G.R. No. L-20089 December 26, 1964 BEATRIZ P. WASSMER, plaintiff-appellee, vs. FRANCISCO X. VELEZ, defendant-appellant.

Jalandoni & Jamir for defendant-appellant. Samson S. Alcantara for plaintiff-appellee. BENGZON, J.P., J.:

Republic of the Philippines SUPREME COURT Manila EN BANC

The facts that culminated in this case started with dreams and hopes, followed by appropriate planning and serious endeavors, but terminated in frustration and, what is worse, complete public humiliation. Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of love, decided to get married and set September 4, 1954 as the big day. On September 2, 1954 Velez left this note for his bride-to-be: Dear Bet Will have to postpone wedding My mother opposes it. Am leaving on the Convair today. Please do not ask too many people about the reason why That would only create a scandal. Paquing But the next day, September 3, he sent her the following telegram: NOTHING CHANGED REST ASSURED RETURNING VERY SOON APOLOGIZE MAMA PAPA LOVE . PAKING Thereafter Velez did not appear nor was he heard from again. Sued by Beatriz for damages, Velez filed no answer and was declared in default. Plaintiff adduced evidence before the clerk of court as commissioner, and on April 29, 1955, judgment was rendered ordering defendant to pay plaintiff P2,000.00 as actual damages; P25,000.00 as moral and exemplary damages; P2,500.00 as attorney's fees; and the costs. On June 21, 1955 defendant filed a "petition for relief from orders, judgment and proceedings and motion for new trial and reconsideration." Plaintiff moved to strike it cut. But the court, on August 2, 1955, ordered the parties and their attorneys to appear before it on August 23, 1955 "to explore at this stage of the proceedings the possibility of arriving at an amicable settlement." It added that should any of them fail to appear "the petition for relief and the opposition thereto will be deemed submitted for resolution." On August 23, 1955 defendant failed to appear before court. Instead, on the following day his counsel filed a motion to defer for two weeks the resolution on defendants petition for relief. The counsel stated that he would confer with defendant in Cagayan de Oro City the latter's residence on the possibility of an amicable element. The court granted two weeks counted from August 25, 1955. Plaintiff manifested on June 15, 1956 that the two weeks given by the court had expired on September 8, 1955 but that defendant and his counsel had failed to appear.

Another chance for amicable settlement was given by the court in its order of July 6, 1956 calling the parties and their attorneys to appear on July 13, 1956. This time. however, defendant's counsel informed the court that chances of settling the case amicably were nil. On July 20, 1956 the court issued an order denying defendant's aforesaid petition. Defendant has appealed to this Court. In his petition of June 21, 1955 in the court a quo defendant alleged excusable negligence as ground to set aside the judgment by default. Specifically, it was stated that defendant filed no answer in the belief that an amicable settlement was being negotiated. A petition for relief from judgment on grounds of fraud, accident, mistake or excusable negligence, must be duly supported by an affidavit of merits stating facts constituting a valid defense. (Sec. 3, Rule 38, Rules of Court.) Defendant's affidavit of merits attached to his petition of June 21, 1955 stated: "That he has a good and valid defense against plaintiff's cause of action, his failure to marry the plaintiff as scheduled having been due to fortuitous event and/or circumstances beyond his control." An affidavit of merits like this stating mere conclusions or opinions instead of facts is not valid. (Cortes vs. Co Bun Kim, L-3926, Oct. 10, 1951; Vaswani vs. P. Tarrachand Bros., L-15800, December 29, 1960.) Defendant, however, would contend that the affidavit of merits was in fact unnecessary, or a mere surplusage, because the judgment sought to be set aside was null and void, it having been based on evidence adduced before the clerk of court. In Province of Pangasinan vs. Palisoc, L-16519, October 30, 1962, this Court pointed out that the procedure of designating the clerk of court as commissioner to receive evidence is sanctioned by Rule 34 (now Rule 33) of the Rules of Court. Now as to defendant's consent to said procedure, the same did not have to be obtained for he was declared in default and thus had no standing in court (Velez vs. Ramas, 40 Phil. 787; Alano vs. Court of First Instance, L-14557, October 30, 1959). In support of his "motion for new trial and reconsideration," defendant asserts that the judgment is contrary to law. The reason given is that "there is no provision of the Civil Code authorizing" an action for breach of promise to marry. Indeed, our ruling in Hermosisima vs. Court of Appeals (L-14628, Sept. 30, 1960), as reiterated in Estopa vs. Biansay (L-14733, Sept. 30, 1960), is that "mere breach of a promise to marry" is not an actionable wrong. We pointed out that Congress deliberately eliminated from the draft of the new Civil Code the provisions that would have it so. It must not be overlooked, however, that the extent to which acts not contrary to law may be perpetrated with impunity, is not limitless for Article 21 of said Code provides that "any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage." The record reveals that on August 23, 1954 plaintiff and defendant applied for a license to contract marriage, which was subsequently issued (Exhs. A, A-1). Their wedding was set for September 4, 1954. Invitations were printed and distributed to relatives, friends and acquaintances (Tsn., 5; Exh. C). The bride-to-be's trousseau, party drsrses and other apparel for the important occasion were purchased (Tsn., 7-8). Dresses for the maid of honor and the flower girl were prepared. A matrimonial bed, with accessories, was bought. Bridal showers were given and gifts received (Tsn., 6; Exh. E). And then, with but two days before the wedding, defendant, who was then 28 years old,: simply left a note for plaintiff stating: "Will have to postpone wedding My mother opposes it ... " He enplaned to his home city in Mindanao, and the next day, the day before the wedding, he wired plaintiff: "Nothing changed rest assured returning soon." But he never returned and was never heard from again. Surely this is not a case of mere breach of promise to marry. As stated, mere breach of promise to marry is not an actionable wrong. But to formally set a wedding and go through all the above-described preparation and publicity, only to walk out of it when the matrimony is about to be solemnized, is quite different. This is palpably and unjustifiably contrary to good customs for which defendant must be held answerable in damages in accordance with Article 21 aforesaid. Defendant urges in his afore-stated petition that the damages awarded were excessive. No question is raised as to the award of actual damages. What defendant would really assert hereunder is that the award of moral and exemplary damages, in the amount of P25,000.00, should be totally eliminated. Per express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in the cases mentioned in Article 21 of said Code. As to exemplary damages, defendant contends that the same could not be adjudged against him because under Article 2232 of the New Civil Code the condition precedent is that "the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner." The argument is devoid of merit as under the above-narrated circumstances of this

case defendant clearly acted in a "wanton ... , reckless [and] oppressive manner." This Court's opinion, however, is that considering the particular circumstances of this case, P15,000.00 as moral and exemplary damages is deemed to be a reasonable award. PREMISES CONSIDERED, with the above-indicated modification, the lower court's judgment is hereby affirmed, with costs.

The Case

This is a petition for review[1] of the Decision[2] dated 13 August 1998 and the Resolution dated 10 March 1999 of the Court of Appeals in CA-G.R. SP No. 43134. The Court of Appeals affirmed with modification the decision of the trial court by ordering the payment of P18,000 monthly rental starting 19 December 1995 until Car Cool Philippines, Inc. vacates the premises.

The Fact

On 19 December 1995, Ushio Realty and Development Corporation (USHIO Realty) filed an ejectment case against Car Cool Philippines, Inc. (CAR COOL) to recover possession of a parcel of land (property) located at No. 72 (137) Quezon Avenue, corner Victory Avenue, Quezon City.

USHIO Realty alleges that the former owners of the property, Spouses Hector and Gloria Hizon Lopez (Spouses Lopez), leased the property to CAR COOL since 1972. In 1990, the Spouses Lopez and CAR COOL executed a written lease agreement over the property for two years. On 16 August 1992, on the expiration of the written lease agreement, the Spouses Lopez allowed CAR COOL to continue occupying the property upon payment of monthly rentals. Later, a verbal month-to-month lease agreement continued until 31 August 1995. On 15 June 1995, Hector Lopez wrote CAR COOL to inform it of his intention to sell the property. Hector Lopez gave CAR COOL the option to buy the property before offering the same to other prospective buyers. CAR COOL failed to respond to the offer. On 28 June 1995, Hector Lopez terminated the verbal lease agreement and gave CAR COOL until 31 August 1995 to vacate the property. In his subsequent letters dated 22 July, 1 August and 12 August 1995, Hector Lopez reiterated his demand for CAR COOL to vacate the property. CAR COOL allegedly ignored the demands to vacate the property and continued to occupy the same.

In a letter dated 31 August 1995, USHIO Realty informed CAR COOL that it had purchased the property from the Spouses Lopez. USHIO Realty gave CAR COOL another 30 days from 31 August 1995 to vacate the property. CAR COOL failed to

respond to the demand letter and continued to occupy the property. On 3 December 1995, USHIO Realty sent a final demand to CAR COOL, giving it a non-extendible 15 days within which to vacate the property. CAR COOL refused to vacate the property, prompting USHIO Realty to file the complaint for ejectment on 19 December 1995. CAR COOL, on the other hand, alleges that USHIO Realty was aware of the lease agreement between CAR COOL and the former owner, Hector Lopez. According to CAR COOL, on 20 January 1995, Hector Lopez agreed to renew the lease for another two years to cover the period from 1 January 1995 to December 1996, for a monthly rental of P18,000 and an additional security deposit of P216,000. In compliance with the agreement to renew the lease, CAR COOL claims that it paid in advance to Hector Lopez P205,200 representing the monthly rentals for the period from 1 January 1995 to 31 December 1995. CAR COOL also claims to have paid in advance P205,200 covering monthly rentals for the period from 1 January 1996 to 31 December 1996, plus P216,000 as additional security deposit for 1 January 1996 to 1 January 1997. Upon his receipt of the advance rentals and security deposit, Hector Lopez allegedly promised to execute a written contract of lease for two years covering the period from 1 January 1995 to 31 December 1996. CAR COOL further alleges that USHIO Realty, despite its knowledge of the lease agreement, still demanded that CAR COOL vacate the property on the ground that USHIO Realty had already bought the property from the Spouses Lopez. On 1 October 1995, USHIO Realty allegedly broke into the leased premises, demolished the improvements on the premises, and threatened and inflicted bodily injuries upon two employees of CAR COOL. Virgilio de la Rosa, CAR COOLs President and General Manager, was able to enter the leased premises the following day and found some personal items missing. On 9 October 1995, CAR COOL filed a complaint-affidavit against the agents and representative of USHIO Realty for robbery with force upon things and malicious mischief.[3] CAR COOL later amended the complaint-affidavit to include the charge of grave coercion.[4] On 21 November 1995, CAR COOL filed a complaint for specific performance and damages with the Regional Trial Court of Quezon City. The complaint sought to compel Hector Lopez to execute a written lease contract for the period from 1 January 1995 until 31 December 1996 and for USHIO Realty to be bound by the contract. On 19 June 1996, the Metropolitan Trial Court rendered a decision in the ejectment case in favor of USHIO Realty. The dispositive portion of the decision reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff USHIO Realty Development Corporation and against the defendant CAR COOL Philippines, Inc. represented by President and General Manager Virgilio dela Rosa as follows: 1. 2. 3. 4. Ordering the defendant and all persons claiming right under her to surrender the possession of the premises to the plaintiff and vacate therefrom; Ordering the defendant to pay plaintiff the amount of P18,000.00 per month as reasonable compensation for the use of the premises beginning October 1995 and every month thereafter until the premises is finally vacated; Defendant to pay plaintiff the sum of P20,000.00 as and by way of attorneys fees; and Defendant to pay [the] cost. SO ORDERED.

CAR COOL appealed to the Regional Trial Court. On 28 October 1996, the Regional Trial Court rendered its decision affirming the decision of the Metropolitan Trial Court. On appeal, the Court of Appeals affirmed the trial courts decision with the modification that the payment of P18,000 monthly rental should start from 19 December 1995 until CAR COOL finally vacates the property. The Court of Appeals held that CAR COOLs possession of the property became unlawful only on 19 December 1995, upon receipt of the demand to vacate the property and CAR COOLs refusal to surrender possession.[6] On 15 September 1998, CAR COOL filed a motion for reconsideration, which the Court of Appeals denied. Hence, the instant petition.

The Issue CAR COOL raises the sole issue of whether the Court of Appeals erred in awarding damages by way of rentals and attorneys fees in favor of USHIO.[7] The Ruling of the Court We find the petition partly meritorious.

