G.R. No.

185121

January 18, 2010

LIMANCH-O HOTEL AND LEASING CORPORATION and CONRADO TIU, Petitioners,

vs.
CITY OF OLONGAPO, ATTY. MA. ELLEN AGUILAR, ENGR. RAMON ZAVALLA, ENGR.
ANDREW DAYOT, and ENGR. REYNALDO EDRAISA, Respondents.
DECISION

PUD and to the City, the latter argued that it should not be faulted for doing its job of going after those
who pilfer electricity and tamper with metering devices.
After petitioners Tiu and Limanch-O Hotel rested their case, the City filed a demurrer to the evidence.
The RTC granted the same and dismissed the complaint. On appeal, 7 the CA affirmed the RTC
decision, having found no reversible error in the same. Tiu and Limanch-O Hotel, said the appellate
court, were unable to prove the elements that will support an action for malicious prosecution, namely:
(a) absence of probable cause in the filing of the criminal case and (b) a showing of legal
malice.8 Their motion for reconsideration having been denied,9 Tiu and Limanch-O Hotel are now
before this Court on a petition for review.10

ABAD, J.:
Issue Presented
This case is about a claim for damages based on malicious prosecution.
The Facts and the Case
Sometime in 1993, the respondent City of Olongapo assessed, through its Public Utilities Department
(PUD), petitioner Conrado Tiu (the owner, president, and general manager of petitioner Limanch-O
Hotel and Leasing Corporation) his unregistered electricity consumption from November 1988 to
February 1993 in the amount ofP9,364,276.50. The City threatened to cut off his electric supply if he
did not immediately settle the amount.
Petitioner Tiu filed an action against the City before the Regional Trial Court (RTC) of Olongapo for
injunction with damages, which he won. The RTC enjoined the City from collecting the deficiency
amount and from cutting off Tius power supply.1
Pending the RTCs resolution of its motion for reconsideration, the City filed criminal complaints
against petitioner Tiu for: (a) theft of electrical current punished under Presidential Decree (P.D.) 401;
and (b) disengaging and tampering with his electric meters potential link, thereby resulting to a zerozero power consumption in violation of City Ordinance 23, series of 1989, and P.D. 401.
After the preliminary investigation, the state prosecutor issued a resolution, dismissing the complaints
for insufficiency of evidence.2 On appeal, however, the Acting Secretary of Justice modified the State
Prosecutors resolution and directed the filing of the corresponding information for theft of electricity
against petitioner Tiu.3Subsequently, however, the Secretary of Justice reconsidered and ordered
instead the withdrawal of any information that might in the meantime have been filed in court. 4 When
the matter was elevated to the Court of Appeals (CA) and, ultimately, to this Court, both courts
affirmed the dismissal of the Citys complaints against Tiu.5
Claiming that petitioner Tiu suffered mental anguish, serious anxiety, besmirched reputation, wounded
feelings, moral shock and social humiliation and that petitioner Limanch-O Hotel suffered loss of
business goodwill, financial reverses, and injured reputation, both filed an action for damages against
the City for having filed a malicious and unfounded charge of theft of electricity against them. 6
In its answer, the City denied any ill motive in filing the criminal complaint. It explained that it filed
the criminal action following an examination of the electric meter installed at petitioner Tius building
and registered in his name. The examination showed reverse polarity markings on the electric meter,
causing it not to register Tius correct power consumption. Since this brought tremendous losses to the

The issue in this case is whether or not the CA erred in its finding that petitioners Tiu and Limanch-O
Hotel failed to present sufficient evidence showing that respondent City instituted the criminal
complaint for theft of electricity against them maliciously and without probable cause.
The Courts Ruling
To entitle petitioners Tiu and Limanch-O Hotel to damages for malicious prosecution, they needed to
prove the following elements: (1) that the respondent City had caused their prosecution; (2) that the
criminal action ended in their acquittal; (3) that, in bringing the action, the City had no probable cause;
and (4) that it was impelled by legal malicean improper or a sinister motive. 11 Both parties concede
that the first two elements were present in this case. What needs to be determined is whether or not
petitioners Tiu and Limanch-O Hotel have proved the last two elements.
Here, petitioners claim that this Court itself found in Public Utilities Department v. Hon. Guingona,
Jr.12 that no probable cause existed to support the charge of theft of electricity against Tiu. This finding
establishes, they said, the third element of filing of the action without probable cause. Further, they
point to the City Mayors call for the boycott of Tius business after he was branded an electricity theft;
the procurement of a search warrant to gather evidence against him; the eventual dismissal of the
complaint for theft of electricity; and the respondent Citys dogged persistence in pursuing the case all
the way to the Supreme Court as clear proofs of legal malice.
But the burden in suits for malicious prosecution is being able to prove the complainants deliberate
initiation of a criminal action knowing the charge to be false and groundless. 13 Here, the respondent
City did not concoct out of thin air the criminal charge for theft of electricity against petitioners Tiu
and Limanch-O Hotel. It filed the case based on the result of an investigation carried out at Tius
premises which indicated a tampering of the electric meter. Indeed, petitioners never claimed that the
inspection of Tius premises was just a farce. The City did not merely conjure the charge with the
intention of vexing Tiu and Limanch-O Hotel. It acted within its right to bring up the result of that
investigation to the authorities for evaluation and resolution.
It is not enough to say that, since the Supreme Court sustained the Secretary of Justices finding that no
probable cause for electricity theft existed against petitioners Tiu and Limanch-O Hotel, a case for
malicious prosecution already exists against the complainant. When the Supreme Court reviewed the
resolution of the Secretary of Justice, it merely determined if he gravely abused his discretion in the
matter. The Courts finding does not amount to a judicial determination that the evidence established
probable cause.141avvphi1

The test should be whether sufficient facts exist which show that, in bringing the criminal action,
complainant acted without probable cause,15 defined as the existence of such facts and circumstances
as would excite the belief in a reasonable mind that the person charged and prosecuted in a criminal
case is probably guilty of the crime or wrongdoing. 16 Here, the fact that the filing of the complaint was
prompted by the result of an investigation shows that the City had a reasonable ground to believe that a
crime had probably been committed. Additionally, the fact that the Department of Justice at first found
basis for filing the charge of theft of electricity indicates that the existence of probable cause is not
clearly settled, only that its final determination had to succumb to the sound discretion of the Secretary
of Justice under his power to review, revise, or overturn the findings of his subordinates.
Finally, no evidence was shown that there had been bad blood between respondent City and petitioners
Tiu and Limanch-O Hotel prior to the filing of the criminal charge, which circumstance if present
could justify a malicious motive in filing the charge. Resort to judicial processes, by itself, is not an
evidence of ill will which would automatically make the complainant liable for malicious prosecution.
Otherwise, peaceful recourse to the courts will be greatly discouraged and the exercise of ones right to
litigate would become meaningless and empty.17
Even if the Court were to concede that the City branded petitioners Tiu and Limanch-O Hotel as
thieves, asked the people not to patronize their business, and had been overly zealous in pursuing the
criminal complaint that it filed, these are not the legal malice contemplated in suits for malicious
prosecution as the determining factor is evil motive in bringing the action, not the acts exhibited by the
complainant after the case had been filed.
WHEREFORE, the Court DENIES the petition and AFFIRMS the Decision dated July 8, 2008 and
Resolution dated October 22, 2008 of the Court of Appeals in CA-G.R. CV 88619.
SO ORDERED.
GRAND UNION SUPERMARKET, INC. and NELIA SANTOS FANDINO, petitioners,
vs.
JOSE J. ESPINO JR., and THE HONORABLE COURT OF APPEALS, respondents.
GUERRERO, J.
This is a petition tor certiorari by way of appeal from the decision of the Court of Appeals 1 dated
September 26, 1977 rendered in CA-G.R. No. 55186-R entitled "Jose J. Espino, Jr., plaintiff-appellant.
versus Grand Union Supermarket, Inc. and Nelia Santos-Fandino, defendants-appellees," the
dispositive portion of which states;
WHEREFORE, the appealed judgment is hereby reversed and set aside.
Defendants are ordered to pay plaintiff-jointly and severally, the sum of
Seventy-Five Thousand Pesos (P75,000.00) by way of moral damages. TwentyFive Thousand Pesos (P25,000.00) as exemplary damages, and Five Thousand
Pesos (P5,000.00) as attorney's fee, Costs of both instances shall be taxed
against the defendant defendants.
The facts of the case are as stated in the decision of the respondent court to wit:

"Upon the evidence, and from the findings of the lower court, it appears that in the morning of August
22, 1970, plaintiff Jose J. Espino. Jr., a civil engineer and an executive of Procter and Gamble
Philippines, Inc., and his wife and their two daughters went to shop at the defendants' South
Supermarket in Makati. While his wife was shopping at the groceries section, plaintiff browsed around
the other parts of the market. Finding a cylindrical "rat tail" file which he needed in his hobby and had
been wanting to buy, plaintiff picked up that item from one of the shelves. He held it in his hand
thinking that it might be lost, because of its tiny size, if he put it in his wife's grocery cart. In the course
of their shopping, plaintiff and his wife saw the maid of plaintiff's aunt. While talking to this maid,
plaintiff stuck the file into the front breast pocket of his shirt with a good part of the merchandise
exposed.
"At the check-out counter, the plaintiff paid for his wife's purchases which amounted to P77.00, but he
forgot to pay for the file. As he was leaving by the exit of the supermarket on his way to his car,
carrying two bags of groceries and accompanied by his wife and two daughter, plaintiff was
approached by a uniformed guard of the supermarket who said: "Excuse me, Mr., I think you have
something in your pocket which you have not paid for." (p. 5, tsn, Aug. 13, 1971), pointing to his left
front breast pocket. Suddenly reminded of the file, plaintiff apologized thus: "I am sorry," and he
turned back toward the cashier to pay for the file. But the guard stopped him and led him instead
toward the rear of the supermarket. The plaintiff protested but the guard was firm saying: "No, Mr.,
please come with me. It is the procedure of the supermarket to bring people that we apprehend to the
back of the supermarket" (p. 8, Ibid). The time was between 9 and 10 o'clock. A crowd of customers on
their way into the supermarket saw the plaintiff being stopped and led by a uniformed guard toward the
rear of the supermarket. Plaintiff acquiesced and signaled to his wife and daughters to wait.
"Into a cubicle which was immediately adjacent to the area where deliveries to the supermarket were
being made, the plaintiff was ushered. The guard directed him to a table and gave the file to the man
seated at the desk. Another man stood beside the plaintiff. The man at the desk looked at the plaintiff
and the latter immediately explained the circumstances that led to the finding of the file in his
possession. The man at the desk pulled out a sheet of paper and began to ask plaintiff's name, age,
residence and other personal data. Plaintiff was asked to make a brief statement, and on the sheet of
paper or "Incident Report" he wrote down the following: "While talking to my aunt's maid with my
wife, I put this item in my shirt pocket. I forgot to check it out with my wife's items" (Exhibit A).
Meanwhile, the plaintiff's wife joined him and asked what had taken him so long.
"The guard who had accosted plaintiff took him back inside the supermarket in the company of his
wife. Plaintiff and his wife were directed across the main entrance to the shopping area, down the line
of check-out counters, to a desk beside the first checkout counter. To the woman seated at the desk,
who turned out to be defendant Nelia Santos-Fandino, the guard presented the incident report and the
file, Exhibit B. Defendant Fandino read the report and addressing the guard remarked: "Ano, nakaw na
naman ito" (p. 22, Id.). Plaintiff explained and narrated the incident that led to the finding of the file in
his pocket, telling Fandino that he was going to pay for the file because he needed it. But this
defendant replied: "That is all they say, the people whom we cause not paying for the goods say... They
all intended to pay for the things that are found to them." (p. 23, Id). Plaintiff objected and said that he
was a regular customer of the supermarket.
"Extracting a P5.00 bill from his pocket, plaintiff told Fandino that he was paying for the file whose
cost was P3.85. Fandino reached over and took the P5.00 bill from plaintiff with these words: "We are
fining you P5.00. That is your the fine." Plaintiff was shocked. He and his wife objected vigorously
that he was not a common criminal, and they wanted to get back the P5.00. But Fandino told them that
the money would be given as an incentive to the guards who apprehend pilferers. People were milling
around them and staring at the plaintiff. Plaintiff gave up the discussion. He drew a P50.00 bill and

took back the file. Fandino directed him to the nearest check-out counter where he had to fall in line.
The people who heard the exchange of words between Fandino and plaintiff continued to stare at him.
At the trial, plaintiff expressed his embarrassment and humiliation thus: " I felt as though I wanted to
disappear into a hole on the ground" (p. 34, Id.). After paying for the file, plaintiff and his wife walked
as fast as they could out of the supermarket. His first impulse was to go back to the supermarket that
night to throw rocks at its glass windows. But reason prevailed over passion and he thought that justice
should take its due course.

D. Petitioners did not exercise their right maliciously, wilfully or in bad faith;
and/or
E. The proximate cause of respondent Espino's alleged injury or suffering was
his own negligence or forgetfulness; petitioners acted in good faith.
II

"Plaintiff was certain during the trial that when he signed the incident report, Exhibit A, inside the
cubicle at the back of the supermarket only his brief statement of the facts (Exhibit A-2), aside from his
name and personal circumstances, was written thereon. He swore that the following were not in the
incident report at, the time he signed it:

Assuming arguendo that petitioners are hable for moral and exemplary damages,
the award of P75,000.00 for moral damages and P25,000.00 for exemplary
damages by the respondent Court of Appeals is not legally justified and/or is
grossly excessive in the premises.

Exhibit A-I which says opposite the stenciled word SUBJECT "Shoplifting"
III
Exhibit A-3 which says opposite the stenciled words Action Taken: Released by
Mrs. Fandino after paying the item.
Exhibit A-4 which says opposite the stenciled words Remarks Noted: "Grd.
Ebreo requested Grd. Paunil to apprehend subject shoplifter.
Private respondent's complaint filed on October 8, 1970 is founded on Article 21 in relation to Article
2219 of the New Civil Code and prays for moral damages, exemplary damages, attorney s fees and
'expenses of litigation, costs of the suit and the return of the P5.00 fine. After trial, the Court of First
Instance of Pasig, Rizal, Branch XIX dismissed the complaint, Interposing the appeal to the Court of
Appeals, the latter reversed and set aside the appealed judgment, granting and damages as earlier
stated.
Not satisfied with the decision of the respondent court, petitioners instituted the present petition and
submits the following grounds and/or assignment of errors, to wit:
I
Respondent Court of Appeals erred in awarding moral and exemplary damages
to the respondent Espino under Articles 19 and 21 in relation to Article 2219 of
the Civil Code, considering that
A. Respondent Espino was guilty of theft;
B. Petitioners legitimately exercised their right of defense of property within the
context of Article 429 of the Civil Code negating the application of Articles 19
and 21 of the same Code;
C. Petitioners acted upon probable cause in stopping and investigating
respondent Espino for shoplifting and as held in various decisions in the United
States on shoplifting, a merchant who acts upon probable cause should not be
held liable in damages by the suspected shoplifter;

The award of P5,000.00 for attorney's fees by the respondent Court of Appeals is
unjustified and unwarranted under Article 2199 of the Civil Code.
We agree with the holding of the respondent appellate court that "the evidence sustains the court's
finding that the plaintiff had absolutely no intention to steal the file." The totality of the facts and
circumstances as found by the Court of Appeals unerringly points to the conclusion that private
respondent did not intend to steal the file and that is act of picking up the file from the open shelf was
not criminal nor done with malice or criminal intent for on the contrary, he took the item with the
intention of buying and paying for it.
This Court needs only to stress the following undisputed facts which strongly and convincingly uphold
the conclusion that private respondent was not "shoplifting." Thus, the facts that private respondent
after picking the cylindrical "rat-tail" file costing P3.85 had placed it inside his left front breast pocket
with a good portion of the item exposed to view and that he did not conceal it in his person or hid it
from sight as well as the fact that he paid the purchases of his wife amounting to P77.00 at the
checkout counter of the Supermarket, owed that he was not acting suspiciously or furtively. And the
circumstance that he was with his family consisting of his wife Mrs. Caridad Jayme Espino, and their
two daughters at the time negated any criminal intent on his part to steal. Moreover, when private
respondent was approached by the guard of the Supermarket as he was leaving by the exit to his car
who told him, "Excuse me, Mr., I think you have something in your pocket which you have not paid
for," Espino, immediately apologized and answered, "I am sorry," which indicated his sincere apology
or regrets. He turned back towards the cashier to pay for the file which proved his honesty sincerity
and good faith in buying the item, and not to shoplift the same. His brief statement on the sheet of
paper called the Incident Report where private respondent wrote the following: "While talking to my
aunt's maid with my wife, I put this item in in my shirt pocket. I forgot to check it out with my wife's
item," was an instant and contemporaneous explanation of the incident.
Considering further the personal circumstances of the private respondent. his education, position and
character showing that he is a graduate Mechanical Engineer from U.P. Class 1950, employed as an
executive of Proctor & Gamble Phils., Inc., a corporate manager incharge of motoring and
warehousing therein; honorably discharged from the Philippine Army in 1946; a Philippine
government pensionado of the United States for six months; member of the Philippine veterans
Legion; author of articles published in the Manila Sunday Times and Philippines Free Press; member
of the Knights of Columbus, Council No. 3713; son of the late Jose Maria Espino, retired Minister,

Department of Foreign Affairs at the Philippine Embassy Washington, We are fully convinced, as the
trial and appellate courts were, that private respondent did not intend to steal the article costing P3.85.
Nothing in the records intimates or hints whatsoever that private respondent has had any police record
of any sort much less suspicion of stealing or shoplifting.
We do not lay down here any hard-and-fast rule as to what act or combination of acts constitute the
crime of shoplifting for it must be stressed that each case must be considered and adjudged on a caseto-case basis and that in the determination of whether a person suspected of shoplifting has in truth and
in fact committed the same, all the attendant facts and circumstances should be considered in their
entirety and not from any single fact or circumstance from which to impute the stigma of shoplifting
on any person suspected and apprehended therefor.
We likewise concur with the Court of Appeals that "(u)pon the facts and under the law, plaintiff has
clearly made the cause of action for damages against the defendants. Defendants wilfully caused loss
or injury to plaintiff in a manner that was contrary to morals, good customs or public policy, making
them amenable to damages under Articles 19 and 21 in relation to Article 2219 of the Civil Code." 2
That private respondent was falsely accused of shoplifting is evident. The Incident Report (Exhibit A)
with the entries thereon under Exhibit A-1 which says opposite the stenciled word SUBJECT:
"Shoplifting," Exhibit A-3 which says opposite the stenciled words Action Taken: Relesed by Mrs.
Fandino after paying the item," Exhibit A-4 which says opposite the stenciled words Remarks Noted:
Grd. Ebreo requested Grd. Paunil to apprehend subject shoplifter," established the opinion, judgment
or thinking of the management of petitioner's supermarket upon private respondent's act of picking up
the file. ln plain words, private respondent was regarded and pronounced a shoplifter and had
committed "shoplifting."
We also affirm the Court of Appeals' finding that petitioner Nelia Santos Fandino, after reading the
incident report, remarked the following: "Ano, nakaw na naman ito". Such a remark made in the
presence of private respondent and with reference to the incident report with its entries, was offensive
to private respondent's dignity and defamatory to his character and honesty. When Espino explained
that he was going to pay the file but simply forgot to do so, Fandino doubted the explanation. saying:
"That is all what they say, the people whom we caught not paying for the goods say... they all intended
to pay for the things that are found to them." Private respondent objected and said that he was a regular
customer of the Supermarket.
The admission of Fandino that she required private respondent to pay a fine of P5.00 and did in fact
take the P5.00 bill of private respondent tendered by the latter to pay for the file, as a fine which would
be given as an incentive to the guards who apprehend pilferers clearly proved that Fandino branded
private respondent as a thief which was not right nor justified.
The testimony of the guard that management instructed them to bring the suspected customers to the
public area for the people to see those kind of customers in order that they may be embarassed (p. 26,
tsn, Sept. 30, 1971); that management wanted "the customers to be embarrassed in public so that they
will not repeat the stealing again" (p. 2, tsn, Dec. 10, 1971); that the management asked the guards "to
bring these customers to different cashiers in order that they will know that they are pilferers" (p. 2,
Ibid.) may indicate the manner or pattern whereby a confirmed or self-confessed shoplifter is treated
by the Supermarket management but in the case at bar, there is no showing that such procedure was
taken in the case of the private respondent who denied strongly and vehemently the charge of
shoplifting.

