121
FIRST DIVISION on March 8, 2002, the Fifth Division of the Sandiganbayan dismissed two [5] of five criminal
MARIANO UN OCAMPO III, G.R. Nos. 156547-51
Petitioner,
- versus -
PEOPLE OF THE PHILIPPINES,
Respondent.
X -------------------------------------------------------------------------------------- X
ANDRES S. FLORES, G.R. Nos. 156384-85
Petitioner,
Present:
- versus - PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.
PEOPLE OF THE PHILIPPINES,
Respondent. Promulgated:
February 4, 2008
X ---------------------------------------------------------------------------------------X
DECISION
AZCUNA, J.:
These are consolidated petitions for review on certiorari[1] of the Sandiganbayans
Decision promulgated on March 8, 2002 and its Resolution promulgated on January 6, 2003.
The Decision and Resolution of the Sandiganbayan held petitioners Mariano Un
Ocampo III and Andres S. Flores guilty of malversation of public funds in Crim. Case Nos.
16794 and 16795.
The facts are as follows:
During the incumbency of President Corazon C. Aquino, Tarlac Province was chosen
as one of the four provinces that would serve as a test case on decentralization of local
government administration.
For this purpose, the Department of Budget and Management (DBM) released National
Aid for Local Government Units (NALGU) funds in the total amount of P100 million to the
Province of Tarlac. The NALGU is a fund set aside in the General Appropriations Act to assist
local governments in their various projects and services. The distribution of this fund is entirely
vested with the Secretary of the DBM.
Petitioner Ocampo, provincial governor of Tarlac from February 22, 1988 up to June
30, 1992, loaned out P56.6 million of the P100 million to the Lingkod Tarlac Foundation, Inc.
(LTFI) for the implementation of various livelihood projects. The loan was made pursuant to a
Memorandum of Agreement (MOA) entered into by the Provinceof Tarlac, represented by
petitioner Ocampo, and LTFI, represented by petitioner Flores, on August 8, 1988.
LTFI is a private non-stock corporation with petitioner Ocampo as its first chairperson
and petitioner Andres S. Flores as its executive director. The Sandiganbayan, in its Resolution
dated January 6, 2000, admitted the annexes[2] submitted by petitioner Ocampo, which
annexes proved that petitioner Ocampo resigned as chairperson and trustee of the LTFI prior
to August 8, 1988, the date when petitioner Ocampo and LTFI entered into the MOA.
How the P56.6 million released to LTFI was utilized became the subject matter of 25
criminal cases. In a Resolution in G.R. Nos. 103754-78 dated October 22, 1992,[3]this Court
quashed 19 of the 25 Informations filed against petitioner Ocampo. The Fifth Division of the
Sandiganbayan dismissed one case[4] on demurrer to evidence. In its Decision promulgated
1
cases for malversation of public funds against petitioners. On motion for reconsideration, the
Sandiganbayan dismissed one[6] more case in a Resolution promulgated on January 6,
2003. The two remaining cases are the subject matters in the instant consolidated petitions.
The Informations of the remaining two cases filed on May 28, 1991 state:
Crim. Case No. 16794
That on or about the periods between November 2, 1988 to February 27, 1989,
or sometime subsequent thereto, in the Province of Tarlac, Philippines and within the
jurisdiction of this Honorable Court, accused Mariano Un Ocampo III, then the
Governor of the province of Tarlac and at the same time President-Chairman of the
Board of Trustees of the Lingkod Tarlac Foundation, Inc. (LTFI), a private entity, having
received by reason of his position, public funds amounting to more than Fifty Two
Million Pesos (P52,000,000) x x x from the National Aid for Local Government Unit
(NALGU) funds, which he is accountable by reason of his official duties, did then and
there with intent to defraud the government aforethought release out of the aforesaid
funds thru the said LTFI, the amount of EIGHT MILLION EIGHT HUNDRED SIXTY
THOUSAND PESOS (P8,860,000) x x x for the payment of the importation of Juki
Embroidery Machines which actually cost SEVEN MILLION SIX HUNDRED SEVENTY
NINE THOUSAND FIVE HUNDRED THIRTY PESOS AND FIFTY TWO CENTAVOS
(P7,679,530.52) x x x thereby leaving a balance of P1,180,463.48 which ought to have
been returned, but far from returning the said amount, accused Mariano Un Ocampo
III, in connivance with his co-accused, Andres S. Flores and William Uy wilfully,
unlawfully and feloniously misapply, misappropriate and convert for their own
personal use and benefit the said amount resulting to the damage and prejudice of the
government in the aforesaid sum of One Million One Hundred Eighty Thousand Four
Hundred Sixty Three Pesos and Forty Eight Centavos (P1,180,463.48).
CONTRARY TO LAW.
Crim. Case No. 16795
That on or about the periods between November 2, 1988 to February 27, 1989, or
sometime subsequent thereto, in the Province of Tarlac, Philippines and within the jurisdiction
of this Honorable Court, accused Mariano Un Ocampo III, then the Governor of the province of
Tarlac, and at the same time President-Chairman of the Board of Trustees of the Lingkod Tarlac
Foundation, Inc. (LTFI), a private entity, having received by reason of his position, public funds
amounting to more than Fifty Two Million Pesos (P52,000,000.00) x x x from the National Aid
for Local Government Unit (NALGU) Funds, which he is accountable by reason of his official
duties, caused the withdrawal by co-accused Andres S. Flores on April 28, 1989, then Executive
Officer, LTFI, from the PHILIPPINE NATIONAL BANK LTFI account the sum of FIFTY EIGHT
THOUSAND PESOS (P58,000.00), portion of the said NALGU funds deposited by LTFI under
Account No. 490-555744, both accused conniving and confederating with one another, with
intent to gain and to defraud the government, did then and there, wilfully, unlawfully and
feloniously misappropriate, misapply and convert the same to their own personal use and
benefit to the damage and prejudice of the government in the aforesaid amount of P58,000.00,
Philippine Currency.
CONTRARY TO LAW.[7]
The Prosecution relied mainly on an audit conducted by the Commission on Audit on
LTFI from February 12, 1990 up to April 2, 1990. The audit covered the period from July 1,
1988 to December 31, 1989 and was confined to the examination of the loans granted by the
Provincial Government of Tarlac for the implementation of its Rural Industrialization Can
121
Happen Program. The result of the audit was embodied in Special Audit Report No. 90-91, According to the Sandiganbayan, Sec. 203(t) of the Local Government Code obligated
offered as Exhibit B by the prosecution. provincial governors to adopt measures to safeguard all the lands, buildings, records, monies,
According to the Sandiganbayan, the money trail with respect to the two credits and other property rights of the province. However, petitioner Ocampo, as governor of
cases, as proven by the prosecution, is as follows: Tarlac, neglected to set up safeguards for the proper handling of the NALGU funds in the hands
(1) Accused Ocampo released P11.5 Million to of LTFI which resulted in the disappearance of P1,132,739 and P58,000 of the said funds. The
LTFI, P7,023,836.00 of which was intended for the purchase of 400 Sandiganbayan held:
embroidery machines; For such gross and inexcusable negligence, accused is liable for malversation. In so
(2) The total amount released was deposited by LTFI to the Rural ruling, we are guided by the oft-repeated principle that malversation may be committed through
Bank of Tarlac, Inc.; a positive act of misappropriation of public funds or passively though negligence by allowing
(3) Within two (2) months from the deposit, a total another to commit such misappropriation (Cabello vs. Sandiganbayan, 197 SCRA 94
of P5,465,000.00 was withdrawn and given to William Uy (LTFIs [1991]).Although accused was charged with willful malversation, he can validly be convicted of
broker for the importation of the machines); malversation through negligence where the evidence sustains the latter mode of committing
(4) This amount (P5,465,000) was thereafter deposited to the the offense (Cabello, supra).[9]
personal account of Willam Uy and/or Andres Flores under S/A No. Further, the Sandiganbayan stated that under Sec. 203(f) of the Local Government
26127; Code of 1983,[10] the provincial governor, as chief executive of the provincial government, has
(5) Another account (PNB S/A No. 490-555744-6) was opened by the power to represent the province in all its business transactions and sign on its behalf all
LTFI by Andres Flores, this time with PNB, intended solely for the bonds, contracts and obligations and other official documents made in accordance with law or
purchase of the machines; ordinance.