Award of damages in the form of rentals CAR COOL asserts that to award damages to USHIO Realty would constitute unjust enrichment at the expense of CAR COOL. CAR COOL claims that it never benefited from its occupation of the property after USHIO Realtys agents entered the property on 1 October 1995 and unlawfully destroyed CAR COOLs office, equipment and spare parts. Because of the destruction of the equipment and spare parts needed to operate its business, CAR COOL asserts that it was no longer possible to continue its business operations.[8] We are not convinced. Rule 70 of the Rules of Civil Procedure, which governs the rule on ejectment (forcible entry and unlawful detainer), provides under Sections 17 and 19 that Sec. 17. Judgment. If after trial the court finds that the allegations of the complaint are true, it shall render judgment in favor of the plaintiff for the restitution of the premises, the sum justly due as arrears of rent or as reasonable compensation for the use and occupation of the premises, attorneys fees and costs. If it finds that said allegations are not true, it shall render judgment for the defendant to recover his costs. If a counterclaim is established, the court shall render judgment for the sum found in arrears from either party and award costs as justice requires. (Emphasis supplied) Sec. 19. Immediate execution of judgment; how to stay same. If judgment is rendered against the defendant, execution shall issue immediately upon motion, unless an appeal has been perfected and the defendant to stay execution files a sufficient supersedeas bond, approved by the Municipal Trial Court and executed in favor of the plaintiff to pay the rents, damages, and costs accruing down to the time of the judgment appealed from, and unless, during the pendency of the appeal, he deposits with the appellate court the amount of rent due from time to time under the contract, if any, as determined by the judgment of the Municipal Trial Court. In the absence of a contract, he shall deposit with the Regional Trial Court the reasonable value of the use and occupation of the premises for the preceding month or period at the rate determined by the judgment of the lower court on or before the tenth day of each succeeding month or period. The supersedeas bond shall be transmitted by the Municipal Trial Court, with the other papers, to the clerk of the Regional Trial Court to which the action is appealed. (Emphasis supplied) In this case, there is no dispute on the ownership of the property. An Absolute Deed of Sale dated 14 September 1995 shows that the Spouses Lopez sold the property to USHIO Realty.[9] On 19 September 1995, the Registry of Deeds of Quezon City issued a Transfer Certificate of Title for the property in the name of USHIO Realty.[10] On 3 December 1995, USHIO Realty sent a final demand to CAR COOL, giving it a non-extendible 15 days within which to vacate the property. When CAR COOL still refused to vacate the property, USHIO Realty filed the complaint for ejectment on 19 December 1995. USHIO Realty, as the new owner of the property, has a right to physical possession of the property.[11] Since CAR COOL deprived USHIO Realty of its property, CAR COOL should pay USHIO Realty rentals as reasonable compensation for the use and occupation of the property.

Contrary to CAR COOLs allegations, the payment of damages in the form of rentals for the property does not constitute unjust enrichment. The Court of Appeals held: x x x [T]he alleged payment by the petitioner as rentals were given to the former owner (Lopez) and not to the private respondent who was not privy to the transaction. As a matter of fact, it never benefited financially from the alleged transaction. Aside from that, the postdated checks the private respondent admitted to have received, as rental payments for September to December 1995, were never encashed. On the contrary, the private respondent even offered to return the same to the petitioner, but was refused. [T]herefore, it did not amount to payment.[12] We have held that [t]here is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience.[13] Article 22 of the Civil Code provides that [e]very person who throu gh an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. The principle of unjust enrichment under Article 22 requires two conditions: (1) that a person is benefited without a valid basis or justification, and (2) that such benefit is derived at anothers expense or damage.[14] There is no unjust enrichment when the person who will benefit has a valid claim to such benefit. Under Section 17 of Rule 70 of the Rules of Civil Procedure, USHIO Realty has the legal right to receive some amount as reasonable compensation for CAR COOLs occupation of the property.[15] Thus, in Benitez v. Court of Appeals,[16] we held that: xxx Damages are recoverable in ejectment cases under Section 8, Rule 70 of the Revised Rules of Court. These damages arise from the loss of the use and occupation of the property, and not the damages which private respondents may have suffered but which have no direct relation to their loss of material possession. Damages in the context of Section 8, Rule 70 is limited to rent or fair market value for the use and occupation of the property. The Metropolitan Trial Court and the Regional Trial Court assessed against CAR COOL the amount of P18,000 per month as reasonable compensation for CAR COOLs use of the property. Both trial courts held that the P18,000 monthly payment should run from October 1995 until CAR COOL vacates the property. The Court of Appeals sustained the P18,000 monthly rental but held that the start of payment should be from 19 December 1995 until CAR COOL vacates the property. The records show that CAR COOL already vacated the property on 18 November 1996. The Sheriff of the Regional Trial Court of Quezon City certified that on 18 November 1996, he turned over the possession of the property to USHIO Realty.[17] Thus, the P18,000 monthly rental for the use of the property should run from 19 December 1995 until 18 November 1996 or a period of 11 months. Therefore, the total amount due as reasonable compensation for the use of the property is P198,000.[18] The trial court established this amount with reasonable accuracy or certainty because the trial court based this amount on the latest monthly rental CAR COOL paid the previous owner of the property.[19] Accordingly, this amount should earn interest at 6 percent per annum from 19 November 1996 until finality of this decision, after which the accrued interest, together with the P198,000, shall earn interest at 12 percent per annum until full payment.[20]

Attorneys Fees We cannot sustain the award of attorneys fees. The Court of Appeals failed to state explicitly in its decision the basis for the award of attorneys fees. The award of attorneys fees is the exception rather than the rule and the court must state exp licitly the legal reason for the award of attorneys fees.[21] In ABS-CBN Broadcasting Corp. v. CA,[22] we held that: The general rule is that attorneys fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit. The power of the court to award attorneys fees under Article 2208 demands factual, legal, and equitable justification. Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorneys fees may not be awarded where no sufficient showing of bad

faith could be reflected in a partys persistence in a case other than an erroneous conviction of the righteousness of his cause.

WHEREFORE, we AFFIRM the Decision dated 13 August 1998 and the Resolution dated 10 March 1999 of the Court of Appeals in CA-G.R. SP No. 43134 with the MODIFICATION that the P18,000 monthly rental for the use of the property should run from 19 December 1995 until 18 November 1996, aggregating P198,000. This amount shall earn 6 percent interest per annum from 19 November 1996 until finality of this decision, after which the accrued interest, together with the P198,000, shall earn interest at 12 percent per annum until full payment. We delete the award of attorneys fees. Costs against petitioner.

SO ORDERED.

THIRD DIVISION [G.R. No. 141536. February 26, 2001] GIL MIGUEL T. PUYAT, petitioner, vs. RON ZABARTE, respondent. DECISION PANGANIBAN, J.: Summary judgment in a litigation is resorted to if there is no genuine issue as to any material fact, other than the amount of damages. If this verity is evident from the pleadings and the supporting affidavits, depositions and admissions on file with the court, the moving party is entitled to such remedy as a matter of course.
The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, challenging the August 31, 1999 Decisioni[1] of the Court of Appeals (CA), which affirmed the Regional Trial Court (RTC) of Pasig City, Branch 67 in Civil Case No. 64107; and the January 20, 2000 CA Resolutionii[2] which denied reconsideration. The assailed CA Decision disposed as follows: WHEREFORE, finding no error in the judgment appealed from, the same is AFFIRMED." iii[3]
The Facts

The facts of this case, as narrated by the Court of Appeals, are as follows: iv[4] It appears that on 24 January 1994, [Respondent] Ron Zabarte commenced [an action] to enforce the money judgment rendered by the Superior Court for the State of California, County of Contra Costa, U.S.A. On 18 March 1994, [petitioner] filed his Answer with the following special and affirmative defenses: x x x x x x x x x

8) The Superior Court for the State of California, County of Contra Costa[,] did not properly acquire jurisdiction over the subject matter of and over the persons involved in [C]ase #C21-00265. 9) The Judgment on Stipulations for Entry in Judgment in Case #C21-00265 dated December 12, 1991 was obtained without the assistance of counsel for [petitioner] and without sufficient notice to him and therefore, was rendered in clear violation of [petitioners] constitutional rights to substantial and procedural due process. 10) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12, 1991 was procured by means of fraud or collusion or undue influence and/or based on a clear mistake of fact and law. 11) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12, 1991 is contrary to the laws, public policy and canons of morality obtaining in the Philippines and the enforcement of such judgment in the Philippines would result in the unjust enrichment of [respondent] at the expense of [petitioner] in this case. 12) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12, 1991 is null and void and unenforceable in the Philippines. 13) In the transaction, which is the subject matter in Case #C21-00265, [petitioner] is not in any way liable, in fact and in law, to [respondent] in this case, as contained in [petitioners] Answer to Complaint in Case #C21-00265 dated April 1, 1991, Annex B of [respondents] Complaint dated December 6, 1993. 14) [Respondent] is guilty of misrepresentation or falsification in the filing of his Complaint in this case dated December 6, 1993. Worse, [respondent] has no capacity to sue in the Philippines. 15) Venue has been improperly laid in this case.

(Record, pp. 42-44) On 1 August 1994, [respondent] filed a [M]otion for [S]ummary [J]udgment under Rule 34 of the Rules of Court alleging that the [A]nswer filed by [petitioner] failed to tender any genuine issue as to the material facts. In his [O]pposition to [respondents] motion, [petitioner] demurred as follows: 2) [Petitioner] begs to disagree[;] in support hereof, [he] wishes to mention that in his Answer with Special and Affirmative Defenses dated March 16, 1994 [petitioner] has interposed that the Judgment on Stipulations for Entry in Judgment is null and void, fraudulent, illegal and unenforceable, the same having been obtained by means of fraud, collusion, undue influence and/or clear mistake of fact and law. In addition, [he] has maintained that said Judgment on Stipulations for Entry in Judgment w as obtained without the assistance of counsel for [petitioner] and without sufficient notice to him and therefore, was rendered in violation of his constitutional rights to substantial and procedural due process. The [M]otion for [S]ummary [J]udgment was set for hearing on 12 August 1994 during which [respondent] marked and submitted in evidence the following: Exhibit A - x x x Judgment on Stipulation For Entry In Judgment of the Supreme Court of the State of California[,] County of Contra Costa[,] signed by Hon. Ellen James, Judge of the Superior Court. - x x x Certificate of Authentication of the [O]rder signed by the Hon. Ellen James, issued by the Consulate General of the Republic of the Philippines. [R]eturn of the [W]rit of [E]xecution (writ unsatisfied) issued by the sheriff/marshall, County of Santa Clara, State of California. [W]rit of [E]xecution

Exhibit B

Exhibit C

Exhibit D

Exhibit 'E'

[P]roof of [S]ervice of copies of [W]rit of [E]xecution, [N]otice of [L]evy, [M]emorandum of [G]arnishee, [E]xemptions from [E]nforcement of [J]udgment. Certification issued by the Secretary of State, State of California that Stephen Weir is the duly elected, qualified and acting [c]ounty [c]lerk of the County of Contra Costa of the State of California. Certificate of [A]uthentication of the [W]rit of [E]xecution.

Exhibit F

Exhibit G

On 6 April 1995, the court a quo issued an [O]rder granting [respondents] [M]otion for [S]ummary [J]udgment [and] likewise granting [petitioner] ten (10) days to submit opposing affidavits, after which the case would be deemed submitted for resolution (Record, pp. 152-153). [Petitioner] filed a [M]otion for [R]econsideration of the aforesaid [O]rder and [respondent] filed [C]omment. On 30 June 1995, [petitioner] filed a [M]otion to [D]ismiss on the ground of lack of jurisdiction over the subject matter of the case and forum-non-conveniens (Record, pp. 166-170). In his [O]pposition to the [M]otion (Record, pp. 181-182) [respondent] contended that [petitioner could] no longer question the jurisdiction of the lower court on the ground that [the latters] Answer had failed to raise the issue of jurisdiction. [Petitioner] countered by asserting in his Reply that jurisdiction [could] not be fixed by agreement of the parties. The lower court dismissed [his] [M]otion for [R]econsideration and [M]otion [to] [D]ismiss (Record, pp. 196-198), x x x. The RTCv[5] eventually rendered its February 21, 1997 Decision,vi[6] which disposed as follows: WHEREFORE, judgment is hereby rendered, ordering [petitioner] to pay [respondent] the following amounts: 1. The amount of U.S. dollars $241,991.33, with the interest of legal rate from October 18, 1991, or its peso equivalent, pursuant to the [J]udgment of [S]tipulation for [E]ntry in [J]udgment dated December 19, 1991; 2. 3. The amount of P30,000.00 as attorneys fees; To pay the costs of suit.

The claim for moral damages, not having been substantiated, it is hereby denied. vii[7]
Ruling of the Court of Appeals

Affirming the trial court, the Court of Appeals held that petitioner was estopped from assailing the judgment that had become final and had, in fact, been partially executed. The CA also ruled that summary judgment was proper, because petitioner had failed to tender any genuine issue of fact and was merely maneuvering to delay the full effects of the judgment. Citing Ingenohl v. Olsen,viii[8] the CA also rejected petitioners argument that the RTC should have dismissed the action for the enforcement of a foreign judgment, on the ground of forum non conveniens. It reasoned out that the recognition of the foreign judgment was based on comity, reciprocity and res judicata. Hence, this Petition.ix[9]
Issue

In his Memorandum, petitioner submits this lone but all-embracing issue: Whether or not the Court of Appeals acted in a manner x x x contrary to law when it affirmed the Order of the trial court gr anting respondents Motion for Summary Judgment and rendering judgment against the petitioner. x[10] In his discussion, petitioner contends that the CA erred in ruling in this wise:

1.

That his Answer failed to tender a genuine issue of fact regarding the following: (a) (b) the jurisdiction of a foreign court over the subject matter the validity of the foreign judgment

(c) the judgments conformity to Philippine laws, public policy, canons of morality, and norms against unjust enrichment 2. That the principle of forum non conveniens was inapplicable to the instant case.

This Courts Ruling

The Petition has no merit.