Nonetheless, the false accusation charged against the private respondent after detaining and
interrogating him by the uniformed guards and the mode and manner in which he was subjected,
shouting at him, imposing upon him a fine, threatening to call the police and in the presence and
hearing of many people at the Supermarket which brought and caused him humiliation and
embarrassment, sufficiently rendered the petitioners liable for damages under Articles 19 and 21 in
relation to Article 2219 of the Civil Code. We rule that under the facts of the case at bar, petitioners
wilfully caused loss or injury to private respondent in a manner that was contrary to morals, good
customs or public policy. It is against morals, good customs and public policy to humiliate, embarrass
and degrade the dignity of a person. Everyone must respect the dignity, personality, privacy and peace
of mind of his neighbors and other persons (Article 26, Civil Code). And one must act with justice,
give everyone his due and observe honesty and good faith (Article 19, Civil Code).
Private respondent is entitled to damages but We hold that the award of Seventy-Five Thousand Pesos
(P75,000.00) for moral damages and Twenty-Five Thousand Pesos (P25,000.00, for exemplary
damages is unconscionable and excessive.
While no proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or
exemplary damages may be adjudicated, the assessment of such damages, except liquidated ones, is
left to the discretion of the court, according to the circumstances of each case (Art. 2216, New Civil
Code). In the case at bar, there is no question that the whole incident that befell respondent had arisen
in such a manner that was created unwittingly by his own act of forgetting to pay for the file. It was his
forgetfullness in checking out the item and paying for it that started the chain of events which led to his
embarassment and humiliation thereby causing him mental anguish, wounded feelings and serious
anxiety. Yet, private respondent's act of omission contributed to the occurrence of his injury or loss and
such contributory negligence is a factor which may reduce the damages that private respondent may
recover (Art. 2214, New Civil Code). Moreover, that many people were present and they saw and
heard the ensuing interrogation and altercation appears to be simply a matter of coincidence in a
supermarket which is a public place and the crowd of onlookers, hearers or bystanders was not
deliberately sought or called by management to witness private respondent's predicament. We do not
believe that private respondent was intentionally paraded in order to humiliate or embarrass him
because petitioner's business depended for its success and patronage the good will of the buying public
which can only be preserved and promoted by good public relations.
As succinctly expressed by Mr. Justice J. B. L. Reyes in his concurring and dissenting opinion in
Pangasinan Transportation Company, Inc, vs. Legaspi, 12 SCRA 598, the purpose of moral damages is
essentially indemnity or reparation, both punishment or correction. Moral damages are emphatically
not intended to enrich a complainant at the expense of a defendant; they are awarded only to enable the
injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering
he has undergone, by reason of the defendant's culpable action. In other words, the award of moral
damages is aimed at a restoration, within the limits of the possible, of the spiritual status quo ante and,
it must be proportionate to the suffering inflicted.
In Our considered estimation and assessment, moral damages in the amount of Five Thousand Pesos
(P5,000.00) is reasonable and just to award to private respondent.
The grant of Twenty-Five Thousand Pesos (P25,000.00) as exemplary damages is unjustified.
Exemplary or corrective damages are imposed by way of example or correction for the public good, in
addition to the moral, temperate, liquidated or compensatory damages (Art. 2229, New Civil Code).
Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they
could be adjudicated (Art. 2223, New Civil Code). Considering that exemplary damages are awarded
for wanton acts, that they are penal in character granted not by way of compensation but as a

punishment to the offender and as a warning to others as a sort of deterrent, We hold that the facts and
circumstances of the case at bar do not warrant the grant of exemplary damages.
Petitioners acted in good faith in trying to protect and recover their property, a right which the law
accords to them. Under Article 429, New Civil Code, the owner or lawful possessor of a thing has a
right to exclude any person from the enjoyment and disposal thereof and for this purpose, he may use
such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful
physical invasion or usurpation of his property. And since a person who acts in the fulfillment of a duty
or in the lawful exercise of a right or office exempts him from civil or criminal liability, petitioner may
not be punished by imposing exemplary damages against him. We agree that petitioners acted upon
probable cause in stopping and investigating private respondent for taking the file without paying for
it, hence, the imposition of exemplary damages as a warning to others by way of a deterrent is without
legal basis. We, therefore, eliminate the grant of exemplary damages to the private respondent.
In the light of the reduction of the damages, We hereby likewise reduce the original award of Five
Thousand Pesos (P5,000.00) as attorney's fees to Two Thousand Pesos (P2,000.00).
WHEREFORE, IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals is hereby
modified. Petitioners are hereby ordered to pay, jointly and severally, to private respondent moral
damages in the sum of Five Thousand Pesos (P5,000.00) and the amount of Two Thousand Pesos
(P2,000.00) as and for attorney's fees; and further, to return the P5.00 fine to private respondent. No
costs.

On 16 May 1976 at about 10:00 o'clock in the evening, while a benefit dance was on-going in
connection with the celebration of the town fiesta, petitioner together with two (2) policemen were
posted near the gate of the public auditorium to check on the assigned watchers of the gate. Private
respondent Bienvenido Bacalocos, President of the Association of Barangay Captains of Pilar, Capiz
and a member of the Sangguniang Bayan, who was in a state of drunkenness and standing near the
same gate together with his companions, struck a bottle of beer on the table causing an injury on his
hand which started to bleed. Then, he approached petitioner in a hostile manner and asked the latter if
he had seen his wounded hand, and before petitioner could respond, private respondent, without
provocation, hit petitioner's face with his bloodied hand. As a consequence, a commotion ensued and
private respondent was brought by the policemen to the municipal building. 2
As a result of the incident, a criminal complaint for "Slander by Deed was flied by petitioner with the
Municipal Trial Court of Pilar, Capiz, docketed as Criminal Case No. 2228, but the same was
dismissed. 3 Subsequently, a complaint for damages was filed by petitioner with the court a quo. In a
decision 4 dated 18 April 1978, the court ruled in favor of herein petitioner (as complainant), holding
private respondent liable to the former for moral damages as a result of the physical suffering, moral
shock and social humiliation caused by private respondent's act of hitting petitioner on the face in
public. The dispositive part of the decision reads as follows:
WHEREFORE, the Court orders defendant to pay plaintiff the damages as
follows:
a) Moral damages of P10,000.00

SO ORDERED.
b) Exemplary damages, P1,000.00 and
G.R. No. L-51832 April 26, 1989
c) Attorney's fees, P2,000.00.
RAFAEL PATRICIO, petitioner,
vs.
THE HONORABLE OSCAR LEVISTE, JUDGE, CFI CAPIZ, BRANCH II and BIENVENIDO
BACALOCOS,respondents.
Stephen C. Arceo for petitioner.
Isagani V. Roblete for private respondent.
PADILLA, J.:
Petition for review on certiorari of the Order 1 of the Court of First Instance of Capiz, Branch II, on
the motion for reconsideration flied by private respondent Bienvenido Bacalocos, dismissing the
complaint for damages against the latter, docketed as Civil Case No. V-3937.
Petitioner Rafael Patricio, an ordained Catholic priest, and actively engaged in social and civic affairs
in Pilar, Capiz, where he is residing, was appointed Director General of the 1976 Religious and
Municipal Town Fiesta of Pilar, Capiz.

SO ORDERED. 5
On 9 June 1978, petitioner filed a motion for execution of judgment, alleging that the 18 April 1978
decision had become final and executory after the lapse of thirty (30) days from receipt thereof by
private respondent, without any motion for reconsideration or appeal having been filed. 6 However,
said motion was denied by the court a quo on the ground that there was a pending motion for
reconsideration filed by private respondent. 7 Subsequently, private respondent filed a supplemental
motion for reconsideration 8 and the court ordered petitioner to file a reply (opposition) thereto. 9 In
compliance, petitioner flied a reply (opposition) to the motion for reconsideration, alleging that the
filing of said motion and supplement thereto was without notice to the adverse party and proof of
service, hence, the decision sought to be reconsidered had already become final and unappealable. 10
Private respondent filed a rejoinder (reply) and a manifestation stating that petitioner was duly served
with a copy of said motion for reconsideration by ordinary mail, attaching thereto the affidavit of
Godofredo Almazol who stated that he mailed the envelope to counsel for herein petitioner. 11 The
court a quo then scheduled the motion for oral argument and the parties were allowed to extensively
argue their respective causes.
On 3 August 1979, an order 12 of dismissal of the petitioner's complaint was issued by the trial court,
thus

ORDER
This is a motion for reconsideration of the decision of this Court dated April 18,
1978, filed by counsel for defendant on May 18, 1978.
In view of the recent trend in the Supreme Court to liberally construe the Rules,
and in view of Section 2, Rule 1, the Court resolves to give due course to the
motion.
Upon review of the facts of the case, it appears and the Court finds merit in the
motion for reconsideration, particularly noting that there is indeed no showing of
compensatory damages being proved.
WHEREFORE, tills Court reconsiders its decision to conform to the facts and
the law, namely, that moral and exemplary damages, in order to merit, the
plaintiff ought to have proven actual or compensatory damages.

What the law really eschews is not the lack of previous notice of hearing but the lack of opportunity to
be heard. It has been held that parties should not rely on mere technicalities which, in the interest of
justice, may be relaxed. 14The rifles of procedure should be viewed as mere tools designed to facilitate
the attainment of justice. Their strict and rigid application, which would result in technicalities that
tend to frustrate rather than promote substantial justice, must be avoided. 15 Moreover, the case
should, as much as possible, be decided on the merits and not merely on technicalities.
As to the petitioner's claim for moral damages, we find the same to be meritorious. There is no
question that moral damages may be recovered in cases where a defendant's wrongful act or omission
has caused the complainant physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation and similar injury. 16 An award of moral
damages is allowed in cases specified or analogous to those provided in Article 2219 of the Civil Code,
to wit:
ART. 2219. Moral damages may be recovered in the following and analogous
cases
(1) A criminal offense resulting in physical injuries;

WHEREFORE, this case is ordered dismissed.

(2) Quasi-delicts causing physical injuries;
SO ORDERED.
(3) Seduction, abduction, rape, or other lascivious acts.
Not satisfied with said order, petitioner filed the petition at bar contending that no copy of the Motion
for consideration was served upon petitioner and no proof of service as well as notice of hearing were
attached to said motion when filed with the court a quo; thus, the motion for reconsideration did not
interrupt the running of the period to appeal. The alleged mailing of a copy of said motion by ordinary
mail did not, according to petitioner, cure the defect. Petitioner further argues that respondent's
admission that he slapped herein petitioner in public causing him physical suffering and social
humiliation, entitles the latter to moral damages. Actual and compensatory damages need not be
proven before an award of moral damages can be granted, so petitioner contends.
On the other hand, private respondent claims that the order of the court a quo apprising petitioner of
the motion for reconsideration filed by private respondent and requiring the former to file a reply
(opposition) thereto, had cured the defect of lack of proof of service and notice of hearing of said
motion for reconsideration; and that the award of moral damages to petitioner is without basis for lack
of proof of bad faith on the part of private respondent.
With respect to the alleged lack of service on petitioner of a copy of the motion and notice of hearing
and failure to attach to the motion proof of service thereof, the general rule is that notice of motion is
required where a party has a right to resist the relief sought by the motion and principles of natural
justice demand that his rights be not affected without an opportunity to be heard. 13
In the case at bar, a copy of the motion for reconsideration was served upon petitioner, although service
was effected through ordinary mail and not by registered mail as reqired by the rules. But, petitioner
was duly given the full opportunity to be heard and to argue his case when the court a quo required
him to file a reply (opposition) to the motion for reconsideration and subsequently set the motion for
oral argument.

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in article 309;
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
xxx xxx xxx
Private respondent's contention that there was no bad faith on his part in slapping petitioner on the face
and that the incident was merely accidental is not tenable. It was established before the court a quo that
there was an existing feud between the families of both petitioner and private respondent and that
private respondent slapped the petitioner without provocation in the presence of several persons.

The act of private respondent in hitting petitioner on the face is contrary to morals and good customs
and caused the petitioner mental anguish, moral shock, wounded feelings and social humiliation.
Private respondent has to take full responsibility for his act and his claim that he was unaware of what
he had done to petitioner because of drunkenness is definitely no excuse and does not relieve him of
his liability to the latter.
Pursuant to Art. 21 of the Civil Code in relation to par. (10) of Art. 2219 of the same Code, "any person
who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for the damage."
The fact that no actual or compensatory damage was proven before the trial court, does not adversely
affect petitioner's right to recover moral damages. Moral damages may be awarded in appropriate cases
referred to in the chapter on human relations of the Civil Code (Articles 19 to 36), without need of
proof that the wrongful act complained of had caused any physical injury upon the complainant. 17 It
is clear from the report of the Code Commission that the reason underlying an award of damages under
Art. 21 of the Civil Code is to compensate the injured party for the moral injury caused upon his
person, thus
... . Fully sensible that there are countless gaps in the statutes, which leave so
many victims of moral wrongs helpless, even though they have actually suffered
material and moral injury, the Commission has deemed it necessary, in the
interest of justice, to incorporate in the proposed Civil Code the following rule:
ART. 23. Any person who wilfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for the damage.
xxx xxx xxx 18
In addition to the award of moral damages, exemplary or corrective damages may be imposed upon
herein private respondent by way of example or correction for the public good. 19 Exemplary damages
are required by public policy to suppress the wanton acts of the offender. They are an antidote so that
the poison of wickedness may not run through the body politic. 20 The amount of exemplary damages
need not be proved where it is shown that plaintiff is entitled to either moral, temperate or
compensatory damages, as the case may be, 21although such award cannot be recovered as a matter of
right. 22
In cases where exemplary damages are awarded to the injured party, attorney's fees are also
recoverable. 23
WHEREFORE, the petition is GRANTED. The order appealed from, dated 3 August 1979, is
REVERSED and the decision of the court a quo dated 18 April 1978 is hereby REINSTATED. With
costs against private respondent.
SO ORDERED.
G.R. Nos. L-51171-72 June 4, 1990

MARIA G. FORD, Substituted by PATRICK G. FORD, petitioner,**

vs.
COURT OF APPEALS and SULPICIA FABRIGAR, respondents.
G.R. No. L-51273 June 4, 1990
VICENTE F. UY, petitioner,
vs.
COURT OF APPEALS and SULPICIA FABRIGAR, respondents.
Quiason, Makalintal, Barot, Torres & Ibarra for petitioner in 51171-72.
Charlito F. Fantilanan for petitioner in 51273.
Ricardo C. Castro, Jr. and Teodulfo L.C. Castro for private respondents.

REGALADO, J.:
The generally accepted rule m our jurisprudence is that the findings of fact of a trial court carry great
weight since it had the opportunity of observing the demeanor of the witnesses on the stand as a further
aid in determining their credibility. The rule, however, admits of exceptions, both in the factual
findings of the trial court and the conclusions drawn by it therefrom, and, as respondent court holds,
the decision of the court a qou in these cases exemplifies a warranted departure from the aforesaid
jurisprudential rule.
These consolidated petitions seek the review of the decision of respondent court 1 in CA-G.R.
Nos.59402-03-R entitled "Sulpicia F. Fabrigar, Plaintiff-Appellant vs. Vicente F. Uy and Maria G.
Ford, Defendants-Appellees," together with its resolution denying petitioners' motions for
recondsideration, which reversed the decision of the trial court in Civil Cases Nos. M-282 and M-283
of the then the Court of First Instance of Capiz, Mambusao Branch, filed herein private respondent
Sulpicia Fabrigar against spouses Vicente Uy and Paciencia Uy and spouses Thomas J. Ford and Maria
G. Ford, respectively.
From the nature of the issues raised in the present appeals, we are constrained to set out and analyze
the facts involved which we are told do not sustain the conclusions drawn by the court. below. The
decision of respondent court presents the two sides of the incident as follows:
On July 27, 1973, at about 7:00 o'clock in the morning, Sulpicia Fabrigar, being
a public school teacher of Barrio Sta. Cruz. Dumalag, Capiz reported to the
precinct of her assignment particularly at the Elementary School of Sta. Cruz,
Dumalag, Capiz, by reason of the deputization of all public school teachers to
assist the COMELEC in the conduct of the National Referendum.
Between 3:00 and 3:30 P.M. of that day, while she was inside Precinct No. 11-a,
she saw Elmo Uy, son of the barrio captain of Sta. Cruz, Vicente Uy, get the

remark sheet of voter Regalado Firmalino and began to write on said remark
sheet of the latter. She called the attention of the Referendum Committee
composed of Leandra Fagtanac, Chairwoman; Concepcion Fale and Benito
Facura, Members, to these acts of Elmo Uy but the Committee did not mind her.
So, she took the initiative of going to and advising Elmo Uy not to write
anything on the remark sheet of the voter Firmalino. Elmo Uy asked Sulpicia
what business of hers (sic) in so doing to which she answered that she was
merely advising him. Elmo Uy stood up, pulled out his appointment paper as an
observer in the referendum and tore it to pieces saying that it was useless and
not respected anyway. Thereafter, Elmo Uy went out of the precinct reported the
matter to his father, Vicente Uy, the barrio captain of Sta. Cruz. A few minutes
later, barrio captain Vicente Uy, father of Elmo, entered Precinct No. 11-A and
shouted at Sulpicia Fabrigar, 'Hijo de puta, why do you interfere with what my
son is doing? Why are you pretending to be somebody here in Sta. Cruz? You
are a no good headteacher. I do not send my children to this school because of
your enviousness.' Sulpicia Fabrigar answered that she was merely advising
Elmo Uy not to write on the remark sheet of Regalado Firmalino and she did not
pretend to be somebody. While Vicente Uy was leaving the precinct, he further
said that he would report Sulpicia Fabrigar to Mrs. Maria Ford.
Thirty minutes after Vicente Uy had left the precinct, Maria Ford, owner of the
Asturias Sugar Central, arrived very angry, saying, 'Where is Suping, where is
Suping?' Sulpicia Fabrigar immediately presented herself to Maria Ford, and the
latter said, 'Why did you campaign for 'No' according to the barrio captain?'
Sulpicia Fabrigar answered, 'I did not campaign for 'No' I even wanted a zero
'No' because you promised to provide electricity in this barrio if nobody votes
'No'. 'Elmo Uy then interrupted their conversation and said that Sulpicia
Fabrigar really campaigned for ''No' votes. Maria Ford said, 'Its true you
campaigned for 'No' and why do you still insist on reasoning? and then, Maria
Ford slapped Sulpicia Fabrigar on the left face. She wanted to retaliate but her
sister, Fidelina Frias, held her back and pulled her away. Maria Ford further said,
'Ill have you transferred to a far place. You are ungrateful to me. You are always
rebelling against me. Get out and go home.' , Sulpicia Fabrigar reported this
particular incident to the police authorities of Dumalag, Capiz (Exhibit 'A'/'1').
She also sent telegrams to the President (Exhibits 'I' and 'H'), to the COMELEC
(Exhibit 'J') and to the Secretary of National Defense (Exhibit 'U') in connection
with this incident. 2
Respondent court observes that, on his part, Vicente Uy presented his version of the incident thus:
At about 2 p.m. on referendum day, Benito Facura, upon the request of the
chairwoman of the Referendum Committee, Leandra Fagtanac, went to the
house of Vicente Uy to inform him that there was trouble in the barrio center.
Vicente Uy went to said place and he had a talk with Leandra Fagtanac about
what happened thereat. Leandra Fagtanac informed Vicente Uy that Sulpicia
Fabrigar shouted at Elmo Uy; that she requested Sulpicia Fabrigar to keep quiet
but the latter continued to shout at Elmo Uy that he should not teach the voters
because they were more intelligent than him; that when Elmo Uy showed his
appointment papers as referendum observer, Sulpicia Fabrigar tore it to pieces
and threw it on the floor; and that as a result of the commotion created by the
quarrel of Sulpicia Fabrigar and Elmo Uy, the people scattered away from the
precinct.

Upon getting this information from Leandra Fagtanac, Vicente Uy asked her
where was Sulpicia Fabrigar and he was told that she had just left the room.
When Vicente Uy was about to leave the precinct, Sulpicia Fabrigar came in.
Vicente Uy then addressed her, 'Mrs. Fabrigar, what happened here? Can you not
settle this since this is our affair? Sulpicia Fabrigar answered, 'I told Elmo not to
teach the voters because they also know what they're doing and why are you
inquiring?' Vicente Uy said: 'Why did you humiliate Elmo when we have a
chairwoman to refer this matter?' (sic) Sulpicia Fabrigar countered, 'You think
you are still a barangay captain inside this precinct. It's the headteacher who is
powerful in this building. 'Vicente Uy said, 'I'm not trying to be somebody here.
If you won't believe me, I'd report this matter at the poblacion.' Sulpicia Fabrigar
said, 'I don't care to whom you'd report, I'm not afraid, go ahead. 'So, Vicente Uy
left with-his jeep. The people were no longer voting, and on the way to the
poblacion Vicente Uy thought of asking Maria Ford to pacify Sulpicia Fabrigar,
to stop her from molesting and disturbing the people so they could vote. Vicente
Uy then believed that Maria Ford, being the godmother of Sulpicia Fabrigar,
could pacify her.
Maria Ford asked Vicente Uy how the voting was going along, and the latter told
her that Sulpicia Fabrigar was getting uncontrollable in the precinct, that she
tore the appointment as observer of his son Elmo, and that the people were not
voting anymore. Vicente Uy asked Maria Ford to stop Sulpicia Fabrigar from
molesting and disturbing the people. Thereafter, Vicente Uy left to report the
matter to the COMELEC Registrar but he did not meet him because he was out.
On his way home, he met the Mayor and the Governor and to whom he narrated
this incident. The following day, Vicente Uy reported this incident to the police
authorities of Dumalag, Capiz and it was entered in the Police Blotter (Exhibit
'3'-Uy). 3
Said decision continues with an account of the incident this time by Maria Ford:
At about 1:30 p.m. on referendum day, some people reported to Maria Ford that
Sulpicia Fabrigar was screaming at the polling place, and they asked her to stop
Sulpicia Fabrigar as she is her (a)hijada and relative because people were going
away and not voting anymore. Then came Vicente Uy, the barrio captain, who
also asked Maria Ford to intercede with Sulpicia Fabrigar because she was
creating trouble, fighting with his son, and many people were leaving the polling
place.
Maria Ford went to the polling place to find out the truth of the report and also
to make the people vote. Upon her arrival at the polling place, Sulpicia Fabrigar
immediately shouted, 'Why did you come here, you're helping the barrio captain
Maria Ford answered, 'I came here because the people and the barrio captain
asked me to make you keep quiet and stop this trouble.' Then Sulpicia Fabrigar
screamed, 'I'm the headteacher here!' Maria Ford told Sulpicia Fabrigar to keep
quiet and go home and not to scream, but she answered that she was the
headteacher and she was supposed to be there and she would not go home. Then
Maria Ford started to inquire from the people around whether or not Sulpicia
Fabrigar has some trouble with Elmo Uy and whether or not she tore his
appointment paper as referendum observer. Suddenly, Sulpicia Fabrigar
screamed again saying that Elmo Uy was insulting her. Maria Ford told Elmo