(6) A check in the amount of P3,395,000.00 dated February 27, Sec. 2 (c) of Rule XI[11] of the Rules and Regulations Implementing the Local
1989, was remitted for the payment of the machines; Government Code of 1983 provides that the local chief executive of a local government unit
(7) This amount, together with the P5,465,000.00 placed on the shall [r]epresent the respective local units in all their business transactions and sign on its
personal account of William Uy and/or Andres Flores, made up the behalf all bonds, contracts and obligations and other official documents made in accordance
cost of he machines or a total of P8,860,000.00 as recorded in the with law or ordinance. Sec. 2 of Rule VI[12] states that [t]he power to sue, to acquire and convey
books of LTFI; real or personal property, and to enter into contracts shall be exercised by the local chief
(8) To the PNB account was added a total executive upon authority of the Sanggunian concerned. Thus, the Sandiganbayan declared
of P4,332,261.00 deposited on different dates from March 6 to April that since the required authority from the Sangguniang Panlalawigan was not shown to have
17, 1989 which funds came from S/A No. 26127; been obtained by petitioner Ocampo, the MOA is ineffective as far as the Province of Tarlac is
(9) Thus, the total amount on deposit with PNB concerned.
was P7,727,261.00 plus interest; Petitioner Flores, as executive director of LTFI, was charged with malversation of public
(10) Of this amount, P7,679,530.52 was used for the opening of the funds in connivance with a public officer. However, the Sandiganbayan found that there was
LC (for the payment of the machines) leaving a balance no conspiracy between the petitioners, and held petitioner Flores guilty of malversation through
of P47,730,48.00 plus interest; his independent acts under Art. 222 of the Revised Penal Code,[13]since the purpose of Art. 222
(11) Between the amount listed in the books of the is to extend the provisions of the Penal Code on malversation to private individuals. According
corporation (P8,860,000) and the amount of the LC (P7,679,530), a to the Sandiganbayan, petitioner Flores bound himself, as a signatory of the MOA representing
discrepancy of P1,180,496.48 existed. LTFI, to receive NALGU funds from the province of Tarlac. In such capacity, he had charge of
(12) Between the total amount deposited in PNB S/A No. 490-555744- these funds.
6 (P7,727,261.00) and the total amount withdrawn from the account In Crim. Case No. 16794, petitioner Flores was found to have charge of missing NALGU
for the payment of the machines (P7,679,530.52), a balance funds deposited in his personal account in the amount of P1,132,739, which formed part of
of P47,730.48 remained. This balance (plus interest), in the amount the discrepancy of the actual cost of the embroidery machines and the NALGU funds released
of P58,000.00, was later withdrawn upon authorization of for payment of the said machines.
accused Flores.[8] In defense, petitioner Flores claimed that the broker for the importation of the
Petitioner Ocampo did not testify regarding the subject cases on the ground machines made an initial payment to the supplier of the machines, which initial payment would
that he was not competent to testify on the disbursements made by LTFI but only as explain the discrepancy between the reported cost as stated in the books of the corporation
to the receipt of the NALGU funds from the government. and the letter of credit. However, the Sandiganbayan stated that the explanation was hearsay
The Sandiganbayan declared that petitioner Ocampo as governor of Tarlac, who as the broker was not presented in court, and there was no proof of the initial payment.
personally received the NALGU funds from the DBM and thereafter released some of them to In Crim. Case No. 16795, the Sandiganbayan held that petitioner Flores failure to
the LTFI, was duty bound to put up regular and effective measures for the monitoring of the explain the purpose of the withdrawal on April 28, 1989 of P58,000 upon his authorization,
projects approved by him.

2
121
considering that he was in charge of the PNB savings account, made him liable for malversation
of public funds.
Petitioners presented five documents to show that LTFIs obligations to
the Province of Tarlac, in the amount of P56.6 million, have been extinguished. The documents
are as follows:
1) The Tripartite Memorandum of Agreement (TMOA) dated May 23, 1990 executed by the
Province of Tarlac, LTFI and the Barangay Unity for Industrial andLeadership Development
(BUILD) Foundation whereby the liability of LTFI in favor of the Province of Tarlac was
transferred and assumed by BUILD in the total amount of P40 million.
2)Resolution No. 76 of the Sangguniang Panlalawigan of Tarlac dated April 5, 1990 showing
that the authority of petitioner Ocampo in entering into the TMOA was with prior approval of
the Sangguniang Panlalawigan.
3) A Deed of Assignment between Tarlac and LTFI whereby the latter assigned its loan
portfolios (including interests and certificates of time deposit), the Juki embroidery machines
and other assignable documents to the Province of Tarlac in the total amount of P16,618,403.
4) Resolution No. 199 of the Sangguniang Panlalawigan of Tarlac dated October 18,
1990 authorizing petitioner Ocampo to enter into the Deed of Assignment with LTFI.
5)A certified photocopy of a document dated June 16, 1992 issued by the OIC provincial
treasurer of Tarlac whereby the treasurer affirmed the existence of the above documents.
The Sandiganbayan declared that the documents showing the extinguishment of LTFIs
obligations to the Province of Tarlace do not mitigate the liability of petitioners since the crime
is consummated as of asportation, akin to the taking of anothers property in theft. It held that
the return of the amount malversed is neither an exempting circumstance nor a ground for
extinguishing the criminal liability of petitioners.
On March 8, 2002, the Fifth Division of the Sandiganbayan rendered a Decision
acquitting petitioners of the crime of malversation of public funds in Crim. Case Nos. 16796
and 16802, but finding them guilty of the crime in Crim. Case Nos. 16787, 16794 and
16795. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, accused Mariano Un Ocampo III and
Andres S. Flores are hereby found GUILTY beyond reasonable doubt of the crime of
malversation of Public Funds under Crim. Case No. 16787 and are sentenced to suffer
the indeterminate penalty of (10) years, and one (1) day of prision mayor, as
minimum, to eighteen (18) years, eight (8) months and one (1) day of reclusion
temporal as maximum and to pay a fine of sixty-six thousand nine hundred thirty-two
pesos and seventy centavos (P66,932.70). They shall also suffer the penalty of
perpetual special disqualification. Costs against the accused.
For Crim. Case No. 16794, accused Mariano Un Ocampo III and Andres S.
Flores are hereby found GUILTY beyond reasonable doubt of the crime of Malversation
of Public Funds and are sentenced to suffer the indeterminate penalty of (10) years,
and one (1) day of prision mayor, as minimum, to eighteen (18) years, eight (8) months
and one (1) day of reclusion temporal as maximum and to pay a fine of one million one
hundred thirty-two thousand seven hundred thirty-nine pesos (P1,132,739.00). They
shall also suffer the penalty of perpetual special disqualification. Costs against the
accused.
For Crim. Case No. 16795, accused Mariano Un Ocampo III and Andres S.
Flores are hereby found GUILTY beyond reasonable doubt of the crime of Malversation
of Public Funds and are sentenced to suffer the indeterminate penalty of (10) years,
and one (1) day of prision mayor, as minimum, to eighteen (18) years, eight (8) months
3
and one (1) day of reclusion temporal as maximum and to pay a fine of fifty-eight
thousand pesos (P58,000.00). They shall also suffer the penalty of perpetual special
disqualification. Costs against the accused.
For Crim. Case No. 16796, on ground that the crime was not committed by
the accused, accused Mariano Un Ocampo III and Andres S. Flores are hereby
ACQUITTED of the crime charged. The surety bonds posted by them for their
provisional liberty are cancelled.
For Crim. Case No. 16802, on ground of reasonable doubt, accused Mariano
Un Ocampo III and Andres S. Flores are hereby ACQUITTED of the crime charged. The
surety bonds posted by them for their provisional liberty are cancelled.
SO ORDERED.[14]
Petitioners separately filed a motion for reconsideration of the Decision.
In a Resolution promulgated on January 6, 2003, the Sandiganbayan reconsidered its
Decision in Crim. Case No. 16787, and acquitted petitioners of the crime charged. In that case,
the prosecution alleged that P5 million of the NALGU funds loaned to LTFI were placed in time
deposits with the Rural Bank of Tarlac and earned a total interest ofP116,932.77, of which
amount only P50,000.00 was recorded in the books of LTFI. The unrecorded interest
of P66,932.77 was said to have been withdrawn from December 27, 1988 to February 2,
1989 and allegedly malversed by petitioners. The Sandiganbayan held that as this Court has
already labeled the subject agreement as one of loan, the said interest are private funds, hence,
not the proper subject for malversation of public funds. Thus, petitioners were acquitted in
Crim. Case No. 16787.
Petitioners thereafter filed their respective petitions, which were consolidated by the
Court in a Resolution dated February 20, 2006.
The pertinent issues raised by petitioners may be summarized as follows:
1) Whether or not petitioners Ocampo and Flores are guilty of the crime of
malversation of public funds under Art. 217 and Art. 220 respectively of the Revised Penal
Code;
2)Whether or not the Sandiganbayan erred in holding that the MOA is void and did not
bind the Province of Tarlac on the ground that the MOA was entered into by petitioner Ocampo
without authority from the Sangguniang Panlalawigan in violation of the Local Government
Code of 1983.
First Issue: Whether or not petitioners Ocampo and Flores are guilty of the crime
of malversation of public funds under Art. 217 and Art. 220 respectively of the Revised Penal
Code?
Crucial to the resolution of the first issue is the nature of the transaction entered into
by the Province of Tarlac and LTFI.
Petitioners claim that in the instant cases, the public funds alleged to have been
malversed were loaned by the Province of Tarlac to LTFI per the MOA; hence, LTFI acquired
ownership of the funds which thus shed their public character and became private funds.
Petitioner Ocampo also asserts that the Sandiganbayan impliedly ruled that the funds
were private in character and owned by LTFI when it ruled in Crim. Case No. 16787 that since
this Court has already labeled the subject agreement as one of loan, the interests from the loan
are private funds; hence, not the proper subject for malversation of public funds. Having
declared the interests earned by the funds loaned to LTFI as private funds, the Sandiganbayan
should have also declared the funds loaned as private.