First Question: Summary Judgment

Petitioner vehemently insists that summary judgment is inappropriate to resolve the case at bar, arguing that his Answer allegedly raised genuine and material factual matters which he should have been allowed to prove during trial. On the other hand, respondent argues that the alleged genuine issues of fact raised by petitioner are mere conclusions of l aw, or propositions arrived at not by any process of natural reasoning from a fact or a combination of facts stated but by the application of the artificial rules of law to the facts pleaded.xi[11] The RTC granted respondents Motion for Summary Judgment because petitioner, in his Answer, admitted the existence of the Judgment on Stipulation for Entry in Judgment. Besides, he had already paid $5,000 to respondent, as provided in the foreign judgment sought to be enforced.xii[12] Hence, the trial court ruled that, there being no genuine issue as to any material fact, the case should properly be resolved through summary judgment. The CA affirmed this ruling. We concur with the lower courts. Summary judgment is a procedural device for the prompt disposition of actions in which the pleadings raise only a legal issue, and not a genuine issue as to any material fact. By genuine issue is meant a question of fact that calls for the presentation of evidence. It should be distinguished from an issue that is sham, contrived, set in bad faith and patently unsubstantial.xiii[13] Summary judgment is resorted to in order to avoid long drawn out litigations and useless delays. When affidavits, depositions and admissions on file show that there are no genuine issues of fact to be tried, the Rules allow a party to pierce the allegations in the pleadings and to obtain immediate relief by way of summary judgment. In short, since the facts are not in dispute, the court is allowed to decide the case summarily by applying the law to the material facts. Petitioner contends that by allowing summary judgment, the two courts a quo prevented him from presenting evidence to substantiate his claims. We do not agree. Summary judgment is based on facts directly proven by affidavits, depositions or admissions.xiv[14] In this case, the CA and the RTC both merely ruled that trial was not necessary to resolve the case. Additionally and correctly, the RTC specifically ordered petitioner to submit opposing affidavits to support his contentions that (1) the Judgment on Stipulation for Entry in Judgment was procured on the basis of fraud, collusion, undue influence, or a clear mistake of law or fact; and (2) that it was contrary to public policy or the canons of morality.xv[15] Again, in its Orderxvi[16] dated November 29, 1995, the trial court clarified that the opposing affidavits were for [petitioner] to spell out the facts or circumstances [that] would constitute lack of jurisdiction over the subject matter of and over the persons involved in Case No. C21-00265, and that would render the judgment therein null and void. In this light, petitioners contention that he was not allowed to present evidence to substantiate his claims is clearly untenable. For summary judgment to be valid, Rule 34, Section 3 of the Rules of Court, requires (a) that there must be no genuine issue as to any material fact, except for the amount of damages; and (b) that the party presenting the motion for summary judgment must

be entitled to a judgment as a matter of law.xvii[17] As mentioned earlier, petitioner admitted that a foreign judgment had been rendered against him and in favor of respondent, and that he had paid $5,000 to the latter in partial compliance therewith. Hence, respondent, as the party presenting the Motion for Summary Judgment, was shown to be entitled to the judgment. The CA made short shrift of the first requirement. To show that petitioner had raised no genuine issue, it relied instead on the finality of the foreign judgment which was, in fact, partially executed. Hence, we shall show in the following discussion how the defenses presented by petitioner failed to tender any genuine issue of fact, and why a full-blown trial was not necessary for the resolution of the issues.
Jurisdiction

Petitioner alleges that jurisdiction over Case No. C21-00265, which involved partnership interest, was vested in the Securities and Exchange Commission, not in the Superior Court of California, County of Contra Costa. We disagree. In the absence of proof of California law on the jurisdiction of courts, we presume that such law, if any, is similar to Philippine law. We base this conclusion on the presumption of identity or similarity, also known as processual presumption.xviii[18] The Complaint,xix[19] which respondent filed with the trial court, was for the enforcement of a foreign judgment. He alleged therein that the action of the foreign court was for the collection of a sum of money, breach of promissory notes, and damages.xx[20] In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of the Securities and Exchange Commission (SEC). The jurisdiction of the latter is exclusively over matters enumerated in Section 5, PD 902-A,xxi[21] prior to its latest amendment. If the foreign court did not really have jurisdiction over the case, as petitioner claims, it would have been very easy for him to show this. Since jurisdiction is determined by the allegations in a complaint, he only had to submit a copy of the complaint filed with the foreign court. Clearly, this issue did not warrant trial.
Rights to Counsel and to Due Process

Petitioner contends that the foreign judgment, which was in the form of a Compromise Agreement, cannot be executed without the parties being assisted by their chosen lawyers. The reason for this, he points out, is to eliminate collusion, undue influence and/or improper exertion of ascendancy by one party over the other. He alleges that he discharged his counsel during the proceedings, because he felt that the latter was not properly attending to the case. The judge, however, did not allow him to secure the services of another counsel. Insisting that petitioner settle the case with respondent, the judge practically imposed the settlement agreement on him. In his Opposing Affidavit, petitioner states: It is true that I was initially represented by a counsel in the proceedings in #C21-00625. I discharged him because I then felt that he was not properly attending to my case or was not competent enough to represent my interest. I asked the Judge for time to secure another counsel but I was practically discouraged from engaging one as the Judge was insistent that I settle the case at once with the [respondent]. Being a foreigner and not a lawyer at that I did not know what to do. I felt helpless and the Judge and [respondents] lawyer were the ones telling me what to do. Under ordinary circumstances, their directives should have be en taken with a grain of salt especially so [since respondents] counsel, who was telling me what to do, ha d an interest adverse to mine. But [because] time constraints and undue influence exerted by the Judge and [respondents] counsel on me disturbed and seriously affected my freedom to act according to my best judgment and belief. In point of fact, the terms of the settlement were practically imposed on me by the Judge seconded all the time by [respondents] counsel. I was then helpless as I had no counsel to assist me and the collusion between the Judge and [respondents] counsel was becoming more evident by the way I was treated in the Superior Court of [t]he State of California. I signed the Judgment on Stipulation for Entry in Judgment without any lawyer assisting me at the time and without being fully aware of its terms and stipulations. xxii[22] The manifestation of petitioner that the judge and the counsel for the opposing party had pressured him would gain credibility only if he had not been given sufficient time to engage the services of a new lawyer. Respondents Affidavit xxiii[23] dated May 23, 1994, clarified, however, that petitioner had sufficient time, but he failed to retain a counsel. Having dismissed his lawyer as early as June 19, 1991, petitioner directly handled his own defense and negotiated a settlement with respondent and his counsel in December 1991. Respondent also stated that petitioner, ignoring the judges reminder of the importance of having a lawyer, argued that he would be the one to settle the case and pay anyway. Eventually, the Compromise Agreement was presented in

court and signed before Judge Ellen James on January 3, 1992. Hence, petitioners rights to counsel and to due process were not violated.
Unjust Enrichment

Petitioner avers that the Compromise Agreement violated the norm against unjust enrichment because the judge made him shoulder all the liabilities in the case, even if there were two other defendants, G.S.P & Sons, Inc. and the Genesis Group. We cannot exonerate petitioner from his obligation under the foreign judgment, even if there are other defendants who are not being held liable together with him. First, the foreign judgment itself does not mention these other defendants, their participation or their liability to respondent. Second, petitioners undated Opposing Affidavit states: [A]lthough myself and these entities were initially represented by Atty. Lawrence L. Severson of the Law Firm Kouns, Quinlivan & Severson, x x x I discharged x x x said lawyer. Subsequently, I assumed the representation for myself and these firms and this was allowed by the Superior Court of the State of California without any authorization from G.G.P. & Sons, Inc. and the Genesis Group. xxiv[24] Clearly, it was petitioner who chose to represent the other defendants; hence, he cannot now be allowed to impugn a decision based on this ground. In any event, contrary to petitioners contention, unjust enrichment or solutio indebiti does not apply to this case. This doctrine contemplates payment when there is no duty to pay, and the person who receives the payment has no right to receive it.xxv[25] In this case, petitioner merely argues that the other two defendants whom he represented were liable together with him. This is not a case of unjust enrichment. We do not see, either, how the foreign judgment could be contrary to law, morals, public policy or the canons of morality obtaining in the country. Petitioner owed money, and the judgment required him to pay it. That is the long and the short of this case. In addition, the maneuverings of petitioner before the trial court reinforce our belief that his claims are unfounded. Instead of filing opposing affidavits to support his affirmative defenses, he filed a Motion for Reconsideration of the Order allowing summary judgment, as well as a Motion to Dismiss the action on the ground of forum non conveniens. His opposing affidavits were filed only after the Order of November 29, 1995 had denied both Motions.xxvi[26] Such actuation was considered by the trial court as a dilatory ploy which justified the resolution of the action by summary judgment. According to the CA, petitioners allegations sought to delay the full effects of the judgment; hence, summary judgment was proper. On this point, we concur with both courts.
Second Question: Forum Non Conveniens

Petitioner argues that the RTC should have refused to entertain the Complaint for enforcement of the foreign judgment on the principle of forum non conveniens. He claims that the trial court had no jurisdiction, because the case involved partnership interest, and there was difficulty in ascertaining the applicable law in California. All the aspects of the transaction took place in a foreign country, and respondent is not even Filipino. We disagree. Under the principle of forum non conveniens, even if the exercise of jurisdiction is authorized by law, courts may nonetheless refuse to entertain a case for any of the following practical reasons: 1) The belief that the matter can be better tried and decided elsewhere, either because the main aspects of the case transp ired in a foreign jurisdiction or the material witnesses have their residence there; 2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum shopping[,] merely to secure procedural advantages or to convey or harass the defendant; 3) The unwillingness to extend local judicial facilities to non-residents or aliens when the docket may already be overcrowded; 4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained; and

The difficulty of ascertaining foreign law.xxvii[27] None of the aforementioned reasons barred the RTC from exercising its jurisdiction. In the present action, there was no more need for material witnesses, no forum shopping or harassment of petitioner, no inadequacy in the local machinery to enforce the foreign judgment, and no question raised as to the application of any foreign law. Authorities agree that the issue of whether a suit should be entertained or dismissed on the basis of the above-mentioned principle depends largely upon the facts of each case and on the sound discretion of the trial court.xxviii[28] Since the present action lodged in the RTC was for the enforcement of a foreign judgment, there was no need to ascertain the rights and the obligations of the parties based on foreign laws or contracts. The parties needed only to perform their obligations under the Compromise Agreement they had entered into. Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a judgment in an action in personam rendered by a foreign tribunal clothed with jurisdiction is presumptive evidence of a right as between the parties and their successors-in-interest by a subsequent title.xxix[29] Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or elsewhere -- enjoys the presumption that it is acting in the lawful exercise of its jurisdiction, and that it is regularly performing its official duty.xxx[30] Its judgment may, however, be assailed if there is evidence of want of jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law or fact. But precisely, this possibility signals the need for a local trial court to exercise jurisdiction. Clearly, the application of forum non coveniens is not called for. The grounds relied upon by petitioner are contradictory. On the one hand, he insists that the RTC take jurisdiction over the enforcement case in order to invalidate the foreign judgment; yet, he avers that the trial court should not exercise jurisdiction over the same case on the basis of forum non conveniens. Not only do these defenses weaken each other, but they bolster the finding of the lower courts that he was merely maneuvering to avoid or delay payment of his obligation. WHEREFORE, the Petition is hereby DENIED and the assailed Decision and Resolution AFFIRMED. Double costs against petitioner. SO ORDERED.

G.R. No. 138381

April 16, 2002

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. COMMISSION ON AUDIT, respondent. x---------------------------------------------------------x G.R. No. 141625 April 16, 2002 GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. ALFREDO D. PINEDA, DANIEL GO, FELINO BULANDUS, FELICIMO J. FERRARIS, JR., BEN HUR PORLUCAS, LUIS HIPONIA, MARIA LUISA A. FERNANDEZ, VICTORINA JOVEN, CORAZON S. ALIWANAG, SILVER L. MARTINES, SR.,

RENATO PEREZ, LOLITA CAYLAN, DOUGLAS VALLEJO and LETICIA ALMAZAN, on their own behalf and on behalf of all GSIS retirees with all of whom they share a common and general interest, respondents. YNARES-SANTIAGO, J.: At the core of these two consolidated petitions is the determination of whether the Commission on Audit (COA) properly disallowed on post-audit, certain allowances and/or fringe benefits granted to employees of the Government Service Insurance System (GSIS), after the effectivity of Republic Act No. 6758, otherwise known as the Salary Standardization Law on July 1, 1989. I. G.R. No. 138381 In this special civil action for certiorari under Rule 65 in relation to Rule 64 of the 1997 Rules of Civil Procedure, petitioner GSIS seeks the annulment of COA Decision No. 98-337 dated August 25, 1998, which affirmed the Resident Auditor's disallowance of monetary benefits granted to or paid by GSIS in behalf of its employees. After the effectivity of R.A. No. 6758 on July 1, 1989, petitioner GSIS increased the following benefits of its personnel: a) longevity pay; b) children's allowance; c) housing allowance for its branch and assistant branch managers; and d) employer's share in the GSIS Provident Fund from 20% to 45% of basic salary for incumbent employees as of June 30, 1989. The GSIS also remitted employer's share to the GSIS Provident Fund for new employees hired after June 30, 1989, continued the payment of premiums for group personnel accident insurance and granted loyalty cash award to its employees in addition to a service cash award. Upon post-audit and examination, the GSIS Corporate Auditor disallowed the aforementioned allowances and benefits, citing Section 12 of R.A. No. 6758 in relation to sub-paragraphs 5.4 and 5.5 of its implementing rules, DBM Corporate Compensation Circular No. 10 (CCC No. 10). The first paragraph of Section 12, R.A. No. 6758 reads: SEC. 12. Consolidation of Allowances and Compensation.- All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM , shall be deemed included in the standardized salary rates herein prescribed. Such other additional compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989, not integrated into the standardized salary rates shall continue to be authorized. x x x Sub-paragraphs 5.4 and 5.5 of CCC No. 10,1 meanwhile, supplemented Section 12 above by enumerating the additional compensation authorized to be continued for incumbent employees as of July 1, 1989. According to the Corporate Auditor, R.A. No. 6758 authorized the continued grant of allowances/fringe benefits not integrated into the standardized salary for incumbents as of June 30, 1989. However, these non-integrated benefits may not be increased after effectivity of the statute, without prior approval of the DBM or Office of the President or in the absence of legislative authorization in accordance with CCC No. 10. Explaining this position, the Corporate Auditor invoked COA Memorandum No. 90653 dated June 4, 1990, which states: x x x While it is true that R.A. 6758 and Corporate Compensation Circular (CCC) No. 10 are silent with respect to the increase of allowances/fringe benefits not integrated into the basic salary and allowed to be continued only for incumbents as of June 30, 1989, it would be inconsistent to allow further increase in said allowances and fringe benefits after July 1, 1989 since continuance thereof for incumbents is merely being tolerated until they vacate their present positions for which they have been authorized to receive allowances/fringe benefits.2