Uy to go home, and when Elmo Uy passed between her and Sulpicia Fabrigar,
the latter continued to scream insulting words at Elmo Uy. 'Sulpicia Fabrigar
even wanted to beat Elmo Uy, and she was trembling. So, laboring under the
belief that Sulpicia Fabrigar had already become hysterical, Maria Ford slapped
her on the face to calm her down. After this, Sulpicia Fabrigar quieted down
momentarily, and then she said to Maria Ford, 'If you're not only old, I'd beat
you!' Maria Ford held out her face to Sulpicia Fabrigar and ordered her to hit it,
but she did not. 4
After trial in the Court of First Instance of Capiz, Mambusao Branch, presided over by Judge Tomas R.
Leonidas, judgment was rendered dismissing Sulpicia Fabrigar's complaint and further ordering her to
pay Maria Ford P2,000.00 as moral damages, P2,000.00 as exemplary damages, P1,000.00 for
attorney's fees and P5,000.00 for expenses of litigation; and also to pay Vicente Uy P2,000.00 as moral
damages, P2,000.00 as exemplary damages, P2,000.00 for attorney's fees and P1,000.00 for expenses
of litigation, said amounts to bear interest from the date of judgment. 5
In dismissing said complaint for damages of herein private respondent, the lower court arrived at the
following conclusions:
According Sulpicia Fabrigar, upon entering the precinct, Vicente Uy
immediately shouted at her, 'Hijo de puta why do you interfere with what my
son is doing here? Why are you pretending to be somebody here in Sta. Cruz?
You are a no good headteacher. I do not send my children to this school because
of your enviousness. ...
It clearly appears that from among the statements of Vicente Uy, only 'Why are
you pretending to be somebody in Sta. Cruz' called for comment or action from
Sulpicia Fabrigar which, to the mind of the court, is an innocuous expression or
statement merely showing disgust, displeasure of, at its worst, anger, and not to
slander. It is of a lesser degree and intensity than the words 'putang ina mo"
Which the Supreme Court in Reyes v. People, L-21528, March 28, 1969, 27
SCRA 686, has stated to be a common expression in the dialect that is often
employed not really to slander but rather to express anger or displeasure. With
respect to the other statements of Vicente Uy which did not call for any
comment from Sulpicia Fabrigar, her silence should be deemed to be an
admission of their truth and truth can not hurt or insult. Thus, an act or
declaration made in the presence and within the observation of a party who does
or says nothing when the act or declaration is such as naturally to call for action
or comment if not true, may be given in evidence against him. (See. 23, Rule
130 Rules of Court). . . .
xxx xxx xxx
Maria Ford admitted that she slapped Sulpicia Fabrigar because the latter
became hysterical and the former was then laboring under the belief that the
only way to stop a hysteric is to slap and jolt him There is speciousness in this
assertion. Sulpicia Fabrigar even admitted on the witness stand that Maria Ford
slapped her so that she would stop with Elmo Uy, but she failed to positively
state that by this one slap she was, dishonored, defamed or shamed. She merely
felt a deafening sensation, and nothing more. Sulpicia Fabrigar, by her ravings

and rantings against Elmo Uy, was already disturbing the peace of mind of the
people and scaring them from participating in the referendum process. There
was then an emergency, absent any police officer, and as godmother and second
cousin by affinity of Sulpicia Fabrigar, Maria Ford thought it her duty to do
what she did which nobody would have dared done. In this setting, this court
finds that Maria Ford acted within her legal and moral right and duty, for her
own peace of mind, to arrest the shameful act of an (a)hijada and relative. To
restore peace and order in the polling place and to prevent Sulpicia Fabrigar
from further eroding and invading the right of suffrage of others. In so doing,
Maria Ford could not have been actuated with malice aforethought of putting
Sulpicia Fabrigar into disrepute, but rather to restore her to normal self and bring
back order to the referendum process. . . 6
Respondent court, however, rejected said conclusions on the following ratiocinations:
As we appreciate the facts of the case, We believe that Vicente Uy was very
much offended by the action of Mrs. Fabrigar in admonishing former's son,
Elmo, who has been shown to have interfered in the voting in Sta. Cruz,
Dumalag, Capiz. Unable to swallow the fact that someone has questioned his
'power' as barrio captain, Vicente Uy immediately rushed to the barrio school
and there began insulting the lowly school headteacher, Sulpicia Fabrigar.
We cannot clearly see Our way through when in disregarding other slanderous
remarks of Vicente Uy, the lower court said that "her silence (to those facts)
should be deemed an admission of their truth and truth cannot hurt or insult.'
The trial court most certainly is in error in this regard. 7
xxx xxx xxx
It further observed that. . . It is not for Maria Ford to say whether her acts did or-did not place the
offended party Sulpicia Fabrigar in contempt of the spectators. The facts
obtaining in this case indicate that appellee Ford in performing the act of
slapping the school teacher in front of the people was motivated by personal
animosity because Maria Ford has been misinformed that Sulpicia Fabrigar has
been campaigning for 'No' votes in the National. Referendum of July 27, 1973
which was against the wishes of Maria Ford. And taking into account the
position held by the victim and the circumstances surrounding the incidents in
question, we believe that Maria Ford has by deed slandered plaintiff Sulpicia
Fabrigar which would entitle the latter to damages. There can be no
circumstance more humiliating for a headteacher of a barrio school than to be
seen by the barrio folks being slapped in her face. 8
Setting aside the decision of the trial court, respondent court ordered Vicente Uy to pay Sulpicia
Fabrigar the sum of P5,000.00 as moral damages, P2,000.00 as exemplary damages, and P2,000.00, as
attorney's fees; and also ordered Maria Ford to pay Sulpicia Fabrigar the sum of P10,000.00, as moral
damages, P2,000.00 as exemplary damages and P2,000.00 as attorney's fees, with costs against both
defendants-appellees.

In her petition at bar, the late Maria Ford contends that respondent court erred in holding that she acted
with malice and ill will when she slapped private respondent, and in awarding damages and attorney's
fees to the latter.9 Along the same vein, petitioner Uy submits that the Court of Appeals should not
have, reversed, the trial court's decision nor should it have awarded damages, attorney's fees, litigation
expenses and costs to private respondent. 10
Petitioner Ford contends that the act of slapping, standing alone and unexplained, would not speak well
of the intent of the actor and that to determine the intent, the surrounding stances, particularly those
preceding the slapping, should be taken into consideration. It is submitted that this is so since malice,
which is an essential element in this type of an offense, is a state of mind and can only be proven by
extrinsic evidence. She declares that her act of slapping Sulpicia Fabrigar was not actuated by malice
but engendered by a legitimate motive prompted by her desire to calm down a person who appeared to
be hysterical and to stop a goddaughter and relative from further creating a scandal. She also assails as
exorbitant the award of moral damages and, for alleged lack of legal basis, the awards of exemplary
damages and attorney's fees. 11
On the other hand, petitioner Uy maintains that he has not slandered Sulpicia Fabrigar; and that the
contents of Exhibits "A"/"1" (police blotter of the incident in question), "I" and "K", (telegram of
Fabrigar to the President), "J" (Telegram of Fabrigar to the Commission on Elections) and
"L"(telegram Fabrigar to the Secretary of National Defense) constitute admissions against Fabrigar's
interest under Section 22, Rule 130 and also judicial admissions under Section 2, Rule 129, both of the
1964 Rules of court, which would have barred respondent court from reversing the lower court's
finding that he did not utter the words imputed to him and did not insult Fabrigar.12
We find both appeals devoid of merit.
The decision of the trial court proceeds from misapprehensions and patently erroneous conclusions of
fact. A slap on the face is an unlawful aggression. The face personifies one's dignity and slapping it is a
serious personal affront. It is a physical assault coupled with a willful disregard of the integrity of one's
person. This is especially true if the aggrieved party is a school teacher who, in penal law, is a person
in authority. Respect for a teacher is required of all, if we are to uphold and enhance the dignity of the
teaching profession. The demeaning act of respondent Ford is virtually inexpiable when done, as in this
case, in the presence of the public inside a polling precinct during an electoral exercise. This certainly
is one of the extreme circumstances under which ridicule, discredit and contempt could be cast upon
the aggrieved party in the community where she performs her functions as a mentor of their children.
As discerningly observed by respondent court, considering the position of private respondent, nothing
but shame, humiliation and dishonor could have been heaped upon her by the indignities she had to
suffer at the hands of petitioner Ford. Furthermore, there is ample reason to believe that said
petitioner's displeasure over the rumor that private respondent was campaigning for "No" votes was
sufficient motive for her to deliberately confront private respondent and maltreat the latter.
The act of petitioner Ford in slapping private respondent on the face in public is contrary to morals and
good customs and under the circumstances, could not but have caused the latter mental anguish, moral
shock, wounded feelings and social humiliation. 13 Full responsibility attached to said act of the late
petitioner Ford and the corresponding sanctions should be imposed. Her excuse that she was prompted
by her desire to calm down private respondent and prevent her from becoming hysterical is too lame a
subterfuge upon which to premise a plea for exoneration. We are not persuaded by such pretense.
Private respondent was in the performance of her duty when the incident took place and she had every
right to stay in her post. On the other hand, petitioner Ford had no legitimate business inside the

polling precinct. Definitely, she barged into the premises in response to the report and importuning of
petitioner Uy.
The award of moral damages is allowed in cases specified or analogous to those provided in Article
2219 of the Civil Code. 14 Under Article 21 of said Code, in relation to Paragraph (10), Article 2219
thereof, any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for moral damages. By way of
example or correction for the public good, exemplary damages may also be awarded. 15Attorney's fees
are also recoverable. 16
With respect to petitioner Uy, the gravity of the defamatory words uttered by him depends not only
upon their sense and grammatical meaning, judging them separately, but also upon the special
circumstances of the case and the 'antecedents or relationship between the offended party and the
offender which might tend to prove the intention of the offender at the time. 17
Suffice it to say that the imputations uttered by petitioner Uy against private respondent also cast
further dishonor, discredit and contempt on the latter. Petitioner Uy was a barrio captain. His proven
actuations do not speak well of a, public officer, especially when done in the presence of the public
during said referendum.
Petitioner Uy claims that private respondent should be bound by her statement appearing in the police
blotter where, she made no mention that she was slandered by the former. This is fallacious reasoning.
The entry in the police blotter, even if admitted as an exception to the hearsay rule, is not necessarily
entitled to full credit as the, entrant did not have personal knowledge of the facts stated and the police
agent who prepared the same did not testify in court. 18 Admissibility of evidence is one thing; the
weight thereof is another. The court below also declared that an entry in the police blotter is an entry in
an official record made in the performance of duty by a public officer and as such, its trustworthiness
arises and its correctness cannot be impugned, there being a presumption of regularity in its execution.
This is not entirely correct. Entries in official records are only prima facie evidence of the facts therein
stated. They are not conclusive.
We are satisfied with private respondent's explanation. Her initiative in promptly instituting her
complaint clearly manifests her honest intention to vindicate the wrong committed against her. She
explained that shortly after the incident between her and petitioner Uy, petitioner Ford came and
slapped her. Thus, when the report was made by private respondent to the police authorities of
Dumalag Capiz, the immediate hurt and humiliation being felt by her was not only the slander
committed by petitioner Uy but, primarily and foremost, the slapping by petitioner Ford. Hence, the
police report of private respondent which focused on her being slapped by petitioner Ford, although
inadvertently omitting the incident with petitioner Uy in view of her emotional state then, should not
be construed to mean that private respondent was not slandered by petitioner Uy.
Like an affidavit, a police blotter is taken ex parte hence, in the same manner, it could be just as
incomplete and inaccurate, sometimes from either partial suggestions or for want of suggestion or
inquiries, without the aid of which the witness may be unable to recall the connected collateral
circumstances necessary for the correction of the first suggestion of his memory and for his accurate
recollection of all that pertains to the subject. 19 It is understandable that the testimony during the trial
would be more lengthy and detailed than the matters stated in the police blotter. Petitioner Uy's
disquisition on the omission of his intemperate and slanderous outburst in the entries made in the
police blotter, or in the telegrams sent by private respondent, cannot outweigh the evidence on -which
respondent court based its factual findings and conclusions that he did commit said act. Further, the

testimony thereon of private respondent in open court, in our view, has not been successfully rebutted
and we have no reason to doubt the veracity thereof.

1. National Power Corporations Specification No. Sp80DLc 502

2. Any and all plans, drawings, and schedules prepared by National Power Corporation.

WHEREFORE, the instant petitions are hereby DENIED for lack of merit. The decision of respondent
court is hereby AFFIRMED in toto.
SO ORDERED.

3. SUB-CONTRACTORS proposal dated March 8, 1982.

The documents mentioned above shall collectively be referred to as "Contract Documents." 3

ROMAGO ELECTRIC CO., INC., petitioner,

vs.
HONORABLE COURT OF APPEALS, SOLEDAD C. CAC, JOEPHIL BIEN, RENATO
CUNANAN and DELFIN INCIONG, respondents.
DECISION
CHICO-NAZARIO, J.:
The Case
This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking the reversal of
the decision1of the Court of Appeals dated 31 July 1997 and its resolution dated 16 September 1997 in
CA-G.R. CV No. 28608. The Court of Appeals affirmed the decision 2 dated 29 June 1990 of the
Regional Trial Court (RTC), Branch 19, Cauayan, Isabela, in Civil Case No. 19-300 in favor of herein
private respondents for collection of a sum of money with damages.
The Facts
In 1982, the National Power Corporation (NPC) entered into an agreement with ROMAGO
ELECTRIC CO., INC. (ROMAGO), under Contract No. Sp80DLC-502, for the erection and
installation of NPCs 69 KV 3-Phase Transmission Lines from Santiago-Jones, Jones-Saguday and
Cauayan-Roxas, Isabela, for an agreed consideration of P2,657,856.40.
Subsequently, on 07 June 1982, ROMAGO subcontracted the project to BICC Construction, an
unregistered loose partnership composed of Soledad Cac, Delfin Inciong, Joephil Bien and Renato
Cunanan, for and in consideration of the sum of P1,614,387.99. Under the subcontract agreement, the
following documents, collectively termed therein as "Contract Documents," were incorporated into and
made part of the contract "as though fully written out and set forth herein," to wit:
ARTICLE I
DOCUMENTS COMPRISING THE CONTRACT
The following documents are hereby incorporated and made part of this Contract as though
fully written out and set forth herein insofar as they are not inconsistent with the terms
thereof:

Also in the aforementioned agreement, the subcontractors obligations are defined in its Article II, to
wit:
SUB-CONTRACTOR shall, in accordance with the provisions of this Contract and
Contract Documents, fully and faithfully furnish all labor, tools, equipment and necessary
materials (except NPC supplied) and proceed to completely perform the Erection and
Installation of the 69 KV, 3 Phases Transmission Lines (Schedule II) under the 7th Power
Loan.
SUB-CONTRACTOR shall commence the work starting March 23, 1982 and shall
complete the same within two hundred forty (240) calendar days plus any extension of time
duly granted by National Power Corporation under the provisions of the Contract
Documents.
Except as otherwise provided for herein, all provisions of the National Power Corporations
Specifications No. Sp80DLc-502, with reference to obligations, responsibilities of
Contractor thereunder are hereby made applicable to the SUB-CONTRACTOR under this
Contract.4
In the course of the construction, the NPC granted ROMAGO a Contract Price Adjustment (CPA)
amounting to P250,778.65.
Under the provision governing the CPA, as embodied in GP-085 of the "Plans and Specifications":
GP-08 CONTRACT PRICE ADJUSTMENT
Adjustment of contract prices will be made should any or both of the following conditions
occur as embodied in P.D. No. 454 as amended by PD No. 459.
(a) If during the effectivity of the contract, the cost of labor, materials, equipment rentals
and supplies for construction should increase or decrease due to the direct acts of the
Philippine Government. The increase of prices of gasoline and other fuel oils, and of
cement shall be considered as direct acts of the Philippine Government.
(b) If during the effectivity of the contract, the costs of labor, equipment rentals,
construction materials and supplies used in the project should cause the sum total of the
prices of bid items to increase or decrease by more than five percent (5%) compared with
the total contract price.

The increased amount in the contract price shall be determined by application of

appropriate official indices, complied and issued by the Central Bank of the Philippines.
The additive or deductive adjustment shall be added or deducted from the unit prices every
six (6) months beginning from the date of bidding.6
When the project was completed, there appeared to be an outstanding balance due to BICC
Construction from ROMAGO, part of which was the formers share in the CPA amounting to 70% of
the NPC-ROMAGO contract or P175,545.05.

3. Ordering the defendant to pay the plaintiffs said CPA in the amount of P250,778.65
excluding therefrom any tax lawfully paid by the defendant to the Philippine Government
supported by authentic official receipts;
4. Ordering the defendant to pay interest on said amount at the legal rate from August 12,
1983 until fully paid; and
5. Ordering the defendant to pay the plaintiffs the sum of P10,000.00 as attorneys fees.
Costs further taxed against the defendant.7

Mrs. Soledad Cac, one of the owners of BICC Construction, wrote NPC to hold its payment to
ROMAGO of the aforementioned CPA amounting to P250,778.65. Payment was nonetheless released
to ROMAGO by virtue of a sworn affidavit executed by ROMAGOs Vice President for Finance
Eduardo Cruz who certified that "there does not exist any lien or encumbrances against" the said NPCROMAGO contract.
It appears that on 04 October 1983, Mariano Cac, authorized representative and husband of Soledad
Cac, one of the partners of BICC Construction, was paid the amount of P38,712.70 "in full payment of
accounts including retention of various works at NPC-Isabela" under defendants Cash Disbursement
Voucher No. 23162 dated 03 October 1983.
When BICCs demands for payment were ignored by ROMAGO, the partners, thru Mrs. Soledad Cac
as lone plaintiff, filed a complaint for collection of sum of money with damages.
In its pre-trial order of 23 November 1988, the lower court summed up the issues agreed upon by the
parties, as follows:

From the foregoing decision, defendant Romago filed a notice of appeal8 on 26 July 1990.
Thereafter, the Court of Appeals rendered the assailed decision 9 on 31 July 1997.
The Court of Appeals found the claim of private respondents to be meritorious. Consequently, the
dispositive portion of the assailed decision of the appellate court pronounced that:
WHEREFORE, with the modification that appellant is hereby ordered to pay the appellees
the sum of P175,545.05 representing 70% of the total contract price adjustment of
P250,778.65, with interest thereon at the legal rate from August 12, 1983 until fully paid
but deducting therefrom any lawful tax appellant may have paid the government, the
decision appealed from is hereby AFFIRMED in all other respects and the instant
appeal DISMISSED.
With costs against appellant.10

1. Whether or not plaintiffs, as sub-contractors of the projects mentioned in Exhibit C (i.e.,

NPC-ROMAGO contract)are entitled to the price cost adjustment under said contract
obtained by the defendant from the NPC; and
2. Whether or not all obligations and/or indebtedness of the defendant to the plaintiffs were
already paid and/or released upon the execution of Mariano Cac of the defendants Exh. A"
(sic; it should be Exh. 4).
On 29 June 1990, the trial court rendered its decision, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered:
1. Declaring that the venue of this case could be before this Court at the option of the
plaintiffs;
2. Declaring that all contract price adjustments (CPA) under contract No. Sp 80DLc-502-(b)
of the NPC inured to the benefit of the plaintiffs and not to the defendant;

The Issues
Its motion to reconsider the said decision having been denied by the Court of Appeals in a Resolution
dated 16 September 1997, petitioner Romago filed the instant petition for review predicated on the
following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN ITS
INTERPRETATION OF THE SUB-CONTRACT IN RELATION TO NATIONAL
POWER CORPORATIONS (NPC) "PLANS AND SPECIFICATION" . . . BY FINDING
THAT THE CONTRACT PRICE ADJUSTMENT (CPA) OBTAINED BY PETITIONER
INURES TO THE BENEFIT OF PRIVATE RESPONDENTS;
II.
WHETHER OR NOT THE HONORABLE COURT ERRED WHEN IT APPLIED THE
PRINCIPLE OF EQUITY TO JUSTIFY PAYMENT TO PRIVATE RESPONDENTS OF

THE CONTRACT PRICE ADJUSTMENT (CPA) WHEN THE CLEAR TERMS OF THE
SUBCONTRACT AND THE LAW PRECLUDES (SIC) SUCH APPLICATION;

Contract Documents were incorporated in the Subcontract for the purpose of binding private
respondents in fulfilling the obligations and responsibilities of petitioner in the latters contract with
NPC. . . ."14

III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED WHEN IT
INTERPRETED THAT THE PARTICULARS OF PETITIONERS CASH
DISBURSEMENT VOUCHER NO. 23162 WHICH STATES "FULL PAYMENT OF
ACCOUNTS INCLUDING RETENTION FOR VARIOUS WORKS AT NPC-ISABELA
AS ATTACHED PHP37,712.70" SIGNED BY PRIVATE RESPONDENTS
AUTHORIZED REPRESENTATIVE / AGENT ACKNOWLEDGING RECEIPT OF SAID
AMOUNT DID NOT EXTINGUISH, RELIEVE, RELEASE ANY AND ALL CLAIMS
INCLUDING CONTRACT PRICE ADJUSTMENT (CPA) WHICH PRIVATE
RESPONDENTS MAY HAVE AGAINST PETITIONER ON THE SUBCONTRACT;
IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED WHEN IT
HELD THAT MARIANO CAC WAS NOT CLOTHED WITH AUTHORITY BY
PRIVATE RESPONDENTS TO RENOUNCE OR WAIVE WHATEVER CLAIMS
INCLUDING CPA THAT PRIVATE RESPONDENTS MAY HAVE AGAINST
PETITIONER;
V.
WHETHER OR NOT, GRANTING GRATIS ARGUENDO THAT PRIVATE
RESPONDENTS ARE ENTITLED TO SHARE IN THE CONTRACT PRICE
ADJUSTMENT (CPA) GRANTED BY NPC TO PETITIONER THE HONORABLE
COURT OF APPEALS ERRED IN AWARDING PHP175,545.05 THEREOF, TO
PRIVATE RESPONDENTS SINCE IT HAS NO BASIS AND CONTRARY TO
EVIDENCE OF PRIVATE RESPONDENTS WHICH ONLY CLAIM AN AMOUNT OF
PHP134,755.10 MINUS WHATEVER LEGAL DEDUCTIONS, IF ANY.11
The Courts Ruling
The petition is not meritorious.

The petitioner further hypothesizes that "(h)ad the parties intended that private respondents shall be
entitled to share in the CPA that may be granted by NPC to petitioner, the Subcontract could have
expressly stipulated. But it did not. Moreover, in Art. I of the Subcontract, it provides that the
Contract Documents incorporated shall only be considered fully written insofar as they are not
inconsistent with the terms thereof. NPC Contract No. Sp80DLC-502 being inconsistent to the
unequivocal silence of the Subcontract with respect to the grant of CPA, private respondents are not
entitled to grant of the CPA."15
For its part, however, the Court of Appeals ruled that the private respondents claim under the CPA is
meritorious.
The appellate court clarified that the provision of the CPA is not found in the NPC-Romago
contract,16 but in the NPC's "Plans and Specifications." 17 On the other hand, the "obligations and
responsibilities" averred to by the petitioner "are, in appellants own words, those flowing from the
provisions of the x x x contract entered into between NPC and ROMAGO" Thus, the phrase
"obligations and responsibilities" should only qualify the main contract and not the other Contract
Documents.
The records of the present case sustain the findings of the Court of Appeals. Thus, the petition must
fail.
Contrary to the petitioners asseverations that the CPA was not intended to be made applicable to the
Romago-BICC subcontract, it must be remembered that the petitioner and the private respondents
expressly agreed what documents were going to be incorporated in the principal subcontract. We agree
with the appellate court that the qualifying phrase "obligations and responsibilities" contained in the
Romago-BICC subcontract was applicable only to the NPC-Romago contract. What is more, the CPA
is not found in the NPC-Romago contract,18 but in the NPC's "Plans and Specifications" 19 which was
expressly included as part of the "Contract Documents," to wit:
ARTICLE I
DOCUMENTS COMPRISING THE CONTRACT

The first two issues can be stated in one concise statement, that is, whether or not the private
respondents are entitled to the CPA accorded to the petitioner by NPC.