Petitioners arguments are meritorious.
The MOA states:
121
xxx
WHEREAS, the First Party [the Provincial Government of Tarlac], in order to
vigorously pursue its livelihood program for rural development, has identified the need
to establish a RICH (Rural Industrialization Can Happen) Program;
WHEREAS, the First Party now realizes the effectivity and efficiency of
designating a professional private non-profit organization to implement the various
livelihood projects under the RICH Program;
WHEREAS, the Second Party [Lingkod Tarlac Foundation], has represented
that it has the technical expertise required by the First Party in the implementation of
the various livelihood projects under the RICH Program;
WHEREAS, the First Party desires to engage the Second Party and the latter
agrees as the implementing arm of the Provincial Government for its livelihood projects;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Parties hereby agree as follows:
ARTICLE I
UNDERTAKINGS OF THE FIRST PARTY
1. The First Party shall provide all the data and information as may be
required by [the] Second Party in the implementation of the RICH Program;
ARTICLE III
DESCRIPTION OF THE PRIORITY PROJECTS
A. Program For Lease Purchase Agreements on equipment, machineries,
buildings and structures:
xxx
B. Direct Lending Pogram:
Under this scheme, the Lingkod Tarlac Foundation shall engage in direct
lending operations to proponents of livelihood activities under the Rural
Industrialization Can Happen (RICH PROGRAM) at variable interest rates and loan
conditions depending on the viability and nature of the livelihood projects availing of
the loan.
C.Direct Borrowing by Lingkod Tarlac Foundation:
The Lingkod Tarlac Foundation shall be allowed to borrow funds directly
from the Provincial government to fund Lingkod Tarlac Foundation
projects provided the projects are livelihood projects under the Rural Industrialization
Can Happen (RICH Program).
D. Other project financing schemes that may be developed for the RICH
Program.
ARTICLE IV
CONDITIONS FOR RELEASE OF FUNDS
The First Party shall release in lump sum the appropriate funds for the
approved projects covered by individual loan documents upon signing of [the]
respective loan agreement and approval of the Commission on Audit.
ARTICLE V
TERMS OF REPAYMENT
4
1. The Second Party shall repay the First Party only the total amount of capital
without interest in consideration of the following:
a) The Second Party shall shoulder all its operating expenses.
b) The Second Party shall not charge the Province any management fees or whatever
fees.
c) The Second Party shall, whenever necessary, assure the beneficiaries of the project
interests and management fees at rates lower than the commercial financial rates.
2. The terms of repayment shall be based on the projects ability to pay without
sacrificing on the projects viability.
ARTICLE VI
SUCCESSORS AND ASSIGNEES
Except as may be mutually agreed in writing, neither party can assign,
sublet, or transfer its interest or duties under this Agreement.
ARTICLE VII
TERMS OF THE AGREEMENT
This Agreement shall exist for as long as the Program exists or any extension
thereof.
IN WITNESS WHEREOF, the Parties have hereunto set their hands
on this 8th day of August, 1988 in Tarlac, Tarlac.
LINGKOD TARLAC FOUNDATION PROVINCE OF TARLAC
Second Party First Party
(Signed) (Signed)
ANDRES S, FLORES MARIANO UN OCAMPO III
Executive Director Governor
CONCURRED IN BY:
(Signed)
GUILLERMO N. CARAGUE
Secretary of Budget
& Management
The MOA shows that LTFI is allowed to borrow funds directly from the Provincial
Government to fund Lingkod Tarlac Foundation projects provided the projects are livelihood
projects under the Rural Industrialization Can Happen Program. Moreover, the agreement
stipulates under the Conditions for Release of Funds that the Province of Tarlac shall release
in lump sum the appropriate funds for the approved projects covered by individual loan
documents upon signing of the respective loan agreement....[15]
In Crim. Case No. 16794, the fund alleged to have been malversed in the amount
of P1,180,496.48 represents the discrepancy of the cost of the Juki embroidery machines as
listed in the books of LTFI and the amount actually paid to open the letter of credit for the
payment of the machines. In the books of LTFI, the cost of the Juki embroidery machines was
listed as P8,860,000, while the amount paid to open the letter of credit for the payment of the
machines was P7,679,530.52. Petitioner Flores was held liable only up to the amount
of P1,132,739.
In Crim. Case No. 16795, the fund alleged to have been malversed in the amount
of P58,000 is the money left (P47,730) in PNB S/A No. 490-555744-6 after the withdrawal
of the purchase price of the Juki embroidery machines, plus interest. The amount of P58,000
was withdrawn upon the authorization of petitioner Flores. The withdrawal was neither
reflected as deposit in the bank accounts of LTFI nor spent by it.
121
In both cases, the money trail proven by the prosecution shows that the subject funds
or the money used for the purchase of the Juki embroidery machines came from the release of
the Province of Tarlac through petitioner Ocampo of NALGU funds in the amount of P11.5
million to LTFI on October 24, 1988. The release of the funds was covered by a loan document
in accordance with the MOA which states that the Province of Tarlac shall release in lump sum
the appropriate funds for the approved projects covered by individual loan documents upon
signing of the respective loan agreement....
The Report on the Special Audit of LTFI[16] stated:
. . . For the period July 1988 to December 1989, LTFI received a total of P56.6
million which consisted of six releases and covered by individual loan agreements, as
follows:
Date Amount
08 30 88 P7, 000, 000
10 24 88 11,500, 000
12 08 88 1,500, 000
02 22 89 4,000, 000
04 12 89 18,000, 000
06 14 89 12,718, 403
Total P56,618, 403
xxx
On October 24, 1988, the Provincial Government of Tarlac approved and
released an amount of P11,500,000 to Lingkod Tarlac Foundation, Inc. (LTFI) for the
Rural Industrialization Can Happen (RICH) Program. Of the amount
released, P7,023,836 was intended for the purchase of 400 sets embroidery machines
for the Embroidery Skills Training Project.[17]
Based on the foregoing, it is clear that the funds released by the Province of Tarlac,
including the money allegedly malversed by petitioners in Crim. Case Nos. 16794 and 16795,
were in the nature of a loan to LTFI.
Art. 1953 of the Civil Code provides that [a] person who receives a loan of money or
any other fungible thing acquires the ownership thereof, and is bound to pay to the creditor an
equal amount of the same kind and quality.
Hence, petitioner Ocampo correctly argued that the NALGU funds shed their public
character when they were lent to LTFI as it acquired ownership of the funds with an obligation
to repay the Province of Tarlac the amount borrowed. The relationship between
the Province of Tarlac and the LTFI is that of a creditor and debtor. Failure to pay the
indebtedness would give rise to a collection suit.
The Sandiganbayan convicted petitioner Ocampo of malversation of public funds
under Art. 217 of the Revised Penal Code for his gross and inexcusable negligence in not setting
up safeguards in accordance with Sec. 203(t) of the Local Government Code [18] for the proper
handling of the NALGU funds in the hands of LTFI which resulted in the disappearance
of P1,132,739 allegedly malversed in Crim. Case No. 16794 and the disappearance of P58,000
in Crim. Case No. 16795.
In his petition, petitioner Ocampo states that he made sure that proper safeguards
were in place within LTFI to ensure the proper handling of NALGU funds by LTFI. On August
5, 1988, before the Province of Tarlac and LTFI entered into the MOA, LTFIs Articles of
Incorporation were amended to add the following:
TENTH: That no part of the net income of the Foundation shall inure to the benefit of
any member of the Foundation and that at least seventy percent (70%) of the funds shall be
5
used for the projects and not more than thirty percent (30%) of said funds shall be used for
administrative purposes.
Petitioner Ocampo argues that since he had resigned from LTFI both as chairperson and as
trustee on June 22, 1988, he ceased to become accountable for the handling of the NALGU
funds after the same were loaned to LTFI pursuant to the MOA dated August 8,
1988. Consequently, he may not be held criminally liable for disbursements made by LTFI since
he had nothing to do with its operations after his resignation.
Malversation may be committed by appropriating public funds or property; by taking
or misappropriating the same; by consenting, or through abandonment or negligence, by
permitting any other person to take such public funds or property; or by being otherwise guilty
of the misappropriation or malversation of such funds or property.[19]
The essential elements common to all acts of malversation under Art. 217 of the
Revised Penal Code[20] are:
(a) That the offender be a public officer;
(b) That he had the custody or control of funds or property by reason of the duties
of his office;
(c) That those funds or property were public funds or property for which he was
accountable;
(d) That he appropriated, took, misappropriated or consented or, through
abandonment or negligence, permitted another person to take them.[21]
There can be no malversation of public funds by petitioner Ocampo in the instant
cases since the loan of P11.5 million transferred ownership and custody of the funds, which
included the sum of money allegedly malversed, to LTFI for which Ocampo could no longer be
held accountable. Thus, contrary to the allegation of the Office of the Special Prosecutor,
petitioner Ocampo cannot be held culpable for malversation committed through negligence
in adopting measures to safeguard the money of the Province of Tarlac, since the same were
neither in his custody nor was he accountable therefor after the loan to LTFI.