The Corporate Auditor also did not allow in audit the remittance of employer's share to the GSIS Provident Fund for new-hires because the continuation of said benefit was only in favor of incumbents, as explicitly stated in the law. The payment of group insurance premiums covering all employees was likewise disallowed, for the reason that under sub-paragraph 5.6 of CCC No. 10,3 all fringe benefits granted on top of basic salary not otherwise enumerated under sub-paragraphs 5.4 and 5.5 thereof were already discontinued effective November 1, 1989. As for the loyalty cash award and the service cash award, the Corporate Auditor opined that only one of the two monetary incentives may be availed of by GSIS personnel. On February 26, 1993, Mr. Julio Navarrete, Vice-President of the GSIS Human Resources Group, wrote to respondent COA appealing, in behalf of GSIS, the afore-stated disallowances by the Corporate Auditor. Mr. Navarrete averred that although it may be conceded that the Salary Standardization Law did not extend the subject benefits to new-hires after the law's effectivity, the increase thereof should nonetheless be allowed for incumbents since these benefits have been enjoyed by said employees even prior to the passage of said law.4 In the case of Philippine Ports Authority v. Commission on Audit,5 which involved a similar increase, after the enactment of R.A. No. 6758, in the representation and transportation allowance (RATA) of Philippine Ports Authority (PPA) employees, it was held that: x x x the date July 1, 1989 does not serve as a cut-off date with respect to the amount of RATA. The date July 1, 1989 becomes crucial only to determine that as of said date, the officer was an incumbent and was receiving the RATA, for purposes of entitling him to its continued grant. This given date should not be interpreted as fixing the maximum amount of RATA to be received by the official.6 It was further alleged that contrary to the Corporate Auditor's contention, the GSIS Board of Trustees retained its power to fix and determine the compensation package for GSIS employees despite the passage of the Salary Standardization Law, pursuant to Section 36 of Presidential Decree No. 1146, as amended by Presidential Decree No. 1981, to wit: Sec. 36. x x x The Board of Trustees has the following powers and functions, among others: xxx xxx xxx

(d) Upon the recommendation of the President and General Manager, to approve the System's organizational and administrative structure and staffing pattern, and "to establish, fix, review, revise and adjust the appropriate compensation package for the officers and employees of the System, with reasonable allowances, incentives, bonuses, privileges and other benefits as may be necessary or proper for the effective management, operation and administration of the System." For the purpose of this and the preceding subsection, the System shall be exempt from the rules and requirements of the Office of the Budget and Management and the Office of the Compensation and Position Classification; xxx xxx xxx

Pursuant thereto, the GSIS Board of Trustees may validly increase and grant the subject benefits, even without securing the imprimatur of the DBM, Office of the President or Congress. On August 25, 1998, the COA affirmed the disallowances made by the Corporate Auditor and held that Section 36 of P.D. No. 1146, as amended, was already repealed by Section 16 of R.A. No. 6758.7 The COA similarly concluded that the GSIS Board of Trustees may not unilaterally augment or grant benefits to its personnel, without the necessary authorization required under CCC No. 10.8 GSIS filed a motion for reconsideration of the COA decision, invoking the ruling in De Jesus, et al. v. COA and Jamoralin.9 Corporate Compensation Circular No. 10 (CCC No. 10) was declared to be of no legal force or effect due to its non-publication in

the Official Gazette or a newspaper of general circulation. In view of this development, GSIS posited that the questioned disallowances no longer had any leg to stand on and that COA should consequently lift the disallowances premised on CCC No. 10. On March 23, 1999, the COA denied the motion for reconsideration stating: Although CCC No. 10 has been declared ineffective due to its non-publication as provided for in Article 2 of the Civil Code of the Philippines, the disallowances on the increased rates of the allowances/fringe benefits can still be sustained because as ruled earlier, the power of the governing boards of corporations to fix compensation and allowances of personnel, including the authority to increase the rates, pursuant to their specific charters had already been repealed by Sec. 3 of P.D. 1597 and Section 16 of R.A. 6758. The other reasons or grounds relied upon by the petitioner upon which the Motion is predicated have already been judiciously passed upon by this Commission when it rendered the subject COA Decision No. 98-337. Accordingly, there being no new, sufficient and material evidence adduced as would warrant a reversal or modification of the decision herein sought to be reconsidered, this Commission denies with finality the instant motion for reconsideration for utter lack of merit.10 Hence, this petition, challenging the above decision and resolution of the COA on the following grounds: A.)RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT THE POWER SPECIFICALLY GRANTED BY PRESIDENTIAL DECREE NO. 1146, AS AMENDED, TO THE GSIS BOARD OF TRUSTEES, TO ESTABLISH AND FIX THE APPROPRIATE COMPENSATION PACKAGE FOR GSIS OFFICERS AND EMPLOYEES HAS ALREADY BEEN REPEALED BY REPUBLIC ACT NO. 6758. B.)RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DENYING PETITONER'S MOTION FOR RECONSIDERATION DESPITE THE DECLARATION BY THIS HONORABLE COURT IN THE CASE OF RODOLFO S. DE JESUS et al. vs. COMMISSION ON AUDIT and LEONARDO L. JAMORALIN, THAT CCC NO. 10 - THE MAIN BASIS OF THE QUESTIONED DISALLOWANCE - IS INVALID AND INEFFECTIVE FOR LACK OF THE REQUIRED PUBLICATION.11 II. G.R. No. 141625 This petition for review on certiorari under Rule 45 of the Rules of Court was precipitated by the factual antecedents of G.R. No. 138381. While GSIS was appealing the disallowances made by the Corporate Auditor above, some of its employees retired and submitted the requisite papers for the processing of their retirement benefits. Since the retired employees received allowances and benefits which had been disallowed by the Corporate Auditor, GSIS required them to execute deeds of consent that would authorize GSIS to deduct from their retirement benefits the previously paid allowances, in case these were finally adjudged to be improper. Some of the retired employees agreed to sign the deed, while others did not. Nonetheless, GSIS went ahead with the deductions. On April 16, 1998, a number of these retired GSIS employees12 (hereafter referred to as "retirees") brought Case No. 001-98 before the GSIS Board of Trustees (hereafter referred to as "GSIS Board") questioning the legality of the deductions. They claimed that COA disallowances can not be deducted from retirement benefits, considering that these were explicitly exempted from such deductions under the last paragraph of Section 39, Republic Act No. 8291, which states: SEC. 39. Exemption from Tax, Legal Process and Lien. - x x x xxx xxx xxx

The funds and/or the properties referred to herein as well as the benefits, sums or monies corresponding to the benefits under this Act shall be exempt from attachment, garnishment, execution, levy or other processes issued by the courts, quasi-judicial agencies or administrative bodies including Commission on Audit (COA) disallowances and from all financial obligations of the members, including his pecuniary accountability arising from or caused or occasioned by his exercise or performance of his official functions or duties, or incurred relative to or in connection with his position or work except when his monetary liability, contractual or otherwise, is in favor of the GSIS. The GSIS Board subsequently referred the case for hearing to its Corporate Secretary, Atty. Alicia Albert. Thereafter, the retirees and GSIS, through its Legal Services Group (LSG), entered into a stipulation of facts and agreed on a focal issue, namely: whether the COA disallowances may be legally deducted from the retirement benefits, on the premise that the same are monetary liabilities of the retirees in favor of GSIS under Section 39 above. GSIS also insisted that since the deductions were anchored on the disallowances made by the COA, the retirees' remedy was to ventilate the issue before said Commission and not the GSIS Board. Meanwhile, the De Jesus case mentioned in G.R. No. 138381 was promulgated, rendering CCC No. 10 legally ineffective. This prompted the hearing officer to suggest that the parties enter into an agreement as to what allowances and benefits are covered by CCC No. 10, so that a partial decision can be rendered thereon. The retirees thus filed a motion for partial decision, submitting that there no longer existed any obstacle to the increase in allowances and benefits covered by CCC No. 10. These allegedly include: a) GSIS management's share in the Provident Fund; b) initial payment of the productivity bonus; c) acceleration implementation of the new salary schedule effective August 1, 1995; d) increase in clothing allowance, rice allowance, meal subsidy, children's allowance and longevity pay; e) loyalty award; f) 1995 mid-year financial assistance; and g) other allowances as may be suggested by the Vice-President of the GSIS Human Resources Group.13 On November 25, 1998, GSIS filed an opposition to the retiree's motion for partial decision,14 asserting that De Jesus had no bearing on the principal issue which, as agreed upon, was the interpretation of Section 39 of RA No. 8291. GSIS also filed on even date, a motion to dismiss,15 alleging that the nullity of CCC No. 10 rendered the petition moot and academic and paved the way for the payment of the controverted allowances earlier deducted from the retirement benefits. Replying to the two pleadings filed by GSIS, the retirees countered that a motion to dismiss was a prohibited pleading under Section 14.13, Rule XIV of the GSIS Implementing Rules and Regulations.16 Moreover, the retirees maintained that a motion to dismiss may be filed in proceedings before the GSIS Board only prior to the filing of an answer which GSIS had already done. Also, the LSG had previously agreed to a partial decision based on the De Jesus case; it could thus no longer take a contradictory stand by opposing the retiree's motion for partial decision.17 On January 14, 1999, the retirees filed a motion for summary judgment18 claiming that there were no factual issues involved and that the question raised in the petition was purely legal in nature. The matter was directly submitted to the GSIS Board for its consideration and resolution. On March 3, 1999, the GSIS Board issued Resolution No. 72,19 dismissing the petition. A motion for reconsideration filed by the retirees was also denied by the Board in its Resolution No. 16120 dated May 18, 1999. The matter was then elevated to the Court of Appeals, which rendered a decision on September 30, 1999, disposing as follows: IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. Resolution No. 72, Annex "A" of the Petition and Resolution No. 161 Annex "C" of the Petition are hereby SET ASIDE and NULLIFIED. The Hearing Officer of the Board of Trustees of the Respondent is directed to proceed, with dispatch, with the proceedings of Case No. 001-98, as provided for in the Rules and regulations implementing Republic Act 8291 (IRR). SO ORDERED.21 The appellate court held that the motion to dismiss filed by the LSG before the GSIS Board is a prohibited pleading under applicable GSIS rules. The GSIS also had jurisdiction over the retirees' petition, as it pertained to the interpretation and application of Section 39 of R.A. No. 8291, a law exclusively administered by the GSIS Board. Contrary to the LSG's