The following documents are hereby incorporated and made part of this Contract as though
fully written out and set forth herein insofar as they are not inconsistent with the terms
thereof:

Petitioner posits that by virtue of its contract with NPC, it is exclusively entitled to the CPA and "no
amount of strained interpretation could the CPA be deemed extended to private respondents." 12

1. National Power Corporations Specification No. Sp80DLc 502

The petitioner contends that under its contract with the private respondents, only the provisions of the
NPC-Romago Contract pertaining to Romagos "obligations and responsibilities" 13 thereunder were
made applicable to the private respondents. "While it is true that National Power Corporations
Specification No. Sp80DLC-502 were among those Contract Documents forming part of the
Subcontract. . ., it would be gross judicial error to read the grant of the CPA in the Subcontract. These

2. Any and all plans, drawings, and schedules prepared by National Power Corporation.
3. SUB-CONTRACTORS proposal dated March 8, 1982.

The documents mentioned above shall collectively be referred to as "Contract

Documents."20 [Emphasis supplied.]
As propitiously pointed out by the Court of Appeals, the NPC prepared a document entitled, "Plans and
Specifications," paragraph GP-O8 of which deals with contract price adjustment:
It must be stressed herein that among the documents which were incorporated into and
made part of the ROMAGO-BICC contract (Exh. "D") "as though fully written out and set
forth" therein are "[A]ny and all plans, drawings, and schedules prepared by the National
Power Corporation." Relative thereto, appellant makes no denial of the fact that in
connection with the project in question, there was prepared by the NPC a document entitled
"Plans and Specifications" (Exhs. "E" to "E-5"), paragraph GP-O8 of which deals on
contract price adjustment, thus:
"GP-O8 CONTRACT PRICE ADJUSTMENT
Adjustment of contract prices will be made should any or both of the following
conditions occur as embodied in PD No. 454 as amended by PD No. 459:
(a) If during the effectivity of the contract, the cost of labor,
materials, equipment rentals and supplies for construction should
increase or decrease due to the direct acts of the Philippine
Government. The increase of prices of gasoline and other fuel oils,
and of cement shall be considered as direct acts of the Philippine
Government.
(b) If during the effectivity of the contract, the costs of labor,
equipment rentals, construction materials and supplies used in the
project should cause the sum total of the prices of bid items to
increase or decrease by more than five percent (5%) compared with
the total contract price." (Exh. "E-5-A").21
And assuming for the sake of argument that the qualifying phrase "obligations and responsibilities"
applies to the other Contract Documents, upon closer inspection of the provisions granting the CPA, it
is quite evident that said provision consequently requires an obligation or responsibility on the part of
the petitioner that in the event of a decrease in the cost of labor, materials, equipment rentals and
supplies for construction, etc., the reduction of the contract price will be for the account of the
petitioner. The provision respecting the grant of CPA does not merely provide for the probability of
receipt of additional payment, but it also involves an obligation on the part of the petitioner and the
private respondents to return any excess payment received from the NPC in the event of any decrease
in the cost of labor, materials, equipment rentals and supplies for the construction of said transmission
lines.
The petitioners view that the CPA provision is inconsistent with the tenor of the subcontract is
indefensible. In contrast, the inverse is true. Contrary to the petitioners assertions, there is nothing in
the subcontract that supports the claimed inconsistency. Had the parties to the subcontract intended to
restrict the application of the CPA provision, they would have particularly stated so. Alas, they only
made a sweeping statement as to what documents were to be deemed read into the subcontract. To

borrow the words of the petitioner, the unequivocal silence of the subcontract with respect to the nonapplicability of the CPA necessitates the entitlement of the private respondents to said adjustment.
Finally, the petitioner relies heavily on the case of MC Engineering, Inc. v. Court of Appeals, et al.22 In
said case, we held that:
In a subcontract transaction, the benefit of a main contractor is not unjust even if it does less
work, and earns more profit, than the subcontractor. The subcontractor should be satisfied
with its own profit, even though less than the main contractors, because that is what it
bargained for and contracted with the main contractor. Article 22 of the Civil Code is not
intended to insure that every party to a commercial transaction receives a profit
corresponding to its effort and contribution. If a subcontractor knowingly agrees to receive
a profit less than its proportionate contribution, that is its own lookout. The fact that a
subcontractor accepts less does not make it dumb for that may be the only way to beat its
competitors. The winning subcontractor cannot be allowed to later on demand a higher
price after bagging the contract and beating competitors who asked for higher prices. Even
if the subcontractor incurs a loss because of its low price, it cannot invoke Article 22 of the
Civil Code to save it from financial loss. Article 22 is not a safety net against bad or overly
bold business decisions.23
Its reliance is misplaced. Upon a thorough review of the facts of the above-quoted case, it is quite
evident that its particulars are not on all fours with the circumstances of the case at bar.
In the case of MC Engineering, Inc., MC Engineering, Inc. and Surigao Coconut Development
Corporation entered into a contract for the restoration of the latters building, land improvement,
electrical and mechanical works which were damaged by a strong typhoon. The next day, MC
Engineering, Inc. entered into a subcontract agreement with Gerent Builders. The subcontracted work
covered only the restoration of the building and improvement portion of the original contract. Two
months later, Surigao and MC Engineering, Inc., entered into another agreement amending Section 7 of
the original contract by increasing the price of the civil works, i.e., building and land improvement, to
P854,851.51. When the subcontracted work was completed, subcontractor Gerent received the
payment of the works done under the subcontract. Subsequently, however, Gerent claimed an
additional P632,590.13 as its shares in the adjusted contract price pertaining to the civil works, alleging
that the subcontract is subject to the re-adjustment provided for in Section 7, as amended, plus
P166,252.00 for additional works outside the scope of the subcontract. MC Engineering, Inc. refused
to pay Gerent, thus, the latter filed a complaint in court.
This Court ruled in favor of MC Engineering, Inc., as it found that the main contract between MC
Engineering, Inc. and Surigao clearly provides that "as a condition precedent for any upward or
downward adjustment in the contract price, there must first be a true valuation of the materials and
labor costs to be determined through evaluation and inspection by representatives of petitioner and
Sucodeco. A similar provision is found in the subcontract requiring, before any change in the
subcontract price, for a true valuation to be determined by Sucodeco, petitioner and respondent Gerent.
The records establish that respondent Gerent was responsible for making the estimates of the actual
cost of the civil works which served as basis for the original price of the main contract." 24 The evidence
adduced, however, revealed that the parties did not undertake any true valuation of the cost of civil
works. We held:
. . . The price increase could not have been based on a true valuation because no true
valuation was ever made as required by the main contract and subcontract. There is no

substantial evidence to support respondent Gerents assertion that the price increase was
based on a second estimate that Gerent allegedly supplied petitioner.25
In the case at bar, though, the provisions pertaining to the CPA are quite clear the adjustment in the
contract price, i.e., increase or decrease, is dependent on the application of appropriate official indices,
as compiled and issued by the Central Bank of the Philippines, and not on the acts of any of the parties
to the contract or subcontract. In fact, there is no issue as to the occurrence of any of the scenarios
envisioned under the provisions of GP-08 that necessitated the increase as stated in the contract as well
as in the subcontract.
Anent the third and fourth assigned errors, the petitioner asserts that whatever claims the private
respondents may have against it, including the CPA, has been extinguished when Mariano Cac
received from the petitioner a check for P38,712.70 representing "full payment of accounts including
retention for various works at NPC-Isabela." This is so due to the fact that said authorized
representative or agent had the authority to bind the private respondents. By signing and receiving, he
released the petitioner from whatever claims private respondents had against the former in connection
with the subcontract, including the CPA.

(4) NPC Material Acct.

Local -

P14,631.75

Foreign -

64,373.79

Surcharge fee -

16,093.44

Penalty for 33 days

95,098.98
64,337.46

(P1,317,

P 38
======

Total Balance Due BICC including Retention --

Petitioner Romagos position is untenable.

(Paid per CDV #23162 ) 10-3-83.26
The very same petition that the petitioner filed with the Court clearly negates its position. Said
pleading expressly states that "the CPA is not included in the computation." This is precisely because
the petitioner believes that the private respondents are not entitled to the CPA, hence, "there is no basis
for including it."
Said CPA not being part of the subcontract price of P1,614,387.99, the release mentioned in the cash
voucher cannot, therefore, be construed as a release of the CPA. In fact, nowhere in the computation
prepared by petitioners finance manager, Narita Chalak, provides for the payment of the CPA, to wit:

As to the final issue regarding the amount of CPA the private respondents are entitled to, we disagree
with the petitioner that the private respondents are only entitled to the amount of P134,755.10
representing 70% of the CPA claimed by petitioner Romago from NPC less tax due thereon and
P38,712.70, the amount received by BICC contained in Cash Disbursement Voucher No. 23162. The
petitioners computation is incorrect. As established above, the amount received by the private
respondents under said voucher does not in any way represent a single centavo of the CPA. As
evidenced again by the computation prepared by the petitioners own finance manager, Ms. Narita
Chalak, the P38,712.71 was arrived at as follows:

RE: BICC CONSTRUCTION

RE: BICC CONSTRUCTION
Total Actual Billing of BICC to
Romago - - - - - - - - - - - - - - - - - -

Total Actual Billing of BICC to

Romago - - - - - - - - - - - - - - - - - -

P1,355

Less:
Less:
(1) Withholding tax .0045% -

P 6,100.70
(1) Withholding tax .0045% -

(2) Total payments made -

1,143,387.76
(2) Total payments made -

(3) Material Accountability -

P 6,100.70
1,143,387.76

8,076.61
(3) Material Accountability -

8,076.61

On October 21, 1988, petitioner, Vicente S. Almario (Almario), was hired by respondent, Philippine
Airlines, Inc. (PAL), as a Boeing 747 Systems Engineer.

(4) NPC Material Acct.

Local -

On April 28, 1995, Almario, then about 39 years of age1 and a Boeing 737 (B-737) First Officer at
PAL, successfully bid for the higher position of Airbus 300 (A-300) First Officer.2 Since said higher
position required additional training, he underwent, at PALs expense, more than five months of
training consisting of ground schooling in Manila and flight simulation in Melbourne, Australia.3

P14,631.75

Foreign -

64,373.79

Surcharge fee -

16,093.44

Penalty for 33 days

95,098.98
64,337.46

Total Balance Due BICC including Retention -(Paid per CDV #23162 ) 10-3-83.27
As seen from the above-quoted computation, therefore, the sum of P38,712.71, representing the total
balance due to BICC under its original contract with ROMAGO excluding the CPA, should not be
deducted from P175,545.05, BICCs share of the CPA received by ROMAGO from NPC.
In fine, private respondents are entitled to the CPA as embodied in the subcontract. Basic is the rule
that parties are bound by the terms of their contract which is the law between them. 28

After completing the training course, Almario served as A-300 First Officer of PAL, but after eight
months of service as such or on September 16, 1996, he tendered his resignation, for "personal
reasons," effective October 15, 1996.4
On September 27, 1996, PALs Vice President for Flight Operations sent Almario a letter, the pertinent
portions of which read:
xxxx
2. Our records show that you have been trained by the Company as A300 First Officer starting on 04
September 1995 and have completed said training on 08 February 1996. As you are aware the
Company invested heavily on your professional training in the estimated amount of PHP786,713.00 on
the basis that you continue to serve the Company for a definite period of time which is approximately
three (3) years or thirty-six (36) months.
3. In view of the foregoing, we urge you to reconsider your proposed resignation otherwise you will be
required to reimburse the Company an amount equivalent to the cost of your professional training and
the damaged [sic] caused to the Company.5 (Emphasis and underscoring supplied)
Despite receipt of the letter, Almario pushed through with his resignation.

WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The
questioned Decision dated 31 July 1997, of the Court of Appeals and its Resolution dated 16
September 1997, in CA-G.R. CV No. 28608 are hereby AFFIRMED.
With costs against the petitioner.

By letter of October 9, 1996, Almarios counsel sought PALs explanation behind its September 27,
1996 letter considering that Almario "did not sign anything regarding any reimbursement." 6 PAL did
not reply, prompting Almarios counsel to send two letters dated January 6, 1997 and February 10,
1997 following-up PALs reply, as well as the release of Almarios clearances which he needed to avail
of his benefits.7

SO ORDERED.
G.R. No. 170928

September 11, 2007

VICENTE S. ALMARIO, Petitioner,

vs.
PHILIPPINE AIRLINES, INC., Respondent.
DECISION
CARPIO MORALES, J.:

On February 11, 1997, PAL filed a Complaint8 against Almario before the Makati Regional Trial Court
(RTC), for reimbursement of P851,107 worth of training costs, attorneys fees equivalent to 20% of the
said amount, and costs of litigation. PAL invoked the existence of an innominate contract of do ut
facias (I give that you may do) with Almario in that by spending for his training, he would render
service to it until the costs of training were recovered in at least three (3) years. 9 Almario having
resigned before the 3-year period, PAL prayed that he should be ordered to reimburse the costs for his
training.
In his Answer with Special and Affirmative Defenses and Compulsory Counterclaims, 10 Almario
denied the existence of any agreement with PAL that he would have to render service to it for three
years after his training failing which he would reimburse the training costs. He pointed out that the
1991-1994 Collective Bargaining Agreement (CBA) between PAL and the Airline Pilots Association
of the Philippines (ALPAP), of which he was a member,11 carried no such agreement.

Almario thus prayed for the award of actual damages on account of PALs withholding of the necessary
clearances which he needed in order to obtain his lawful benefits, and moral and exemplary damages
for malicious prosecution and unjust harassment. 12

2- Ordering the plaintiff to pay the defendant:

a- the amount of P312,425.00 as actual damages with legal interest from the
filing of the counterclaim;

PAL, in its Reply to Defendants Answer and Answer to Counterclaim, 13 argued as follows:
b- the amount of P500,000.00 as exemplary damages;
The right of PAL to be reimbursed for training expenses is based on Article XXIII, Section 1 of the
1991-1994 Collective Bargaining Agreement (CBA, for brevity) and which was taken from the
decision of the Secretary of Labor.
[The Secretary of Labor] ruled that a pilot should remain in the position where he is upon reaching the
age of fifty-seven (57), irrespective of whether or not he has previously qualified in the Companys
turbo-jet operations. The rationale behind this is that a pilot who will be compulsorily retired at age
sixty (60) should no longer be burdened with training for a new position.
Thus, Article XXIII, Section 1 of the CBA provide[s]:
"Pilots fifty-seven (57) years of age shall be frozen in their position. Pilots who are less than fiftyseven (57) years of age provided they have previously qualified in any companys turbo-jet aircraft
shall be permitted to occupy any position in the companys turbo-jet fleet.
The reason why pilots who are 57 years of age are no longer qualified to bid for a higher position is
because they have only three (3) years left before the mandatory retirement age [of 60] and to send
them to training at that age, PAL would no longer be able to recover whatever training expenses it will
have to incur.
Simply put, the foregoing provision clearly and unequivocally recognizes the prohibitive training cost
principle such that it will take a period of at least three (3) years before PAL could recover from the
training expenses it incurred.14 (Emphasis and underscoring supplied)
By Decision15 of October 25, 2000, Branch 147 of the Makati RTC, finding no provision in the CBA
between PAL and ALPAP stipulating that a pilot who underwent a training course for the position of A300 First Officer must serve PAL for at least three years failing which he should reimburse the training
expenses, rendered judgment in favor of Almario.
The trial court denied Almarios claim for moral damages, however.16 It denied too Almarios claim for
the monetary equivalent of his family trip pass benefits (worth US$49,824), it holding that the same
had been forfeited as he did not avail of them within one year from the date of his separation.
Thus the trial court disposed:
WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of defendant
Vicente Almario and against the plaintiff:
1- Dismissing the plaintiffs complaint;

c- the amount of P150,000.00 as attorneys fees;

d- the costs of the suit.
SO ORDERED.17
On appeal by both parties,18 the Court of Appeals, by Decision 19 dated March 31, 2005, reversed the
trial courts decision. It found Almario liable under the CBA between PAL and ALPAP and, in any
event, under Article 22 of the Civil Code. Thus it disposed:
WHEREFORE, the appealed Decision is REVERSED and SET ASIDE. In lieu thereof, a new
judgment is herebyENTERED, as follows: (a) Appellee Vicente Almario is hereby ordered to pay
appellant Philippine Airlines, Inc. the sum of Five Hundred Fifty Nine Thousand, Seven Hundred
[T]hirty Nine & 9/100 Pesos (P559, 739.90) with six percent (6%) interest as above-computed; and (b)
the award of exemplary damages and attorneys fees in favor of appellee is
hereby DELETED.20 (Emphasis in the original; underscoring supplied)
His Motion for Reconsideration 21 having been denied,22 Almario filed the instant Petition for Certiorari
[sic] (Under Rule 45),23 raising the following issues:
A. Whether the Court of Appeals committed reversible error in interpreting the Collective
Bargaining Agreement between Philippine Airlines, Inc. (PAL) and the Airline Pilots
Association of the Philippines (ALPAP) as an ordinary civil law contract applying ordinary
contract law principles which is contrary to the ruling of the Supreme Court in Samahang
Manggagawa sa Top Form Manufacturing-United Workers of the Philippines (SMTFMUWP) v. NLRC and, therefore, erroneously reading into the CBA a clause that was not
agreed to during the negotiation and not expressly stated in the CBA;
B. Whether the Court of Appeals committed reversible error in holding that Article 22 of
the Civil Code can be applied to recover training costs which were never agreed to nor
included as reimbursable expenses under the CBA;
C. Whether the availing by petitioner of a required training is a legal ground justifying the
entitlement to a benefit and therefore, negating claims of unjust enrichment;
D. Whether the failure of private respondent to honor and provide the Family Trip Pass
Benefit in the equivalent amount of US$ 49,824.00 which petitioner and his family were
not able to avail of within the one (1) year from date of separation due to the actions of PAL
amounts to unjust enrichment;

E. Whether or not respondent is liable for malicious prosecution[.]24 (Underscoring

supplied)

xxxx
Section 1, Article XXIII of the 1985-1987 CBA provides:

Almario insists on the absence of any written contract or explicit provision in the CBA obliging him to
reimburse the costs incurred by PAL for his training. And he argues:
[T]here can be no unjust enrichment because petitioner was entitled to the benefit of training when his
bid was accepted, and x x x PAL did not suffer any injury because the failure to include a
reimbursement provision in the CBA was freely entered into by the negotiating parties;
xxxx
It is not disputed that the petitioner merely entered a bid for a higher position, and that when he was
accepted based on seniority and qualification, the position was awarded to him. It is also not disputed
that petitioner [had] not asked, requested, or demanded for the training. It came when his bid was
accepted by PAL;
Because the training was provided when the bid was accepted, the acceptance of the bid was the basis
and legal ground for the training;
Therefore, since there is a legal ground for the entitlement of the training, contrary to the ruling of the
Court of Appeals, there can be no unjust enrichment;25 (Underscoring supplied)
The petition fails.
As reflected in the above-enumerated issues raised by Almario, he cites the case of Samahang
Manggagawa sa Top Form Manufacturing-United Workers of the Philippines (SMTFM-UWP) v.
NLRC26 (Manggagawa) in support of his claim that the appellate court erred in interpreting the CBA as
an ordinary civil law contract and in reading into it "a clause that was not agreed to during the
negotiation and not expressly stated in the CBA."
On the contrary, the ruling in Manggagawa supports PALs position. Thus this Court held:
The CBA is the law between the contracting parties the collective bargaining representative and the
employer-company. Compliance with a CBA is mandated by the expressed policy to give protection to
labor. In the same vein, CBA provisions should be "construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and purpose which it is intended to serve." This is
founded on the dictum that a CBA is not an ordinary contract but one impressed with public interest. It
goes without saying, however, that only provisions embodied in the CBA should be so interpreted and
complied with. Where a proposal raised by a contracting party does not find print in the CBA, it is not
a part thereof and the proponent has no claim whatsoever to its implementation. 27 (Emphasis and
underscoring supplied)
In N.S. Case No. 11-506-87, "In re Labor Dispute at the Philippine Airlines, Inc.," the Secretary of the
Department of Labor and Employment (DOLE), passing on the failure of PAL and ALPAP to agree on
the terms and conditions for the renewal of their CBA which expired on December 31, 1987 and
construing Section 1 of Article XXIII of the 1985-1987 CBA, held:

Pilots fifty-five (55) years of age or over who have not previously qualified in any Company turbo-jet
aircraft shall not be permitted to bid into the Companys turbo-jet operations. Pilots fifty-five (55)
years of age or over who have previously qualified in the companys turbo-jet operations may be bypassed at Company option, however, any such pilot shall be paid the by-pass pay effective upon the
date a junior pilot starts to occupy the bidded position.
x x x PAL x x x proposed to amend the provision in this wise:
The compulsory retirement age for all pilots is sixty (60) years. Pilots who reach the age of fifty-five
(55) years and over without having previously qualified in any Company turbo-jet aircraft shall not be
permitted to occupy any position in the Companys turbo-jet fleet. Pilots fifty-four (54) years of age
and over are ineligible for promotion to any position in Group I. Pilots reaching the age of fifty-five
(55) shall be frozen in the position they currently occupy at that time and shall be ineligible for any
further movement to any other positions.
PALs contention is basically premised on prohibitive training costs. The return on this investment in
the form of the pilot promoted is allegedly five (5) years. Considering the pilots age, the chances of
full recovery [are] asserted to be quite slim.
ALPAP opposed the proposal and argued that the training cost is offset by the pilots maturity,
expertise and experience.
By way of compromise, we rule that a pilot should remain in the position where he is upon reaching
age fifty-seven (57), irrespective of whether or not he has previously qualified in the Companys turbojet operations. The rationale behind this is that a pilot who will be compulsorily retired at age sixty (60)
should no longer be burdened with training for a new position. But if a pilot is only at age fifty-five
(55), and promotional positions are available, he should still be considered and promoted if qualified,
provided he has previously qualified in any company turbo-jet aircraft. In the latter case,
the prohibitive training costs are more than offset by the maturity, expertise, and experience of the
pilot.
Thus, the provision on age limit should now read:
Pilots fifty-seven (57) years of age shall be frozen in their positions. Pilots fifty-five (55) [sic] years of
age provided they have previously qualified in any company turbo-jet aircraft shall be permitted to
occupy any position in the companys turbo-jet fleet.28 (Emphasis and underscoring supplied)
The above-quoted provision of Section 1 of Article XXIII of the 1985-1987 CBA, as construed by the
DOLE Secretary, was substantially incorporated in the 1991-1994 CBA between PAL and ALPAP 29 as
follows:
Pilots fifty-seven (57) years of age shall be frozen in their position. Pilots who are less than fifty-seven
(57) years of age provided they have previously qualified in any companys turbo-jet aircraft shall be
permitted to occupy any position in the companys turbo-jet fleet. 30

The same section of Article XXIII of the 1991-1994 CBA was reproduced in the 1994-2000 CBA. 31

Witness:

Arturo Gabanton, PALs Senior Vice President for Flight Operations, testifying on PALs "policy or
practice" on underwriting the training costs of its pilots at the time Almario was trained, with the
"expectation" of benefiting therefrom "in order to recover the cost of training," explained:

A: It is on page 99 of the Collective Bargaining Agreement, Article 23, Miscellaneous.

