very careful. x x x5

The dispositive portion of the trial court's Decision reads, thus:

WHEREFORE, premises considered, judgment is hereby rendered ordering defendants [Ardiente, COWD and Gonza
jointly and severally plaintiffs, the following sums:

(a) ₱200,000.00 for moral damages; (b)

200,000.00 for exemplary damages; and

(c) 50,000.00 for attorney's fee.

The cross-claim of Cagayan de Oro Water District and Engr. Gaspar Gonzales is hereby dismissed. The Court is not
the cutting off of the water supply of plaintiffs was because they were influenced by defendant Joyce Ardiente. They w
negligent too for which they should be liable.

SO ORDERED.6

Petitioner, COWD and Gonzalez filed an appeal with the CA.


On August 28, 2003, the CA promulgated its assailed Decision disposing as follows:

IN VIEW OF ALL THE FOREGOING, the appealed decision is AFFIRMED, with the modification that the awarded da
reduced to ₱100,000.00 each for moral and exemplary damages, while attorney's fees is lowered to ₱25,000.00. Cos
appellants.

SO ORDERED.7

The CA ruled, with respect to petitioner, that she has a "legal duty to honor the possession and use of water line by M
Pastorfide pursuant to their Memorandum of Agreement" and "that when [petitioner] applied for its disconnection, she
bad faith causing prejudice and [injury to] Ma. Theresa Pastorfide."8

As to COWD and Gonzalez, the CA held that they "failed to give a notice of disconnection and derelicted in
reconnec water line despite payment of the unpaid bills by the [respondent spouses Pastorfide]."9

Petitioner, COWD and Gonzalez filed their respective Motions for Reconsideration, but these were denied by the CA
Resolution dated December 17, 2003.

COWD and Gonzalez filed a petition for review on certiorari with this Court, which was docketed as G.R. No. 161802
based on technical grounds and on the finding that the CA did not commit any reversible error in its assailed Decision
petition was denied via a Resolution10 issued by this Court on March 24, 2004. COWD and Gonzalez filed a motion fo
reconsideration, but the same was denied with finality through this Court's Resolution11 dated June 28, 2004.

Petitioner, on the other hand, timely filed the instant petition with the following Assignment of Errors:

7.1 HONORABLE COURT OF APPEALS (ALTHOUGH IT HAS REDUCED THE LIABILITY INTO
HA
STILL COMMITTED GRAVE AND SERIOUS ERROR WHEN IT UPHELD THE JOINT AND
SOLIDAR
LIABILITY OF PETITIONER JOYCE V. ARDIENTE WITH CAGAYAN DE ORO WATER DISTRICT
(C
ENGR. GASPAR D. GONZALES FOR THE LATTER'S FAILURE TO SERVE NOTICE UPON
RESPO
SPOUSES PASTORFIDE PRIOR TO THE ACTUAL DISCONNECTION DESPITE EVIDENCE
ADDU
DURING TRIAL THAT EVEN WITHOUT PETITIONER'S REQUEST, COWD WAS ALREADY SET
TO DISCONNECTION OF RESPONDENTS' WATER SUPPLY DUE TO NON-PAYMENT OF
ACCOUNT THREE (3) MONTHS.

7.2 THE HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS ERROR
WHEN TOTALLY AGAINST PETITIONER AND FAILED TO FIND THAT RESPONDENTS ARE
GUILTY OF
CONTRIBUTORY NEGLIGENCE WHEN THEY FAILED TO PAY THEIR WATER BILLS FOR
THREE
AND TO MOVE FOR THE TRANSFER OF THE COWD ACCOUNT IN THEIR NAME, WHICH WAS
A
VIOLATION OF THEIR MEMORANDUM OF AGREEMENT WITH PETITIONER JOYCE V. ARDIENT
RESPONDENTS LIKEWISE DELIBERATELY FAILED TO EXERCISE DILIGENCE OF A GOOD
FAT THE FAMILY TO MINIMIZE THE DAMAGE UNDER ART. 2203 OF THE NEW CIVIL CODE.
7.3 THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DISREGARDED
THE
THAT RESPONDENT SPOUSES PASTORFIDE ARE LIKEWISE BOUND TO OBSERVE ARTICLE
1
NEW CIVIL CODE, i.e., IN THE EXERCISE OF THEIR RIGHTS AND IN THE PERFORMANCE OF
T
DUTIES TO ACT WITH JUSTICE, GIVE EVERYONE HIS DUE AND OBSERVE HONESTY AND
GO

7.4 THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT GRANTED AN


AWARD
AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES AS AGAINST PETITIONER ARDIENTE. 12

At the outset, the Court noticed that COWD and Gonzalez, who were petitioner's co-defendants before the RTC and
appellants in the CA, were impleaded as respondents in the instant petition. This cannot be done. Being her co-partie
RTC and the CA, petitioner cannot, in the instant petition for review on certiorari, make COWD and Gonzalez, advers
It is a grave mistake on the part of petitioner's counsel to treat COWD and Gonzalez as respondents. There is no bas
considering that, in the first place, there is no showing that petitioner filed a cross-claim against COWD and Gonzalez
Section 2, Rule 9 of the Rules of Court, a cross-claim which is not set up shall be barred. Thus, for failing to set up a
against COWD and Gonzalez before the RTC, petitioner is already barred from doing so in the present petition.

More importantly, as shown above, COWD and Gonzalez's petition for review on certiorari filed with this Court was
al denied with finality on June 28, 2004, making the presently assailed CA Decision final and executory insofar as
COW Gonzalez are concerned. Thus, COWD and Gonzalez are already precluded from participating in the present
petition cannot resurrect their lost cause by filing pleadings this time as respondents but, nonetheless, reiterating the
same p previous pleadings filed with the RTC and the CA.

As to the merits of the instant petition, the Court likewise noticed that the main issues raised by petitioner are factual
settled that the resolution of factual issues is the function of lower courts, whose findings on these matters are receive
respect and considered binding by the Supreme Court subject only to certain exceptions, none of which is present in
petition.13 This is especially true when the findings of the RTC have been affirmed by the CA as in this case.14

In any case, a perusal of the records at hand would readily show that the instant petition lacks merit.

Petitioner insists that she should not be held liable for the disconnection of respondent spouses' water supply, becau
no participation in the actual disconnection. However, she admitted in the present petition that it was she who reques
to disconnect the Spouses Pastorfide's water supply. This was confirmed by COWD and Gonzalez in their cross-claim
petitioner. While it was COWD which actually discontinued respondent spouses' water supply, it cannot be denied tha
through the instance of petitioner that the Spouses Pastorfide's water supply was disconnected in the first place.

It is true that it is within petitioner's right to ask and even require the Spouses Pastorfide to cause the transfer of the f
account with COWD to the latter's name pursuant to their Memorandum of Agreement. However, the remedy to enfor
right is not to cause the disconnection of the respondent spouses' water supply. The exercise of a right must be in ac
with the purpose for which it was established and must not be excessive or unduly harsh; there must be no intention
another.15 Otherwise, liability for damages to the injured party will attach.16 In the present case, intention to harm was
the part of petitioner when she requested for the disconnection of respondent spouses’ water supply without warning
the latter of such request. Petitioner claims that her request for disconnection was based on the advise of COWD per
that her intention was just to compel the Spouses Pastorfide to comply with their agreement that petitioner's account
be transferred in respondent spouses' name. If such was petitioner's only intention, then she should have advised res
spouses before or immediately after submitting her request for disconnection, telling them that her request was simpl
them to comply with their obligation under their Memorandum of Agreement. But she did not. What made matters wo
fact that COWD undertook the disconnection also without prior notice and even failed to reconnect the Spouses Pas
water supply despite payment of their arrears. There was clearly an abuse of right on the part of petitioner, COWD an
They are guilty of bad faith.

The principle of abuse of rights as enshrined in Article 19 of the Civil Code provides that every person must, in the
ex rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and
good fai

In this regard, the Court's ruling in Yuchengco v. The Manila Chronicle Publishing Corporation17 is instructive, to wit:

xxxx

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

In Globe Mackay Cable and Radio Corporation v. Court of Appeals, it was elucidated that while Article 19 "lays down
conduct for the government of human relations and for the maintenance of social order, it does not provide a
remedy violation. Generally, an action for damages under either Article 20 or Article 21 would be proper." The Court
said:

One of the more notable innovations of the New Civil Code is the codification of "some basic principles that are to be
for the rightful relationship between human beings and for the stability of the social order." [REPORT ON THE CODE
COMMISSION ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking
the defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit, incorporated cert
fundamental precepts which were "designed to indicate certain norms that spring from the fountain of good conscienc
which were also meant to serve as "guides for human conduct [that] should run as golden threads through society, to
that law may approach its supreme ideal, which is the sway and dominance of justice." (Id.) Foremost among these p
that pronounced in Article 19 x x x.

xxxx

This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards
be observed not only in the exercise of one's rights, but also in the performance of one's duties. These standards are
following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, rec
primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be obs
right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of s
illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and re
damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while
lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does no
remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper.