submissions, the Court of Appeals ruled that there was no identity in subject matter between the retiree's petition and the appeal from the auditor's disallowances filed by GSIS with the COA. Thus, the GSIS Board may take cognizance of the retirees' petition independently from the COA proceedings. Hence, this second petition, assigning the following as errors: I THE COURT OF APPEALS ERRED IN RULING THAT THE BOARD OF TRUSTEES OF GSIS HAS JURISDICTION OVER THE CASE. II THE COURT OF APPEALS ERRED IN RULING THAT THE CASE PENDING BEFORE THE SUPREME COURT IS DIFFERENT FROM THE PRESENT CASE.22 On August 20, 2001, the two petitions were consolidated. During the pendency of these petitions, GSIS Board Resolution No. 79,23 which authorized the Provident Fund rate increase for incumbent employees, was approved retroactively from March 1, 1994 by then President Joseph Estrada. 24 Thus, there no longer appears to be any basis for disallowing the rate increase in management contribution to the Provident Fund from 20% to 45% of the basic salary received by petitioner's incumbent employees. The presidential approval cured the lack of authorization cited by respondent COA for disallowing this particular increase in benefit. We now proceed to the resolution of the twin petitions. Petitioner GSIS insists that the GSIS Board retained its power to increase the subject benefits under Section 36 of P.D. 1146, as amended (or the Revised GSIS Charter), despite the passage of R.A. No. 6758, particularly Section 16 thereof. The latter, which is a general law, can not repeal or take precedence over the former because the Revised GSIS Charter is a special law that specifically exempts GSIS from Office of the Compensation and Position Classification coverage. We need not delve lengthily into this submission as this was earlier laid to rest by the Court in Philippine International Trading Corporation (PITC) v. COA,25 where we held that "the repeal by Section 16 of RA 6758 of 'all corporate charters that exempt agencies from the coverage of the system' was clear and expressed necessarily to achieve the purposes for which the law was enacted, that is, the standardization of salaries of all employees in government owned and/or controlled corporations to achieve 'equal pay for substantially equal work'."26 As things now stand, GSIS is already exempt from salary standardization by express provision of R.A. 829127 a subsequent enactment approved on May 30, 1997 which amended the Revised GSIS Charter. But since GSIS was still governed by the latter at the time the increase in benefits were disallowed in audit, GSIS was then yet covered by the Salary Standardization Law, thereby making our ruling in PITC presently relevant and applicable. We now come to the legal propriety of the COA disallowances. For purposes of clarity, a distinction must initially be made between those allowances which are deemed consolidated into the standardized salary and those which are not under the terms of R.A. No. 6758. As correctly pointed out by petitioner GSIS, the housing allowance, longevity pay and children's allowance are non-integrated benefits, expressly made so by sub-paragraphs 5.4 and 5.5 of CCC No. 10 in relation to the last sentence of Section 12 (par. 1), R.A. No. 6758. On the other hand, the payment of group personnel accident insurance premiums, loyalty cash award and service cash award are not excluded from the standardized salary by the same provisions of CCC No. 10 or R.A. No. 6758. These latter allowances are thus considered integrated into the basic salary and are treated differently under the same law. A. NON-INTEGRATED BENEFITS AND ALLOWANCES

a. Longevity Pay and Children's Allowance As regards the increase in longevity pay and children's allowance, we find applicable our pronouncement in Philippine Ports Authority (PPA) v. COA.28 This case involved an adjustment in the representation and transportation allowance (RATA) of incumbent PPA employees after the effectivity of R.A. No. 6758 on July 1, 1989. The RATA therein is similar to the longevity pay and children's allowance subject of the instant petition, in the sense that: a) it is also a non-integrated allowance authorized to be continued for incumbents under Section 12, R.A. No. 6758; and b) the rate thereof did not consist of a definite amount but was subject to certain factors and/or stipulations that were nonetheless fixed before R.A. 6758 took effect. In the PPA case, the adjustment was brought about by a corresponding increase in the employees' basic salary upon which the 40% RATA was based. Respondent Commission disallowed the payment of RATA differentials arguing, as in this petition, that the RATA should be fixed at the prevailing rate prior to July 1, 1989, regardless of the increase in basic salary. It was postulated therein that consistent with the second sentence of said Section 12 (par. 1), the RATA should no longer be based on 40% of basic standardized salary but on the highest amount of RATA received by the incumbent as of July 1, 1989. We rejected respondent COA's interpretation of Section 12 and held that the date July 1, 1989 should not be construed as a cutoff date for setting the amount of allowances authorized to be continued under said provision. The date July 1, 1989 is important only for determining whether an employee is an incumbent and receiving the allowance prior to the law's effectivity in order to ascertain if such employee is qualified to its continued grant. It is not, however, to be interpreted as fixing the maximum amount of allowance that an incumbent employee is authorized to receive, but is only a qualifying date imposed by the statute. Accordingly, the specific amount of longevity pay and children's allowance being received by an incumbent GSIS employee as of July 1, 1989 is not to be considered as the highest amount authorized under the law. It is thus evident that in adjusting the amount of allowances mentioned above, petitioner GSIS was merely complying with the policy of non-diminution of pay and benefits enunciated in R.A. No. 6758.29 This policy does not only pertain specifically to the amount being received by the incumbent as of July 1, 1989, but also to the terms and conditions attached to these benefits prior to the passage of the statute. Relative to this, it should be noted that respondent COA did not dispute the fact that these benefits, including the terms and conditions thereof, are part of a compensation package granted by the GSIS Board to incumbents even before R.A. 6758 took effect. In turn, this compensation package was incorporated in the 1978 GSIS Revised Compensation System approved by the President, upon recommendation of the Department of Budget and Management (DBM). Thus, to peg the amount of these non-integrated allowances at the figure being received by the incumbent as of July 1, 1989 would vary the terms of the benefits to which the incumbents are entitled. This could not have been the intendment of the statute, because such interpretation would effectively impair the incumbents' rights to these allowances, which have already accrued prior to July 1, 1989. In other words, before R.A. No. 6758 was enacted, incumbent GSIS employees had a fixed right to these allowances under the terms and conditions then obtaining.30 They could not therefore be excluded from its enjoyment under the same terms and conditions without violating basic precepts of fairness and due process. b. Housing Allowance In contrast to the two preceding non-integrated benefits, it appears that the housing allowance given to petitioner's incumbent branch and assistant branch managers before the passage of R.A. No. 6758 consisted of a fixed amount of P500.00 and P300.00 respectively. Said amounts were subsequently increased to P2,000.00 and P3,000.00 by virtue of GSIS Board Resolution No. 29431 dated July 26, 1991. As stated earlier, the power of the GSIS Board to "establish, fix, review, revise and adjust" the allowances, privileges and other benefits of its employees under Section 36 of the Revised GSIS Charter has been repealed by R.A. No. 6758.32 As a consequence, the GSIS Board may no longer grant any increase in housing allowance on its own volition after June 30, 1989. Further, unlike the two preceding non-integrated benefits, it cannot be said that the affected branch and assistant branch managers acquired a vested right to any amount of housing allowance in excess of that granted to them before the passage of R.A. No. 6758. They could not have been entitled to any amount other than that which was already determined before the law

took effect, because the terms of this allowance did not admit of any adjustment. Otherwise stated, since the amount of said housing allowance was fixed, the disallowance by the COA of increases therein would not result in any diminution of benefits for these incumbent managers. Neither can the GSIS Board unilaterally grant said increases by board resolution because it no longer had any power to do so when it issued Resolution No. 294. It appears that respondent COA did not totally disallow the increase in housing allowance, but merely approved a lesser amount. Respondent COA allowed a 100% increase of P1,000.00 and P600.00 respectively, in accordance with the amount authorized by the DBM.33 In fact, the DBM permitted the increase in express recognition of the fact that this has been the practice in GSIS before the advent of R.A. No. 6758. Consequently, it is only to the extent of the approved amount that the housing allowance should be allowed in audit. B. INTEGRATED BENEFITS AND ALLOWANCES a. Group Personnel Accident Insurance Premiums As stated earlier, the payment of premiums for group personnel accident insurance in favor of incumbent GSIS employees was not listed as an exception to the standardized salary under Section 12, R.A. No. 6758 and sub-paragraphs 5.4 and 5.5 of CCC No. 10. As such, it is considered as a fringe benefit granted on top of basic salary which, according to sub-paragraph 5.6 of CCC No. 10, must be discontinued as of November 1, 1989. However, as pointed out by petitioner GSIS, CCC No. 10 was declared to be of no legal force and effect in De Jesus v. COA.34 It can not thus be utilized as a justification for depriving incumbent employees of integrated benefits which they were receiving prior to R.A. No. 6758. As held in De Jesus: x x x it is decisively clear that DBM CCC No. 10, which completely disallows payment of allowances and other additional compensation to government officials and employees, starting November 1, 1989, is not a mere interpretative and internal regulation. It is something more than that. And why not, when it tends to deprive government workers of their allowances and additional compensation sorely needed to keep body and soul together. At the very least, before said circular under attack may be permitted to substantially reduce their income, the government officials and employees concerned should be apprised and alerted by the publication of subject circular in the Official Gazette or in a newspaper of general circulation in the Philippines-to the end that they may be given amplest opportunity to voice out whatever opposition they may have, and to ventilate their stance on the matter. This approach is more in keeping with democratic precepts and rudiments of fairness and transparency.35 Conformably, since the disallowance of the premium payments was founded upon CCC No. 10, the consequent outcome of the latter's nullification is to remove any obstacle to the aforesaid benefit. The subsequent publication of CCC No. 10 in the Official Gazette on March 1, 1999,36 neither cured the defect nor retroact to the time that the aforesaid items were disallowed in audit. Again, in PITC v. COA,37 we ruled that from the time the COA disallowed the benefit up to the filing of the instant petition, CCC No. 10 remained in legal limbo due to its lack of publication. And because publication is a condition precedent to the effectivity of CCC No. 10, it must first be complied with before affecting individual rights; otherwise, "such omission would offend due process insofar as it would deny the public, knowledge of the laws that are supposed to govern it."38 b. Loyalty and Service Cash Award We have carefully examined the records of the case and find that the disallowance of the simultaneous grant of these two integrated benefits was not so much founded on CCC No. 10, but upon a ruling made by the Civil Service Commission (CSC). Notably, with respect to the loyalty and service cash award, respondent COA held: As regards the payment of loyalty cash award under Sec. 7 (e), Rule X, of the CSC Omnibus rules Implementing Book V of E.O. No. 292 and service cash award, this Commission holds that only one can be availed of by GSIS employees

in the light of the clear ruling of the Civil Service Commission embodied in a letter dated May 12, 1993 that since both benefits have the same rationale, which is to reward long and dedicated service, "availment of the award can be made only under either system, whichever is more advantageous to the employees."39 The foregoing conclusion was apparently based on the position taken by Corporate Auditor Fe R. Munoz, who expounded thereon in a second indorsement40 dated December 14, 1993 as follows: Service Cash Award is an incentive granted exclusively to any officer or employee of the GSIS who has rendered at least fifteen (15) years continuous and dedicated service to the GSIS. It entitles them to receive amounts ranging from P500.00 to P15,000.00 according to the number of years of service, pursuant to the provisions of the Collective Bargaining Agreement (CBA), which payments are deducted by this Office from payment of Loyalty (Cash) Award. On the other hand, this should not be confused with the amount of Loyalty (Cash) Award in graduated amounts of P1,200.00, P1,300.00, P1,400.00 and P1,500.00 for every year of service of GSIS executives and employees who have completed at least ten (10) years of continuous service as authorized under Board Resolution No. 333 dated October 29, 1992 (Annex 7), using as legal basis Section 7 (e), Rule X of the Omnibus Civil Service Law and Rules, Implementing Book V of Executive Order No. 292, providing for the cash bonus of not less than One Hundred Pesos (P100.00) per year of service, chargeable against Agency's savings. It seems that the foregoing provision allows for a minimum but not for a maximum amount to be given, thereby giving the agencies enough flexibility to fix their own maximum amounts depending on the agency's savings. It is worthy to note in this connection that when the Civil Service Commission issued Memorandum Circular No. 42, series 1992, amending Section 7 (e), Rule X of the Omnibus Civil Service Law and Rules, providing that the amount of cash bonus to be given should not be more than P100.00 per year of service, the GSIS returned to the old computation as authorized under Board Resolutions No. 192 and 187 dated May 16, 1989 and May 29, 1992 respectively (Annexes 8 and 9). Hence, the matter was referred to the Civil Service Commission for clarification. The Commission ruled in a letter dated May 12, 1993 (Annex 10) addressed to PGM Cesar N. Sarino, that the availment of the award can be made only under either system, whichever is more advantageous to the employees. Petitioner GSIS did not squarely address the above finding of respondent COA or the Corporate Auditor. Instead, it based its arguments on the general assumption that all the benefits and allowances subject of this petition were disallowed on the basis of Section 12, R.A. No. 6758 and its implementing rules. This is beside the point, however, as it can readily be seen that respondent COA's ruling on the loyalty and service cash award is actually based on a purported CSC declaration relative thereto. As a result, there has been no real joinder of issues as far as these benefits are concerned. Coming now to G.R. No. 141625, the Court of Appeals did not commit any reversible error when it held that the petition filed before the GSIS Board questioning the legality of the deductions could proceed independently from the appeal brought by petitioner GSIS from the COA disallowances. No error could be attributed to the appellate court's finding that there was no identity of subject matter or issue between the COA proceedings and the retirees' claim before the GSIS Board. However, considering that it has already been resolved in G.R. No. 138381, we no longer find it necessary to discuss whether GSIS can deduct the COA disallowances from the respondents/retirees' retirement benefits. Having settled G. R. No. 138381, it is now incumbent upon petitioner GSIS to reimburse the proper amounts to respondents/retirees. Necessarily, the amount of said refund should be in accord with our ruling in G.R. No. 138381. WHEREFORE, in view of the foregoing, G.R. No. 138381 is PARTLY GRANTED. The disallowance of the adjustment in longevity pay and children's allowance and the payment of group personnel accident insurance premiums in favor of incumbent GSIS employees is SET ASIDE. The disallowance of the increase in housing allowance and the simultaneous grant of loyalty and service cash award are AFFIRMED. Petitioner GSIS is further ordered to REFUND the amounts deducted from the retirement benefits in G.R. No. 141625, corresponding to the amount of benefits allowed in G.R. No. 138381. SO ORDERED.

Bellosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing , De Leon, Jr., Sandoval-Gutierrez, and Carpio, JJ., concur. Davide, Jr., C. J., Melo, Kapunan, and Austria-Martinez, JJ., on official leave. Corona, J., took no part in the deliberation-absent. SECOND DIVISION [G.R. No. 108395. March 7, 1997] HEIRS OF THE LATE TEODORO GUARING, JR., petitioners, vs. COURT OF APPEALS, PHILIPPINE RABBIT BUS LINES, INC., and ANGELES CUEVAS, respondents. DECISION MENDOZA, J.: This is a petition for review of the decision of the Court of Appeals, reversing the decision of the Regional Trial Court of Manila, Branch 20, which ordered respondent Philippine Rabbit Bus Lines, Inc. and its driver, Angeles Cuevas, to pay various amounts in damages to petitioners, the heirs of the late Teodoro Guaring, Jr. This case arose from an unfortunate vehicular accident which happened on November 7, 1987, along the North Expressway in San Rafael, Mexico, Pampanga. Involved in the accident were a Mitsubishi Lancer car driven by Teodoro Guaring, Jr., who died as a result of the mishap, Philippine Rabbit Bus No. 415, driven by Angeles Cuevas, and a Toyota Cressida car, driven by Eligio Enriquez. The Mitsubishi Lancer was heading north, at the speed of 80 to 90 kilometers per hour. Following it was the Philippine Rabbit Bus No. 415, with Plate No. CVD-584. On the other hand, the Toyota Cressida was cruising on the opposite lane, bound for Manila. Petitioners, heirs of Teodoro Guaring, Jr., brought this action for damages, based on quasi delict, in the Regional Trial Court of Manila. Their evidence tended to show that the Rabbit bus tried to overtake Guarings car by passing on the right shoulder o f the road and that in so doing it hit the right rear portion of Guarings Mitsubishi Lancer. The impact caused the Lancer to swerve to the south-bound lane, as a result of which it collided with the Toyota Cressida car coming from the opposite direction. With Teodoro Guaring, Jr. in the Lancer, seated beside him in front, was Bonifacio Clemente. Riding in the Toyota Cressida driven by Sgt. Eligio Enriquez was his mother, Dolores Enriquez, who was seated beside him. Seated at the back were his daughter Katherine (who was directly behind him), his wife Lilian, and his nephew Felix Candelaria. Killed in the collision were Teodoro Guaring, Jr., who was driving the Lancer, and Dolores Enriquez, who was riding in the Cressida, while injured were Bonifacio Clemente and the occupants of the Toyota Cressida. Private respondents, on the other hand, presented evidence tending to show that the accident was due to the negligence of the deceased Guaring. They claimed that it was Guaring who tried to overtake the vehicle ahead of him on the highway and that in doing so he encroached on the south-bound lane and collided with the oncoming Cressida of U.S. Air Force Sgt. Enriquez. Private respondents claim that as a result of the collision the Lancer was thrown back to its lane where it crashed into the Rabbit bus. On May 16, 1990, the Regional Trial Court rendered judgment finding Philippine Rabbit Bus Lines, Inc. and its driver, Angeles Cuevas, at fault, and holding them solidarily liable for damages to petitioners. The dispositive portion of its decision reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants, ordering the latter to pay the former, jointly and severally, the sum of: 1. P500,000.00 for loss of earning capacity of the deceased Teodoro Guaring, Jr.; 2. P1,000,000.00 as moral damages;

3. P50,000.00 as and for attorneys fees; and 4. Costs of suit. From this judgment, private respondent Philippine Rabbit Bus Lines, Inc. appealed, contending: 1. The lower court erred in not finding that the proximate cause of the collision was Guarings negligence in attempting to overtake the car in front of him. 2. The lower court erred in not holding that PRBL exercised due diligence in the supervision of its employees. 3. The lower court erred in awarding the amount of P500,000.00 in favor of plaintiffs-appellees representing Guarings loss of earning capacity. 4. The lower court erred in awarding moral damages in favor of plaintiffs-appellees. 5. The lower court erred in awarding attorneys fees in favor of plaintiffs-appellees. On December 16, 1992, the Court of Appeals rendered a decision, setting aside the decision of the Regional Trial Court of Manila in the civil action for damages and dismissing the complaint against private respondents Philippine Rabbit Bus Lines, Inc. and Cuevas, on the strength of a decision rendered by the Regional Trial Court at San Fernando, Pampanga, in the criminal case, acquitting the bus driver Angeles Cuevas of reckless imprudence resulting in damage to property and double homicide. The appellate court held that since the basis of petitioners action was the alleged negligence of the bus driver, the latters acquittal in the criminal case rendered the civil case based on quasi delict untenable. Hence, this petition. Petitioners contend that [1] EVIDENCE IN ONE CASE IS INADMISSIBLE IN ANOTHER CASE AGAINST A PERSON NOT A PARTY IN THE FIRST CASE AND TO HOLD OTHERWISE IS VIOLATIVE OF PROCEDURAL DUE PROCESS. [2] THE DECISION OF THE COURT OF APPEALS WAS WITHOUT FACTUAL FINDINGS AND DID NOT RESOLVE SQUARELY THE ASSIGNED ERRORS AND IS THEREFORE A VOID JUDGMENT. [3] ACQUITTAL OF THE ACCUSED IN THE CRIMINAL CASE, WHETHER ON REASONABLE DOUBT OR NOT, IS NO BAR TO THE PROSECUTION FOR DAMAGES BASED ON QUASI-DELICT. The question is whether the judgment in the criminal case extinguished the liability of private respondent Philippine Rabbit Bus Lines, Inc. and its driver, Angeles Cuevas, for damages for the death of Teodoro Guaring, Jr. In absolving private respondents from liability, the Court of Appeals reasoned:i[1] Since the appellees civil action is predicated upon the negligence of the accused which does not exist as found by the trial court in the said criminal case, it necessarily follows that the acquittal of the accused in the criminal case carries with it the extinction of the civil responsibility arising therefrom. Otherwise stated, the fact from which the civil action might arise, that is, the negligence of the accused, did not exist. The finding in the criminal case that accused Cuevas was not negligent and the proximate cause of the accident was the act of deceased Guaring in overtaking another vehicle ahead of him likewise exonerates PRB from any civil liability. Although it did not say so expressly, the appellate court appears to have based its ruling on Rule 111, 2(b) of the Rules of Criminal Procedure, which provides: (b) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist.

This provision contemplates, however, a civil action arising from crime, whereas the present action was instituted pursuant to Art. 2176 of the Civil Code, which provides: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. It is now settled that acquittal of the accused, even if based on a finding that he is not guilty, does not carry with it the extinction of the civil liability based on quasi delict. Thus, in Tayag v. Alcantara,i[2] it was held: . . . a separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, if he is actually charged also criminally, to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary. In other words, the extinction of civil liability referred to in Par. (c), Section 3, Rule 111 [now Rule 111, 2(b)], refers exclusively to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil liability for the same act considered as a quasi-delict only and not as a crime is not extinguished even by a declaration in the criminal case that the criminal act charged has not happened or has not been committed by the accused. . . . It is noteworthy that the accident in that case also involved a Philippine Rabbit bus and that, as in this case, the acquittal of the bus driver was based on reasonable doubt. We held that the civil case for damages was not barred since the cause of action of the heirs was based on quasi delict. Again, in Gula v. Dianala it was held:i[3] Since the cause of action of plaintiffs-appellants is based on culpa aquiliana and not culpa criminal, thus precluding the application of the exception in Sec. 3(c) of Rule 111 [now Rule 111, 2(b)], and the fact that it can be inferred from the criminal case that defendant-accused, Pedro Dianala, was acquitted on reasonable doubt because of dearth of evidence and lack of veracity of the two principal witnesses, the doctrine in Mendoza vs. Arrieta, 91 SCRA 113, will not find application. In that case, the acquittal was not based on reasonable doubt and the cause of action was based on culpa criminal, for which reason we held the suit for damages barred. Even if damages are sought on the basis of crime and not quasi delict, the acquittal of the bus driver will not bar recovery of damages because the acquittal was based not on a finding that he was not guilty but only on reasonable doubt. Thus, it has been held:i[4] The judgment of acquittal extinguishes the liability of the accused for damages only when it includes a declaration that the facts from which the civil might arise did not exist. Thus, the civil liability is not extinguished by acquittal where the acquittal is based on reasonable doubt (PNB v. Catipon, 98 Phil. 286) as only preponderance of evidence is required in civil cases; where the court expressly declares that the liability of the accused is not criminal but only civil in nature (De Guzman v. Alvia, 96 Phil. 558; People v. Pantig, supra) as, for instance, in the felonies of estafa, theft, and malicious mischief committed by certain relatives who thereby incur only civil liability (See Art. 332, Revised Penal Code); and, where the civil liability does not arise from or is not based upon the criminal act of which the accused was acquitted (Castro v. Collector of Internal Revenue, 4 SCRA 1093; See Regalado, Remedial Law Compendium, 1983 ed., p. 623). In the present case, the dispositive portion of the decision of the RTC in the criminal case reads: WHEREFORE, the Court, entertaining reasonable doubt as to his guilt, the accused is hereby acquitted, of the offense of reckless imprudence resulting to double homicide and damage to property as charged in the Information, without pronouncement as to costs.

SO ORDERED.i[5] It was thus error for the appellate court to skip the review of the evidence in this case and instead base its decision on the findings of the trial court in the criminal case. In so doing, the appellate court disregarded the fact that this case had been instituted independently of the criminal case and that petitioners herein took no part in the criminal prosecution. In fact this action was filed below before the prosecution presented evidence in the criminal action. The attention of the Court of Appeals was called to the decision in the criminal case, which was decided on September 7, 1990, only when the decision of the trial court in this case was already pending review before it (the Court of Appeals). The appellate court did not even have before it the evidence in the criminal case. What it did was simply to cite findings contained in the decision of the criminal court. Worse, what the criminal court considered was reasonable doubt concerning the liability of the bus driver the appellate court regarded as a categorical finding that the driver was not negligent and, on that basis, declared in this case that the proximate cause of the accident was the act of deceased Guaring in overtaking another vehicle ahead of him. The notion that an action for quasi delict is separate and distinct from the criminal action was thus set aside. This case must be decided on the basis of the evidence in the civil case. This is important because the criminal court appears to have based its decision, acquitting the bus driver on the ground of reasonable doubt, solely on what it perceived to be the relative capacity for observation of the prosecution and defense witnesses.i[6] The prosecution did not call Bonifacio Clemente to testify despite the fact that shortly after the accident he gave a statement to the police, pinning the blame for the accident on the Philippine Rabbit bus driver. Indeed, the civil case involved a different set of witnesses. Petitioners presented Eligio Enriquez, who was driving the Cressida, and Bonifacio Clemente, who was a passenger in Guarings car. Thus, both h ad full view of the accident. It is unfair to bind petitioners to the result of the criminal action when the fact is that they did not take part therein. That the witnesses presented on behalf of the petitioners are different from those presented by the prosecution should have brought home to the appellate court the fundamental unfairness of considering the decision in the criminal case conclusive of the civil case. Because the Court of Appeals did not consider the evidence in the civil case, this case should be remanded to it so that it may render another decision in accordance with the law and the evidence. The issues raised by petitioners are essentially factual and require the evaluation of evidence, which is the function of the Court of Appeals in the exercise of its exclusive appellate jurisdiction. They cannot be decided in this Court. WHEREFORE, the decision of the Court of Appeals is REVERSED and this case is REMANDED to the Court of Appeals with instruction to render judgment with reasonable dispatch in accordance with law and the evidence presented in Civil Case No. 8843860. SO ORDERED.