Atty. Parinas: I would like to manifest that this provision pointed out by the witness is already marked
as Exhibit B-1by the plaintiff.

Atty. Parinas:
xxxx
Q: At the time the defendant was accepted for training as A300 First Officer, would you know what
was the governing policy or practice of Philippine Airlines that was being employed regarding the
training cost[s] for the pilots?

[Atty. Parinas]

A: The company has to spend for the training of the pilots and after that the company expecting that
services will be rendered in order to recover the cost[s] of training.

Q: Mr. witness, Exhibit B-1 states in part that "Pilots, 57 years of age shall be frozen in their position.
Pilots who are less than 57 years of age provided they have been previously qualified in any
companys Turbo-Jet Aircraft shall be permitted to occupy any position in the companys Turbo-jet
Fleet", why do you say this is the basis for the three (3) year period within which a pilot must render
service to the company after completing the training?

Atty. Parinas:

[Witness]

Q: You stated that the pilot must serve the company after completing the training, for how long after
completing the training?

A: The reason why 57 years old is placed here in the Collective Bargaining Agreement [is that] it is
expected that you serve the position for three (3) years because the retirement age is at 60, therefore, if
you are past 57 years old, it will fall short of the three (3) years recovery period for the company. So it
was established that [anyone] past 57 years old will not be allowed to train for another
position.33 (Emphasis and underscoring supplied)

Witness:

Witness:
A: At least for three (3) years.

It bears noting that when Almario took the training course, he was about 39 years old, 21 years away
from the retirement age of 60. Hence, with the maturity, expertise, and experience he gained from the
training course, he was expected to serve PAL for at least three years to offset "the prohibitive costs"
thereof.

Atty. Parinas:
Q: What is your basis in saying that a pilot must serve the company after completing the training?
Witness:
A: That is embodied in the Collective Bargaining Agreement between Philippine Airlines and the
Airline Pilot Association of the Philippines.32
xxxx
Atty. Parinas:
Q: Can you point to the provision in this agreement relating to the three (3) year period you stated a
while ago?
NOTE: Witness going over the document shown to him by counsel.

The pertinent provision of the CBA and its rationale aside, contrary to Almarios claim, Article 22 of
the Civil Code which reads:
Art. 22. Every person who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall
return the same to him,
applies.
This provision on unjust enrichment recognizes the principle that one may not enrich himself at the
expense of another. An authority on Civil Law34 writes on the subject, viz:
Enrichment of the defendant consists in every patrimonial, physical, or moral advantage, so long as it
is appreciable in money. It may consist of some positive pecuniary value incorporated into the
patrimony of the defendant, such as: (1) the enjoyment of a thing belonging to the plaintiff; (2) the
benefits from service rendered by the plaintiff to the defendant; (3) the acquisition of a right, whether

real or personal; (4) the increase of value of property of the defendant; (5) the improvement of a right
of the defendant, such as the acquisition of a right of preference; (6) the recognition of the existence of
a right in the defendant; and (7) the improvement of the conditions of life of the defendant.
xxxx

Admittedly, PAL invested for the training of Almario to enable him to acquire a higher level of skill,
proficiency, or technical competence so that he could efficiently discharge the position of A-300 First
Officer. Given that, PAL expected to recover the training costs by availing of Almarios services for at
least three years. The expectation of PAL was not fully realized, however, due to Almarios resignation
after only eight months of service following the completion of his training course. He cannot,
therefore, refuse to reimburse the costs of training without violating the principle of unjust
enrichment.1wphi1
Following the computation by the appellate court which was arrived at by offsetting the respective
claims of the parties, viz:

Less:

Less:

P851,107.00

Appellee's corresponding 8 months

Service after training [P850,107.00
divided by 36 months (3 years)
= P23,640.86 x 8 months]

189,126.88

Equals

P661,980.12

Accrued Benefits

102,240.22

Net Reimbursable Amount or

Appellee's Outstanding Account

Costs against petitioner.

SO ORDERED.

The enrichment of the defendant must have a correlative prejudice, disadvantage, or injury to the
plaintiff.1wphi1 This prejudice may consist, not only of the loss of property or the deprivation of its
enjoyment, but also of non-payment of compensation for a prestation or service rendered to the
defendant without intent to donate on the part of the plaintiff, or the failure to acquire something which
the latter would have obtained. The injury to the plaintiff, however, need not be the cause of the
enrichment of the defendant. It is enough that there be some relation between them, that the enrichment
of the defendant would not have been produced had it not been for the fact from which the injury to the
plaintiff is derived. (Underscoring supplied)35

Training Cost

WHEREFORE, the petition is DENIED and the decision appealed from is AFFIRMED.

P559,739.9036
*****************

Almario must pay PAL the sum of P559,739.90, to bear the legal interest rate of 6% per annum from
the filing of PALs complaint on February 11, 1997 until the finality of this decision.
In light of the foregoing discussions on the main issue, the Court finds it unnecessary to dwell on the
other issues raised by Almario. Suffice it to state that the appellate courts disposition thereof is, as its
decision reflects, well-taken.

G.R. No. 183984

April 13, 2011

ARTURO SARTE FLORES, Petitioner,

vs.
SPOUSES ENRICO L. LINDO, JR. and EDNA C. LINDO, Respondents.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review1 assailing the 30 May 2008 Decision 2 and the 4 August 2008
Resolution3of the Court of Appeals in CA-G.R. SP No. 94003.
The Antecedent Facts
The facts, as gleaned from the Court of Appeals Decision, are as follows:
On 31 October 1995, Edna Lindo (Edna) obtained a loan from Arturo Flores (petitioner) amounting
to P400,000 payable on 1 December 1995 with 3% compounded monthly interest and 3% surcharge in
case of late payment. To secure the loan, Edna executed a Deed of Real Estate Mortgage 4 (the Deed)
covering a property in the name of Edna and her husband Enrico (Enrico) Lindo, Jr. (collectively,
respondents). Edna also signed a Promissory Note 5 and the Deed for herself and for Enrico as his
attorney-in-fact.
Edna issued three checks as partial payments for the loan. All checks were dishonored for insufficiency
of funds, prompting petitioner to file a Complaint for Foreclosure of Mortgage with Damages against
respondents. The case was raffled to the Regional Trial Court of Manila, Branch 33 (RTC, Branch 33)
and docketed as Civil Case No. 00-97942.
In its 30 September 2003 Decision, 6 the RTC, Branch 33 ruled that petitioner was not entitled to
judicial foreclosure of the mortgage. The RTC, Branch 33 found that the Deed was executed by Edna
without the consent and authority of Enrico. The RTC, Branch 33 noted that the Deed was executed on
31 October 1995 while the Special Power of Attorney (SPA) executed by Enrico was only dated 4
November 1995.
The RTC, Branch 33 further ruled that petitioner was not precluded from recovering the loan from
Edna as he could file a personal action against her. However, the RTC, Branch 33 ruled that it had no

jurisdiction over the personal action which should be filed in the place where the plaintiff or the
defendant resides in accordance with Section 2, Rule 4 of the Revised Rules on Civil Procedure.
Petitioner filed a motion for reconsideration. In its Order7 dated 8 January 2004, the RTC, Branch 33
denied the motion for lack of merit.
On 8 September 2004, petitioner filed a Complaint for Sum of Money with Damages against
respondents. It was raffled to Branch 42 (RTC, Branch 42) of the Regional Trial Court of Manila, and
docketed as Civil Case No. 04-110858.

proceeding and a collection case. By filing a petition for foreclosure of the real estate mortgage, the
Court of Appeals held that petitioner had already waived his personal action to recover the amount
covered by the promissory note.
Petitioner filed a motion for reconsideration. In its 4 August 2008 Resolution, the Court of Appeals
denied the motion.
Hence, the petition before this Court.
The Issue

Respondents filed their Answer with Affirmative Defenses and Counterclaims where they admitted the
loan but stated that it only amounted to P340,000. Respondents further alleged that Enrico was not a
party to the loan because it was contracted by Edna without Enricos signature. Respondents prayed for
the dismissal of the case on the grounds of improper venue, res judicata and forum-shopping, invoking
the Decision of the RTC, Branch 33. On 7 March 2005, respondents also filed a Motion to Dismiss on
the grounds of res judicata and lack of cause of action.
The Decision of the Trial Court
On 22 July 2005, the RTC, Branch 42 issued an Order8 denying the motion to dismiss. The RTC,
Branch 42 ruled that res judicata will not apply to rights, claims or demands which, although growing
out of the same subject matter, constitute separate or distinct causes of action and were not put in issue
in the former action. Respondents filed a motion for reconsideration. In its Order 9 dated 8 February
2006, the RTC, Branch 42 denied respondents motion. The RTC, Branch 42 ruled that the RTC,
Branch 33 expressly stated that its decision did not mean that petitioner could no longer recover the
loan petitioner extended to Edna.
Respondents filed a Petition for Certiorari and Mandamus with Prayer for a Writ of Preliminary
Injunction and/or Temporary Restraining Order before the Court of Appeals.
The Decision of the Court of Appeals
In its 30 May 2008 Decision, the Court of Appeals set aside the 22 July 2005 and 8 February 2006
Orders of the RTC, Branch 42 for having been issued with grave abuse of discretion.
The Court of Appeals ruled that while the general rule is that a motion to dismiss is interlocutory and
not appealable, the rule admits of exceptions. The Court of Appeals ruled that the RTC, Branch 42
acted with grave abuse of discretion in denying respondents motion to dismiss.
The Court of Appeals ruled that under Section 3, Rule 2 of the 1997 Rules of Civil Procedure, a party
may not institute more than one suit for a single cause of action. If two or more suits are instituted on
the basis of the same cause of action, the filing of one on a judgment upon the merits in any one is
available ground for the dismissal of the others. The Court of Appeals ruled that on a nonpayment of a
note secured by a mortgage, the creditor has a single cause of action against the debtor, that is recovery
of the credit with execution of the suit. Thus, the creditor may institute two alternative remedies: either
a personal action for the collection of debt or a real action to foreclose the mortgage, but not both. The
Court of Appeals ruled that petitioner had only one cause of action against Edna for her failure to pay
her obligation and he could not split the single cause of action by filing separately a foreclosure

The sole issue in this case is whether the Court of Appeals committed a reversible error in dismissing
the complaint for collection of sum of money on the ground of multiplicity of suits.
The Ruling of this Court
The petition has merit.
The rule is that a mortgage-creditor has a single cause of action against a mortgagor-debtor, that is, to
recover the debt.10 The mortgage-creditor has the option of either filing a personal action for collection
of sum of money or instituting a real action to foreclose on the mortgage security.11 An election of the
first bars recourse to the second, otherwise there would be multiplicity of suits in which the debtor
would be tossed from one venue to another depending on the location of the mortgaged properties and
the residence of the parties.12
The two remedies are alternative and each remedy is complete by itself.13 If the mortgagee opts to
foreclose the real estate mortgage, he waives the action for the collection of the debt, and vice
versa.14 The Court explained:
x x x in the absence of express statutory provisions, a mortgage creditor may institute against the
mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In other
words, he may pursue either of the two remedies, but not both. By such election, his cause of action
can by no means be impaired, for each of the two remedies is complete in itself. Thus, an election to
bring a personal action will leave open to him all the properties of the debtor for attachment and
execution, even including the mortgaged property itself. And, if he waives such personal action and
pursues his remedy against the mortgaged property, an unsatisfied judgment thereon would still give
him the right to sue for deficiency judgment, in which case, all the properties of the defendant, other
than the mortgaged property, are again open to him for the satisfaction of the deficiency. In either case,
his remedy is complete, his cause of action undiminished, and any advantages attendant to the pursuit
of one or the other remedy are purely accidental and are all under his right of election. On the other
hand, a rule that would authorize the plaintiff to bring a personal action against the debtor and
simultaneously or successively another action against the mortgaged property, would result not only in
multiplicity of suits so offensive to justice (Soriano v. Enriques, 24 Phil. 584) and obnoxious to law
and equity (Osorio v. San Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of
being sued in the place of his residence or of the residence of the plaintiff, and then again in the place
where the property lies.15

The Court has ruled that if a creditor is allowed to file his separate complaints simultaneously or
successively, one to recover his credit and another to foreclose his mortgage, he will, in effect, be
authorized plural redress for a single breach of contract at so much costs to the court and with so much
vexation and oppressiveness to the debtor.16

accordance with the stipulation pertaining to it. Under the foregoing circumstances, what is lost is
merely the right to foreclose the mortgage as a special remedy for satisfying or settling the
indebtedness which is the principal obligation. In case of nullity, the mortgage deed remains as
evidence or proof of a personal obligation of the debtor and the amount due to the creditor may be
enforced in an ordinary action.

In this case, however, there are circumstances that the Court takes into consideration.
Petitioner filed an action for foreclosure of mortgage. The RTC, Branch 33 ruled that petitioner was
not entitled to judicial foreclosure because the Deed of Real Estate Mortgage was executed without
Enricos consent. The RTC, Branch 33 stated:
All these circumstances certainly conspired against the plaintiff who has the burden of proving his
cause of action. On the other hand, said circumstances tend to support the claim of defendant Edna
Lindo that her husband did not consent to the mortgage of their conjugal property and that the loan
application was her personal decision.
Accordingly, since the Deed of Real Estate Mortgage was executed by defendant Edna Lindo lacks the
consent or authority of her husband Enrico Lindo, the Deed of Real Estate Mortgage is void pursuant
to Article 96 of the Family Code.
This does not mean, however, that the plaintiff cannot recover the P400,000 loan plus interest which he
extended to defendant Edna Lindo. He can institute a personal action against the defendant for the
amount due which should be filed in the place where the plaintiff resides, or where the defendant or
any of the principal defendants resides at the election of the plaintiff in accordance with Section 2,
Rule 4 of the Revised Rules on Civil Procedure. This Court has no jurisdiction to try such personal
action.17

In view of the foregoing, judgment is hereby rendered declaring the deed of real estate mortgage as
void in the absence of the authority or consent of petitioners spouse therein. The liability of petitioner
on the principal contract of loan however subsists notwithstanding the illegality of the real estate
mortgage. 19
The RTC, Branch 93 also ruled that Ednas liability is not affected by the illegality of the real estate
mortgage.
Both the RTC, Branch 33 and the RTC, Branch 93 misapplied the rules.
Article 124 of the Family Code provides:
Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both
spouses jointly. In case of disagreement, the husbands decision shall prevail, subject to recourse to the
court by the wife for proper remedy, which must be availed of within five years from the date of
contract implementing such decision.

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

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

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

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

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

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

The real estate mortgage executed by petition Edna Lindo over their conjugal property is undoubtedly
an act of strict dominion and must be consented to by her husband to be effective. In the instant case,
the real estate mortgage, absent the authority or consent of the husband, is necessarily void. Indeed, the
real estate mortgage is this case was executed on October 31, 1995 and the subsequent special power
of attorney dated November 4, 1995 cannot be made to retroact to October 31, 1995 to validate the
mortgage previously made by petitioner.
The liability of Edna Lindo on the principal contract of the loan however subsists notwithstanding the
illegality of the mortgage. Indeed, where a mortgage is not valid, the principal obligation which it
guarantees is not thereby rendered null and void. That obligation matures and becomes demandable in

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

However, as the Court of Appeals noted, petitioner allowed the decisions of the RTC, Branch 33 and
the RTC, Branch 93 to become final and executory without asking the courts for an alternative relief.
The Court of Appeals stated that petitioner merely relied on the declarations of these courts that he
could file a separate personal action and thus failed to observe the rules and settled jurisprudence on
multiplicity of suits, closing petitioners avenue for recovery of the loan.
Nevertheless, petitioner still has a remedy under the law.
In Chieng v. Santos,20 this Court ruled that a mortgage-creditor may institute against the mortgagedebtor either a personal action for debt or a real action to foreclose the mortgage. The Court ruled that
the remedies are alternative and not cumulative and held that the filing of a criminal action for
violation of Batas Pambansa Blg. 22 was in effect a collection suit or a suit for the recovery of the
mortgage-debt.21 In that case, however, this Courtpro hac vice, ruled that respondents could still be
held liable for the balance of the loan, applying the principle that no person may unjustly enrich
himself at the expense of another.22
The principle of unjust enrichment is provided under Article 22 of the Civil Code which provides:
Art. 22. Every person who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall
return the same to him.

SO ORDERED.
G.R. No. 150925

May 27, 2004

SPOUSES JAMES TAN and FLORENCE TAN, petitioners,

vs.
CARMINA, REYNALDO, YOLANDA and ELISA, all surnamed MANDAP, respondents.
DECISION
QUISUMBING, J.:
For review on certiorari is the decision1 dated August 10, 2001, of the Court of Appeals, in CA-G.R.
CV No. 59694, which affirmed in toto the decision,2 dated March 25, 1998, of the Regional Trial Court
(RTC) of Manila, Branch 34, in Civil Case No. 89-50263. The trial court declared the sale of properties
between Dionisio Mandap, Sr., and the spouses Crispulo and Elenita Vasquez simulated and thus void,
and hence, the subsequent sale between the Vasquez spouses and petitioners herein, the spouses James
and Florence Tan, similarly void. Likewise assailed by the petitioners is the resolution 3 dated
November 23, 2001 of the appellate court, denying their motion for reconsideration.
The pertinent facts, as found by the trial court, are as follows:

There is unjust enrichment "when a person unjustly retains a benefit to the loss of another, or when a
person retains money or property of another against the fundamental principles of justice, equity and
good conscience."23The principle of unjust enrichment requires two conditions: (1) that a person is
benefited without a valid basis or justification, and (2) that such benefit is derived at the expense of
another.241avvphi1
The main objective of the principle against unjust enrichment is to prevent one from enriching himself
at the expense of another without just cause or consideration. 25 The principle is applicable in this case
considering that Edna admitted obtaining a loan from petitioners, and the same has not been fully paid
without just cause. The Deed was declared void erroneously at the instance of Edna, first when she
raised it as a defense before the RTC, Branch 33 and second, when she filed an action for declaratory
relief before the RTC, Branch 93. Petitioner could not be expected to ask the RTC, Branch 33 for an
alternative remedy, as what the Court of Appeals ruled that he should have done, because the RTC,
Branch 33 already stated that it had no jurisdiction over any personal action that petitioner might have
against Edna.
Considering the circumstances of this case, the principle against unjust enrichment, being a substantive
law, should prevail over the procedural rule on multiplicity of suits. The Court of Appeals, in the
assailed decision, found that Edna admitted the loan, except that she claimed it only amounted
to P340,000. Edna should not be allowed to unjustly enrich herself because of the erroneous decisions
of the two trial courts when she questioned the validity of the Deed. Moreover, Edna still has an
opportunity to submit her defenses before the RTC, Branch 42 on her claim as to the amount of her
indebtedness.
WHEREFORE, the 30 May 2008 Decision and the 4 August 2008 Resolution of the Court of Appeals
in CA-G.R. SP No. 94003 are SET ASIDE. The Regional Trial Court of Manila, Branch 42 is directed
to proceed with the trial of Civil Case No. 04-110858.

The respondents are the legitimate children of the marriage of Dionisio Mandap, Sr., and
Maria Contreras Mandap. When the Mandap spouses parted ways, their children opted to
stay with Maria. To help support the children, Maria filed Civil Case No. E-02380 in the
former Juvenile and Domestic Relations Court of Manila for the dissolution and separation
of the conjugal partnership.
Two separate lots, each with an area of 88 square meters covered by TCT Nos. 44730 and 55847,
respectively, located in Felix Huertas Street, Sta. Cruz, Manila, with improvements thereon, were
adjudicated by the Juvenile and Domestic Relations Court in favor of Dionisio Mandap, Sr.
Meanwhile, Dionisio Mandap, Sr., until his death on October 2, 1991 at age 64, lived with Diorita
Dojoles, with whom he had two children. He suffered from diabetes since 1931, became totally blind
in 1940, and was crippled for about 10 years until his death. However, before his death on May 25,
1989, he conveyed the subject properties to his common-law wifes sister, Elenita Dojoles Vasquez;
and her husband, Crispulo Vasquez. As a result of this sale, TCT Nos. 44730 and 55847 were cancelled
and TCT Nos. 186748 and 186749 covering the subject properties were issued in the name of Elenita
Vasquez married to Crispulo Vasquez.
On September 11, 1989, the Vasquez spouses conveyed the parcel of land covered by TCT No. 186748
in favor of petitioners. TCT No. 188862 covering the subject lot was then issued in favor of the latter.
On September 5, 1989, prior to the sale to petitioners, the respondents filed an action for cancellation
of title with damages, before the RTC of Manila against Diorita Dojoles and the Vasquez spouses,
alleging that the sale of subject properties by their father was fictitious, and without any consideration.
Further, the consent of their father was vitiated due to his physical infirmities. The action was docketed
as Civil Case No. 89-50263.

On February 15, 1991, respondents filed a supplemental complaint, this time against the spouses Tan,
for the nullification of the sale to the latter of subject lot.
On March 25, 1998, the trial court decided Civil Case No. 89-50263 in favor of the herein respondents.
The decretal part of its judgment reads as follows:

3. Ordering Spouses Crispulo and Elenita Vasquez to return the sum

of P1,000,000.00 representing the purchase price of the lot covered by TCT No.
188862 with legal rate of interest from the date of this decision;
4. Ordering defendants James and Florence Tan to jointly and severally pay the
sum of P15,000.00 as and for attorneys fees.