Thus, petitioner Flores, as the executive director of LTFI, cannot also be held liable for
malversation of public funds in a contract of loan which transferred ownership of the funds to
LTFI making them private in character. Liwanag v. Court of Appeals[22] held:
. . . in a contract of loan once the money is received by the debtor, ownership over the
same is transferred. Being the owner, the borrower can dispose of it for whatever purpose he
may deem proper.
The Sandiganbayan erred when it stated that the intention of the parties was
for the funds to remain public, citing the MOA which allegedly provided, thus:
The Province shall have the right to have access to all resources and records of either
LTF[I] or BUILD and may conduct COA examination or audit on any or all matter affecting the
loans or assets covered by this agreement and funds from the Province of Tarlac.
A review of the MOA did not show the presence of such provision. But the cited
provision is contained in the TMOA, which was later entered into by the Province of Tarlac,
LTFI and BUILD, whereby LTFI transferred part of its obligation to BUILD.
What is controlling in the instant cases is that the parties entered into a contract
of loan for each release of NALGU funds. The second release on October 24, 1988included
the subject funds in controversy. By virtue of the contract of loan, ownership of the subject
funds was transferred to LTFI making them private in character, and therefore not subject of
the instant cases of malversation of public funds.
The Court notes that the obligation of LTFI to repay the NALGU Funds of P56,618,403
obtained by it from the Province of Tarlac pursuant to the MOA was extinguished as follows:
121
(1) BUILD assumed LTFIs principal loan of P40 million;
(2) LTFI ceded, transferred and assigned to the Province of Tarlac all the rights and
interests of LTFI in certain loans including interests, certificate of time deposit and certain Juki
embroidery machines in the total amount of P16,618,403.
Second Issue: Whether or not the Sandiganbayan erred in holding that the MOA is void
and did not bind the Province of Tarlac on the ground that the MOA was entered into by petitioner
Ocampo without authority from the Sangguniang Panlalawigan in violation of the Local
Government Code of 1983?
In its Resolution dated January 6, 2003, the Sandiganbayan concedes that the
transaction between the Province of Tarlac through petitioner Ocampo and the LTFI was one of
loan. However, it stated that since Ocampo was not authorized by the Sangguniang
Panlalawigan to enter into the MOA as required by the Local Government Code of 1983, the
MOA did not bind the province nor did it give any benefits to the LTFI because a void contract
has no effect whatsoever.
Petitioner Ocampo alleges that he had ample authority to enter into the MOA for the
following reasons:
1) NALGU funds received by the Province of Tarlac came straight from the national
government and were intended for a specific purpose, that is, the implementation of various
livelihood projects in the Province of Tarlac, as evidenced by the exchange of correspondence
between him (petitioner Ocampo) and DBM Secretary Guillermo N. Carague.[23]
2) On July 15, 1988, the DBM released a revolving fund for the implementation of
various livelihood projects in the Province of Tarlac under Advice Allotment No. BCS-0183-88-
301.[24] In August 1988, he (petitioner Ocampo) informed the DBM that
the Province of Tarlac had designated LTFI as the implementing arm for its livelihood projects,
and requested authority to extend loans to LTFI, which request was approved by the DBM
Secretary.[25]
3)The DBMs approval of petitioner Ocampos request constituted the authority of
petitioner Ocampo to enter into the MOA with LTFI.
4)DBM also approved and concurred with the terms of the MOA as evidenced by the
DBM Secretarys signature on the MOA.
Petitioner Ocampo also asserts that Sec. 203(f) of the Local Government Code of
1983,[26] which authorized the provincial governor to enter into business transactions on behalf
of the province, did not expressly require the concurrence of the provincial board unlike its
counterpart provision in the Local Government Code of 1991.[27]
Further, petitioner Ocampo states that in any case, the lack of authority of one who
enters into a contract in the name of another does not render the contract void under Art. 1409
of the Civil Code,[28] as ruled by the Sandiganbayan, but only unenforceable under Art. 1403(1)
of the Civil Code. He points out that unenforceable contracts are susceptible of ratification, and
in this case, the Provincial Board of Tarlac can be deemed to have ratified the MOA when it
passed the following resolutions:
(1) Resolution No. 76, which confirmed and ratified the TMOA among the
Province of Tarlac, LTFI and the BUILD, whereby the liability of LTFI in favor
of the Province of Tarlac in the total amount of P40 million was transferred to
and assumed by BUILD;[29] and
(2) Resolution No. 199, which authorized petitioner Ocampo to sign the Deed
of Assignment between the Province of Tarlac and LTFI, whereby LTFI assigned
loans, sewing machines and other assignable documents in favor of the
6
Province of Tarlac to settle the balance of its obligation in the amount
of P16,618,403.00. [30]
The Court holds that since petitioner Ocampo was not duly authorized by
the Sangguniang Panlalawigan to enter into the MOA, the agreement is an unenforceable
contract under Sec. 1403 of the Civil Code:
Art. 403. The following contracts are unenforceable, unless they are
ratified:
(1) Those entered into in the name of another person by one who has
been given no authority or legal representation, or who has acted
beyond his powers; x x x.
Unenforceable contracts are governed by the following provisions of the Civil Code:
Art. 1404. Unauthorized contracts are governed by article
1317 and the principles of agency in Title X of this Book.
Art. 1317. No one may contract in the name of another without being
authorized by the latter, or unless he has by law or right to represent him.
A contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his powers, shall
be unenforceable, unless it is ratified, expressly or impliedly, by the person
on whose behalf it has been executed, before it is revoked by the other
contracting party.[31]
The Court finds that the MOA has been impliedly ratified by the Sangguniang
Panlalawigan as it has not directly impugned the validity of the MOA despite knowledge of this
controversy. Implied ratification is also shown by the following acts:
1) The Sangguniang Panlalawigan subsequently recognized the
transfer of liabilities of LTFI in favor of the Province of Tarlac to BUILD
in the amount of P40 million contained in a TMOA.[32]
2) It authorized petitioner Ocampo to sign in behalf of
the Province of Tarlac the Deed of Assignment entered into by
the Province of Tarlac and LTFI[33] which extinguished the remaining loan
obligations of LTFI obtained under the MOA.
WHEREFORE, the consolidated petitions are GRANTED. The Decision of the
Sandiganbayan promulgated on March 8, 2002 and its Resolution promulgated on January 6,
2003 are SET ASIDE. Petitioner Mariano Un Ocampo III and petitioner Andres S. Flores are
hereby ACQUITTED of the crime of malversation of public funds in Crim. Case Nos. 16794 and
16795. No costs. SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-13602 April 6, 1918
LEUNG BEN, plaintiff,
vs.
P. J. O'BRIEN, JAMES A OSTRAND and GEO. R. HARVEY, judges of First Instance of
city of Manila,defendants.
Thos. D. Aitken and W. A. Armstrong for plaintiff.
Kincaid & Perkins for defendants.
121
STREET, J.:
This is an application for a writ of certiorari, the purpose of which is to quash an attachment
issued from the Court of First Instance of the City of Manila under circumstances hereinbelow
stated.
Upon December 12, 1917, an action was instituted in the Court of First Instance of the city of
Manila by P. J. O'Brien to recover of Leung Ben the sum of P15,000 alleged to have been lost
by the plaintiff to the defendant in a series of gambling, banking and percentage games
conducted ruing the two or three months prior to the institution of the suit. In his verified
complaint the plaintiff asked for an attachment, under section 424, and 412 (1) of the Code of
Civil Procedure, against the property of the defendant, on the ground that the latter was about
to depart from the Philippine islands with intent to defraud his creditors. This attachment was
issued; and acting under the authority thereof, the sheriff attached the sum of P15,000 which
had been deposited by the defendant with the International Banking Corporation.
The defendant thereupon appeared by his attorney and moved the court to quash the
attachment. Said motion having dismissed in the Court of First Instance, the petitioner, Leung
Ben, the defendant in that action, presented to this court, upon January 8, 1918 his petition
for the writ of certiorari directed against P. J. O'Brien and the judges of the Court of First
Instance of the city of Manila whose names are mentioned in the caption hereof. The prayer is
that the Honorable James A. Ostrand, as the judge having cognizance of the action in said
court be required to certify the record to this court for review and that the order of attachment
which had been issued should be revoked and discharged. with costs. Upon the filing of said
petition in this court the usual order was entered requiring the defendants to show cause why
the writ should not issue. The response of the defendants, in the nature of a demurrer, was
filed upon January 21, 1918; and the matter is now heard upon the pleadings thus presented.
The provision of law under which this attachment was issued requires that there should be
accuse of action arising upon contract, express or implied. The contention of the petitioner is
that the statutory action to recover money lost at gaming is that the statutory action to recover
money lost at gaming is no such an action as is contemplated in this provision, and he therefore
insists that the original complaint shows on its face that the remedy of attachment is not
available in aid thereof; that the Court of First Instance acted in excess of its jurisdiction in
granting the writ of attachment; that the petitioner has no plain, speedy, and adequate remedy
by appeal or otherwise; and that consequently the writ of certiorari supplies the appropriate
remedy for his relief.
The case presents the two following questions of law, either of which, if decided unfavorably to
the petitioner, will be fatal to his application:
(1) Supposing that the Court of First Instance has granted an attachment for which there is no
statutory authority, can this court entertain the present petition and grant the desired relief?