SECOND DIVISION [G.R. No. 107125. January 29, 2001] GEORGE MANANTAN, petitioner, vs. THE COURT OF APPEALS, SPOUSES MARCELINO NICOLAS and MARIA NICOLAS, respondents. DECISION QUISUMBING, J.: This is a petition for review of the decision dated January 31, 1992 of the Court of Appeals in CA-G.R. CV No. 19240, modifying the judgment of the Regional Trial Court of Santiago, Isabela, Branch 21, in Criminal Case No. 066. Petitioner George Manantan was acquitted by the trial court of homicide through reckless imprudence without a ruling on his civil liability. On appeal from the civil aspect of the judgment in Criminal Case No. 066, the appellate court found petitioner Manantan civilly liable and ordered him to indemnify private respondents Marcelino Nicolas and Maria Nicolas P104,400.00 representing loss of support, P50,000.00 as death indemnity, and moral damages of P20,000.00 or a total of P174,400.00 for the death of their son, Ruben Nicolas. The facts of this case are as follows: On June 1, 1983, the Provincial Fiscal of Isabela filed an information charging petitioner Manantan with reckless imprudence resulting in homicide, allegedly committed as follows: That on or about the 25th day of September 1982, in the municipality of Santiago, province of Isabela, Philippines, and within the jurisdiction of this Honorable Court, the said accused, being then the driver and person-in-charge of an automobile bearing Plate No. NGA-816, willfully and unlawfully drove and operated the same while along the Daang Maharlika at Barangay Malvar, in said municipality, in a negligent, careless and imprudent manner, without due regard to traffic laws, regulations and ordinances and without taking the necessary precaution to prevent accident to person and damage to property, causing by such negligence, carelessness and imprudence said automobile driven and operated by him to sideswipe a passenger jeep bearing plate No. 9187F driven by Charles Codamon, thereby causing the said automobile to turn down (sic) resulting to the death of Ruben Nicolas a passenger of said automobile. CONTRARY TO LAW.v[1] On arraignment, petitioner pleaded not guilty to the charge. Trial on the merits ensued. The prosecutions evidence, as summarized by the trial court and adopted by the appellate court, showed that: [I]n the morning of September 25, 1982, Fiscal Wilfredo Ambrocio decided to catch shrimps at the irrigation canal at his farm. He invited the deceased who told him that they (should) borrow the Ford Fiera of the accused George Manantan who is also from Cordon. The deceased went to borrow the Ford Fiera butsaid that the accused also wanted to (come) along. So Fiscal Ambrocio and the deceased dropped by the accused at the Manantan Technical School. They drank beer there before they

proceeded to the farm using the Toyota Starlet of the accused. At the farm they consumed one (more) case of beer. At about 12:00 oclock noon they went home. Then at about 2:00 or 3:00 oclock that afternoon, (defense witness Miguel) Tabangin and (Ruben) Nicolas and the accused returned to the house of Fiscal Ambrocio with a duck. They cooked the duck and ate the same with one more case of beer. They ate and drank until about 8:30 in the evening when the accused invited them to go bowling. They went to Santiago, Isabela on board the Toyota Starlet of the accused who drove the same. They went to the Vicap Bowling Lanes at Mabini, Santiago, Isabela but unfortunately there was no vacant alley. While waiting for a vacant alley they drank one beer each. After waiting for about 40 minutes and still no alley became vacant the accused invited his companions to go to the LBC Night Club. They had drinks and took some lady partners at the LBC. After one hour, they left the LBC and proceeded to a nearby store where they ate arroz caldoand then they decided to go home. Again the accused drove the car. Miguel Tabangin sat with the accused in the front seat while the deceased and Fiscal Ambrocio sat at the back seat with the deceased immediately behind the accused. The accused was driving at a speed of about 40 kilometers per hour along the Maharlika Highway at Malvar, Santiago, Isabela, at the middle portion of the highway (although according to Charles Cudamon, the car was running at a speed of 80 to 90 kilometers per hours on [the] wrong lane of the highway because the car was overtaking a tricycle) when they met a passenger jeepney with bright lights on. The accused immediately tried to swerve the car to the right and move his body away from the steering wheel but he was not able to avoid the oncoming vehicle and the two vehicles collided with each other at the center of the road. As a result of the collision the car turned turtle twice and landed on its top at the side of the highway immediately at the approach of the street going to the Flores Clinic while the jeep swerved across the road so that one half front portion landed on the lane of the car while the back half portion was at its right lane five meters away from the point of impact as shown by a sketch (Exhibit A) prepared by Cudamon the following morning at the Police Headquarters at the instance of his lawyer. Fiscal Ambrocio lost consciousness. When he regained consciousness he was still inside the car (lying) on his belly with the deceased on top of him. Ambrocio pushed (away) the deceased and then he was pulled out of the car by Tabangin. Afterwards, the deceased who was still unconscious was pulled out from the car. Both Fiscal Ambrocio and the deceased were brought to the Flores Clinic. The deceased died that night (Exhibit B) while Ambrocio suffered only minor injuries to hi s head and legs.v[2] The defense version as to the events prior to the incident was essentially the same as that of the prosecution, except that defense witness Miguel Tabangin declared that Manantan did not drink beer that night. As to the accident, the defense claimed that: The accused was driving slowly at the right lane [at] about 20 inches from the center of the road at about 30 kilometers per hour at the National Highway at Malvar, Santiago, Isabela, when suddenly a passenger jeepney with bright lights which was coming from the opposite direction and running very fast suddenly swerve(d) to the cars lane and bumped the car which turned turtle twice and rested on its top at the right edge of the road while the jeep stopped across the center of the road as shown by a picture taken after the incident (Exhibit 1) and a sketch (Exhibit 3) drawn by the accused during his rebuttal testimony. The car was hit on the drivers side. As a result of the collision, the accused and Miguel Tabangin and Fiscal A mbrocio were injured while Ruben Nicolas died at the Flores Clinic where they were all brought for treatment.v[3] In its decision dated June 30, 1988, promulgated on August 4, 1988, the trial court decided Criminal Case No. 066 in petition ers favor, thus: WHEREFORE, in the light of the foregoing considerations, the Court finds the accused NOT GUILTY of the crime charged and hereby acquits him. SO ORDERED.v[4] On August 8, 1988, private respondents filed their notice of appeal on the civil aspect of the trial courts judgment. In their appeal, docketed as CA-G.R. CV No. 19240, the Nicolas spouses prayed that the decision appealed from be modified and that appellee be ordered to pay indemnity and damages. On January 31, 1992, the appellate court decided CA-G.R. CV No. 19240 in favor of the Nicolas spouses, thus:

WHEREFORE, the decision appealed from is MODIFIED in that defendant-appellee is hereby held civilly liable for his negligent and reckless act of driving his car which was the proximate cause of the vehicular accident, and sentenced to indemnify plaintiffs-appellants in the amount of P174,400.00 for the death of Ruben Nicolas, SO ORDERED.v[5] In finding petitioner civilly liable, the court a quo noted that at the time the accident occurred, Manantan was in a state of intoxication, due to his having consumed all in all, a total of at least twelve (12) bottles of beerbetween 9 a.m. and 11 p.m.v[6] It found that petitioners act of driving while intoxicated was a clear violation of Section 53 of the Land Transportation and Traffic Code (R.A. No. 4136)v[7] and pursuant to Article 2185 of the Civil Code,v[8] a statutory presumption of negligence existed. It held that petitioners act of violating the Traffic Code is negligence in itself because the mishap, which occurred, was the precise injury sought to be prevented by the regulation.v[9] Petitioner moved for reconsideration, but the appellate court in its resolution of August 24, 1992 denied the motion. Hence, the present case. Petitioner, in his memorandum, submits the following issues for our consideration: FIRST THE DECISION OF THE TRIAL COURT ACQUITTING THE PETITIONER OF THE CRIME OF RECKLESS IMPRUDENCE RESULTING TO HOMICIDE FORECLOSED ANY FURTHER INQUIRY ON THE ACCUSEDS (PETITIONERS) NEGLIGENCE OR RECKLESS IMPRUDENCE BECAUSE BY THEN HE WILL BE PLACED IN DOUBLE JEOPARDY AND THEREFORE THE COURT OF APPEALS ERRED IN PASSING UPON THE SAME ISSUE AGAIN. SECOND THE COURT OF APPEALS DID NOT HAVE JURISDICTION TO AWARD DAMAGES AND INDEMNITY TO THE PRIVATE RESPONDENTS CONSIDERING THAT THE NON-DECLARATION OF ANY INDEMNITY OR AWARD OF DAMAGES BY THE REGIONAL TRIAL COURT OF ISABELA, BRANCH XXI, WAS ITSELF CONSISTENT WITH THE PETITIONERS ACQUITTAL FOR THE REASON THAT THE CIVIL ACTION WAS IMPLIEDLY INSTITUTED WITH THE CRIMINAL ACTION AND THERE WAS NO EXPRESS WAIVER OF THE CIVIL ACTION OR RESERVATION TO INSTITUTE IT SEPARATELY BY THE PRIVATE RESPONDENTS IN THE TRIAL COURT. THIRD THE COURT OF APPEALS DID NOT HAVE JURISDICTION TO TAKE COGNIZANCE OF THE CASE CA-G.R. CV No. 19240 ENTITLED: SPOUSES MARCELINO NICOLAS AND MARIA NICOLAS v. GEORGE MANANTAN, AND RENDER THE DECISION SOUGHT TO BE REVIEWED WHEN THE SAME WAS PROSECUTED BY THE PRIVATE RESPONDENTS IN THEIR PERSONAL CAPACITIES AND THE FILING FEES NOT HAVING BEEN PAID, THUS VIOLATING THE MANCHESTER DOCTRINE. In brief, the issues for our resolution are: (1) Did the acquittal of petitioner foreclose any further inquiry by the Court of Appeals as to his negligence or reckless imprudence? (2) (3) Did the court a quo err in finding that petitioners acquittal did not extinguish his civil liability? Did the appellate court commit a reversible error in failing to apply the Manchester doctrine to CA-G.R. CV No. 19240?

On the first issue, petitioner opines that the Court of Appeals should not have disturbed the findings of the trial court on the lack of negligence or reckless imprudence under the guise of determining his civil liability. He argues that the trial cour ts finding that he was neither imprudent nor negligent was the basis for his acquittal, and not reasonable doubt. He submits that in finding him liable for indemnity and damages, the appellate court not only placed his acquittal in suspicion, but also pu t him in double jeopardy. Private respondents contend that while the trial court found that petitioners guilt had not been proven beyond reasonable do ubt, it did not state in clear and unequivocal terms that petitioner was not recklessly imprudent or negligent. Hence, impliedly the trial

court acquitted him on reasonable doubt. Since civil liability is not extinguished in criminal cases, if the acquittal is based on reasonable doubt, the Court of Appeals had to review the findings of the trial court to determine if there was a basis for awarding indemnity and damages. Preliminarily, petitioners claim that the decision of the appellate court awarding indemnity placed him in double jeopardy i s misplaced. The constitution provides that no person shall be twice put in jeopardy for the same offense. If an act is punished by a law and an ordinance, conviction or acquittal under either shall constitute a bar to another prosecution for the same act. v[10] When a person is charged with an offense and the case is terminated either by acquittal or conviction or in any other manner without the consent of the accused, the latter cannot again be charged with the same or identical offense.v[11] This is double jeopardy. For double jeopardy to exist, the following elements must be established: (a) a first jeopardy must have attached prior to the second; (2) the first jeopardy must have terminated; and (3) the second jeopardy must be for the same offense as the first.v[12] In the instant case, petitioner had once been placed in jeopardy by the filing of Criminal Case No. 066 and the jeopardy was terminated by his discharge. The judgment of acquittal became immediately final. Note, however, that what was elevated to the Court of Appeals by private respondents was the civil aspect of Criminal Case No. 066. Petitioner was not charged anew in CA-G.R. CV No. 19240 with a second criminal offense identical to the first offense. The records clearly show that no second criminal offense was being imputed to petitioner on appeal. In modifying the lower courts judgment, the appellate court did not modify the judgment of acquittal. Nor did it order the filing of a second criminal case against petitioner for the same offense. Obviously, therefore, there was no second jeopardy to speak of. Petitioners claim of having been placed in double jeopardy is incorrect. Our law recognizes two kinds of acquittal, with different effects on the civil liability of the accused. First is an acquittal on the ground that the accused is not the author of the act or omission complained of. This instance closes the door to civil liability, for a person who has been found to be not the perpetrator of any act or omission cannot and can never be held liable for such act or omission.v[13] There being no delict, civil liability ex delicto is out of the question, and the civil action, if any, which may be instituted must be based on grounds other than the delict complained of. This is the situation contemplated in Rule 111 of the Rules of Court.v[14] The second instance is an acquittal based on reasonable doubt on the guilt of the accused. In this case, even if the guilt of the accused has not been satisfactorily established, he is not exempt from civil liability which may be proved by preponderance of evidence only.v[15] This is the situation contemplated in Article 29 of the Civil Code,v[16] where the civil action for damages is for the same act or omission. Although the two actions have different purposes, the matters discussed in the civil case are similar to those discussed in the criminal case. However, the judgment in the criminal proceeding cannot be read in evidence in the civil action to establish any fact there determined, even though both actions involve the same act or omission.v[17] The reason for this rule is that the parties are not the same and secondarily, different rules of evidence are applicable. Hence, notwithstanding herein petitioners acquittal, the Court of Appeals in determining whether Article 29 app lied, was not precluded from looking into the question of petitioners negligence or reckless imprudence. On the second issue, petitioner insists that he was acquitted on a finding that he was neither criminally negligent nor recklessly imprudent. Inasmuch as his civil liability is predicated on the criminal offense, he argues that when the latter is not proved, civil liability cannot be demanded. He concludes that his acquittal bars any civil action. Private respondents counter that a closer look at the trial courts judgme nt shows that the judgment of acquittal did not clearly and categorically declare the non-existence of petitioners negligence or imprudence. Hence, they argue that his acquittal must be deemed based on reasonable doubt, allowing Article 29 of the Civil Code to come into play. Our scrutiny of the lower courts decision in Criminal Case No. 066 supports the conclusion of the appellate court that the acquittal was based on reasonable doubt; hence, petitioners civil liability was not extinguished by his disc harge. We note the trial courts declaration that did not discount the possibility that the accused was really negligent. However, it found that a hypothesis inconsistent with the negligence of the accused presented itself before the Court and since said hypothesis is consistent with the recordthe Courts mind cannot rest on a verdict of conviction. v[18] The foregoing clearly shows that petitioners acquittal was predicated on the conclusion that his guilt had not been established with moral certain ty. Stated differently, it is an acquittal based on reasonable doubt and a suit to enforce civil liability for the same act or omission lies. On the third issue, petitioner argues that the Court of Appeals erred in awarding damages and indemnity, since private respondents did not pay the corresponding filing fees for their claims for damages when the civil case was impliedly instituted