WHEREFORE, premises considered judgment is hereby rendered as follows:

IN CIVIL CASE NO. 89-50263
1. Declaring the Deeds of Sale (Exh. "A" and "A-1"; "B" and "B-1") both dated
May 25, 1989 executed in favor of Elenita Vasquez married to Crispulo Vasquez
as null and void and of no legal force and effect whatsoever;
2. Ordering the Register of Deeds of Manila to cancel TCT No. 186748 (Exh.
"K" to "K-2") and TCT No. 186749 (Exh. "L" and "L-1") registered in the name
of Elenita Vasquez married to Crispulo Vasquez having been issued thru a void
and inexistent contract; further ordering the reconveyance of said title to the
Estate of Dionisio Mandap, Sr.;
3. Ordering the plaintiffs or the Estate of Dionisio Mandap, Sr., to reimburse or
return the sum ofP570,000.00 representing the purchase price of the subject lot,
plus legal rate of interest starting from the rendition of this decision until fully
paid;
4. Ordering the defendants Spouses Crispulo and Elenita Vasquez and Diorita
Dojoles to jointly and severally reimburse or return the fruits or earnings in the
mentioned lots in the form of rentals which is hereby fixed at P10,000.00 per
month from the date this complaint was filed until defendants restore and/or
surrender the subject premises to the Estate of Dionisio Mandap, Sr.;
5. Ordering the defendants Spouses Crispulo and Elenita Vasquez and Diorita
Dojoles to pay attorneys fees in the amount of P50,000.00 and to pay the costs
of this suit.
IN THE SUPPLEMENTAL COMPLAINT AGAINST SPOUSES JAMES AND
FLORENCE TAN
1. Declaring the Deed of Sale dated September 11, 1989 (Exh. "Q" and "7", Tan)
executed by Elenita Vasquez married to Crispulo Vasquez as null and void and
of no force and effect whatsoever, the vendor having no valid title to dispose of
the same;
2. Ordering the Register of Deeds of Manila to cancel TCT No. 188862 issued in
the name of James Tan, the source of which having been declared null and void;

IN BOTH CASES THE COUNTERCLAIMS INTERPOSED BY THE DEFENDANTS

ARE DISMISSED FOR LACK OF MERIT.
SO ORDERED.4
From the above judgment, petitioners appealed to the Court of Appeals in CA-G.R. CV No. 59694 on
the ground that the trial court erred in not declaring them to be buyers in good faith and in not
sustaining the validity of their title, TCT No. 188862.
In its decision dated August 10, 2001, the Court of Appeals found the appeal bereft of merit and
affirmed in totothe lower court decision, thus:
WHEREFORE, the appeals interposed by appellants Dojoles, Sps. Vasquez and Sps. James
and Florence Tan is without merit; the Decision of the lower court dated March 25, 1998 is
AFFIRMED in toto.
Costs against appellants.
SO ORDERED.5
Petitioners seasonably moved for reconsideration, but it was denied by the appellate court.
Hence, this petition for review, submitting the following issues for our resolution:
I
WHETHER OR NOT PETITIONERS HAVE THE LEGAL PERSONALITY TO BRING
THE INSTANT PETITION.
II
WHETHER OR NOT THE SALE BETWEEN MANDAP SR. AND THE VASQUEZES IS
VALID.
III
WHETHER OR NOT THE SALE BETWEEN THE VASQUEZES AND PETITIONERS
IS VALID.

IV
WHETHER OR NOT THE AWARD OF ATTORNEYS [FEES] HAS LEGAL BASIS. 6
Anent the first issue, the petitioners submit that having been made parties-defendants by respondents
via the supplemental complaint in Civil Case No. 89-50263, they have the right to appeal to this Court
the adverse ruling of the appellate court against them, even if their co-defendants did not appeal the
said ruling of the Court of Appeals.
Respondents counter that petitioners have no legal personality to appeal the decision of the appellate
court voiding the sale between Dionisio Mandap, Sr., and the Vasquez spouses. They contend that
inasmuch as the latter did not appeal the questioned decision, it had become final and executory.
Respondents contend that petitioners, not being privy to said sale, cannot invoke its validity.
We find for petitioners on this issue. The trial court voided the petitioners sale of subject lot, and on
appeal that decision was affirmed by the Court of Appeals. Hence, as aggrieved parties, petitioners
may elevate to the Supreme Court the controversy within the prescriptive period for appeal.7 They
possess locus standi, or legal personality, to seek a review by this Court of the decision by the appellate
court which they assail. Note that while petitioners elevated the trial courts decision to the appellate
court, their co-defendants in Civil Case No. 89-50263 did not do so. Thus, the trial courts decision
became final and executory only as to petitioners co-defendants in the trial court who did not appeal,
namely Diorita Dojoles and the Vasquez spouses.
With regard to the second issue, the petitioners insist the essential requisites of a contract of sale have
been satisfied, namely, (1) consent of the contracting parties, (2) object certain, and (3) cause or
consideration therefor. They have been satisfied first in the sale by Mandap, Sr., of the lots to the
Vasquez spouses and subsequently, in the sale by the Vasquezes to petitioners. Hence, petitioners
contend that it was error for the appellate court to declare the sale to them of the subject lot null and
void.
After careful consideration of the submission of the parties, we find in favor of respondents.
Petitioners contentions lack merit.
At the time Dionisio Mandap, Sr., purportedly sold the lots in question to the Vasquez spouses, he was
already totally blind and paralyzed. He could not possibly have read the contents of the deeds of sale.
He could not have consented to a contract whose terms he never knew nor understood. It cannot be
presumed Mandap, Sr., knew the contents of the deeds of sale disposing of his properties. Article 1332
of the Civil Code is applicable in these circumstances, to wit:
ART. 1332. When one of the parties is unable to read, or if the contract is in a language not understood
by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms
thereof have been fully explained to the former.
As the party seeking to enforce the contract, the petitioners should have presented evidence showing
that the terms of the deeds of sale to the Vasquez spouses were fully explained to Mandap, Sr. But
petitioners failed to comply with the strict requirements of Article 1332, thereby casting doubt on the
alleged consent of the vendor. Since the vendor in this case was totally blind and crippled at the time of
the sale, entirely dependent on outside support, every care to protect his interest conformably with
Article 24 of the Civil Code must be taken. Article 24 is clear on this.

ART. 24. In all contractual, property or other relations, when one of the parties is at a disadvantage on
account of his moral dependence, ignorance, indigence, mental weakness, tender age or other
handicap, the courts must be vigilant for his protection.
Petitioners presented no evidence disproving that (1) Mandap, Sr. was totally blind and suffering from
acute diabetes such that he could no longer discern the legal consequences of his acts, and (2) that
undue influence was exerted upon him, which vitiated his consent.
It is true that he who alleges a fact bears the burden of proving it. However, since fraud and undue
influence are alleged by respondents, the burden shifts8 to petitioners to prove that the contents of the
contract were fully explained to Mandap, Sr. Nothing, however, appears on record to show that this
requirement was complied with. Thus, the presumption of fraud and undue influence was not rebutted.
More important, evidence on record, in our view, prove the existence of fraud. On August 1, 1990,
commissioners appointed by the lower court conducted an ocular inspection concerning the physical
condition of Mandap, Sr. He stated on that occasion that he received P550,000 as first payment,
another P550,000 as second payment, andP1,550,000 the remaining balance of the total selling price of
what was loaned to the vendees. However, in the deeds of sale covering the subject properties, the
prices indicated were P250,000 and P320,000, respectively or a total of only P570,000. This
inconsistency in the amount of the consideration is unexplained. They point to fraud in the sale of the
subject properties, to the prejudice of Mandap, Sr.
Petitioners do not dispute the fact that the notary public who notarized the deeds of sale was not duly
commissioned. But they contend the deeds validity were not affected. However, it bears stressing that
even an apparently valid notarization of a document does not guarantee its validity. 9 The crucial point
here is that while Mandap, Sr., testified that he executed the deeds of sale in Las Pias, the said
documents were actually notarized in Manila. Mandap, Sr., did not personally appear before a notary
public. Yet the documents stated the contrary. Such falsity raises doubt regarding the genuineness of
the vendors alleged consent to the deeds of sale.
Petitioners also claim the purchase price was not grossly inadequate so as to invalidate the sale of
subject properties. True, mere inadequacy of the price does not necessarily void a contract of sale.
However, said inadequacy may indicate that there was a defect in the vendors consent. 10 More
important, it must be pointed out that the trial court and the Court of Appeals voided the sale of the
subject properties not because the price was grossly inadequate, but because the presumptions of fraud
and undue influence exerted upon the vendor had not been overcome by petitioners, the parties
interested in enforcing the contract.
On the third issue, petitioners argue that since the sale of subject properties by Mandap, Sr. to the
Vasquez spouses is valid, it follows that the subsequent sale of the property by the latter to petitioners
is also valid. But this contention cannot be sustained, since we find that based on the evidence on
record, the sale in favor of the Vasquez spouses is void. Hence, it follows that the sale to petitioners is
also void, because petitioners merely stepped into the shoes of the Vasquez spouses. Since the
Vasquezes as sellers had no valid title over the parcel of land they sold, petitioners as buyers thereof
could not claim that the contract of sale is valid.
On the last issue, petitioners contest the award of attorneys fees. Indeed, no premium should be placed
on the right to litigate, and not every winning party is entitled to an automatic grant of attorneys
fees.11 The party must show that he falls under one of the instances enumerated in Article 2208 of the
Civil Code, to wit:

ART. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:

(11) In any other case where the court deems it just and equitable that attorneys
fees and expenses of litigation should be recovered.

The undisputed facts, per summary of the Court of Appeals, follow.

Herein petitioners, Spouses Domingo Paguyo and Lourdes Paguyo, were the owners of a small fivestorey building known as the Paguyo Building located at Makati Avenue, corner Valdez Street, Makati
City. With one (1) unit per floor, the building has an average area of 100 square meters per floor and is
constructed on a land belonging to the Armas family.5

In this particular case, the award of attorneys fees is just and equitable, considering the circumstances
herein. The court a quos order to pay P15,000 as attorneys fees does not appear to us unreasonable
but just and equitable.

This lot on which the Paguyo Building stands was the subject of Civil Case No. 5715 entitled, Armas,
et al., v. Paguyo, et al., wherein the RTC of Makati City, Branch 57, rendered a decision on 20 January
1988 approving a Compromise Agreement made between the Armases and the petitioners. The
compromise agreement provided that in consideration of the total sum of One Million Seven Hundred
Thousand Pesos (P1,700,000.00), the Armases committed to execute in favor of petitioners a deed of
sale and/or conveyance assigning and transferring unto said petitioners all their rights and interests
over the parcel of land containing an area of 299 square meters. 6

WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals dated August
10, 2001 in CA-G.R. CV No. 59694, which sustained the decision dated March 25, 1998 of the
Regional Trial Court of Manila, Branch 34, is AFFIRMED. Costs against petitioners.

In order for the petitioners to complete their title and ownership over the lot in question, there was an
urgent need to make complete payment to the Armases, which at that time stood at P917,470.00
considering that petitioners had previously made partial payments to the Armases.

SO ORDERED

On 29 November 1988, in order to raise the much needed amount, petitioner Lourdes Paguyo entered
into an agreement captioned as Receipt of Earnest Money with respondent Pierre Astorga, for the sale
of the formers property consisting of the lot which was to be purchased from the Armases, together
with the improvements thereon, particularly, the existing building known as the Paguyo Building,
under the following terms and conditions as stated in the document, to wit:

G.R. No. 130982 September 16, 2005

SPOUSES DOMINGO and LOURDES PAGUYO, Petitioners,
vs.
Pierre astorga and St. Andrew Realty, Inc., Respondent.
DECISION
CHICO-NAZARIO, J.:
. . . Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose money by
them 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 the 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.1
The case at bar demonstrates a long drawn-out litigation between parties who already entered into a
valid contract that has subsisted for almost twenty (20) years but one of them later balks from being
bound by it, alleging fraud, gross inadequacy of consideration, mistake, and undue influence.
This is a petition for review on certiorari where petitioner Spouses Domingo and Lourdes Paguyo seek
the reversal of the Decision2 and the Resolution,3 dated 30 April 1997 and 12 September 1997,
respectively, of the Court of Appeals in CA-G.R. CV No. 47034, affirming in toto the Decision4 dated
21 April 1994 of the Regional Trial Court (RTC), Branch 142 of Makati City.
The Antecedents

RECEIVED from MR. PIERRE M. ASTORGA the sum of FIFTY THOUSAND (P50,000.00) PESOS
(U.C.P.B. Managers Check No. 013085 dated November 29, 1988) as earnest money for the sale of
our property consisting of a parcel of land designated as Lot 12 located at Makati Avenue, Makati,
Metro Manila, covered by and described in T.C.T. No. 154806 together with the improvements thereon
particularly the existing building known as the Paguyo Bldg. under the following terms and conditions:
1. The earnest money (Exh. "D") shall be good for fifteen (15) days from date of this document during
which period the owner is bound to sell the property to the buyer;
2. Should the buyer decide not to buy the subject property within the earnest/option period, the seller
has the right to forfeit Fifteen Thousand (P15,000.00) pesos, and return the difference to the buyer;
3. The agreed total purchase price is seven million (P7,000,000.00) pesos Philippine Currency;
4. Within fifteen (15) days from execution of this document, the buyer shall pay Fifty (50%) percent of
the total purchase price less the aforesaid earnest money, upon payment of which the following
documents shall be executed or caused to be executed as the case may be, namely:
a. Deed of Absolute Sale of the Paguyo Bldg., in favor of the buyer.
b. Deed of Absolute Sale to be executed by the Armases who still appear as the registered owners of
the lot in favor of the buyer.

c. Deed of Real Estate Mortgage of the same subject lot and Bldg. to secure the 50% balance of the
total purchase price to be executed by the buyer in favor of the herein seller.
5. The Deed of Real Estate Mortgage shall contain the following provisions, namely:
a. payment of the 50% balance of the purchase price shall be payable within fifteen (15) days from
actual vacating of the Armases from the subject lot.
b. During the period commencing from the execution of the documents mentioned under paragraph 4
(which should be done simultaneously) the buyer is entitled to one-half (1/2) of the rental due and
actually received from the tenants of the Paguyo Bldg. plus the use of the penthouse while the seller
shall retain possession and use of the basement free of rent until the balance of the purchase price is
fully paid in accordance with the herein terms and conditions. The one-half (1/2) of the tenants
deposits shall be credited in favor of the buyer.7
However, contrary to their express representation with respect to the subject lot, petitioners failed to
comply with their obligation to acquire the lot from the Armas family despite the full financial support
of respondents. Nevertheless, the parties maintained their business relationship under the terms and
conditions of the above-mentioned Receipt of Earnest Money.8
On 12 December 1988, petitioners asked for and were given by respondents an additional P50,000.00
to meet the formers urgent need for money in connection with their construction business. Due also to
the urgent necessity of obtaining money to finance their construction business, petitioner Lourdes
Paguyo, who was also the attorney-in-fact of her husband, proposed to the respondents the separate
sale of the building in question while she continued to work on the acquisition of the lot from the
Armas family, assuring the respondents that she would succeed in doing so. 9
Aware of the risk of buying an improvement on the lot of a third party who appeared ambivalent on
whether to dispose their property in favor of the respondents, respondents took a big business gamble
and, relying on the assurance of petitioners that they would eventually acquire the lot and transfer the
same to respondents in accordance with their undertaking in the Receipt of Earnest Money,
respondents agreed to petitioner Lourdes Paguyos proposal to buy the building first. Thus, on 5
January 1989, the parties executed the four documents in question namely, the Deed of Absolute Sale
of the Paguyo Building, the Mutual Undertaking, the Deed of Real Estate Mortgage, and the Deed of
Assignment of Rights and Interest.10 Simultaneously with the signing of the four documents,
respondents paid petitioners the additional amount of P500,000.00.11 Thereafter, the respondents
renamed the Paguyo Building into GINZA Bldg. and registered the same in the name of respondent St.
Andrew Realty, Inc. at the Makati Assessors Office after paying accrued real estate taxes in the total
amount ofP169,174.95. Since 1990, respondents paid the real estate taxes on subject building as
registered owners thereof. Further, respondents obtained fire insurance and applied for the conversion
of Paguyo Building into a condominium. All of these acts of ownership exercised by respondents over
the building were with the express knowledge and consent of the petitioners.12
Pursuant to their agreement contained in the aforecited documents, particularly in the Mutual
Undertaking,13respondent company filed an ejectment case and obtained a favorable decision against
petitioners in the Metropolitan Trial Court (MeTC) of Makati in Civil Case No. 40050. The case
reached this Court which affirmed the decision of the MeTC in favor of respondent company. This
decision had already been executed and the respondent company is now in possession of the building.
Accordingly, respondents continued to exercise acts of full ownership, possession and use over the
building.14

On 06 October 1989, petitioners filed a Complaint for the rescission of the Receipt of Earnest
Money15 with the undertaking to return the sum of P763,890.50. They also sought the rescission of
the Deed of Real Estate Mortgage,16 the Mutual Undertaking, the Deed of Absolute Sale of
Building,17 and the Deed of Assignment of Rights and Interest.18
In their complaint, petitioners alleged that respondents Astorga and St. Andrew Realty, Inc., led them
to believe that they would advance the P917,470.00, which was needed by petitioners to complete
payment with the Armases, with the understanding that said amount would simply be deducted from
the P7 Million total consideration due them for the sale of the lot and the building as agreed upon in
their Receipt of Earnest Money. The same, however, did not materialize because instead of making
available the check for the said amount, respondents did not produce the amount and even ordered the
"stop payment" of the same before it could be deposited in court.19
Respondents, in their Answer, however, interjected that as gleaned from the Receipt of Earnest
Money, theMutual Undertaking, the Deed of Assignment of Rights and Interest, their original
intention was to purchase the Paguyo Building and the lot on which it stands simultaneously.
Respondents interposed that at the time the decision on the compromise agreement between petitioners
and Armases was rendered, petitioners were badly in need of money because they were financing their
construction business and, with the balance payable to the Armases, the former were in a huff to
produce an amount sufficient to cover both transactions. Thus, petitioners prevailed upon respondents
to purchase the Paguyo Building first with the lot to follow after petitioners have successfully acquired
it from the Armas family.
Respondents, likewise, stated in their Answer that sometime in July of 1989, petitioners asked
respondent corporation to execute a check in the amount of P917,470.0020 for the final execution of the
Deed of Conveyance of the lot, saying that they were finally able to negotiate the purchase of the lot
owned by the Armases. To settle the transaction, respondent corporation again complied. After
investigation, however, respondents learned that petitioners were not in the position to deliver the land,
all the rights and interest thereof having allegedly been transferred already to spouses Rodolfo and
Aurora Bacani. They were able to confirm this after obtaining a copy of a letter dated 22 September
1989 of petitioners counsel (same counsel representing them presently) to the Register of Deeds of
Makati a month prior to the filing of the instant case. The letter stated:
Ms. Mila Flores
Register of Deeds
Makati, Metro Manila
Dear Ms. Flores:
We represent the spouses Rodolfo and Aurora Bacani, who happen to be the assignees of all the rights
and interests that the couple Domingo and Lourdes Paguyo have over that parcel of land located
along Makati Avenue, the particulars and description of which are indicated on TCT No.
154806 which, for reasons we perceive to be not legitimate, was cancelled.
...

(SGD.) HECTOR B. ALMEYDA

For the Firm21

1. In concluding that the supposed acts of ownership and possession of respondents preclude
petitioners from seeking rescission and declaration of nullity of documents signed and executed under
mistaken premises that were not all true and accurate;

(Emphasis supplied.)

2. IN FAILING to find that fraud, mistake and undue influence had been exerted on petitioner Lourdes
Paguyo to make her a party to the assailed documents;

Respondents further explained in their Answer that because of this development, they were constrained
to order "stop payment" of the P917,470.00 check, which was duly communicated to petitioners in a
letter dated 14 July 1989, to wit:

3. In reading the documents involved without regard to the contemporaneous acts of the parties prior,
during and immediately after the signing process;

I am very sorry to inform you that I have to stop payment on Philtrust Check No. 006759 because I
was just reliably informed that you are no longer in a position to deliver the lot subject of our
agreement. While the financier had already advanced half million pesos which was already placed in
my account, I discouraged her from putting another million pesos to cover my check with you. I
therefore find myself with no alternative but to order stop payment on my check to protect my rights
and interests.22

4. In affirming the dismissal of the complaint; and

5. In awarding damages and attorneys fees in favor of the respondents. 27
The questions the Court is now tasked to answer are: (1) Did the Court of Appeals err in upholding the
trial courts decision denying petitioners complaint for rescission? (2) Was the award of damages and
attorneys fees to respondents proper?

The Ruling of the Trial Court

After trial, the RTC ruled in favor of respondents in a Decision 23 dated 21 April 1994, the dispositive
portion of which reads:
Judgment is hereby rendered dismissing the complaint for lack of cause of action, the petition for
preliminary injunction is hereby denied, judgment is rendered in favor of the defendants and ordering
the plaintiff spouses Domingo and Lourdes Paguyo to pay the defendants Pierre Astorga and St.
Andrew Realty, Inc. on their counterclaim.

On the first issue, petitioners claim that the 05 January 1989 documents, particularly the Deed of
Absolute Sale of Building, Mutual Undertaking, Real Estate Mortgage, and Assignment of Rights and
Interests read together with the 29 November 1988 Receipt of Earnest Money, were all designed, per
the respondents representations, to secure their exposure in the total sum of P763,890.50 which
constituted their outlay in the projected purchase of the Paguyo lot and building.
Respondents dispute petitioners' line of reasoning. They say that the Deed of Absolute Sale over the
building was absolute and unconditional.

1. P400,000.00 for moral damages;

Our Ruling

2. P200,000.00 as exemplary damages;

Petitioners contentions lack merit.

3. P100,00.00 for attorneys fees and litigation expenses and pay the cost of suit. 24

The right to rescind a contract involving reciprocal obligations is provided for in Article 1191 of the
Civil Code. Article 1191 states: M

The Ruling of the Court of Appeals

25

On appeal, the Court of Appeals promulgated its Decision dated 30 April 1997 in CA-G.R. CV No.
47034 affirming the decision of the trial court, the dispositive portion of which reads as follows:
WHEREFORE, We find the lower courts decision in full accord with the facts and the law. Judgment
is hereby rendered affirming the assailed decision dated April 21, 1994 in toto.26
Aggrieved by the ruling, petitioners elevated the matter to us via the instant petition, contending that
the Court of Appeals erred:

The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with the
payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment,
if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a
period.
This is understood to be without prejudice to the rights of third persons who have acquired the thing, in
accordance with Articles 1385 and 1388 and the Mortgage Law.