Corollarilly, Article 20 provides that "every person who, contrary to law, willfully or negligently causes damage to anot
indemnify the latter for the same." It speaks of the general sanctions of all other provisions of law which do not espec
for its own sanction. When a right is exercised in a manner which does not conform to the standards set forth in the s
provision and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be resp
Thus, if the provision does not provide a remedy for its violation, an action for damages under either Article 20 or Arti
Civil Code would be proper.

The question of whether or not the principle of abuse of rights has been violated resulting in damages under Article
2 applicable provision of law, depends on the circumstances of each case. x x x18
To recapitulate, petitioner's acts which violated the abovementioned provisions of law is her unjustifiable act of having
respondent spouses' water supply disconnected, coupled with her failure to warn or at least notify respondent spouse
intention. On the part of COWD and Gonzalez, it is their failure to give prior notice of the impending disconnection an
subsequent neglect to reconnect respondent spouses' water supply despite the latter's settlement of their delinquent

On the basis of the foregoing, the Court finds no cogent reason to depart from the ruling of both the RTC and the CA
petitioner, COWD and Gonzalez are solidarily liable.

The Spouses Pastorfide are entitled to moral damages based on the provisions of Article 2219,19 in connection with A
2020 and 2121 of the Civil Code.

As for exemplary damages, Article 2229 provides that exemplary damages may be imposed by way of example or co
the public good. Nonetheless, exemplary damages are imposed not to enrich one party or impoverish another, but to
deterrent against or as a negative incentive to curb socially deleterious actions.22 In the instant case, the Court agree
CA in sustaining the award of exemplary damages, although it reduced the amount granted, considering that respond
spouses were deprived of their water supply for more than nine (9) months, and such deprivation would have continu
not for the relief granted by the RTC.

With respect to the award of attorney's fees, Article 2208 of the Civil Code provides, among others, that such fees ma
recovered when exemplary damages are awarded, when the defendant's act or omission has compelled the plaintiff t
with third persons or to incur expenses to protect his interest, and where the defendant acted in gross and evident ba
refusing to satisfy the plaintiffs’ plainly valid, just and demandable claim.

WHEREFORE, instant petition for review on certiorari is DENIED. The Decision and Resolution of the Court of Appea
August 28, 2003 and December 17, 2003, respectively, in CA-G.R. CV No. 73000 are AFFIRMED.

SO ORDERED.

Velasco, Jr., (Chairperson), Abad, Mendoza, and Leonen, JJ., concur.

July 24, 2013

N O T I C E OF J U D G M E N T Sirs/Mesdames:

Please take notice that on ___July 17, 2013___ a Decision, copy attached herewith, was rendered by the Supreme C
above-entitled case, the original of which was received by this Office on July 19, 2013 at 2:25 p.m. Very truly yours,

(SGD)
LUCITA ABJELINA SORIANO Division
Clerk of Court

Footnotes

* Spelled as Gonzales in other parts of the rollo and records.

1 Penned by Associate Justice Conrado M. Vasquez, Jr., with Associate Justices Edgardo P. Cruz
an Tijam, concurring; rollo, pp. 60-67.
2 Id. at 68.

3 Penned by Judge Leonardo N. Demecillo, id. at 27-37.

4 Rollo, pp. 60-62.

5 Id. at 35-36.

6 Id. at 37.

7 Id. at 67. (Emphasis in the original)

8 Id. at 65.

9 Id. at 64.

10 Id. at 219.

11 Id. at 220.

12 Id. at 14.

13 Philippine National Bank v. DKS International, Inc., G.R. No. 179161, January 22, 2010, 610
SCRA

14 Id.

15 Uypitching v. Quiamco, G.R. No. 146322, December 6, 2006, 510 SCRA 172, 179.

16 Id.

17 G.R. No. 184315, November 28, 2011, 661 SCRA 392.

18 Id. at 402-404. (Emphasis supplied)

19 Art. 2219. Moral damages may be recovered in the following and analogous cases:

xxxx

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

xxxx

20 Every person who, contrary to law, willfully or negligently causes damage to another, shall
indemnif for the same.
21 Any person who willfully causes loss or injury to another in a manner that is contrary to morals,
goo or public policy shall compensate the latter for the damage.

22 Yuchengco v. The Manila Chronicle Publishing Corporation, supra note 17, at 405.

The Lawphil Project - Arellano Law Foundation

FIRST DIVISION

Today is Saturday, September 14, 2019

G.R. No. 144712 July 4, 2002

SPOUSES SILVESTRE and CELIA PASCUAL, petitioners, vs.


RODRIGO V. RAMOS, respondent.

DECISION

DAVIDE, JR., C.J.:

Before us is a petition for review on certiorari assailing the 5 November 1999 Decision1 and the 18 August 2000 Resolution2 of the
Court of Appeals in CA G.R. CV No. 52848. The former affirmed the 5 June 1995 and 7 September 1995 Orders of the Regional
Trial Court, Malolos, Bulacan, Branch 21, in Civil Case No. 526-M-93, and the latter denied petitioner’s motion for
reconsideration.

The case at bar stemmed from the petition3 for consolidation of title or ownership filed on 5 July 1993 with the trial court by herein
respondent Rodrigo V. Ramos (hereafter RAMOS) against herein petitioners, Spouses Silvestre and Celia Pascual (hereafter the
PASCUALs). In his petition, RAMOS alleged that on 3 June 1987, for and in consideration of ₱150,000, the PASCUALs
executed in his favor a Deed of Absolute Sale with Right to Repurchase over two parcels of land and the improvements thereon
located in Bambang, Bulacan, Bulacan, covered by Transfer Certificate of Title (TCT) No. 305626 of the Registry of Deeds of
Bulacan. This document was annotated at the back of the title. The PASCUALs did not exercise their right to repurchase the
property within the stipulated one-year period; hence, RAMOS prayed that the title or ownership over the subject parcels of land
and improvements thereon be consolidated in his favor.

In their Answer,4 the PASCUALs admitted having signed the Deed of Absolute Sale with Right to Repurchase for a consideration
of ₱150,000 but averred that what the parties had actually agreed upon and entered into was a real estate mortgage. They
further alleged that there was no agreement limiting the period within which to exercise the right to repurchase and that they had
even overpaid RAMOS. Furthermore, they interposed the following defenses: (a) the trial court had no jurisdiction over the
subject or nature of the petition; (b) RAMOS had no legal capacity to sue; (c) the cause of action, if any, was barred by the
statute of limitations; (d) the petition stated no cause of action; (e) the claim or demand set forth in RAMOS’s pleading had been
paid, waived, abandoned, or otherwise extinguished; and (f) RAMOS has not complied with the required confrontation and
conciliation before the barangay.

By way of counterclaim, the PASCUALs prayed that RAMOS be ordered to execute a Deed of Cancellation, Release or
Discharge of the Deed of Absolute Sale with Right to Repurchase or a Deed of Real Estate Mortgage; deliver to them the
owner’s duplicate of TCT No. T-305626; return the amount they had overpaid; and pay each of them moral damages and
exemplary damages in the amounts of ₱200,000 and ₱50,000, respectively, plus attorney’s fees of ₱100,000; appearance fee of
₱1,500 per hearing; litigation expenses; and costs of suit.

After the pre-trial, the trial court issued an order5 wherein it identified the following issues: (1) whether the Deed of Absolute Sale
with Right to Repurchase is an absolute sale or a mere mortgage; (2) whether the PASCUALs have paid or overpaid the principal
obligation; (3) whether the ownership over the parcel of land may be consolidated in favor of RAMOS; and (4) whether damages
may be awarded.

Among the documents offered in evidence by RAMOS during the trial on the merits was a document denominated as
Sinumpaang Salaysay6 signed by RAMOS and Silvestre Pascual, but not notarized. The contents of the document read:

Ako, si SILVESTRE PASCUAL, Filipino, nasa hustong gulang, may asawa at kasalukuyang naninirahan sa Bambang, Bulacan,
Bulacan, ay nagsasabing buong katotohanan at sumusumpa sa aking mga salaysay sa kasulatang ito:

1. Na ngayong June 3, 1987 dahil sa aking matinding pangangailangan ng puhunan ay lumapit ako
at nakiusap kay Rodrigo Ramos ng Taal, Pulilan, Bulacan na pautangin ako ng halagang ₱150,000.00.