with the criminal action. Petitioner submits that the non-payment of filing fees on the amount of the claim for damages violated the doctrine in Manchester Development Corporation v. Court of Appeals, 149 SCRA 562 (1987) and Supreme Court Circular No. 7 dated March 24, 1988.v[19] He avers that since Manchester held that The Court acquires jurisdiction over any case only upon payment of the prescribed docket fees, the appellate court was without jurisdiction to hear and try CA-G.R. CV No. 19240, much less award indemnity and damages. Private respondents argue that the Manchester doctrine is inapplicable to the instant case. They ask us to note that the criminal case, with which the civil case was impliedly instituted, was filed on July 1, 1983, while the Manchester requirements as to docket and filing fees took effect only with the promulgation of Supreme Court Circular No. 7 on March 24, 1988. Moreover, the information filed by the Provincial Prosecutor of Isabela did not allege the amount of indemnity to be paid. Since it was not then customarily or legally required that the civil damages sought be stated in the information, the trial court had no basis in assessing the filing fees and demanding payment thereof. Moreover, assuming that the Manchester ruling is applied retroactively, under the Rules of Court, the filing fees for the damages awarded are a first lien on the judgment. Hence, there is no violation of the Manchester doctrine to speak of. At the time of the filing of the information in 1983, the implied institution of civil actions with criminal actions was governed by Rule 111, Section 1 of the 1964 Rules of Court.v[20] As correctly pointed out by private respondents, under said rule, it was not required that the damages sought by the offended party be stated in the complaint or information. With the adoption of the 1985 Rules of Criminal Procedure, and the amendment of Rule 111, Section 1 of the 1985 Rules of Criminal Procedure by a resolution of this Court dated July 7, 1988, it is now required that: When the offended party seeks to enforce civil liability against the accused by way of moral, nominal, temperate or exemplary damages, the filing fees for such civil action as provided in these Rules shall constitute a first lien on the judgment except in an award for actual damages. In cases wherein the amount of damages, other than actual, is alleged in the complaint or information, the corresponding filing fees shall be paid by the offended party upon the filing thereof in court for trial. The foregoing were the applicable provisions of the Rules of Criminal Procedure at the time private respondents appealed the civil aspect of Criminal Case No. 066 to the court a quo in 1989. Being in the nature of a curative statute, the amendment applies retroactively and affects pending actions as in this case. Thus, where the civil action is impliedly instituted together with the criminal action, the actual damages claimed by the offended parties, as in this case, are not included in the computation of the filing fees. Filing fees are to be paid only if other items of damages such as moral, nominal, temperate, or exemplary damages are alleged in the complaint or information, or if they are not so alleged, shall constitute a first lien on the judgment.v[21] Recall that the information in Criminal Case No. 066 contained no specific allegations of damages. Considering that the Rules of Criminal Procedure effectively guarantee that the filing fees for the award of damages are a first lien on the judgment, the effect of the enforcement of said lien must retroact to the institution of the criminal action. The filing fees are deemed paid from the filing of the criminal complaint or information. We therefore find no basis for petitioners allegations that the filing fees were not paid or improperly paid and that the appellate court acquired no jurisdiction. WHEREFORE, the instant petition is DISMISSED for lack of merit. The assailed decision of the Court of Appeals in CA-G.R. CV No. 19240 promulgated on January 31, 1992, as well as its resolution dated August 24, 1992, denying herein petitioners motion for reconsideration, are AFFIRMED. Costs against petitioner. SO ORDERED. Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-33772 June 20, 1988 FRANCISCO BONITE, CANDIDO BONITE, VENECIA BONITE, CONSTANCIO BONITE, ERNESTO BONITE, ANGELINA BONITE, MARIA BONITE and JUANITA BONITE, for herself and for her minor children namely: NADIJA BONITE, NERIO BONITE, FELIX BONITE and MARIA FEDILA BONITE, petitioners, vs. HON. MARIANO A. ZOSA, Presiding Judge, Court of First Instance of Misamis Occidental, 16th Judicial District, Branch III and ELIGIO ABAMONGA, respondents. A.C. Dulalas & F.G. Zapatos Law Office for petitioners. Rufino Abadies for respondent Eligio Abamonga.

PADILLA, J.: Petition for review on certiorari of the order of the Court of First Instance of Misamis Occidental, Branch III, dated 25 February 1971, 1 in Civil Case No. 2806 filed by herein petitioners against private respondent, dismissing the complaint for damages, and the order dated 27 March 1971 2 denying petitioners' motion for reconsideration of aforesaid order. The factual background of the case is as follows: At about 2:00 P.M. of 24 September 1968, while Florencio Bonite was working as "caminero" of the Bureau of Public Highways in Barrio Vicente Alto (Dagatan), Oroquieta City, he was hit by a truck driven by private respondent, as a result of which, Bonite

died on that same day. Consequently, a criminal complaint for Homicide through Reckless Imprudence was filed by the surviving heirs of the deceased (now petitioners) against the respondent Abamonga, with the City Court of Oroquieta City, docketed as Criminal Case No. 9328. Petitioners through their counsel Atty. Alberto Dulalas, as private prosecutor, actively participated in the prosecution of the criminal case against the accused. 3 After trial on the merits, a decision was rendered by the court in the criminal case, acquitting the accused Abamonga for failure of the prosecution to prove his guilt beyond reasonable doubt. 4 On 28 December 1970, petitioners filed an action for recovery of damages against the same accused on account of the death of Florencio Bonite, with the Court of First Instance of Misamis Occidental, 16th Judicial District, Branch III, docketed as Civil Case No. 2806. In an order dated 25 February 1971, the court a quo dismissed the complaint for damages. The pertinent portion of the order 5 reads as follows: ... the court believes and so holds that as the plaintiffs did not reserve the right to file an independent civil action, and the further fact that the plaintiffs have been represented by a private prosecutor in the prosecution of the criminal case, the action presently filed by the plaintiffs is already res adjudicata and therefore, dismisses the complaint without pronouncement as to costs. SO ORDERED. Petitioners moved for reconsideration of the aforesaid order, but the same was denied: 6 hence, this petition for review. The main issue to be resolved in this petition is whether or not an independent civil action for damages, under Article 29 of the Civil Code, is deemed barred by petitioners' failure in the criminal action to make a reservation to file a separate civil action and by their active participation in the prosecution of such criminal action. When the accused in a criminal case is acquitted on the ground that his guilt has not been proved beyond reasonable doubt, a civil action for damages for the same act or omission may still be instituted against him, and only a preponderance of evidence is required to hold the accused liable. The civil liability is not extinguished by acquittal of the accused, where the acquittal is based on reasonable doubt. Article 29, Civil Code, provides thus When the accused in a criminal prosecution is acquitted on the ground that his guilt has not been proved beyond reasonable doubt, a civil action for damages for the same act or omission may be instituted. Such action requires only a preponderance of evidence. Upon motion of the defendant, the court may require the plaintiff to file a bond to answer for damages in case the complaint should be found to be malicious. If in a criminal case the judgment of acquittal is based upon reasonable doubt, the courtshall so declare. In the absence of any declaration to that effect, it may be inferred from the text of the decision whether or not the acquittal is due to that ground. In the instant case, the criminal complaint for homicide through reckless imprudence was dismissed on the ground that the guilt of the accused (herein private respondent) was not proved beyond reasonable doubt. Clearly, herein petitioners have the right to file an independent civil action for damages, the acquittal of the accused in the criminal case notwithstanding. In addition to anchoring their right to bring a separate civil action for damages under the express provisions of Article 29 of the Civil Code, petitioners may base such separate civil action for damages on Article 2176 of the Civil Code. 7 Acquittal of the accused from a charge of criminal negligence, whether on reasonable doubt or not, is not a bar to a subsequent civil action for recovery of civil liability, arising not from criminal negligence, but from a quasi-delict or culpa aquiliana. It has been held that Article 2176 of the Civil Code, in referring to "fault or negligence" covers acts "not punishable by law" as well as acts that may be criminal in character, whether intentional and voluntary or negligent. Consequently, a separate civil action lies against the

offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed to recover damages on both scores (delict and quasi-delict). 8 In regard to private respondent's claim that the specific provision applicable in the case at bar is Article 33 of the Civil Code 9 (and not Article 29), because the latter is not applicable to criminal offenses proceeding from a tortious act, we find the same to be devoid of merit. It is important to note that Article 29 of the Civil Code does not state that the right to file an independent civil action for damages (under said article) can be availed of only in offenses not arising from a tortious act. The only requisite set forth therein for the exercise of the right to file a civil action for damages is that the accused must have been acquitted in the criminal action based on reasonable doubt. It is a well known maxim in statutory construction that where the law does not distinguish, the courts should not distinguish. 10 Moreover, Article 33 of the Civil Code assumes a defamation, fraud, or physical injuries 11 intentionally committed. The death of the deceased in the case at bar was alleged to be the result of criminal negligence, i.e., not inflicted with malice. Criminal negligence under Article 365 of the Revised Penal Code consists in the execution of an imprudent or negligent act that, if intentionally done, would be punishable as a felony. Thus, the law penalizes the negligent or reckless act, not the result thereof. The gravity of the consequence is only taken into account to determine the penalty. 12 As reckless imprudence or criminal negligence is not mentioned in Article 33, no independent civil action for damages arising from reckless imprudence or criminal negligence may be instituted under said article. 13 It is, therefore, not applicable to the case at bar. Coming now to private respondent's contention that the enforcement of the right to file an action for damages under Article 29, should be subject to the procedure outlined in Rule 111 of the former Rules on Criminal Procedure, i.e., that a reservation be made in the criminal case of the right to institute an independent civil action, we find such contention to be without merit. Article 29 of the Civil Code does not include any such reservation requirement. It allows an action for damages against the accused upon the latter's acquittal in the criminal case based upon reasonable doubt. Besides, the requirement in Section 2 of Rule 111 of the former Rules on Criminal Procedure that there be a reservation in the criminal case of the right to institute an independent civil action, has been declared as not in accordance with law. It is regarded as an unauthorized amendment to the substantive law, i.e. the Civil Code, which does not require such a reservation. 14 In fact, the reservation of the right to file an independent civil action has been deleted from Section 2, Rule 111 of the 1985 Rules on Criminal Procedure, in consonance with the decisions of this Court declaring such requirement of a reservation as ineffective. Lastly, that petitioners actively participated in the prosecution of the criminal case does not bar them from filing an independent and separate civil action for damages under Article 29 of the Civil Code. The civil action based on criminal liability and a civil action under Article 29 are two separate and independent actions. WHEREFORE, the Orders dated 25 February 1971 and 27 March 1971 of the respondent court are hereby REVERSED and SET ASIDE, and a new one is entered reinstating the complaint in Civil Case No. 2806 and directing said court to proceed with the trial of the case. Costs against private respondent. SO ORDERED. Yap, C.J., Paras and Sarmiento; JJ., concur. Separate Opinions MELENCIO-HERRERA, J., concurring: I concur but, in my opinion, the following distinction should be made. If there has been active participation in the prosecution of a criminal case by the offended party, the civil action arising from the crime is deemed to have been also brought in the criminal case. Consequently, a judgment finding the accused guilty and granting him damages is binding upon the offended party and he may not thereafter file a separate civil action under Article 33 of the Civil Code (Roa vs. de la Cruz, 107 Phil. 8). This is so because the civil action for damages which Article 33 allows to be instituted is ex delicto, this being manifest from the provision

which uses the expressions "criminal action" and "criminal prosecution" (Madeja vs. Hon. Caro, L-51183, December 21, 1983, 126 SCRA 293). However, where the accused is acquitted on the ground of reasonable doubt, as in this case, the civil action for damages for the same act may be instituted under Article 29 of the Civil Code, notwithstanding the fact that the offended party had actively participated in the criminal action. Incidentally, the rule in Corpus vs. Paje (L-26737, July 21, 1969, 28 SCRA 1062), which states that reckless imprudence is not included in Article 33 of the Civil Code, was deemed not an authoritative doctrine because, of eleven Justices, only nine took part in the Decision and four of them merely concurred in the result (Madeja vs. Caro, et al. supra). In that case involving a criminal prosecution for Reckless Imprudence resulting in Homicide, it was held that the civil action may proceed independently of the criminal action, following Article 33 of the Civil Code,

Separate Opinions MELENCIO-HERRERA, J., concurring: I concur but, in my opinion, the following distinction should be made. If there has been active participation in the prosecution of a criminal case by the offended party, the civil action arising from the crime is deemed to have been also brought in the criminal case. Consequently, a judgment finding the accused guilty and granting him damages is binding upon the offended party and he may not thereafter file a separate civil action under Article 33 of the Civil Code (Roa vs. de la Cruz, 107 Phil. 8). This is so because the civil action for damages which Article 33 allows to be instituted is ex delicto, this being manifest from the provision which uses the expressions "criminal action" and "criminal prosecution" (Madeja vs. Hon. Caro, L-51183, December 21, 1983, 126 SCRA 293). However, where the accused is acquitted on the ground of reasonable doubt, as in this case, the civil action for damages for the same act may be instituted under Article 29 of the Civil Code, notwithstanding the fact that the offended party had actively participated in the criminal action. Incidentally, the rule in Corpus vs. Paje (L-26737, July 21, 1969, 28 SCRA 1062), which states that reckless imprudence is not included in Article 33 of the Civil Code, was deemed not an authoritative doctrine because, of eleven Justices, only nine took part in the Decision and four of them merely concurred in the result (Madeja vs. Caro, et al. supra). In that case involving a criminal prosecution for Reckless Imprudence resulting in Homicide, it was held that the civil action may proceed independently of the criminal action, following Article 33 of the Civil Code,