The law speaks of the right of the "injured party" to choose between rescission or fulfillment of the
obligation, with the payment of damages in either case.28

- Objection, your Honor. May we know if the witness is going to express an opinion or is he testifying
now as an expert realtor?

Here, petitioners claim to be the injured party and consequently seek the rescission of the Deed of
Absolute Sale of the Building and the other documents in question. Petitioners aver that they are
entitled to cancel the Deed of Sale altogether in view of fraud, gross inadequacy of price, mistake, and
undue influence.

COURT

To boost their claim that the Deed of Absolute Sale was intended merely to document the cash outlays
of respondents, petitioners say that the P600,000.00 consideration as contained in the Deed of Absolute
Sale of the 5-storey Paguyo building is a far cry from the P3 Million valuation attached to it by
respondent Astorga himself and the buildings fair market value of P2,848,000.00 assessed by the
Cuervo Appraisers, Inc.
We find no such inadequacy of consideration in the case at bar. For one, on top of the P600,000.00
which petitioners received, respondents had to shoulder the accrued real estate taxes
of P169,174.95. For another, respondent Pierre Astorga explained that said price was what St. Andrew
Realty, Inc., believed as value for their money inasmuch as the building stands on the lot owned by
another and there were separate owners of the land, who appear reluctant to sell it. For a third, said
amount was arrived at considering the depreciated value of the building and in view of the economic
and political uncertainties in the country at that time, marked by a series ofcoup detat, which caused
real estate prices to plummet. Respondent Astorga was explicit on this score
ATTY. JOSE
Q: There was statement here by Mrs. Paguyo that this document entitled the deed of absolute sale of a
building marked Exhibit "9" was not expressive of the intention of the parties meaning to say that she
did not intend to sell the said building and one of the reasons she tried to raise was the fact that the
building was only sold for P500,000.00, what can you say to that?
A: Well, the P500,000.00 amount that she would want to impress to be an inadequate amount is what
we in St. Andrews end believed as value for money for the reason that the building stands on the
lot she does not own and there were separate owners and apparent conflict between them even
the seeming impossibility of getting the lot
Q: By the way, before the plaintiffs decided to dispose the building or sell the building by virtue of this
deed of sale marked Exhibit "98" was your company ever interested in acquiring the said building?
A: The building alone, no. In fact, on December 21 when we had the problem as to acquiring the lot,
we did not part with any payment to Mrs. Paguyo demonstrating that we had really and truly intended
a simultaneous buy of the building and the lot to acquire the property simultaneously the building and
as well as the lot.
Q: Now, you mentioned that you are a realtor, I will ask you the same question, which Atty. Almeyda
asked me when I was on the witness stand, as a realtor will you please tell the court what would be
your appraisal of the value of the building?
ATTY. COLOMA

- As an opinion but it would not bind the Court.

WITNESS
- I can explain to you.
ATTY. JOSE
- Yes, please explain.
WITNESS
A: Okay, appraisal can take many forms if its appraised value based on the construction cost it could be
different from appraising per se the building. That is now existing in that address also appraisal will
depend on where the building is and there is only one owner of the building and the lot. As the case
here is, the building in a manner of speaking stands on thin air. That is so including depreciation and
timing that we were doing in this transaction which was 1989, my appraisal will be in the range of a
Million may be.
Q: You made mentioned the word timing in 1989, why did you mention that?
A: Well, 89 was not the best real estate year. In fact, we have a boom in 1988 but prices were already
deep during this year such that it is in 1988 when it could have been another price. But this transaction
happened or entered into in 1989, there were no interested buyers during that time, sir.
Q: Why?
A: coup de etat was one, and many other issue on hand that causes value to take deep.
Q: You mentioned that word depreciation, will you please explain to us what that depreciation has got
to do with that building?
A: In appraisal terms the building is in an economic line in every year of which a certain value is
allocated as depreciation for wear and tear for breakdowns and all that is depreciation. This is
deductible from the amount of the building (sic).
Q: Before you went into this agreement with the plaintiff Paguyo have you inspected the building?
A: Yes, sir. Thoroughly, sir.

Q: Will you please explain to the court the size of the building and the description of the building?
A: That building is five (5) storey it has only one (1) unit per floor, sir. There is a narrow stairway that
leads up to the penthouse. It is, I would say, in an advance deteriorating stage, it needed some
renovations here and there.29(Emphasis supplied.)
Moreover, Articles 1355 and 1470 of the Civil Code state:
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a
contract,unless there has been fraud, mistake or undue influence. (Emphasis supplied)
Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may indicate a
defect in the consent, or that the parties really intended a donation or some other act or contract.
(Emphasis supplied)
Petitioners herein failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil
Code, which would invalidate, or even affect, the Deed of Sale of the Building and the related
documents. Indeed, there is no requirement that the price be equal to the exact value of the subject
matter of sale.30

Now, during the transaction of this subject matter, you will also recall that at times you were
represented in dealing with me as counsel for defendant corporation by Atty. Lalin and Atty. Carino?
A Yes, sir.32
Neither does the fact that the subject contracts have been prepared by respondents ipso facto entail that
their validity and legality be strictly interpreted against them. Petitioner Lourdes Paguyos insinuation
that she was disadvantaged will not hold. True, Article 24 of the New Civil Code provides that "(i)n all
contractual, property or other relations, when one of the parties is at a disadvantage on account of his
moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts
must be vigilant for his protection."33 Thus, the validity and/or enforceability of the impugned contracts
will have to be determined by the peculiar circumstances obtaining in each case and the situation of the
parties concerned.
Here, petitioner Lourdes Paguyo, being not only cultured but a person with great business acumen as
well, cannot claim to be the weaker or disadvantaged party in the subject contract so as to call for a
strict interpretation against respondents. More importantly, the parties herein went through a series of
negotiations before the documents were signed and executed.34
Further, we find the stipulations in the subject documents plain and unambiguous. For instance, the
Deed of Sale provides in no uncertain terms-

In Sps. Buenaventura v. Court of Appeals,31 the Court was unequivocal:

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 them 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 the 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. (Emphases in the original)
What is more, petitioners would wish to convince this Court that petitioner Lourdes Paguyo was nave
enough to accept at face value the assurance of respondent Astorga that the Deed of Sale was merely to
document respondents cash outlay.
Far from being the nave and easy to fleece lady that she wants this Court to perceive her to be,
evidence on record reveals that petitioner Lourdes Paguyo is in reality an astute businesswoman,
having insured that legal minds would be available at her disposal at the time she entered into the
transactions she now impugns. As she herself admitted in her testimony before the trial court, during
her receipt of the earnest money and during the transactions subject of the instant case, her lawyers,
one Atty. Lalin and a certain Atty. Cario, assisted her. She testified as follows:

WHEREAS, the VENDOR is the true and absolute owner, free from any lien or encumbrance, of a
concrete building presently known as the Paguyo Building, constructed on Lot 12, Blk. 4 (described in
T.C.T No. 154806-Makati) located at No. 7856 Makati Ave. corner Valdez St., Makati, Metro Manila,
covered by and described in Tax Declaration No. 93762 for the year 1984, and more particularly
described as follows:

WHEREAS, the VENDOR is desirous of selling and the VENDEE is willing to buy the aforedescribed
building;
NOW THEREFORE, for and in consideration of the foregoing premises and of the sum of SIX
HUNDRED THOUSAND (P600,000.00) PESOS, Philippine currency, the receipt of which is hereby
acknowledged, the VENDOR hereby cedes, transfers, and conveys, by way of absolute sale, unto and
in favor of the VENDEE, his successors and assigns, the aforementioned building with all the
improvements therein.
The Municipal Assessor of Makati is therefore hereby authorized to register this sale in the new Tax
Declaration in the name of the VENDEE.

ATTY. JOSE

IN WITNESS WHEREOF, the VENDOR hereby affixed his signature by his wife and attorney-in-fact,
LOURDES S. Paguyo, this 5th day of January, 1989, in Pasay City.35

Wait, wait, your Honor. I have one question. Now, madam witness, you mentioned that you were
accompanied by a certain Atty. Molina when you executed the receipt of the earnest money with me.

Inasmuch as the stipulations in the aforesaid contract and in the other contracts being questioned leave
no room for interpretation, there was no cause for applying Article 24 of the New Civil Code.

In sum, in the case at bar, petitioners pray for rescission of the Deed of Sale of the building and offer to
repay the purchase price after their liquidity position would have improved and after respondents
would have refurbished the building, updated the real property taxes, and turned the building into a
profitable business venture. This Court, however, will not allow itself to be an instrument to the
dissolution of contract validly entered into. A party should not, after its opportunity to enjoy the
benefits of an agreement, be allowed to later disown the arrangement when the terms thereof ultimately
would prove to operate against its hopeful expectations. 36
On the matter of damages, the Court of Appeals affirmed the trial courts award of damages and
attorneys fees to respondents, namely P400,000 as moral damages, P200,000 as exemplary
damages, P100,000 as attorneys fees and the costs of suit.
We have held that moral damages may be recovered in cases where one willfully causes injury to
property, or in cases of breach of contract where the other party acts fraudulently or in bad
faith.37 There is no hard and fast rule in the determination of what would be a fair amount of moral
damages, since each case must be governed by its own peculiar circumstances. 38 Exemplary damages,
on the other hand, are imposed by way of example or correction for the public good, when the party to
a contract acts in a wanton, fraudulent, oppressive or malevolent manner.39 Attorneys fees are allowed
when exemplary damages are awarded and when the party to a suit is compelled to incur expenses to
protect his interest.40
While it has been sufficiently proven that the respondents are entitled to damages, the actual amounts
awarded by the lower court must be reduced because damages are not intended for a litigants
enrichment, at the expense of the petitioners.41 Judicial discretion granted to the courts in the
assessment of damages must always be exercised with balanced restraint and measured objectivity. 42
Thus, the amount of moral damages should be set at only P30,000.00, and the award of exemplary
damages at only P20,000.00. The award of attorneys fees should also be reduced to P20,000.00 which,
under the circumstances of this case, appears justified and reasonable.
All told, we find no reason to reverse the assailed decision of respondent court. The factual findings of
the appellate court are conclusive on the parties and carry greater weight when they coincide with the
factual findings of the trial court.43 This Court will not weigh the evidence anew lest there is a showing
that the findings of the lower court are totally devoid of support or are clearly erroneous so as to
constitute serious abuse of discretion. In the instant case, the trial court found that the documents,
which petitioners seek to rescind, were entered into as a result of an arms-length transaction. These are
factual findings that are now conclusive upon us.44
WHEREFORE, the Decision and the Resolution dated 30 April 1997 and 12 September 1997,
respectively, of the Court of Appeals in CA-G.R. CV No. 47034, are hereby AFFIRMED with
MODIFICATION as to the amount of damages and attorneys fees recoverable, as follows: (1) moral
damages is reduced to P30,000.00, (2) exemplary damages is reduced to P20,000.00, and (3) attorneys
fees is reduced to P20,000.00. Costs against petitioners.
SO ORDERED.
G.R. No. L-45551 February 16, 1982

JOSE S. ANGELES and GILBERTO G. MERCADO, in his capacity as Dean of Institute of

Technology, FEU,petitioners,
vs.
HON. RAFAEL S. SISON, as Judge of the Court of First Instance of Manila, EDGARDO PICAR
and WILFREDO PATAWARAN, represented by his father WENCESLAO
PATAWARAN, respondents.

FERNANDEZ, J.:
This is a petition for certiorari to review the decision of the Court of First Instance of Manila, Branch
XXVII, dated December 29, 1976 in Civil Case No. 101222 entitled, "Edgardo Picar and Wilfredo
Patawaran, represented by his father, Wenceslao Patawaran, Plaintiffs, versus Jose S. Angeles, Dean
Gilberto G. Mercado in his capacity as Dean of the Institute of Technology, Defendants," the
dispositive part of which reads:
WHEREFORE, the petition prayed for by the plaintiffs is hereby GRANTED,
and the defendants are hereby perpetually enjoined from further proceeding with
the administrative investigation against the plaintiffs.
So ordered. 1
The records disclose that sometime in November 1975 the petitioner, Jose Angeles, initiated an
administrative case before the Office of the Dean, Gilberto G. Mercado, of the Institute of Technology,
Far Eastern University, by filing a complaint 2 against the private respondents Edgardo Picar and
Wilfredo Patawaran for alleged breach of the university's rules and regulations. In the said complaint, it
is alleged that on October 20, 1975, Jose Angeles, a professor in the Institute of Technology of Far
Eastern University (FEU), was assaulted by Edgardo Picar and Wilfredo Patawaran, both students in
mechanical engineering in the said institute at the Oak Barrel Restaurant located at P. Gomez Street,
Quiapo, Manila on the occasion of the birthday party of Professor Alfonso Bernabe, the Secretary of
the Institute of Technology of FEU.
The same incident became also the subject of a criminal complaint for assault against a person in
authority instituted by the petitioner Jose Angeles in the Office of the City Fiscal of Manila against the
private respondents Picar and Patawaran. Later, the complaint was ammended to assault and/or
physical injuries. The case was dismissed as against private respondent Wilfredo Patawaran but an
information for slight physical injuries was filed against private respondent Edgardo Picar in the City
Court of Manila. 3 However, during the pendency of this case, on July 8, 1977, the criminal case for
slight physical injuries against Edgardo Picar was dismissed on the basis of an affidavit of
desistance 4 submitted by petitioner Jose Angeles before the City Court of Manila, Branch VIII, stating
among others, that the subject incident was only "a result of a misunderstanding and nobody is to be
blamed."
Acting on the administrative complaint filed before his Office by the petitioner Jose Angeles, the Dean
of the Institute, petitioner Gilberto Mercado, immediately created a committee headed by him to
investigate the complaint. The private respondents Picar and Patawaran questioned the authority of the
Dean and his committee to conduct the administrative investigation because the act complained of
the alleged assault of Professor Angeles at the Oak Barrel Restaurant is not within his authority to

investigate. They contend that the Dean's authority to investigate under the Code of Conduct of FEU
(as amended) from where he derives that power, is limited to acts done or committed within the
premises of the compound of the University. The Dean proceeded to conduct the challenged
administrative investigation. Thus the private respondents, Picar and Patawaran, the latter being then a
minor, was represented by his father, Wenceslao Patawaran, filed on February 13, 1976 in the Court of
First Instance of Manila a complaint 5 with petition for issuance of a writ of preliminary injunction to
restrain the petitioners from proceeding with the administrative investigation against the private
respondents.

DISCIPLINE THE PRIVATE RESPONDENTS, WHO ARE STUDENTS OF

SAID UNIVERSITY, FOR THEIR CONDUCT OUTSIDE OF SCHOOL
HOURS AND NOT WITHIN THE SCHOOL PREMISES WHICH DIRECTLY
AFFECTS THE GOOD ORDER AND WELFARE OF THE SCHOOL.
II
THE RESPONDENT JUDGE ERRED IN FINDING THAT THE SERVICE
MANUAL FOR PUBLIC SCHOOLS APPLIES TO, AND OVERRIDES THE
RULES AND REGULATIONS OF FEU A PRIVATE SCHOOL, UPON THE
GROUND THAT THERE IS NO DIFFERENCE BETWEEN A PRIVATE
SCHOOL AND A PUBLIC SCHOOL.

Forthwith, the respondent judge issued on the same day, February 13, 1976, an Order temporarily
restraining the petitioners from further proceeding with the administrative investigation against the
private respondents, and setting the motion for the issuance of the writ of preliminary injunction for
hearing.
On March 10, 1976, the petitioners filed their answer to the complaint and an opposition to the petition
for injunction. 7

III
THE RESPONDENT JUDGE ERRED IN FINDING THAT THE CONDUCT
OF THE PRIVATE RESPONDENTS IN MAULING PETITIONER JOSE S.
ANGELES, A FACULTY MEMBER OF FEU, OUTSIDE THE PREMISES OF
THE SCHOOL IS NOT PRESCRIBED BY THE RULES AND
REGULATIONS CONTAINED IN THE SERVICE MANUAL
FOR PUBLIC SCHOOLS .

Over the opposition of the petitioners, the respondent Judge issued an Order on June 7, 1976 granting
the writ of preliminary injunction and enjoining the petitioners from proceeding with the
administrative investigation of private respondents until further orders from the Court.
On July 13, 1976, the petitioners moved for a reconsideration of the order of the respondent judge and
to lift the order granting plaintiffs' petition for preliminary injunction. 9 The private respondents
opposed the said motion for reconsideration on August 10, 1976. 10
On October 11, 1976, the respondent Judge issued an order denying the petitioners' motion for
reconsideration. 11
Consequently, the petitioners filed on November 17, 1976, a motion for summary judgment stating,
among others, that "since the issue before this Court is one of law and not of fact, and therefore, there
exists no genuine controversy as to any material fact, summary judgment will lie to effectuate the
prompt disposition of this case." 12
Finding no objection to the rendition of a summary judgment, the private respondents filed to that
effect a manifestation 13 on December 8, 1976.
On December 29, 1976, the respondent judge rendered the decision under review, perpetually
enjoining the petitioners from further proceeding with the administrative investigation against the
private respondents.

IV
THE RESPONDENT JUDGE ERRED IN FINDING THAT FEU, THROUGH
PETITIONER GILBERTO G. MERCADO, IS LEGALLY INHIBITED FROM
INVESTIGATING PRIVATE RESPONDENTS FOR CONDUCT
PRESCRIBED BY ITS RULES AND REGULATIONS BECAUSE OF THE
PENDENCY OF CRIMINAL CHARGES AGAINST SAID
RESPONDENTS. 14
The main legal issue presented in this petition is whether a school through its duly authorized
representative has the jurisdiction to investigate its student or students for an alleged misconduct
committed outside the school premises and beyond school hours.
The petitioners contend that the mauling incident, subject matter of this case, was sought to be
investigated under and pursuant to the following rules and regulations of the Manual of Registration
for Private Schools. 15
(1) Paragraph l45, Section IX:

From this decision, the petitioners interposed an appeal to this Court, assigning the following as errors:
I
THE RESPONDENT JUDGE ERRED IN FINDING THAT FAR EASTERN
UNIVERSITY ("FEU", FOR BREVITY), THROUGH PETITIONER
GILBERTO G. MERCADO WHO IS THE DEAN OF THE INSTITUTE OF
TECHNOLOGY, IS NOT AUTHORIZED TO INVESTIGATE AND

Every private school is required to maintain good school discipline. No cruel or

physically harmful punishment shall be imposed nor shall corporal punishment
be countenanced. The school rules governing discipline and the corresponding
sanctions therefor must be clearly specified and defined in writing and made
known to the students and/or their parents or guardians. Schools shall have the
authority and prerogative to promulgate such rules and regulations as they may

deem necessary from time to time effective as of the promulgation unless

otherwise specified.
No penalty shall be imposed upon any student, except for cause as defined in
this Manual and/or in the school's rules and regulations duly promulgated and
only after due investigation shall have been conducted.