2. Na aming napagkasunduan na ang nasabing utang ay babayaran ko ng tubo ng seven percent


(7%) o ₱10,500.00 isang buwan (7% per month).

3. Na bilang sangla (collateral security) sa aking utang, kami ay nagkasundo na mag-execute ng


Deed of Sale with Right to Repurchase para sa aking bahay at lupa (TCT No. 305626) sa Bo. Taliptip,
Bambang,
Bulacan, Bulacan ngayong June 3, 1987 at binigyan ako ni Mr. Ramos ng isang taon hanggang June 3,
1988 upang mabiling muli ang aking isinanla sa kaniya sa kasunduang babayaran kong lahat ang capital
na ₱150,000.00 pati na ang ₱10,500.00 na tubo buwan buwan.

4. Na bilang karagdagang condition, si RODRIGO RAMOS ay pumayag sa aking kahilingan na kung


sakali na hindi ko mabayaran ng buo ang aking pagkakautang (Principal plus interest) sa loob ng isang
taon mula ngayon, ang nakasanglang bahay at lupa ay hindi muna niya iilitin (foreclose) o ipalilipat sa
pangalan niya at hindi muna kami paaalisin sa tinitirhan naming bahay hanggat ang tubo (interest) na
₱10,500.00 ay nababayaran ko buwan buwan.
5. Na ako ay sumasang-ayon sa kundisyon ni Rodrigo Ramos na pagkatapos ng isang taon mula
ngayon hanggang June 3, 1988 at puro interest lamang ang aking naibabayad buwan-buwan, kung
sakaling hindi ako makabayad ng tubo for six (6) consecutive months (1/2 year after June 3, 1988 (6 na
buwang hindi bayad ang interest ang utang ko) si Rodrigo Ramos ay binibigyan ko ng karapatan at
kapangyarihan na mag-mayari ng aming bahay at lupa at kami ng aking pamilya ay kusang loob na aalis
sa nasabing bahay at lupa na lumalabas na ibinenta ko sa kaniya dahil hindi ako nakasunod sa aming
mga pinagkasunduang usapan.

6. At bilang finale ng aming kasunduan, ako ay nangangako na hindi maghahabol ng ano mang sukli
sa pagkakailit ng aming bahay at lupa kung sakali mang dumating sa ganuong pagkakataon o sitwasyon
o di kaya’y magsasampa ng reklamo kanino man.

Bilang pagsang-ayon sa mga nasabing kasunduan, kami ay lumagda sa ibaba nito kalakip ng aming mga pangalan ngayong ika3
ng Hunyo, 1987.

(Sgd.)Rodrigo Ramos (Sgd.) Silvestre Pascual


Nagpautang Umutang

For their part, the PASCUALs presented documentary evidence consisting of acknowledgment receipts7 to prove the payments
they had made.

The trial court found that the transaction between the parties was actually a loan in the amount of ₱150,000, the payment of
which was secured by a mortgage of the property covered by TCT No. 305626. It also found that the PASCUALs had made
payments in the total sum of ₱344,000, and that with interest at 7% per annum, the PASCUALs had overpaid the loan by
₱141,500. Accordingly, in its Decision8 of 15 March 1995 the trial court decreed as follows:

WHEREFORE, judgment is hereby rendered in favor of the defendants and against the plaintiff in the following manner:

1. Dismissing the plaintiff’s petition;

2. Directing the Register of Deeds to cancel the annotation of the Deed of Sale with Right to Repurchase on the
dorsal side of TCT No. 305626;

3. Awarding the defendants the sum of ₱141,500.00 as overpayment on the loan and interests;

4. Granting the defendants attorney’s fee in the sum of ₱15,000.00 and ₱3,000.00 for litigation expenses.

With costs against the plaintiff.

RAMOS moved for the reconsideration of the decision, alleging that the trial court erred in using an interest rate of 7% per annum
in the computation of the total amount of obligation because what was expressly stipulated in the Sinumpaang Salaysay was 7%
per month. The total interest due from 3 June 1987 to 3 April 1995 was ₱987,000. Deducting therefrom the interest payments
made in the sum of ₱344,000, the amount of ₱643,000 was still due as interest. Adding the latter to the principal sum of
₱150,000, the total amount due from the PASCUALs as of 3 April 1995 was ₱793,000.

Finding merit in the motion for reconsideration, which was not opposed by the PASCUALs, the trial court issued on 5 June 1995
an Order9 modifying its decision by deleting the award of ₱141,500 to the PASCUALs as overpayment of the loan and interest
and ordering them to pay RAMOS ₱511,000 representing the principal loan plus interest. The trial court acknowledged that it had
inadvertently declared the interest rate to be 7% per annum when, in fact, the Sinumpaang Salaysay stipulated 7% per month. It
noted that during trial, the PASCUALs never disputed the stipulated interest rate. However, the court declared that the 7% per
month interest is too burdensome and onerous. Invoking the protective mantle of Article 24 of the Civil Code, which mandates the
courts to be vigilant for the protection of a party at a disadvantage due to his moral dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the trial court unilaterally reduced the interest rate from 7% per month to 5% per month.
Thus, the interest due from 3 June 1987 to 3 April 1995 was ₱705,000. Deducting therefrom the payments made by the
PASCUALs in the amount of ₱344,000, the net interest due was ₱361,000. Adding thereto the loan principal of ₱150,000, the
total amount due from the PASCUALs was ₱511,000.

Aggrieved by the modification of the decision, the PASCUALs filed a motion to reconsider the Order of 5 June 1995. They alleged
that the motion for reconsideration filed by RAMOS was a mere scrap of paper because they received a copy of said motion only
a day before the hearing, in violation of the 3-day-notice rule. Moreover, they had already paid the interests and had in fact
overpaid the principal sum of ₱150,000. Besides, RAMOS, being an individual, could not charge more than 1% interest per
month or 12% per annum; and, the interest of either 5% or 7% a month is exorbitant, unconscionable, unreasonable, usurious
and inequitable.

RAMOS opposed the motion of the PASCUALs. He contended that the non-compliance with the 3-day-notice rule was cured
when the trial court gave them an opportunity to file their opposition, but despite the lapse of the period given them, no opposition
was filed. It is not correct to say that he was not allowed to collect more than 1% per month interest considering that with the
moratorium on the Usury Law, the allowable interest is that agreed upon by the parties. In the absence of any evidence that there
was fraud, force or undue influence exerted upon the PASCUALs when they entered into the transaction in question, their
agreement embodied in the Sinumpaang Salaysay should be respected. Furthermore, the trial court had already reduced the
interest rate to 5% per month, a rate which is not exorbitant, unconscionable, unreasonable and inequitable.

Their motion for reconsideration having been denied in the Order10 of 7 September 1995, the PASCUALs seasonably appealed to
the Court of Appeals. They pointed out that since the only prayer of RAMOS in his petition was to have the title or ownership over
the subject land and the improvements thereon consolidated in his favor and he did not have any prayer for general relief, the
trial court had no basis in ordering them to pay him the sum of ₱511,000.

In its Decision11 of 5 November 1999, the Court of Appeals affirmed in toto the trial court’s Orders of 5 June 1995 and 7
September 1995. It ruled that while RAMOS’s petition for consolidation of title or ownership did not include a prayer for the
payment of the balance of the petitioners’ obligation and a prayer for general relief, the issue of whether there was still a balance
from the amount loaned was deemed to have been raised in the pleadings by virtue of Section 5, Rule 10 of the Rules of Court,
which provides that "[w]hen issues not raised by the pleadings are tried with the express or implied consent of the parties, they
shall be treated in all respects as if they had been raised in the pleadings." In the course of the trial, receipts were presented by
the PASCUALs evidencing the payments they had made. Taken in conjunction with the Sinumpaang Salaysay which specified
the interest rate at 7% per month, a mathematical computation readily leads to the conclusion that there is still a balance due
from the PASCUALs, even at a reduced interest rate of 5% interest per month.

With the denial of their motion for reconsideration of the decision by the Court of Appeals, the PASCUALs filed before us the
instant petition raising the sole issue of whether they are liable for 5% interest per month from 3 June 1987 to 3 April 1995.
Invoking this Court’s ruling in Medel v. Court of Appeals,12 they argue that the 5% per month interest is excessive, iniquitous,
unconscionable and exorbitant. Moreover, respondent should not be allowed to collect interest of more than 1% per month
because he tried to hide the real transaction between the parties by imposing upon them to sign a Deed of Absolute Sale with
Right to Repurchase.