(2) Is the statutory obligation to restore money won at gaming an obligation arising from
"contract, express or implied?"
We are of the opinion that the answer to the first question should be in the affirmative. Under
section 514 of the Code of Civil Procedure the Supreme Court has original jurisdiction by the
writ of certiorari over the proceedings of Courts of First Instance, wherever said courts have
exceeded their jurisdiction and there is no plaint, speedy, and adequate remedy. In the same
section, it is further declared that the proceedings in the Supreme Court in such cases hall be
as prescribed for Courts of First Instance in section 217-221, inclusive, of said Code. This
Supreme Court, so far as applicable, the provisions contained in those section to the same
extent as if they had been reproduced verbatim immediately after section 514. Turning to
section 217, we find that, in defining the conditions under which certiorari can be maintained
7
in a Court of First Instance substantially the same language is used as is the same remedy can
be maintained in the Supreme Court of First Instance, substantially the same language is used
as is found in section 514 relative to the conditions under which the same remedy can be
maintained in the Supreme Court, namely, when the inferior tribunal has exceeded its
jurisdiction and there is no appeal, nor any plain, speedy and adequate remedy. In using these
expressions the author of the Code of Civil Procedure merely adopted the language which, in
American jurisdictions at least, had long ago reached the stage of stereotyped formula.
In section 220 of the same Code, we have a provision relative to the final proceedings
in certiorari, and herein it is stated that the court shall determine whether the inferior tribunal
has regularly pursued its authority it shall give judgment either affirming annulling, or
modifying the proceedings below, as the law requires. The expression, has not regularly
pursued its authority as here used, is suggestive, and we think it should be construed in
connection with the other expressions have exceeded their jurisdiction, as used in section 514,
and has exceeded their jurisdiction as used in section 217. Taking the three together, it results
in our opinion that any irregular exercise of juridical power by a Court of First Instance, in
excess of its lawful jurisdiction, is remediable by the writ of certiorari, provided there is no other
plain, speedy, and adequate remedy; and in order to make out a case for the granting of the
writ it is not necessary that the court should have acted in the matter without any jurisdiction
whatever. Indeed the repeated use of expression excess of jurisdiction shows that the lawmaker
contemplated the situation where a court, having jurisdiction should irregularly transcend its
authority as well as the situation where the court is totally devoid of lawful power.
It may be observed in this connection that the word jurisdiction as used in attachment cases,
has reference not only to the authority of the court to entertain the principal action but also to
its authority to issue the attachment, as dependent upon the existence of the statutory ground.
(6 C. J., 89.) This distinction between jurisdiction to issue the attachment as an ancillary
remedy incident to the principal litigation is of importance; as a court's jurisdiction over the
main action may be complete, and yet it may lack authority to grant an attachment as ancillary
to such action. This distinction between jurisdiction over the ancillary has been recognized by
this court in connection with actions involving the appointment of a receiver. Thus in Rocha &
Co. vs. Crossfield and Figueras (6 Phil. Rep., 355), a receiver had been appointed without legal
justification. It was held that the order making the appointment was beyond the jurisdiction of
the court; and though the court admittedly had jurisdiction of the main cause, the order was
vacated by this court upon application a writ of certiorari. (See Blanco vs. Ambler, 3 Phil. Rep.,
358, Blanco vs. Ambler and McMicking 3 Phil. Rep., 735, Yangco vs. Rohde, 1 Phil. Rep., 404.)
By parity of reasoning it must follow that when a court issues a writ of attachment for which
there is no statutory authority, it is acting irregularly and in excess of its jurisdiction, in the
sense necessary to justify the Supreme Court in granting relief by the writ of certiorari. In
applying this proposition it is of course necessary to take account of the difference between a
ground of attachment based on the nature of the action and a ground of attachment based on
the acts or the conditions of the defendant. Every complaint must show a cause of action some
sort; and when the statue declares that the attachment may issue in an action arising upon
contract, the express or implied, it announces a criterion which may be determined from an
inspection of the language of the complaint. The determination of this question is purely a
matter of law. On the other hand, when the stature declares that an attachment may be issued
when the defendant is about to depart from the Islands, a criterion is announced which is
wholly foreign to the cause of action; and the determination of it may involve a disputed
question of fact which must be decided by the court. In making this determination, the court
obviously acts within its powers; and it would be idle to suppose that the writ of certiorari would
121
be available to reverse the action of a Court of First Instance in determining the sufficiency of
the proof on such a disputed point, and in granting or refusing the attachment accordingly.
We should not be understood, in anything that has been said, as intending to infringe the
doctrine enunciated by this court in Herrera vs. Barretto and Joaquin (25 Phil. Rep., 245),
when properly applied. It was there held that we would not, upon application for a writ
of certiorari, dissolve an interlocutory mandatory injunction that had been issued in a Court of
First Instance as an incident in an action of mandamus. The issuance of an interlocutory
injunction depends upon conditions essentially different from those involved in the issuance of
an attachment. The injunction is designed primarily for the prevention of irreparable injury
and the use of the remedy is in a great measure dependent upon the exercise of discretion.
Generally, it may be said that the exercise of the injunctive powers is inherent in judicial
authority; and ordinarily it would be impossible to distinguish between the jurisdiction of the
court in the main litigation and its jurisdiction to grant an interlocutory injunction, for the
latter is involved in the former. That the writ of certiorari can not be used to reverse an order
denying a motion for a preliminary injunction is of course not to cavil. (Somes vs. Crossfield
and Molina, 8 Phil. Rep., 284.)
But it will be said that the writ of certiorari is not available in this cae, because the petitioner
is protected by the attachment bond, and that he has a plain, speedy, and adequate remedy
appeal. This suggestion seems to be sufficiently answered in the case of Rocha &
Co vs. Crossfield and Figueras (6 Phil. Rep., 355), already referred to, and the earlier case there
cited. The remedy by appeal is not sufficiently speedy to meet the exigencies of the case. An
attachment is extremely violent, and its abuse may often result in infliction of damage which
could never be repaired by any pecuniary award at the final hearing. To postpone the granting
of the writ in such a case until the final hearing and to compel the petitioner to bring the case
here upon appeal merely in order to correct the action of the trial court in the matter of allowing
the attachment would seem both unjust and unnecessary.
Passing to the problem propounded in the second question it may be observed that, upon
general principles,. recognize both the civil and common law, money lost in gaming and
voluntarily paid by the loser to the winner can not in the absence of statue, be recovered in a
civil action. But Act No. 1757 of the Philippine Commission, which defines and penalizes several
forms of gambling, contains numerous provisions recognizing the right to recover money lost
in gambling or in the playing of certain games (secs. 6, 7, 8, 9, 11). The original complaint in
the action in the Court of First Instance is not clear as to the particular section of Act No. 1757
under which the action is brought, but it is alleged that the money was lost at gambling,
banking, and percentage game in which the defendant was banker. It must therefore be
assumed that the action is based upon the right of recovery given in Section 7 of said Act,
which declares that an action may be brought against the banker by any person losing money
at a banking or percentage game.
Is this a cause arising upon contract, express or implied, as this term is used in section 412 of
the Code of Civil Procedure? To begin the discussion, the English version of the Code of Civil
Procedure is controlling (sec. 15, Admin. Code, ed. of 1917). Furthermore it is universally
admitted to be proper in the interpretation of any statute, to consider its historical antecedents
and its juris prudential sources. The Code of Civil Procedure, as is well known, is an American
contribution to Philippine legislation. It therefore speaks the language of the common-law and
for the most part reflects its ideas. When the draftsman of this Code used the expression
contract, express or implied, he used a phrase that has been long current among writers on
American and English law; and it is therefore appropriate to resort to that system of law to
discover the appropriate to resort to that system of law to discover the meaning which the
8
legislator intended to convey by those meaning which the legislator intended to convey by those
terms. We remark in passing that the expression contrato tracito, used in the official translation
of the Code of Civil Procedure as the Spanish equivalent of implied contract, does not appear
to render the full sense of the English expression.
The English contract law, so far as relates to simple contracts is planted upon two foundations,
which are supplied by two very different conceptions of legal liability. These two conceptions
are revealed in the ideas respectively underlying (1) the common- law debt and (2) the
assumptual promise. In the early and formative stages of the common-law the only simple
contract of which the courts took account was the real contract or contract re, in which the
contractual duty imposed by law arises upon the delivery of a chattle, as in
the mutuum, commodatum, depositum, and the like; and the purely consensual agreements of
the Roman Law found no congenial place in the early common law system.
In course of time the idea underlying the contract re was extended so as to include from one
person to another under such circumstances as to constitute a justa cuas debendi. The
obligation thereby created was a debt. The constitutive element in this litigation is found in the
fact that the debtor has received something from the creditor, which he is bound by the
obligation of law to return or pay for. From an early day this element was denominated the quid
pro quo, an ungainly phrase coined by Mediaeval Latinity. The quid pro quo was primarily a
materials or physical object, and its constituted the recompense or equivalent acquired by the
debtor. Upon the passage of the quid pro quo from one party to the other, the law imposed that
real contractual duty peculiar to the debt. No one conversant with the early history of English
law would ever conceive of the debt as an obligation created by promise. It is the legal duty to
pay or deliver a sum certain of money or an ascertainable quantity of ponderable or measurable
chattles.