Section 1. Violation of any of the provisions of this Code of Conduct shall be

punished, after due investigation by reprimand, dropping, suspension or
expulsion in accordance with the Manual of Regulation for Private
Schools taking into account the following factors:
a) previous record of the student;

(2) Paragraph l46, Section IX:

b) inherent gravity of the offense committed;

The three categories of disciplinary administrative sanctions which may be

imposed upon erring students, commensurate with the nature and gravity of the
violation of school rules and regulations committed, are:

c) position of the aggrieved person

a. Dropping a school may drop from its rolls during the school year or term a
student who is considered undesirable. The student who is dropped should be
issued immediately his transfer credentials.
b. Suspension a school may suspend an erring student during the school year
or term for a maximum period not exceeding 20% of the prescribed school days.
Suspension which will involve the loss of the entire year or term shall not be
effective unless approved by the Director of Private Schools.

d) established precedents; and

e) other related circumstances, such as the pertinent and applicable mitigating
and aggravating circumstances found in the Revised Penal Code.
Section 2. In cases not covered by this Code, the categories of disciplinary
administrative sanctions contained in the Manual of Regulations for Private
Schools shall apply upon the ground provided in said Manual.
xxx xxx xxx

c. Expulsion the penalty of expulsion is an extreme form of administrative

sanction which debars the student from all public and private schools. To be
valid and effective the penalty of expulsion requires the approval of the
Secretary of Education. Expulsion is usually considered proper punishment for
gross misconduct or dishonesty and/or such offenses as hazing, carrying deadly
weapons, immorality, drunkenness, vandalism, hooliganism, assaulting a teacher
or any other school authority, or his agent or student, instigating, leading or
participating in concerted activities leading to a stoppage of classes, preventing
or threatening students or faculty members or school authorities from
discharging their duties, or from attending classes or entering the school
premises, forging or tampering (with) school records or transfer forms, or
securing or using such forged transfer credentials.
In accordance with the above-quoted provision, the Advisory Council of FEU approved on December
2, 1971, the Code of Conduct 16 for all students to observe. The pertinent articles provide:
Article 1 General Behavior
Section 2. Students shall not use language or commit acts which are
disrespectful, vulgar, or indecent, or which in any manner may cause or tend to
cause molestation or injury to other members of the university community.
xxx xxx xxx
Article V Penalties

Article VI Enforcement
Section 1. The Deans and Principals shall enforce the provision of this Code of
Conduct.
There shall be created in each Institute and School a committee on Discipline,
Manners and Morals, composed of two faculty members and one student, all
appointed by the Dean or Principal, as the case may be, to investigate cases of
violations of this Code of Conduct referred to it by the corresponding Dean or
Principal.
Section 4. In cases involving a student and a faculty member, the Dean or the
Principal concerned shall conduct the hearing. Where the case involves a student
and an administrative personnel, the President may appoint a Committee to
investigate the same which shall submit its findings and recommendations to the
President for decision.
Thus, the petitioner Mercado contends that in his capacity as Dean of the Institute of Technology, he is
charged under Sections 1 and 4 of Article VI of the Code of Conduct of FEU with the duty of
conducting a hearing in cases involving a student and a faculty member in furtherance of the
university's legally recognized right to discipline its students.
On the other hand, the private respondents submit that to apply the above-quoted rules to the instant
case would be "capricious, malicious, palpably unreasonable, arbitrary or a clear abuse of

discretion" 17 and that "any investigation by the school of the said incident will be violative of the
private respondents' right to privacy and peace of mind." 18
The respondent judge opined that the instant case falls under the general rule that the power of the
school ends at the border of its campus. 19 His basis is Section 9, paragraph 145 of the Manual of
Regulations for Private Schools the opening paragraph of which states: "Every private school is
required to maintain good school discipline." He explains thus:
What other interpretation could be placed on the phrase "school discipline"
except that it is a norm of action that must be observed within a school. If the
rules and regulations provided by school authorities shall be deemed to extend
outside of school premises and activities, the term "school discipline" would be
a misnomer. We must consider the fact that FEU as an institution can exercise
only such powers expressly conferred, so that any authority not so given shall be
deemed to be withheld. In the absence of an express provision on this matter,
this Court could not see any reason why paragraph 155 of the Service Manual
relative to public schools should not be applied by way of analogy considering
that there is actually no difference between a private and a public school. The
objective for the promulgation of rules and regulations with respect to both
institutions are one and the same. Section 155, among others, states:
School authorities are not, under ordinary circumstances,
warranted in applying school punishment of pupils for
acts committed outside of the jurisdiction of the school
building and grounds ... As a rule ... the authority and
responsibility of the school stop at the border of the
school grounds, and any action taken for acts committed
without these boundaries should in general be left to the
Police authorities, the courts of justice and the family
concerned.
Of course, there are certain exceptions as correctly pointed out by the
defendants, which are also provided in the same Section 155, but then,
considering that defendants moved for a summary judgment without presenting
any evidence to prove that the case of the plaintiffs fall under any of the
aforequoted exceptions, the Court has no other alternative except to apply the
general rule. 20
Implicit in Paragraph 155 of the Service Manual, Fourth Revision quoted by the respondent judge and
reproduced as follows:
A pupil who has committed an immoral act outside of the school jurisdiction
would be a source of danger to other pupils in the school building, and such
pupil might with reason be excluded from the school. There are certain
borderline cases, however, which are hard to decide, and for which no definite
rules can be laid down. Should pupils in a concerted effort attempt to run a
teacher out of town or try to make life outside of school unbearable for him,
such action might well be taken as having a direct and vital effect on the school
and therefore as coming under school discipline. Pupils engaged in school
matters elsewhere than on the school grounds, such as school athletic affairs and

trips, parades, literary contests, etc., are considered under the jurisdiction of the
school.
is the recognition of the school's authority and power to expel a pupil who has committed an immoral
act outside of the school premises since the latter would be a "source of danger to other pupils in the
school building."
If the power to expel or to punish an immoral act committed outside the school premises is recognized
in this provision, why is the power to investigate the act of a student in mauling a faculty member
outside the school premises not be accorded the same recognition?
It is thus error for respondent judge to state that there is nothing in the authorities relied upon by the
defendants, petitioners herein, which compels any school authority to administratively discipline
students for incidents committed outside the school compound on an occasion which is not schoolsponsored or connected with any activity of the school.
A college or any school for that matter, has a dual responsibility to its students. One is to provide
opportunities for learning and the other is to help them grow and develop into mature, responsible,
effective and worthy citizens of the community. Discipline is one of the means to carry out the second
responsibility.
Thus, there can be no doubt that the establishment of an educational institution requires rules and
regulations necessary for the maintenance of an orderly educational program and the creation of an
educational environment conducive to learning. Such rules and regulations are equally necessary for
the protection of the students, faculty, and property. The power of school officials to investigate, an
adjunct of its power to suspend or expel, is a necessary corollary to the enforcement of such rules and
regulations and the maintenance of a safe and orderly educational environment conducive to learning.
The respondent judge correctly stated that the general rule is that the authority of the school is coextensive with its territorial jurisdiction, or its school grounds, so that any action taken for acts
committed outside the school premises should, in general, be left to the police authorities, the courts of
justice, and the family concerned. 21
However, this rule is not rigid or one without exceptions. It is the better view that there are instances
when the school might be called upon to exercise its power over its student or students for acts
committed outside the school and beyond school hours in the following:
a) In cases of violations of school policies or regulations occurring in connection with a school
sponsored activity off-campus; or 22
b) In cases where the misconduct of the student involves his status as a student or affects the good
name or reputation of the school.
Common sense dictates that the school retains its power to compel its students in or off-campus to a
norm of conduct compatible with their standing as members of the academic community. Hence, when
as in the case at bar, the conduct complained of directly affects the suitability of the alleged violators as
students, there is no reason why the school can not impose the same disciplinary action as when the act
took place inside the campus.

There is a showing from the records of this case that the proximate cause of the alleged mauling
incident, subject of the administrative investigation in question, is attributable to the professor-student
relationship of the parties concerned.
The sworn statement 23 of the petitioner Jose Angeles submitted to the petitioner Dean Gilberto
Mercado, as Head of the Investigating Committee states, inter alia:
4. That sometime after the end of this first semester mentioned earlier, Eduardo
Picar under the influence of liquor accosted me along the corridor of the
Institute building and asked for an explanation why Mr. Garcia gave him a
failing grade in Shop 302. I told him I had no Idea.
5. That from this time on, said Picar stopped being cordial to me and sometimes
would look daggers at me whenever we meet on the campus.
6. That also sometime last July 1975, Wilfredo Patawaran accosted me along the
corridors of the Technology building and asked me to enroll him in my class.
But I told him that I had already enough students for one section.
7. That from this time on, this Patawaran avoided me and together with Picar
they would show their contempt of me, by facial expressions, whenever we met
on the corridors of the Technology building or in the campus.
These statements clearly establish the necessity for an Administrative investigation of the alleged
mauling incident because it cannot be denied that the same is a violation of the norms of decency and
good taste which is antithetical to one of the school's duties vis-a-vis the family, that of developing the
moral character of the youth. 24
Moreover, from the facts of record, the alleged mauling of petitioner Jose Angeles at the Oak Barrel
Restaurant in Quiapo, Manila can be regarded as a continuation or the climax of the alleged display of
animosities by private respondents Picar and Patawaran towards Angeles which began at the corridors
of the FEU Institute of Technology building.

The private respondent's averment that the dismissal of the criminal case against private respondent
Picar upon the filing of the affidavit of desistance of petitioner Jose Angeles has the effect of rendering
this instant petition moot and academic 25 is unmeritorious. The pendency or the dismissal of the
criminal action does not abate the administrative proceeding which involves the same cause of
action. 26 The administrative action before the school authorities can proceed independently of the
criminal action because these two actions are based on different considerations. In the former, the
private respondent's suitability or propriety as a student which is the paramount concern and interest of
the school is involved, while in the latter, what is at stake is his being a citizen who is subject to the
penal statutes and is the primary concern of the State.
Hence, there being no withdrawal of the complaint filed by petitioner Jose Angeles before the
petitioner Dean Gilberto Mercado, the administrative investigation should proceed.
Therefore, as aptly stated by the petitioners 27 to affirm the decision of the respondent Judge would
give nothing less than a license to students of a school, public or private, to assault and maul their
teachers or professors without fear of being subjected to discipline by the school as long as the assault
takes place off-campus or beyond school hours.
WHEREFORE, the decision of the Court of First Instance of Manila sought to be reviewed is hereby
set aside and the writ of preliminary injunction issued by the respondent judge is hereby dissolved,
without pronouncement as to costs.
SO ORDERED.
G.R. No. 93833 September 28, 1995
SOCORRO D. RAMIREZ, petitioner,
vs.
HONORABLE COURT OF APPEALS, and ESTER S. GARCIA, respondents.

KAPUNAN, J.:
Precisely, the administrative investigation in question is proper in order that the duly authorized school
officials can determine whether the continued presence of private respondents, Picar and Patawaran, as
students of FEU and/or petitioner, Jose Angeles, as faculty member, within the university premises is
detrimental to the maintenance of a moral climate conducive to learning.
Furthermore, the true test of a school's right to investigate, or otherwise, suspend or expel a student for
a misconduct committed outside the school premises and beyond school hours is not the time or place
of the offense, but its effect upon the morale and efficiency of the school and whether it, in fact, is
adverse to the school's good order welfare and the advancement of its students.
Likewise the power of the school over its students does not cease absolutely when they leave the
school premises, and that conduct outside of school hours may subject a student to school discipline if
it directly affects the good order and welfare of the school or has a direct and immediate effect on the
discipline or general welfare of the school.

A civil case damages was filed by petitioner Socorro D. Ramirez in the Regional Trial Court of Quezon
City alleging that the private respondent, Ester S. Garcia, in a confrontation in the latter's office,
allegedly vexed, insulted and humiliated her in a "hostile and furious mood" and in a manner offensive
to petitioner's dignity and personality," contrary to morals, good customs and public policy." 1
In support of her claim, petitioner produced a verbatim transcript of the event and sought moral
damages, attorney's fees and other expenses of litigation in the amount of P610,000.00, in addition to
costs, interests and other reliefs awardable at the trial court's discretion. The transcript on which the
civil case was based was culled from a tape recording of the confrontation made by petitioner. 2 The
transcript reads as follows:
Plaintiff Soccoro D. Ramirez (Chuchi) Good
Afternoon M'am.

Defendant Ester S. Garcia (ESG) Ano ba ang nangyari

sa 'yo, nakalimot ka na kung paano ka napunta rito, porke
member ka na, magsumbong ka kung ano ang gagawin ko
sa 'yo.

CHUCHI Eh, di sana

ESG Huwag mong ipagmalaki na may utak ka
kasi wala kang utak. Akala mo ba makukuha ka dito kung
hindi ako.

CHUCHI Kasi, naka duty ako noon.

CHUCHI Mag-eexplain ako.
ESG Tapos iniwan no. (Sic)
CHUCHI Hindi m'am, pero ilan beses na nila akong
binalikan, sabing ganoon
ESG Ito and (sic) masasabi ko sa 'yo, ayaw kung (sic)
mag explain ka, kasi hanggang 10:00 p.m., kinabukasan
hindi ka na pumasok. Ngayon ako ang babalik sa 'yo, nagaaply ka sa States, nag-aaply ka sa review mo, kung
kakailanganin ang certification mo, kalimutan mo na kasi
hindi ka sa akin makakahingi.
CHUCHI Hindi M'am. Kasi ang ano ko talaga noon icocontinue ko up to 10:00 p.m.
ESG Bastos ka, nakalimutan mo na kung paano ka
pumasok dito sa hotel. Magsumbong ka sa Union kung
gusto mo. Nakalimutan mo na kung paano ka nakapasok
dito "Do you think that on your own makakapasok ka
kung hindi ako. Panunumbyoyan na kita (Sinusumbatan
na kita).
CHUCHI Itutuloy ko na M'am sana ang duty ko.
ESG Kaso ilang beses na akong binabalikan doon ng
mga no (sic) ko.
ESG Nakalimutan mo na ba kung paano ka pumasok
sa hotel, kung on your own merit alam ko naman kung
gaano ka "ka bobo" mo. Marami ang nag-aaply alam kong
hindi ka papasa.
CHUCHI Kumuha kami ng exam noon.
ESG Oo, pero hindi ka papasa.
CHUCHI Eh, bakit ako ang nakuha ni Dr. Tamayo
ESG Kukunin ka kasi ako.

ESG Huwag na, hindi ako mag-papa-explain sa 'yo,

makaalala ka kung paano ka puma-rito. "Putang-ina"
sasabi-sabihin mo kamag-anak ng nanay at tatay mo ang
mga magulang ko.
ESG Wala na akong pakialam, dahil nandito ka sa
loob, nasa labas ka puwede ka ng hindi pumasok, okey
yan nasaloob ka umalis ka doon.
CHUCHI Kasi M'am, binbalikan ako ng mga taga
Union.
ESG Nandiyan na rin ako, pero huwag mong
kalimutan na hindi ka makakapasok kung hindi ako. Kung
hindi mo kinikilala yan okey lang sa akin, dahil tapos ka
na.
CHUCHI Ina-ano ko m'am na utang na loob.
ESG Huwag na lang, hindi mo utang na loob, kasi
kung baga sa no, nilapastangan mo ako.
CHUCHI Paano kita nilapastanganan?
ESG Mabuti pa lumabas ka na. Hindi na ako
makikipagusap sa 'yo. Lumabas ka na. Magsumbong ka. 3
As a result of petitioner's recording of the event and alleging that the said act of secretly taping the
confrontation was illegal, private respondent filed a criminal case before the Regional Trial Court of
Pasay City for violation of Republic Act 4200, entitled "An Act to prohibit and penalize wire tapping
and other related violations of private communication, and other purposes." An information charging
petitioner of violation of the said Act, dated October 6, 1988 is quoted herewith:
INFORMATION
The Undersigned Assistant City Fiscal Accusses Socorro D. Ramirez of
Violation of Republic Act No. 4200, committed as follows:

That on or about the 22nd day of February, 1988, in Pasay

City Metro Manila, Philippines, and within the
jurisdiction of this honorable court, the above-named
accused, Socorro D. Ramirez not being authorized by
Ester S. Garcia to record the latter's conversation with
said accused, did then and there willfully, unlawfully and
feloniously, with the use of a tape recorder secretly record
the said conversation and thereafter communicate in
writing the contents of the said recording to other person.

We disagree.
First, legislative intent is determined principally from the language of a statute. Where the language of
a statute is clear and unambiguous, the law is applied according to its express terms, and interpretation
would be resorted to only where a literal interpretation would be either impossible 11 or absurb or
would lead to an injustice. 12
Section 1 of R.A. 4200 entitled, " An Act to Prohibit and Penalized Wire Tapping and Other Related
Violations of Private Communication and Other Purposes," provides:

Contrary to law.
Pasay City, Metro Manila, September 16, 1988.
MARIANO M. CUNETA
Asst. City Fiscal
Upon arraignment, in lieu of a plea, petitioner filed a Motion to Quash the Information on the ground
that the facts charged do not constitute an offense, particularly a violation of R.A. 4200. In an order
May 3, 1989, the trial court granted the Motion to Quash, agreeing with petitioner that 1) the facts
charged do not constitute an offense under R.A. 4200; and that 2) the violation punished by R.A. 4200
refers to a the taping of a communication by a personother than a participant to the communication. 4
From the trial court's Order, the private respondent filed a Petition for Review on Certiorari with this
Court, which forthwith referred the case to the Court of Appeals in a Resolution (by the First Division)
of June 19, 1989.
On February 9, 1990, respondent Court of Appeals promulgated its assailed Decision declaring the trial
court's order of May 3, 1989 null and void, and holding that:
[T]he allegations sufficiently constitute an offense punishable under Section 1 of
R.A. 4200. In thus quashing the information based on the ground that the facts
alleged do not constitute an offense, the respondent judge acted in grave abuse
of discretion correctible by certiorari. 5
Consequently, on February 21, 1990, petitioner filed a Motion for Reconsideration which respondent
Court of Appeals denied in its Resolution 6 dated June 19, 1990. Hence, the instant petition.
Petitioner vigorously argues, as her "main and principal issue" 7 that the applicable provision of
Republic Act 4200 does not apply to the taping of a private conversation by one of the parties to the
conversation. She contends that the provision merely refers to the unauthorized taping of a private
conversation by a party other than those involved in the communication. 8 In relation to this, petitioner
avers that the substance or content of the conversation must be alleged in the Information, otherwise
the facts charged would not constitute a violation of R.A. 4200. 9 Finally, petitioner agues that R.A.
4200 penalizes the taping of a "private communication," not a "private conversation" and that
consequently, her act of secretly taping her conversation with private respondent was not illegal under
the said act. 10

Sec. 1. It shall be unlawfull for any person, not being authorized by all the
parties to any private communication or spoken word, to tap any wire or cable,
or by using any other device or arrangement, to secretly overhear, intercept, or
record such communication or spoken word by using a device commonly known
as a dictaphone or dictagraph or detectaphone or walkie-talkie or tape recorder,
or however otherwise described.
The aforestated provision clearly and unequivocally makes it illegal for any person, not authorized by
all the parties to any private communication to secretly record such communication by means of a tape
recorder. The law makes no distinction as to whether the party sought to be penalized by the statute
ought to be a party other than or different from those involved in the private communication. The
statute's intent to penalize all persons unauthorized to make such recording is underscored by the use of
the qualifier "any". Consequently, as respondent Court of Appeals correctly concluded, "even a
(person) privy to a communication who records his private conversation with another without the
knowledge of the latter (will) qualify as a violator" 13 under this provision of R.A. 4200.
A perusal of the Senate Congressional Records, moreover, supports the respondent court's conclusion
that in enacting R.A. 4200 our lawmakers indeed contemplated to make illegal, unauthorized tape
recording of private conversations or communications taken either by the parties themselves or by third
persons. Thus:
xxx xxx xxx
Senator Taada: That qualified only "overhear".
Senator Padilla: So that when it is intercepted or recorded, the element of
secrecy would not appear to be material. Now, suppose, Your Honor, the
recording is not made by all the parties but by some parties and involved not
criminal cases that would be mentioned under section 3 but would cover, for
example civil cases or special proceedings whereby a recording is made not
necessarily by all the parties but perhaps by some in an effort to show the intent
of the parties because the actuation of the parties prior, simultaneous even
subsequent to the contract or the act may be indicative of their intention.
Suppose there is such a recording, would you say, Your Honor, that the intention
is to cover it within the purview of this bill or outside?
Senator Taada: That is covered by the purview of this bill, Your Honor.

Senator Padilla: Even if the record should be used not in the prosecution of
offense but as evidence to be used in Civil Cases or special proceedings?

(Congressional Record, Vol. III, No. 33, p. 626, March 12, 1964)
xxx xxx xxx

Senator Taada: That is right. This is a complete ban on tape recorded

conversations taken without the authorization of all the parties.
Senator Padilla: Now, would that be reasonable, your Honor?
Senator Taada: I believe it is reasonable because it is not sporting to record the
observation of one without his knowing it and then using it against him. It is not
fair, it is not sportsmanlike. If the purpose; Your honor, is to record the intention
of the parties. I believe that all the parties should know that the observations are
being recorded.
Senator Padilla: This might reduce the utility of recorders.
Senator Taada: Well no. For example, I was to say that in meetings of the board
of directors where a tape recording is taken, there is no objection to this if all the
parties know. It is but fair that the people whose remarks and observations are
being made should know that the observations are being recorded.
Senator Padilla: Now, I can understand.
Senator Taada: That is why when we take statements of persons, we say:
"Please be informed that whatever you say here may be used against you." That
is fairness and that is what we demand. Now, in spite of that warning, he makes
damaging statements against his own interest, well, he cannot complain any
more. But if you are going to take a recording of the observations and remarks
of a person without him knowing that it is being taped or recorded, without him
knowing that what is being recorded may be used against him, I think it is
unfair.
xxx xxx xxx
(Congression Record, Vol. III, No. 31, p. 584, March 12, 1964)
Senator Diokno: Do you understand, Mr. Senator, that under Section 1 of the bill
as now worded, if a party secretly records a public speech, he would be
penalized under Section 1? Because the speech is public, but the recording is
done secretly.
Senator Taada: Well, that particular aspect is not contemplated by the bill. It is
the communication between one person and another person not between a
speaker and a public.
xxx xxx xxx

The unambiguity of the express words of the provision, taken together with the above-quoted
deliberations from the Congressional Record, therefore plainly supports the view held by the
respondent court that the provision seeks to penalize even those privy to the private communications.
Where the law makes no distinctions, one does not distinguish.
Second, the nature of the conversations is immaterial to a violation of the statute. The substance of the
same need not be specifically alleged in the information. What R.A. 4200 penalizes are the acts of
secretly overhearing, intercepting or recording private communications by means of the devices
enumerated therein. The mere allegation that an individual made a secret recording of a private
communication by means of a tape recorder would suffice to constitute an offense under Section 1 of
R.A. 4200. As the Solicitor General pointed out in his COMMENT before the respondent court:
"Nowhere (in the said law) is it required that before one can be regarded as a violator, the nature of the
conversation, as well as its communication to a third person should be professed." 14
Finally, petitioner's contention that the phrase "private communication" in Section 1 of R.A. 4200 does
not include "private conversations" narrows the ordinary meaning of the word "communication" to a
point of absurdity. The word communicate comes from the latin word communicare, meaning "to share
or to impart." In its ordinary signification, communication connotes the act of sharing or imparting
signification, communication connotes the act of sharing or imparting, as in a conversation, 15 or
signifies the "process by which meanings or thoughts are shared between individuals through a
common system of symbols (as language signs or gestures)" 16 These definitions are broad enough to
include verbal or non-verbal, written or expressive communications of "meanings or thoughts" which
are likely to include the emotionally-charged exchange, on February 22, 1988, between petitioner and
private respondent, in the privacy of the latter's office. Any doubts about the legislative body's meaning
of the phrase "private communication" are, furthermore, put to rest by the fact that the terms
"conversation" and "communication" were interchangeably used by Senator Taada in his Explanatory
Note to the bill quoted below:
It has been said that innocent people have nothing to fear from
their conversations being overheard. But this statement ignores the usual nature
of conversations as well the undeniable fact that most, if not all, civilized people
have some aspects of their lives they do not wish to expose.
Freeconversations are often characterized by exaggerations, obscenity, agreeable
falsehoods, and the expression of anti-social desires of views not intended to be
taken seriously. The right to the privacy of communication, among others, has
expressly been assured by our Constitution. Needless to state here, the framers
of our Constitution must have recognized the nature of conversations between
individuals and the significance of man's spiritual nature, of his feelings and of
his intellect. They must have known that part of the pleasures and satisfactions
of life are to be found in the unaudited, and free exchange
of communication between individuals free from every unjustifiable intrusion
by whatever means. 17
In Gaanan vs. Intermediate Appellate Court, 18 a case which dealt with the issue of telephone
wiretapping, we held that the use of a telephone extension for the purpose of overhearing a private
conversation without authorization did not violate R.A. 4200 because a telephone extension devise was

neither among those "device(s) or arrangement(s)" enumerated therein, 19 following the principle that
"penal statutes must be construed strictly in favor of the accused." 20 The instant case turns on a
different note, because the applicable facts and circumstances pointing to a violation of R.A. 4200
suffer from no ambiguity, and the statute itself explicitly mentions the unauthorized "recording" of
private communications with the use of tape-recorders as among the acts punishable.
WHEREFORE, because the law, as applied to the case at bench is clear and unambiguous and leaves
us with no discretion, the instant petition is hereby DENIED. The decision appealed from is
AFFIRMED. Costs against petitioner.
SO ORDERED.