For his part, RAMOS contends that the issue raised by petitioners cannot be entertained anymore because it was neither raised
in the complaint nor ventilated during the trial. In any case, there was nothing illegal on the rate of interest agreed upon by the
parties, since the ceilings on interest rates prescribed under the Usury Law had expressly been removed, and hence parties are
left freely at their discretion to agree on any rate of interest. Moreover, there was no scheme to hide a usurious transaction.
RAMOS then prays that the challenged decision and resolution be affirmed and that petitioners be further ordered to pay legal
interest on the interest due from the time it was demanded.
We see at once the proclivity of the PASCUALs to change theory almost every step of the case.

By invoking the decision in Medel v. Court of Appeals, the PASCUALs are actually raising as issue the validity of the stipulated
interest rate. It must be stressed that they never raised as a defense or as basis for their counterclaim the nullity of the stipulated
interest. While overpayment was alleged in the Answer, no ultimate facts which constituted the basis of the overpayment was
alleged. In their pre-trial brief, the PASCUALs made a long list of issues, but not one of them touched on the validity of the
stipulated interest rate. Their own evidence clearly shows that they have agreed on, and have in fact paid interest at, the rate of
7% per month. Exhibits "1" to "8" specifically mentioned that the payments made were for the interest due on the ₱150,000 loan
of the PASCUALs. In the course of the trial, the PASCUALs never put in issue the validity of the stipulated interest rate.

After the trial court sustained petitioners’ claim that their agreement with RAMOS was actually a loan with real estate mortgage,
the PASCUALs should not be allowed to turn their back on the stipulation in that agreement to pay interest at the rate of 7% per
month. The PASCUALs should accept not only the favorable aspect of the court’s declaration that the document is actually an
equitable mortgage but also the necessary consequence of such declaration, that is, that interest on the loan as stipulated by the
parties in that same document should be paid. Besides, when RAMOS moved for a reconsideration of the 15 March 1995
Decision of the trial court pointing out that the interest rate to be used should be 7% per month, the PASCUALs never lifted a
finger to oppose the claim. Admittedly, in their Motion for Reconsideration of the Order of 5 June 1995, the PASCUALs argued
that the interest rate, whether it be 5% or 7%, is exorbitant, unconscionable, unreasonable, usurious and inequitable. However, in
their Appellants’ Brief, the only argument raised by the PASCUALs was that RAMOS’s petition did not contain a prayer for
general relief and, hence, the trial court had no basis for ordering them to pay RAMOS ₱511,000 representing the principal and
unpaid interest. It was only in their motion for the reconsideration of the decision of the Court of Appeals that the PASCUALs
made an issue of the interest rate and prayed for its reduction to 12% per annum.

In Manila Bay Club Corp. v. Court of Appeals,13 this Court ruled that if an issue is raised only in the motion for reconsideration of
the decision of the Court of Appeals, the effect is that it is as if it was never duly raised in that court at all.

Our ruling in Medel v. Court of Appeals14 is not applicable to the present case. In that case, the excessiveness of the stipulated
interest at the rate of 5.5 % per month was put in issue by the defendants in the Answer. Moreover, in addition to the interest, the
debtors were also required, as per stipulation in the promissory note, to pay service charge of 2% per annum and a penalty
charge of 1% per month plus attorney’s fee of equivalent to 25% of the amount due. In the case at bar, there is no other
stipulation for the payment of an extra amount except interest on the principal loan. Thus, taken in conjunction with the stipulated
service charge and penalty, the interest rate of 5.5% in the Medel case was found to be excessive, iniquitous, unconscionable,
exorbitant and hence, contrary to morals, thereby making such stipulation null and void.

Considering the variance in the factual circumstances of the Medel case and the instant case, we are not prepared to apply the
former lest it be construed that we can strike down anytime interest rates agreed upon by parties in a loan transaction.

It is a basic principle in civil law that parties are bound by the stipulations in the contracts voluntarily entered into by them. Parties
are free to stipulate terms and conditions which they deem convenient provided they are not contrary to law, morals, good
customs, public order, or public policy.15

The interest rate of 7% per month was voluntarily agreed upon by RAMOS and the PASCUALs. There is nothing from the
1âwphi 1

records and, in fact, there is no allegation showing that petitioners were victims of fraud when they entered into the agreement
with RAMOS. Neither is there a showing that in their contractual relations with RAMOS, the PASCUALs were at a disadvantage
on account of their moral dependence, ignorance, mental weakness, tender age or other handicap, which would entitle them to
the vigilant protection of the courts as mandated by Article 24 of the Civil Code. Apropos in our ruling in Vales vs. Villa:

All men are presumed to be sane and normal and subject to be moved by substantially the same motives. When of age and
sane, they must take care of themselves. In their relations with others in the business of life, wits, sense, intelligence, training,
ability and judgment meet and clash and contest, sometimes with gain and advantage to all, sometimes to a few only, with loss
and injury to others. In these contests men must depend upon themselves – upon their own abilities, talents, training, sense,
acumen, judgment. The fact that one may be worsted by another, of itself, furnishes no cause of complaint. One man cannot
complain because another is more able, or better trained, or has better sense or judgment than he has; and when the two meet
on a fair field the inferior cannot murmur if the battle goes against him. The law furnishes no protection to the inferior simply
because he is inferior, any more than it protects the strong because he is strong. The law furnishes protection to both alike – to
one no more or less than to the other. It makes no distinction between the wise and the foolish, the great and the small, the
strong and the weak. The foolish may lose all they have to the wise; but that does not mean that the law will give it back to them
again. Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise investments,
relieve him from one-sided contracts, or annul the effects of foolish acts. Courts cannot constitute themselves guardians of
persons who are not legally incompetent. Courts operate not because one person has been defeated or overcome by another,
but because he has been defeated or overcome illegally. Men may do foolish things, make ridiculous contracts, use miserable
judgment, and lose money by then – indeed, all they have in the world; but not for that alone can the law intervene and restore.

There must be, in addition, a violation of law, the commission of what the law knows as an actionable wrong, before the courts
are authorized to lay hold of the situation and remedy it.16

With the suspension of the Usury Law and the removal of interest ceiling, the parties are free to stipulate the interest to be
imposed on loans. Absent any evidence of fraud, undue influence, or any vice of consent exercised by RAMOS on the
PASCUALs, the interest agreed upon is binding upon them. This Court is not in a position to impose upon parties contractual
stipulations different from what they have agreed upon. As declared in the decision of Cuizon v. Court of Appeals,17

It is not the province of the court to alter a contract by construction or to make a new contract for the parties; its duty is confined
to the interpretation of the one which they have made for themselves without regard to its wisdom or folly as the court cannot
supply material stipulations or read into the contract words which it does not contain.

Thus, we cannot supplant the interest rate, which was reduced to 5% per month without opposition on the part of RAMOS.

We are not persuaded by the argument of the PASCUALs that since RAMOS tried to hide the real transaction by imposing upon
them the execution of a Deed of Absolute Sale with Right to Repurchase, he should not be allowed to collect more than 1% per
month interest. It is undisputed that simultaneous with the execution of the said deed was the execution of the Sinumpaang
Salaysay, which set forth the true agreement of the parties. The PASCUALs cannot then claim that they did not know the real
transaction.

RAMOS’s claim that the interest due should earn legal interest cannot be acted upon favorably because he did not appeal from
the Order of the trial court of 5 June 1995, which simply ordered the payment by the PASCUALs of the amount of P511,000
without interest thereon. No relief can be granted a party who does not appeal.18 Therefore, the order of the trial court should
stand.

Incidentally, we noticed that in the Memorandum filed by RAMOS, the ruling in Vales v. Valle was reproduced by his counsel
without the proper citation. Such act constitutes plagiarism. Atty. Felimon B. Mangahas is hereby warned that a repetition of such
act shall be dealt with accordingly.

WHEREFORE, in view of all the foregoing, the petition is DENIED. The assailed decision of the Court of Appeals in CA-G.R. CV
No. 52848 is AFFIRMED in toto.

Costs against petitioners.

SO ORDERED.

Vitug, Kapunan, Ynares-Santiago, and Austria-Martinez, JJ., concur.


Footnotes

1
Rollo, 16-28. Per Salazar-Fernando, R., with Guerrero, B. and Aliño-Hormachuelos, P. JJ., concurring.

2
Id., 33-35.

3
Original Record (OR), 3-5.

4
OR, 17-20.

5
OR, 34-35.

6
Exhibit "I."

7
Exhibits "1" to "19," inclusive.

8
OR, 59-62. Per Judge Cesar M. Solis.

9
OR, 70-71.

10
OR, 83-84.

11
Supra note 1.

12
299 SCRA 481 [1998].