The ordinary debt, as already stated, originates in a contract in which a quid pro quo passes to
the debtor at the time of the creation of the debt, but the term is equally applicable to duties
imposed by custom or statute, or by judgment of a court.
The existence of a debt supposes one person to have possession of thing (res) which
he owes and hence ought to turn over the owner. This obligation is the oldest conception of
contract with which the common law is familiar; and notwithstanding the centuries that have
rolled over Westminster Hall that conception remains as one of the fundamental bases of the
common-law contract.
Near the end of the fifteenth century there was evolved in England a new conception of
contractual liability, which embodied the idea of obligation resulting from promise and which
found expression in the common law assumpsit, or parol promise supported by a consideration.
The application of this novel conception had the effect of greatly extending the filed of
contractual liability and by this means rights of action came to be recognized which had been
unknown before. The action of assumpsit which was the instrument for giving effect to this
obligation was found to be a useful remedy; and presently this action came to be used for the
enforcement of common-law debts. The result was to give to our contract law the superficial
appearance of being based more or less exclusively upon the notion of the obligation of promise.
An idea is widely entertained to the effect that all simple contracts recognized in the common-
law system are referable to a singly category. They all have their roots, so many of us imagine,
in one general notion of obligation; and of course the obligation of promise is supposed to
supply this general notion, being considered a sort of menstruum in which all other forms of
contractual obligation have been dissolved. This a mistake. The idea of contractual duty
embodied in the debt which was the first conception of contract liability revealed in the common
121
law, has remained, although it was detained to be in a measure obscured by the more modern
conception of obligation resulting from promise.
What has been said is intended to exhibit the fact that the duty to pay or deliver a sum certain
of money or an ascertainable quantity of ponderable or measurable chattles — which is
indicated by them debt — has ever been recognized, in the common-law system, as a true
contract, regardless, of the source of the duty or the manner in which it is create — whether
derived from custom, statue or some consensual transaction depending upon the voluntary
acts of the parties. the form of contract known as the debt is of the most ancient lineage; and
when reference is had to historical antecedents, the right of the debt to be classed as a contract
cannot be questioned. Indeed when the new form of engagement consisting of the parol promise
supported by a consideration first appeared, it was looked upon as an upstart and its right to
be considered a true contract was questioned. It was long customary to refer to it exclusively
as an assumpsit, agreement, undertaking, or parol promise, in fact anything but a contract.
Only in time did the new form of engagement attain the dignity of being classed among true
contract.
The term implied takers us into shadowy domain of those obligations the theoretical
classification of which has engaged the attention of scholars from the time of Gaius until our
own day and has been a source of as much difficulty to the civilian as to the common-law jurist.
There we are concerned with those acts which make one person debtor to another without there
having intervened between them any true agreement tending to produce a legal bond (vinculum
juris). Of late years some American and English writers have adopted the term quasi-contract
as descriptive of these obligations or some of them; but the expression more commonly used is
implied contract.
Upon examination of these obligations, from the view point of the common-law jurisprudence,
it will be found that they fall readily into two divisions according as they bear an analogy to the
common-law debt or to the common law assumpsit. To exhibit the scope of these different
classes of obligations is here impracticable. It is only necessary in this connection to observe
that the most conspicuous division is that which comprises duties in the nature of debt. The
characteristic feature of these obligations is that upon certain states of fact the law imposes an
obligation to pay a sum certain of money; and it is characteristic of this obligation that the
money in respect to which the duty is raised is conceived as being equivalent of something
taken or detained under circumstances giving rise to the duty to return or compensate
therefore. The proposition that no one shall be allowed to enrich himself unduly at the expense
of another embodies the general principle here lying at the basis of obligation. The right to
recover money improperly paid (repeticion de lo indebido) is also recognized as belong to this
class of duties.
It will observed that according to the Civil Code obligations are supposed to be derived either
from (1) the law, (2) contracts and quasi-contracts, (3) illicit acts and omission, or (4) acts in
which some sort ob lame or negligence is present. This enumeration of sources of obligations
and the obligation imposed by law are different types. The learned Italian jurist, Jorge Giorgi,
criticises this assumption and says that the classification embodied in the code is theoretically
erroneous. His conclusion is that one or the other of these categories should have been
suppressed and merged in the other. (Giorgi, Teoria de las Obligaciones, Spanish ed., vol. 5
arts. 5, 7, 9.) The validity of this criticism is, we thin, self-evident; and it is of interest to note
that the common law makes no distinction between the two sources of liability. The obligations
which in the Code are indicated as quasi-contracts, as well as those arising ex lege, are in the
common la system, merged into the category of obligations imposed by law, and all are
denominated implied contracts.
9
Many refinements, more or less illusory, have been attempted by various writers in
distinguishing different sorts of implied contracts, as for example, the contract implied as of
fact and the contract implied as of law. No explanation of these distinctions will be here
attempted. Suffice it to say that the term contract, express or implied, is used to by common-
law jurists to include all purely personal obligations other than those which have their source
in delict, or tort. As to these it may be said that, generally speaking, the law does not impose a
contractual duty upon a wrongdoer to compensate for injury done. It is true that in certain
situations where a wrongdoer unjustly acquired something at the expense of another, the law
imposes on him a duty to surrender his unjust acquisitions, and the injured party may here
elect to sue upon this contractual duty instead of suing upon the tort; but even here the
distinction between the two liabilities, in contract and in tort, is never lost to sight; and it is
always recognized that the liability arising out of the tort is delictual and not of a contractual
or quasi-contractual nature.
In the case now under consideration the duty of the defendant to refund the money which he
won from the plaintiff at gaming is a duty imposed by statute. It therefore arises ex lege.
Furthermore, it is a duty to return a certain sum which had passed from the plaintiff to the
defendant. By all the criteria which the common law supplies, this a duty in the nature of debt
and is properly classified as an implied contract. It is well- settled by the English authorities
that money lost in gambling or by lottery, if recoverable at all, can be recovered by the loser in
an action of indebitatus assumpsit for money had and received. (Clarke vs. Johnson. Lofft, 759;
Mason vs. Waite, 17 Mass., 560; Burnham vs. Fisher, 25 Vt., 514.) This means that in the
common law the duty to return money won in this way is an implied contract, or quasi-contract.
It is no argument to say in reply to this that the obligation here recognized is called an implied
contract merely because the remedy commonly used in suing upon ordinary contract can be
here used, or that the law adopted the fiction of promise in order to bring the obligation within
the scope of the action of assumpsit. Such statements fail to express the true import of the
phenomenon. Before the remedy was the idea; and the use of the remedy could not have been
approved if it had not been for historical antecedents which made the recognition of this remedy
at one logical and proper. Furthermore, it should not be forgotten that the question is not how
this duty but what sort of obligation did the author of the Code of Civil Procedure intend to
describe when he sued the term implied contract in section 412.
In what has been said we have assumed that the obligation which is at the foundation of the
original action in the court below is not a quasi-contract, when judge by the principles of the
civil law. A few observations will show that this assumption is not by any means free from
doubt. The obligation in question certainly does not fall under the definition of either of the
two-quasi- contracts which are made the subject of special treatment in the Civil Code, for its
does not arise from a licit act as contemplated in article 1895. The obligation is clearly a
creation of the positive law — a circumstance which brings it within the purview of article 1090,
in relation with article, 1089; and it is also derived from an illicit act, namely, the playing of a
prohibited game. It is thus seen that the provisions of the Civil Code which might be consulted
with a view to the correct theoretical classification of this obligation are unsatisfactory and
confusing.
The two obligations treated in the chapter devoted to quasi-contracts in the Civil Code are (1)
the obligation incident to the officious management of the affairs of other person (gestion de
negocios ajenos) and (2) the recovery of what has been improperly paid (cabro de lo indebido).
That the authors of the Civil Code selected these two obligations for special treatment does not
signify an intention to deny the possibility of the existence of other quasi-contractual
obligations. As is well said by the commentator Manresa.
121
The number of the quasi-contracts may be indefinite as may be the number of lawful facts, the
generations of the said obligations; but the Code, just as we shall see further on, in the
impracticableness of enumerating or including them all in a methodical and orderly
classification, has concerned itself with two only — namely, the management of the affairs of
other person and the recovery of things improperly paid — without attempting by this to
exclude the others. (Manresa, 2d ed., vol. 12, p. 549.)
It would indeed have been surprising if the authors of the Code, in the light of the jurisprudence
of more than a thousand years, should have arbitrarily assumed to limit the quasi-contract to
two obligations. The author from whom we have just quoted further observes that the two
obligations in question were selected for special treatment in the Code not only because they
were the most conspicuous of the quasi-contracts, but because they had not been the subject
of consideration in other parts of the Code. (Opus citat., 550.)
It is well recognized among civilian jurists that the quasi- contractual obligations cover a wide
range. The Italian jurist, Jorge Giorgi, to whom we have already referred, considers under this
head, among other obligations, the following: payments made upon a future consideration
which is not realized or upon an existing consideration which fails; payments wrongfully made
upon a consideration which is contrary to law, or opposed to public policy; and payments made
upon a vicious consideration or obtained by illicit means (Giorgi, Teoria de las Obligaciones,
vol. 5, art. 130.)