13
245 SCRA 715, 729 [1995].

14
Supra note 12.

15
Article 1306, Civil Code; See also Manila Bay Club Corp. v. Court of Appeals, supra note 13.

16
35 Phil. 769, 787-788 [1916]. See also Sanchez v. Court of Appeals, 279 SCRA 647 [1997].

17
260 SCRA 645, 667 [1996].

18
Consolidated Bank and Trust Corporation (Solidbank) v. Court of Appeals, G.R. No. 114286, 19 April 2001.

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Constitution Statutes Executive Issuances Judicial Issuances Other Issuances Jurisprudence International Legal Resources
AUSL Exclusive
Today is Saturday, September 14, 2019

Republic of the Philippines


SUPREME COURT Manila

SECOND DIVISION

G.R. No. 179736 June 26, 2013

SPOUSES BILL AND VICTORIA HING, Petitioners, vs.


ALEXANDER CHOACHUY, SR. and ALLAN CHOACHUY, Respondents.

DECISION

DEL CASTILLO, J.:

"The concept of liberty would be emasculated if it does not likewise compel respect for one's personality as a unique
whose claim to privacy and non-interference demands respect."1

This Petition for Review on Certiorari2 under Rule 45 of the Rules of Court assails the July 10, 2007 Decision3 and the
11, 2007 Resolution4 of the Court of Appeals (CA) in CA-G.R. CEB-SP No. 01473.

Factual Antecedents

On August 23, 2005, petitioner-spouses Bill and Victoria Hing filed with the Regional Trial Court (RTC) of Mandaue
C
Complaint5 for Injunction and Damages with prayer for issuance of a Writ of Preliminary Mandatory Injunction/Tempo
Restraining Order (TRO), docketed as Civil Case MAN-5223 and raffled to Branch 28, against respondents Alexande
Sr. and Allan Choachuy.

Petitioners alleged that they are the registered owners of a parcel of land (Lot 1900-B) covered by Transfer Certificat
(TCT) No. 42817 situated in Barangay Basak, City of Mandaue, Cebu;6 that respondents are the owners of Aldo Deve
Resources, Inc. (Aldo) located at Lots 1901 and 1900-C, adjacent to the property of petitioners;7 that respondents con
auto-repair shop building (Aldo Goodyear Servitec) on Lot 1900-C; that in April 2005, Aldo filed a case against petitio
Injunction and Damages with Writ of Preliminary Injunction/TRO, docketed as Civil Case No. MAN-5125;8 that in that
claimed that petitioners were constructing a fence without a valid permit and that the said construction would destroy
its building, which is adjacent to petitioners’ property;9 that the court, in that case, denied Aldo’s application for prelim
injunction for failure to substantiate its allegations;10 that, in order to get evidence to support the said case, responden
13, 2005 illegally set-up and installed on the building of Aldo Goodyear Servitec two video surveillance cameras facin
petitioners’ property;11 that respondents, through their employees and without the consent of petitioners, also took pic
petitioners’ on-going construction;12 and that the acts of respondents violate petitioners’ right to privacy.13 Thus, petitio
that respondents be ordered to remove the video surveillance cameras and enjoined from conducting illegal surveilla

In their Answer with Counterclaim,15 respondents claimed that they did not install the video surveillance cameras,16 no
order their employees to take pictures of petitioners’ construction.17 They also clarified that they are not the owners of
are mere stockholders.18

Ruling of the Regional Trial Court

On October 18, 2005, the RTC issued an Order19 granting the application for a TRO. The dispositive portion of the
sa reads:

WHEREFORE, the application for a Temporary Restraining Order or a Writ of Preliminary Injunction is granted. Upon
and approval of a bond by petitioners, which the Court sets at ₱50,000.00, let a Writ of Preliminary Injunction issue a
respondents Alexander Choachuy, Sr. and Allan Choachuy. They are hereby directed to immediately remove the rev
camera that they installed at the left side of their building overlooking the side of petitioners’ lot and to transfer and op
elsewhere at the back where petitioners’ property can no longer be viewed within a distance of about 2-3 meters from
corner of Aldo Servitec, facing the road.

IT IS SO ORDERED.20

Respondents moved for a reconsideration21 but the RTC denied the same in its Order22 dated February 6, 2006.23
Thu

WHEREFORE, the Motion for Reconsideration is hereby DENIED for lack of merit. Issue a Writ of Preliminary
Injunct consonance with the Order dated 18 October 2005.

IT IS SO ORDERED.24

Aggrieved, respondents filed with the CA a Petition for Certiorari25 under Rule 65 of the Rules of Court with
applicatio and/or Writ of Preliminary Injunction.

Ruling of the Court of Appeals

On July 10, 2007, the CA issued its Decision26 granting the Petition for Certiorari. The CA ruled that the Writ of Prelim
Injunction was issued with grave abuse of discretion because petitioners failed to show a clear and unmistakable righ
injunctive writ.27 The CA explained that the right to privacy of residence under Article 26(1) of the Civil Code was not v
since the property subject of the controversy is not used as a residence.28 The CA alsosaid that since respondents ar
owners of the building, they could not have installed video surveillance cameras.29 They are mere stockholders of Ald
has a separate juridical personality.30 Thus, they are not the proper parties.31 The fallo reads:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us GRANTING the petition filed in
The assailed orders dated October 18, 2005 and February 6, 2006 issued by the respondent judge are hereby ANNU
SET ASIDE.

SO ORDERED.32

Issues
Hence, this recourse by petitioners arguing that:

I.

THE X X X CA COMMITTED A REVERSIBLE ERROR WHEN IT ANNULLED AND SET ASIDE THE ORDERS OF
T DATED 18 OCTOBER 2005 AND 6 FEBRUARY 2006 HOLDING THAT THEY WERE ISSUED WITH GRAVE
ABUS DISCRETION.

II.

THE X X X CA COMMITTED A REVERSIBLE ERROR WHEN IT RULED THAT PETITIONER SPOUSES HING
ARE
ENTITLED TO THE WRIT OF PRELIMINARY INJUNCTION ON THE GROUND THAT THERE IS NO VIOLATION
O
CONSTITUTIONAL AND CIVIL RIGHT TO PRIVACY DESPITE THE FACTUAL FINDINGS OF THE RTC, WHICH
RESPONDENTS CHOACHUY FAILED TO REFUTE, THAT THE ILLEGALLY INSTALLED SURVEILLANCE CAMER
RESPONDENTS CHOACH[U]Y WOULD CAPTURE THE PRIVATE ACTIVITIES OF PETITIONER SPOUSES HING
CHILDREN AND EMPLOYEES.

III.

THE X X X CA COMMITTED A REVERSIBLE ERROR WHEN IT RULED THAT SINCE THE OWNER OF THE BUIL
ALDO DEVELOPMENT AND RESOURCES, INC. THEN TO SUE RESPONDENTS CHOACHUY CONSTITUTES A
PURPORTEDLY UNWARRANTED PIERCING OF THE CORPORATE VEIL.

IV.

THE X X X CA COMMITTED A REVERSIBLE ERROR WHEN IT IGNORED THE SERIOUS FORMAL


DEFICIENCIE
BOTH THE PETITION AND THE MOTION FOR RECONSIDERATION DATED 15 MARCH 2006 OF
RESPONDENT CHOACHUY AND GAVE X X X THEM DUE COURSE AND CONSIDERATION.33

Essentially, the issues boil down to (1) whether there is a violation of petitioners’ right to privacy, and (2) whether resp
are the proper parties to this suit.

Petitioners’ Arguments Petitioners insist that they are entitled to


the issuance of a Writ of Preliminary Injunction because respondents’ install stationary camera directly facing
petitioners’ property and a revolving camera covering a significant portion of the sam constitutes a violation of
petitioners’ right to privacy.34 Petitioners cite Article 26(1) of the Civil Code, which enjoins pe prying into the private
lives of others.35 Although the said provision pertains to the privacy of another’s residence, peti opine that it includes
business offices, citing Professor Arturo M. Tolentino.36 Thus, even assuming arguendo that pet property is used for
business, it is still covered by the said provision.37

As to whether respondents are the proper parties to implead in this case, petitioners claim that respondents and
Aldo and the same, and that respondents only want to hide behind Aldo’s corporate fiction.38 They point out that if
respond the real owners of the building, where the video surveillance cameras were installed, then they had no
business cons the ocular inspection conducted by the court.39

Respondents’ Arguments
Respondents, on the other hand, echo the ruling of the CA that petitioners cannot invoke their right to privacy since th
involved is not used as a residence.40 Respondents maintain that they had nothing to do with the installation of the vid
surveillance cameras as these were installed by Aldo, the registered owner of the building,41 as additional security for
building.42 Hence, they were wrongfully impleaded in this case.43

Our Ruling

The Petition is meritorious.

The right to privacy is the right to be let alone.

The right to privacy is enshrined in our Constitution44 and in our laws. It is defined as "the right to be free from unwarr
exploitation of one’s person or from intrusion into one’s private activities in such a way as to cause humiliation to a pe
ordinary sensibilities."45 It is the right of an individual "to be free from unwarranted publicity, or to live without unwarra
interference by the public in matters in which the public is not necessarily concerned."46 Simply put, the right to privac
right to be let alone."47

The Bill of Rights guarantees the people’s right to privacy and protects them against the State’s abuse of power. In

th the State recognizes the right of the people to be secure in their houses. No one, not even the State, except "in

case overriding social need and then only under the stringent procedural safeguards," can disturb them in the

privacy of th The right to privacy under Article 26(1) of the Civil Code covers business offices where the public are

excluded therefrom and only certain individuals are allowed to enter.

Article 26(1) of the Civil Code, on the other hand, protects an individual’s right to privacy and provides a legal
remedy abuses that may be committed against him by other individuals. It states:

Art. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other pers
following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for dama
prevention and other relief:

(1) Prying into the privacy of another’s residence;

xxxx

This provision recognizes that a man’s house is his castle, where his right to privacy cannot be denied or even restric
others. It includes "any act of intrusion into, peeping or peering inquisitively into the residence of another without the c
the latter."49 The phrase "prying into the privacy of another’s residence," however, does not mean that only the reside
entitled to privacy. As elucidated by Civil law expert Arturo M. Tolentino:

Our Code specifically mentions "prying into the privacy of another’s residence." This does not mean, however, that on
residence is entitled to privacy, because the law covers also "similar acts." A business office is entitled to the same p
the public is excluded therefrom and only such individuals as are allowed to enter may come in. x x x50 (Emphasis su

Thus, an individual’s right to privacy under Article 26(1) of the Civil Code should not be confined to his house or resid
may extend to places where he has the right to exclude the public or deny them access. The phrase "prying into the p
another’s residence," therefore, covers places, locations, or even situations which an individual considers as private.
as his right is recognized by society, other individuals may not infringe on his right to privacy. The CA, therefore, erre
the application of Article 26(1) of the Civil Code only to residences.

The "reasonable expectation of privacy"


test is used to determine whether there
is a violation of the right to privacy.

In ascertaining whether there is a violation of the right to privacy, courts use the "reasonable expectation of privacy"
t test determines whether a person has a reasonable expectation of privacy and whether the expectation has been
vio Ople v. Torres,52 we enunciated that "the reasonableness of a person’s expectation of privacy depends on a two-
part whether, by his conduct, the individual has exhibited an expectation of privacy; and (2) this expectation is one
that so recognizes as reasonable." Customs, community norms, and practices may, therefore, limit or extend an
individual’s expectation of privacy."53 Hence, the reasonableness of a person’s expectation of privacy must be
determined on a c basis since it depends on the factual circumstances surrounding the case.54

In this day and age, video surveillance cameras are installed practically everywhere for the protection and safety of e
The installation of these cameras, however, should not cover places where there is reasonable expectation of privacy
consent of the individual, whose right to privacy would be affected, was obtained. Nor should these cameras be used
the privacy of another’s residence or business office as it would be no different from eavesdropping, which is a crime
Republic Act No. 4200 or the Anti-Wiretapping Law.

In this case, the RTC, in granting the application for Preliminary Injunction, ruled that:

After careful consideration, there is basis to grant the application for a temporary restraining order. The operation by
of a revolving camera, even if it were mounted on their building, violated the right of privacy of petitioners, who are
th the adjacent lot. The camera does not only focus on respondents’ property or the roof of the factory at the back
(Aldo Development and Resources, Inc.) but it actually spans through a good portion of the land of petitioners.

Based on the ocular inspection, the Court understands why petitioner Hing was so unyielding in asserting that the rev
camera was set up deliberately to monitor the on[-]going construction in his property. The monitor showed only a port
roof of the factory of Aldo. If the purpose of respondents in setting up a camera at the back is to secure the building a
premises, then the camera should revolve only towards their properties at the back. Respondents’ camera cannot be
extend the view to petitioners’ lot. To allow the respondents to do that over the objection of the petitioners would viola
of petitioners as property owners. "The owner of a thing cannot make use thereof in such a manner as to injure the ri
third person."55

The RTC, thus, considered that petitioners have a "reasonable expectation of privacy" in their property, whether they
business office or as a residence and that the installation of video surveillance cameras directly facing petitioners’ pro
covering a significant portion thereof, without their consent, is a clear violation of their right to privacy. As we see then
issuance of a preliminary injunction was justified. We need not belabor that the issuance of a preliminary injunction is
discretionary on the part of the court taking cognizance of the case and should not be interfered with, unless there is
of discretion committed by the court.56 Here, there is no indication of any grave abuse of discretion. Hence, the CA er
finding that petitioners are not entitled to an injunctive writ.

This brings us to the next question: whether respondents are the proper parties to this suit.

A real party defendant is one who has a


correlative legal obligation to redress a
wrong done to the plaintiff by reason of the
defendant's act or omission which had
violated the legal right of the former.
Section 2, Rule 3 of the Rules of Court provides:

SEC. 2. Parties-in-interest. — A real party-in-interest is the party who stands to be benefited or injured by the
judgme suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every
action mu prosecuted or defended in the name of the real party-in-interest.

A real party defendant is "one who has a correlative legal obligation to redress a wrong done to the plaintiff by reaso
defendant’s act or omission which had violated the legal right of the former."57

In ruling that respondents are not the proper parties, the CA reasoned that since they do not own the building, n
they co have installed the video surveillance cameras.58 Such reasoning, however, is erroneous. The fact that
respondents ar registered owners of the building does not automatically mean that they did not cause the installation
of the video sur cameras.

In their Complaint, petitioners claimed that respondents installed the video surveillance cameras in order to fish for ev
which could be used against petitioners in another case.59 During the hearing of the application for Preliminary Injunc
petitioner Bill testified that when respondents installed the video surveillance cameras, he immediately broached his c
they did not seem to care,60 and thus, he reported the matter to the barangay for mediation, and eventually, filed a Co
against respondents before the RTC.61 He also admitted that as early as 1998 there has already been a dispute betw
family and the Choachuy family concerning the boundaries of their respective properties.62 With these factual circums
mind, we believe that respondents are the proper parties to be impleaded.

Moreover, although Aldo has a juridical personality separate and distinct from its stockholders, records show that it
is owned corporation managed by the Choachuy family.63

Also quite telling is the fact that respondents, notwithstanding their claim that they are not owners of the building,
allo court to enter the compound of Aldo and conduct an ocular inspection. The counsel for respondents even toured
Jud Lagura-Yap inside the building and answered all her questions regarding the set-up and installation of the video
surv cameras.64 And when respondents moved for reconsideration of the Order dated October 18, 2005 of the RTC,
one o arguments they raised is that Aldo would suffer damages if the video surveillance cameras are removed and
transferred.65 Noticeably, in these instances, the personalities of respondents and Aldo seem to merge.

All these taken together lead us to the inevitable conclusion that respondents are merely using the corporate fiction
o shield to protect themselves from this suit. In view of the foregoing, we find that respondents are the proper parties
to

WHEREFORE, the Petition is hereby GRANTED. The Decision dated July 10, 2007 and the Resolution dated Septem
2007 of the Court of Appeals in CA-G.R. CEB-SP No. 01473 are hereby REVERSED and SET ASIDE. The Orders d
October 18,2005 and February 6, 200[6] of Branch 28 of the Regional Trial Court of Mandaue City in Civil Case No. M
are hereby REINSTATED and AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO Associate


Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

ARTURO D. BRION JOSE PORTUGAL PEREZ Associate Justice Associate Justice

ESTELA M. PERLAS-BERNABE Associate


Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the opinion of the Court’s Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the con
the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the
Division.

MARIA LOURDES P. A. SERENO Chief


Justice

Footnotes

1 Morfe v. Mutuc, 130 Phil. 415,434 (1968).

2 Rollo, pp. 10-33.

3 CA rollo, pp. 111-116; penned by Associate Justice Isaias P. Dicdican and concurred in by
Associat Antonio L. Villamor and Stephen C. Cruz.