Im permitting the recovery of money lost at play, Act No. 1757 has introduced modifications in
the application of articles 1798, 180`, and 1305 of the Civil Code. The first two of these articles
relate to gambling contracts, while article 1305 treats of the nullity of contracts proceeding
from a vicious or illicit consideration. Taking all these provisions together, it must be apparent
that the obligation to return money lost at play has a decided affinity to contractual obligations;
and we believe that it could, without violence to the doctrines of the civil law, be held that such
obligations is an innominate quasi-contract. It is, however, unnecessary to place the decision
on this ground.
From what has been said it follows that in our opinion the cause of action stated in the
complaints in the court below is based on a contract, express or implied and is therefore of
such nature that the court had authority to issue writ of attachment. The application for the
writ of certiorari must therefore be denied and the proceedings dismissed. So ordered.
Arellano, C.J., Torres, Johnson and Carson, JJ., concur.
Separate Opinions
MALCOLM, J., concurring:
As I finished reading the learned and interesting decision of the majority, the impression which
remained was that the court was enticed by the nice and unusual points presented to make a
hard case out of an easy one and unfortunately t do violence to the principles of certiorari. The
simple questions are : Di the Court of First Instance of city of Manila exceed its jurisdiction in
granting an attachments against the property of the defendant, now plaintiff? Has this
defendant, now become the plaintiff, any other plain, speedy and adequate remedy? The answer
are found in the decision of thinks court, in Herrera vs. Barretto and Joaquin ([1913], 25 Phil.,
245), from which I quote the following:
It has been repeatedly held by this court that a writ of certiorari will not be issued unless it
clearly appears that the court to which it is to be directed acted without or in excess of
jurisdiction. It will not be issued to cure errors in the proceedings or to correct erroneous
conclusions of law or of fact. If the court has jurisdiction. It will not be issued to cure errors in
10
the proceedings to correct jurisdiction of the subject matter and f the person, decisions upon
all question pertaining to the cause are decisions within its jurisdiction and, however irregular
or erroneous they may be, cannot be corrected by certiorari. The Code of Civil Procedure giving
Courts of First Instance general jurisdiction in actions for mandamus, it goes without saying
that the Court of First Instance had jurisdiction in the present case to resolve every question
arising in such an action and t decide every question presented to it which pertained to the
cause. It has already been held by this court, that while it is a power to be exercised only in
extreme case, a Court of First Instance has power to issue a mandatory injunction t stand until
the final determination of the action in which it is issued. While the issuance of the mandatory
injunction in this particular case may have been irregular and erroneous, a question
concerning which we express no opinion, nevertheless its issuance was within the jurisdiction
of the court and its action is not reveiwable on certiorari. It is not sufficient to say that it was
issued wrongfully and without sufficient grounds and in the absence of the other party. The
question is, Did the court act with jurisdiction?
It has been urged that the court exceeded its jurisdiction in requiring the municipal president
t issue the license, for the reason that he was not the proper person to issue it and that, if he
was the proper person, he had the right to exercise a discretion as to whom the license should
be issued. We do not believe that either of these questions goes to the jurisdiction of the court
to act. One of the fundamental question in a mandamusagainst a public officer is whether or
not that officer has the right to exercise discretion in the performance of the act which the
plaintiff asks him to perform. It is one of the essential determinations of the cause. To claim
that the resolution of that question may deprive the court of jurisdiction is to assert a novel
proposition. It is equivalent to the contention that a court has jurisdiction if he decides right
but no jurisdiction if he decides wrong. It may be stated generally that it is never necessary to
decide the fundamental questions of a cause to determine whether the court has jurisdiction.
The question of jurisdiction is preliminary and never touches the merits of the case. The
determination of the fundamental questions of a cause are merely the exercise of a jurisdiction
already conceded. In the case at bar no one denies the power, authority or jurisdiction of the
Court of First Instance to take cognizance of an action for mandamus and to decide very
question which arises in that cause and pertains thereto. The contention that the decision of
one of those question, if wrong, destroys jurisdiction involves an evident contradiction.
Jurisdiction is the authority to hear and determine a cause — the right to act in a case. Since
it is the power to hear and determine, it does not depend either upon the regularity of the
exercise of that power or upon the rightfulness of the decision made. Jurisdiction should
therefore be distinguished from the exercise of jurisdiction. The authority to decide a case at
all, and not the decision rendered therein, is what makes up jurisdiction. Where there is
jurisdiction of the person and subject matter, as we have said before, the decision of all other
questions arising in the case an exercise of that jurisdiction.
Then follows an elaborate citation and discussion of American authorities, including a decision
of the United States Supreme Court and of the applicable Philippine cases. The decision
continues"
The reasons givens in these cases last cited for the allowance of the writ of prohibition are
applicable only to the class of cases with which the decision deal and do not in any way militate
against the general proposition herein asserted. Those which relate to election contest are
based upon the principle that those proceedings, are special in their nature and must be strictly
followed, a material departure from the statute resulting a loss, or in an excess of jurisdiction.
The cases relating to receivers are based, in a measure, upon the principle the appointment of
a receiver being governed by the statute; and in part upon the theory that the appointment of
121
a receiver in an improper case is in substance a bankruptcy proceeding, the taking of which is
expressly prohibited by law. The case relative to the allowance of alimony pendente lite when
the answer denies the marriage is more difficult to distinguish. The reasons in support of the
doctrine laid down in that case are given the opinion in full and they seem to place the
particular case to which they refer in a class by itself.
It is not alight things that the lawmakers have abolished writs of error and with
them certiorari and prohibition, in so far as they were methods by which the mere errors of an
inferior curt could be corrected. As instruments to that end they no longer exist. Their place is
no taken by the appeal. So long as the inferior court retains jurisdiction its errors can be
corrected only by that method. The office of the writ of certiorari has been reduced to the
correction of defects of jurisdiction solely and cannot legally be used for any other purpose. It
is truly an extra ordinary remedy and in this jurisdiction, its use is restricted to truly
extraordinary cases — cases in which the action of the inferior court is wholly void, where any
further steps in the case would result in a waste of time and money and would produce no
result whatever; where the parties, or their privies, would be utterly deceived; where a final
judgment or decree would be nought but a snare and a delusion, deciding nothing, protecting
nobody, a juridical pretension, a recorded falsehood, a standing menace. It is only to avoid
such result as these that a writ of certiorari is issuable; and even here an appeal will lie if the
aggrieved party prefers to prosecute it.
A full and thorough examination of all the decided cases in this court touching the question of
certiorari and prohibition fully supports the proposition already stated that, where a Court of First
Instance has jurisdiction of the subject matter and of the person, its decision of any question
pertaining to the cause, however, erroneous, cannot be reviewed by certiorari, but must be
corrected by appeal.
I see no reason to override the decision in Herrera vs. Barretto and Joaquin (supra).
Accordingly, I can do no better than to make the language of Justice Moreland my own. applying
these principles, it is self-evident that this court should no entertain the present petition and
should not grant the desired relief.
FISHER, J., dissenting:
I am in full accord with the view that the remedy of certiorari may be invoked in such cases as
this, but I am constrained to dissent from the opinion of the majority as regards the meaning
of the term implied contract.
Section 412 of the code of Civil Procedure in connection with section 424, authorizes the
preliminary attachment of the property of the defendant: "(1) In an action for the recovery of
money or damages on a cause of action arising upon contract, express or implied, when the
defendant is about to depart from the Philippine Islands, with intent to defraud his creditors;
(2) . . .; (3) . . .; (4) . . .; (5) When the defendant has removed or disposed of his property, or is
about to do so, with intent to defraud his creditors."
It is evident that the terms of paragraph five of the article cited are much broader than those
of the first paragraph. The fifth paragraph is not limited to action arising from contract, but is
by its terms applicable to actions brought for the purpose of enforcing extra-contractual rights
as well as contract rights. The limitation upon cases falling under paragraph five is to be found,
not in the character of the obligation for the enforcement for which the action is brought, but
in the terms of article 4265, which requires that the affidavit show that the amount due the
plaintiff . . . is as much as the sum for which the order is granted.
11
That is to say, when application is made for a preliminary attachment upon the ground that
the plaintiff is about to dispose of his property with intent to defraud his creditors — thus
bringing the case within the terms of paragraph five of the section — it is not necessary to show
that the obligation in suit is contractual in its origin, but is sufficient to show that the breach
of the obligation, as shown by the facts stated in the complaint and affidavit, imposes upon the
defendant the obligation to pay a specific and definite sum. For example, if it is alleged in the
complaint that the defendant by negligence, has caused the destruction by fire of a building
belonging to plaintiff, and that such building was worth a certain sum of money, these facts
would show a definite basis upon which to authorize the granting of the writ. But if it were
averred that the defendant has published a libel concerning the plaintiff, to the injury of his
feeling and reputation, there is no definite basis upon which to grant an attachment, because
the amount of the damage suffered, being necessarily uncertain and indeterminate, cannot be
ascertained definitely until the trail has been completed.