4 Id. at 128-129.

5 Records, pp. 1-8.

6 Id. at 2.

7 Id. at 3.

8 Id.

9 Id.

10 Id.
11 Id.

12 Id. at 4.

13 Id. at 5.

14 Id. at 8.

15 Id. at 23-26.

16 Id. at 24.

17 Id. at 25.

18 Id. at 24.

19 Id. at 51-56; penned by Judge Marilyn Lagura-Yap.

20 Id. at 55-56.

21 Id. at 75-79.

22 Id. at 98-99.

23 Erroneously dated as February 6, 2005.

24 Records, p. 99.

25 CA rollo, pp. 2-12.

26 Id. at 111-116.

27 Id. at 113-114.

28 Id. at 114.

29 Id.

30 Id. at 115.

31 Id.

32 Id. at 116. Emphases in the original.

33 Rollo, pp. 20-21.

34 Id. at 173-176.

35 Id. at 172.
36 Id. at 174-175.

37 Id.

38 Id. at 27.

39 Id.

40 Id. at 153-154.

41 Id. at 152.

42 Id. at 154.

43 Id. at 152.

44 Section 2, Article III of the Constitution provides:

Section 2. The right of the people to be secure in their persons, houses, papers, and effects a
unreasonable searches and seizures of whatever nature and for any purpose shall be
inviolab search warrant or warrant of arrest shall issue except upon probable cause to be
determined by the judge after examination under oath or affirmation of the complainant and
the witnesses produce, and particularly describing the place to be searched and the persons
or things to be

45 Social Justice Society (SJS) v. Dangerous Drugs Board, G.R. Nos. 157870, 158633 & 161658,
Nov 2008, 570 SCRA 410, 431.

46 Tolentino, Arturo M., Commentaries and Jurisprudence on the Civil Code of the Philippines, 1990
E Volume I, p. 108.

47 Ople v. Torres, 354 Phil. 948, 970 (1998).

48 Sony Music Entertainment (Phils.), Inc. v. Judge Español, 493 Phil. 507, 516 (2005), citing
Villanue Querubin, 150-C Phil. 519, 525 (1972).

49 Pineda, Ernesto L., Torts and Damages (Annotated), 2004 Edition, p. 279.

50 Supra note 46 at 110.

51 In the Matter of the Petition for Issuance of Writ of Habeas Corpus of Sabio v. Senator Gordon,
535 715 (2006).

52 Supra note 47 at 980.

53 Id. at 981.

54 Id. at 980.

55 Records, p. 55.
56 Overseas Workers Welfare Administration v. Chavez, G.R. No. 169802, June 8, 2007, 524 SCRA

4 57 Reyes v. Enriquez, G.R. No. 162956, April 10, 2008, 551 SCRA 86, 92.

58 CA rollo, pp. 114-115.

59 Records, p. 3

60 Id. at 54.

61 Id. at 52.

62 Id. at 53-55.

63 Id. at 80-91.

64 Id. at 58-71.

65 Id. at 71.

The Lawphil Project - Arellano Law Foundation


Today is Saturday, September 14, 2019

Republic of the Philippines


SUPREME COURT Manila

FIRST DIVISION

G.R. No. 102918. March 30, 1993.

JOSE V. NESSIA, petitioner, vs. JESUS M. FERMIN and MUNICIPALITY OF VICTORIAS, NEGROS OCCIDENTAL,
respondents.

Christine V . Nessia in for petitioner.


Rolando Magbanua Antiquiera for Jesus Fermin.

DECISION

BELLOSILLO, J.:

Article 27 of the Civil Code accords judicial relief to "[a]ny person suffering material or moral loss because a public servant or
employee refuses or neglects, without just cause, to perform his official duty." This the trial court 1 applied in finding respondent
Jesus M. Fermin, Mayor of Victorias, Negros Occidental, liable for damages for maliciously refusing to act on the vouchers of
petitioner Jose V. Nessia covering the latter's claim for reim-bursement of travel expense allowances. The Court of Appeals 2
however ruled that evidence as well as the complaint itself did not establish unjust inaction, hence, it reversed the court a quo
and dismissed the case for lack of cause of action. Considering the disparity in the findings and conclusions of the lower courts,
the version of the appellate court cannot readily be accepted, hence, We are constrained to scrutinize them more judiciously.

This recourse originated from the complaint filed against respondents Jesus M. Fermin and the Municipality of Victorias, Negros
Occidental, by petitioner Jose V. Nessia for recovery of damages and reimbursement of expenses incurred in the performance of
his official duties as the then Deputy Municipal Assessor of Victorias. The complaint theorized that Fermin deliberately ignored and
caused the non-payment of the vouchers in question because Nessia defied the former's request to all municipal officials to
register and vote in Victorias in the 1980 local elections.

In his answer with counterclaim, Fermin disputed the allegations in the complaint and countered that the claims of Nessia could
not be approved because they exceeded the budgetary appropriations therefor.

On its part, Victorias concurred with the arguments of Fermin, and added that plaintiff Nessia was blamable for his predicament
because he neither gave Fermin the justification for drawing funds in excess of the budgetary appropriations nor amended his
vouchers to conform thereto.
Issues having been joined, the parties presented their evidence, except for Victorias which was declared in default for
nonappearance at the pre-trial conference. 3 On 24 April 1987, judgment was rendered by the trial court in favor of Nessia. 4 On
the basis of the evidence, the trial court found that Fermin maliciously refused to act on plaintiffs vouchers, bolstered by his
inaction on Nessia's follow-up letters inquiring on the status thereof.

The court ruled that the vouchers were received by the secretary of Fermin thereby negating his contention that the vouchers
were not received by him. But even if the vouchers never reached him, the trial court nevertheless held Mayor Fermin
answerable because he should have made inquiries into their whereabouts upon receipt of Nessia's follow-up letters. In view of
the foregoing, and the admission of Fermin at the trial that he did nothing on the vouchers, the court of origin awarded damages
to Nessia, although less than what he prayed for.

Both Nessia and Fermin elevated the case to the Court of Appeals, Nessia praying for an increase in the award of moral and
exemplary damages, and Fermin seeking exoneration from liability.

The Municipality of Victorias did not appeal.

On 19 July 1991, respondent appellate court dismissed Nessia's complaint on the ground of lack of cause of action because the
complaint itself as well as Nessia's own testimony admitted that Fermin acted on the vouchers as may be drawn from the
allegations that Fermin denied/refused the claims.

On the basis of its own findings, the Court of Appeals held that the real "situation before us is one in which plaintiff-appellant
accuses defendant-appellant of failing to act on vouchers which are not shown to have been received by the latter; and even if
received, could not be approved for payment because they were submitted late and were not supported by an appropriation."

Nessia now comes to Us on appeal under Rule 45 of the Rules of Court raising four (4) issues, namely: (1) whether respondent
court may reverse the decision of the trial court which has become final and executory as against Victorias for failure to appeal
therefrom; (2) whether respondent appellate court may grant affirmative relief to Victorias which did not appeal the trial court's
decision; (3) whether respondent court erred in exonerating Fermin from malicious refusal to act on petitioner's claims; and, (4)
whether respondent court erred in exonerating Fermin and Victorias from liabilities, which may be summarized into whether
Fermin maliciously refused to act on the vouchers, hence, liable under Art. 27, and whether the dismissal of the complaint by
respondent court absolved Victorias from liability, even though it did not appeal the decision of the trial court.

Before disposing of the merits of the case, We first resolve the issue raised by the Office of the Solicitor General that the assailed
decision attached to the petition is not a certified true copy as required in Circular 1-88, par. 3, hence, the petition should have
been dismissed. The allegation is erroneous because the challenged decision, Annex "A" of the petition, 5 is actually certified by
Atty. Leandro D. Rebong, a Division Clerk of Court of respondent Court of Appeals.

On the first question, We are inclined to sustain the trial court primarily because its appraisal of conflicting testimonies is afforded
greater weight and respect. Likewise, finding no error in its appreciation of the contradictory testimonies relating to the dispute on
the receipt of the vouchers, the determination of the trial court that they were actually received should be followed. Consequently,
as between the findings of the Court of Appeals drawn simply from the reading of the records and the transcript of stenographic
notes, and the determination of the trial court which heard the case, the opinion of the latter deserves greater acceptance, even if
both conclusions are supported by evidence.

The claim that the name inscribed on the lower left portion of the transmittal letter does not appear to be the customary signature
of the Mayor's secretary does not convincingly show that she did not receive the vouchers, nor was it convincingly shown that the
signature purportedly hers was not actually her handwriting. Since proof of the receipt of the vouchers has not been confuted, the
secretary should have indicated on the letter she received that the enclosures therein were not so enclosed or attached,
otherwise, it could be presumed that they were actually enclosed or attached thereto, and properly received by the addressee.
Moreover, the version favoring receipt of the vouchers carries the presumption of regularity in official acts, more so that the
handwritten name of the secretary, which closely resembles her signature, immediately follows the list of enclosures.
As regards the alleged response of Fermin to Nessia, i.e., 'Basta indi lang ako 'mag-approve sang vouchers mo", the same should
have been interpreted in Ilonggo as "refusal to approve or disapprove" considering that Nessia testified on it to clarify an earlier
statement that "I presented him my vouchers but he did not act on it (sic)." 6

In Roque v. Baun We held 7 —

"If the decision of the Court of Appeals on the controversial matter suffers, as it does, from some ambiguity, the doubt should be
resolved to sustain the trial court in the light of the familiar and accepted rule that 'the judge who tries a case in the court below,
has vastly superior advantage for the ascertainment of truth and the detection of falsehood over an appellate court sitting as a
court of review. The appellate court can merely follow with the eye, the cold words of the witness as transcribed upon the record,
knowing at the same time, from actual experience, that more or less, of what the witness actually did say, is always lost in the
process of transcribing. But the main difficulty does not lie here. There is an inherent impossibility of determining with any degree
of accuracy what credit is justly due to a witness from merely reading the words spoken by him, even if there was no doubt as to
the identity of the words' (Moran, Comments on the Rules of Court)."

It is further contended that Nessia may not claim relief under Art. 27 because his theory of unjust inaction is incompatible with his
allegations in the complaint that Fermin denied/refused the vouchers. In support of this view, the cases of Sta. Ana v. Maliwa 8
and Cunanan v. Amparo 9 were cited, where We ruled that a pleader is not allowed to contradict his own pleading.

We do not agree, however, that the allegations in the complaint alluded to, i.e., "plaintiff presented the said claims to the defendant
Mayor Jesus Fermin, but refused and continued to refuse the payments thereof' and "defendants refused and continue to refuse to
pay," should be construed as admission of the act of disapproval of the claims. Refusal to pay is not inferred solely from
disapproval of claims but from inaction thereon as well. Accordingly, the said allegations cannot be considered as contradictory to
Nessia's theory of unjust inaction.

On the defense of lack of appropriation, while it is true that Fermin may not be compelled by mandamus to approve vouchers
because they exceeded the budgetary appropriations, he may, nevertheless, be held liable for damages under Art. 27 for
malicious inaction because he did not act on the vouchers. This provision against official inaction finds its ally in Sec. 3, par. (f),
of R.A. 3019, as amended, otherwise known as the "Anti-Graft and Corrupt Practices Act," which criminalizes "[n]eglecting or
refusing, after due demand or request, without sufficient justification, to act within a reasonable time on any matter pending
before him for the purpose of . . . discriminating against any interested party."

It is apparent that public officials are called upon to act expeditiously on matters pending before them. For only in acting thereon
either by signifying approval or disapproval may the plaintiff continue on to the next step of the bureaucratic process. On the
other hand, official inaction brings to a standstill the administrative process and the plaintiff is left in the darkness of uncertainty.
In this regard, official "inaction" cannot be equated with "disapproval."

In Baldivia v. Lota, We dismissed on appeal the petition to compel by mandamus approval of certain vouchers, even though the
disapproval was politically motivated, on the basis that respondent Mayor was bound to disapprove vouchers not supported by
appropriations. 10 In the penultimate paragraph, We made the following pronouncement:

"Indeed, respondent could have, and should have, either included the claim of petitioners herein in the general budget he is bound
to submit, pursuant to section 2295 of the Revised Administrative Code, or prepared a special budget for said claim, and urged the
municipal council to appropriate the sum necessary therefor. In any event, if the municipal mayor fails or refuses to make the
necessary appropriation, petitioners may bring an action against the municipality for the recovery of what is due them and after
securing a judgment therefor, seek a writ of mandamus against the municipal council and the municipal mayor to compel the
enactment and approval of the appropriation ordinance necessary therefor (19 R.C.L. 1951-1052; 34 Am. Jur., 950-
951; 35 Am. Jur., 21)."

This is precisely what the petitioner did; he filed a collection case to establish his claim against Fermin and the Municipality of
Victorias, which Nessia satisfactorily proved.
As regards the second question, it is settled that a non-appellant cannot, on appeal, seek an affirmative relief. We ruled in Medida
v. Court of Appeals 11 that —

"[A]n appellee who has not himself appealed cannot obtain from the appellate court any affirmative relief other than the ones
granted in the decision of the court below (Alba vs. Santander, et al. 160 SCRA 8[1988]). He cannot impugn the correctness of a
judgment not appealed from by him. He cannot assign such errors as are designed to have the judgment modified. All that said
appellee can do is to make a counter-assignment of errors or to argue on issues raised at the trial only for the purpose of
sustaining the judgment in his favor, even on grounds not included in the decision of the court a quo nor raised in the appellant's
assignment of errors or arguments (Aparri vs. Court of Appeals, et al., 13 SCRA 611 [1965]; Carbonel vs. Court of Appeals, et
al., 147 SCRA 565 [1987]; Dizon, Jr. vs. National Labor Relations Commission, et al., 181 SCRA 472 [1990])."

That the decision of respondent court essentially exonerated the Municipality of Victorias from liability is a mere consequence of
the dismissal of the case for lack of cause of action, although erroneously. In any case, this matter has become irrelevant
considering the conclusion herein reached.

Incidentally, in his memorandum, counsel for private respondent insinuates that the lower courts may have overlooked that 6
April 1980, the alleged date when Nessia supposedly went to Fermin's office and told the latter to go to court instead, was a
Sunday. This is not correct, for it is apparent from the transcript of stenographic notes that the date is actually 16 April 1980, a
Wednesday. Indeed, such allusion that is intended merely to gain undue advantage over the opponent does not square well with
the sporting tenets of fair play.

WHEREFORE, the petition is GRANTED and the assailed decision of 19 July 1991 of respondent Court of Appeals as well as its
19 November 1991 Resolution denying Nessia's motion for reconsideration are SET ASIDE, and the decision of 24 April 1987 of
the Regional Trial Court, Branch LXI, Kabankalan, Negros Occidental, 12 is REINSTATED and AFFIRMED.

SO ORDERED.

Cruz, Griño-Aquino and Quiason, JJ ., concur. Footnotes

1. Regional Trial Court of Kabankalan, Branch 61, Negros Occidental, Judge Artemio L. Balinas, presiding.

2. Justice Santiago M. Kapunan, ponente; Justices Segundino G. Chua and Luis L. Victor, concurring, CA-G.R. CV No. 18535. A
motion to reconsider the decision was denied.

3. Records, p. 83.

4. "WHEREFORE, premises considered, the Court renders judgment in favor of the plaintiff and against defendants and ordering
the latter the following: 1) To pay plaintiff jointly and severally the sum of One Thousand Four Hundred Twenty Four Pesos &
75/100 (P1,424.75) for reimbursement of his traveling and food expenses incurred in connection with his official duties, with
interest of 12% per annum from the filing of this complaint until fully paid; 2) Defendant Mayor Jesus Fermin is hereby ordered
to
pay plaintiff the sum of Ten Thousand Pesos (P10,000.00) as moral damages and Two Thousand Pesos(P2,000.00) as
exemplary damages; 3) To pay plaintiff jointly and severally the sum of Three Thousand Pesos (P3,000.00) as attorneys fees. 4)
To pay costs."

5. Rollo, pp. 19-25.

6. TSN, 14 May 1985, p. 12.

7. No. L-22459, 31 October 1967; 21 SCRA 642; 648.


8. No. L-23023, 31 August 1968; 24 SCRA 1018.

9. 80 Phil. 227 (1948).

10. No. L-12716, 30 April 1960; 107 Phil. 1099, 1104 (1960). As in the case at bar, the motive in Baldivia was political. We quote
the observations of then Judge Conrado M. Vasquez in the trial court's decision: ". . . while the Court feels itself powerless to
grant the relief prayed by the petitioners, it could not help but express its sympathy with their situation, and its displeasure with
the manner by which they had been deprived of a claim which appeared to be valid and meritorious. This case is another
manifestation of that unfortunate phenomenon in local politics in this country wherein considerations of public interest have
been set aside for the satisfaction of petty factional jealousies and sacrificed on the altar of political rivalries."

11. G.R. No. 98334,8 May 1992, 208 SCRA 887, 898-899.

12. See Footnote 4.

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