But it appears that the legislature although it has seen fit to authorize a preliminary attachment
in aid of action of all kinds when the defendant is concealing his property with intent to defraud
his creditors, has provided is about to depart from the country with intent to defraud his
creditos, the writ will issue only when the action in aid of which it is sought arises from
a contract express or implied. If an attachment were permitted upon facts bringing the
application with the first paragraph of the section in support of action of any kind, whether the
obligation sued upon is contractual or not, then paragraph five would by construction be made
absolutely identical with paragraph one, and this would be in effect equivalent to the complete
eliminated of the last two lines of the first paragraph. It is a rule of statutory construction that
effect should be given to all parts of the statue, if possible. I can see no reason why the
legislature should have limited cases falling within the firs paragraph to action arising from
contract and have refrained from imposing this limitation with respect to cases falling within
the terms of the fifth paragraph, but this should have no effect upon us in applying the law.
Whether there be a good reason for it or not the distinction exists.
Had the phrase express or implied not been used to qualify contract, there would be no doubt
whatever with regard to the meaning of the word. In the Spanish Civil law contract are always
consensual, and it would be impossible to define as a contract the judicial relation existing
between a person who has lost money at gaming and the winner of such money, simple because
the law imposes upon the winner the obligation of making restitution. An obligation of this
kind, far from being consensual in its origin, arises against the will of the debtor. To call such
a relation a contract is, from the standpoint of the civil law, a contradiction in terms.
But is said that as the phase express or implied has been used to qualify the word contract
and these words are found in statue which speaks the language of the common law, this implies
the introduction into our law of the concept of the implied contract of the English common-law,
a concept which embraces a certain class of obligation originating ex lege, which have been
arbitrarily classified as contracts, so that they might be enforced by one of the formal actions
of the common law which legal tradition and practice has reserved for the enforcement of
contract. I cannot concur in this reasoning. I believe that when a technical juridical term of
substantive law is used in the adjective law of these islands, we should seek its meaning in our
own substantive law rather than in the law of America or of England. The code of Civil
Procedure was not enacted to establish rules of substantive law, but upon the assumption of
the existence of these rules.
In the case of Cayce vs. Curtis (Dallam's Decisions Texas Reports, 403), it appears that the
legislature, at a time when that State still retained to a large extent the Spanish substantive
civil law, enacted a statue in which the word bonds is used. In litigation involving the
121
construction of that statute, one of the parties contended that the work bond should be given
the technical meaning which it had in the English Common Law. The court rejected this
contention saying —
On the first point it is urged by counsel for the appellant that the word bond used in the statute
being a common law term, we must refer to the common law for its legal signification; and that
by that law no instrument is a bond which is not under seal. The truth of the proposition that
sealing is an absolute requisite to the validity of a bond at common law is readily admitted; but
the applicability of that rule of the case under consideration is not perceived. This bond was
taken at a time when the common law afforded no rule of decision or practice in this country,
and consequently that law cannot be legitimately resorted to, even for the purpose for which it
is invoked by the counsel for the appellant, unless it be shown that the civil law had not term
of similar import for we regard it as a correct rule of construction, that where technical terms
are used in a statute they are to be referred for their signification to terms f similar import in
the system of laws which prevails in the country where the statues is passed, and not to another
system which is entirely foreign t the whole system of municipal regulations by which that
country is governed. (Martin's Reports, vol. 3, 185; 7 Martin [N. S.], 162.)"
Consequently, I believe that in the interpretation of phase "contract, express or implied," we
should apply the rules of our own substantive law. The phrase in itself offers no difficulty. The
concept of the contract, under the Civil Code, as a legal relation of exclusively consensual
origin, offers no difficulty. Nor is any difficulty encountered in the gramatical sense of the words
express and "implied". Express according to the New International Dictionary is that which is
directly and distinctly stated; expressed, not merely implied or left to interference. Therefore, a
contract entered into by means of letters, in which the offer and the acceptance have been
manifested by appropriate words, would be an "express contract." The word "imply" according
to the same dictionary, is to involve in substance or essence, or by fair inference, or by
construction of law, when not expressly stated in words or signs; to contain by implication to
include virtually.
Therefore, if I enter a tailor shop and order a suit of clothes, although nothing is said regarding
payment, it is an inference, both logical and legal, from my act that is my intention to pay the
reasonable value of the garments. The contract is implied, therefore, is that in which
the consent of the parties is implied.
Manresa, commenting upon article 1262 of the Civil Code, says:
The essence of consent is the agreement of the parties concerning that which is to constitute
the contract . . . . The forms of this agreement may vary according to whether it is expressed
verbally or in writing, by words or by acts. Leaving the other differences for consideration
hereafter, we will only refer now to those which exist between express consent
and implied consent . . . . It is unquestionable that implied consent manifested by act or
conduct, produces a contract. . . .
If it were necessary to have recourse to the English common law for the purpose of ascertaining
the meaning of the phrase under consideration, we could find many decisions which gave it the
same meaning as that for which I contend.
An implied contract is where one party receives benefits from another party, under such
circumstances that the law presume a promise on the part of the party benefited to pay a
reasonable price for the same. (Jones vs. Tucker [Del.], 84 Atlantic, 1012.)
It is true that English courts have extended the concept of the term contract to include certain
obligations arising ex lege without consent, express or implied. True contracts created by
implied consent are designated in the English common law as contracts implied in the fact,
while the so-called contracts in which the consent is a fiction of law are called contracts implied
12
by law. But is evident that the latter are not real contracts. They have been called contract
arbitrarily by the courts of England, and those of the Untied States in which the English
common law is in force, in order that certain actions arising ex lege may be enforced by the
action of assumpsit. In the rigid formulism of the English common law the substantive right
had to be accommodated to the form of action. As is stated in the monograph on the action of
assumpsit in Ruling Case Law. (volume 2, 743) —
In theory it wan action to recover for the nonperformance f simple contracts, and the formula
and proceedings were constructed and carried on accordingly. . . . From the reign of Elizabeth
this action has been extended to almost every case where an obligation arises from natural
reason, . . . and it is now maintained in many cases which its principles do not comprehend
and where fictions and intendments are resorted to, to fit the actual cause of action to the
theory of the remedy. It is thus sanctioned where there has been no . . . real contract, but where
some duty is deemed sufficient to justify the court in imputing the promise to perform its, and
hence in bending the transaction to the form of action.
In the ancient English common law procedure the form of the action was regarded as being
much more important than the substantive right to be enforced. If no form of action was found
in which the facts would fit, so much the worse for the facts! to avoid the injustices to which
this condition of affairs gave rise, the judges invented those fictions which permitted them to
preserve the appearance of conservatism and change the law without expressly admitting that
they were doing so. The indispensable averment, that they were doing so. The indispensable
avernment without which the action of assumpsit would not lie, was that the defendant
promised to pay plaintiff the amount demanded. (Sector vs. Holmes, 17 Vs., 566.) In true
contracts, whether express or implied, this promise in fact exists. In obligations arising ex
lege there is no such promise, and therefore the action of assumpsit could not be maintained,
and therefore the action of assumpsit could not be maintained, although by reason of its
relative simplicity it was one of the most favored forms of action. In order to permit the litigant
to make use of this form of action for the enforcement of ascertain classes of obligations
arising ex lege, the judges invented the fiction of the promise of the defendant to pay the amount
of the obligation, and as this fictitious promise give the appearance of consensuality to the legal
relations of the parties, the name of implied contract is given to that class of extra-contractual
obligations enforcible by the action of assumpsit.
Now, it is not be supposed that it was the intention of the Legislature in making use in the first
paragraph of article 412 of the phrase contract, express or implied to corrupt the logical
simplicity of our concept of obligations by importing into our law the antiquated fictions of the
mediaeval English common law. If one of the concepts of the term "implied contract" in the
English common law, namely, that in which consent is presume from the conduct of the debtor,
harmonizes with the concept of the contract in our law, why should we reject that meaning and
hold that the Legislature intended to use this phrase in the foreign and illogical sense of a
contract arising without consent? This is a civil law country. why should we be compelled to
study the fictions of the ancient English common law, in order to be informed as to the meaning
of the word contract in the law of the Philippine Islands? Much more reasonable to my mind
was the conclusion of the Texas court, under similar circumstances, to the effect to be referred
for their signification to terms of similar import in the system of laws which prevails in the
country where the statue is passed." (Cayce vs. Curtis, supra.)
My conclusion is that the phase contract, express or implied should be interpreted in the
grammatical sense of the words and limited to true contracts, consensual obligations arising
from consent, whether expressed in words, writing or signs, or presumed from conduct. As it is
evident that the defendant in the present case never promised, him in the gambling game in
121
question, his obligation to restor the amounts won, imposed by the law, is no contractual, but
purely extra-contractual and therefore the action brought not being one arising upon contract
express or implied, the plaintiff is not entitled to a preliminary attachment upon the averment
that the defendant is about to depart from the Philippine Islands with with intent t defraud his
creditors, no averment being made in the compliant or in the affidavit that the defendant has
removed or disposed of his property, or is about to depart with intent to defraud his creditors,
so as to bring the case within the terms of the fifth paragraph of section 412.
I am unable to agree with the contention of the application (Brief, p. 39) here that the phase in
question should be interpreted in such a way as to include all obligations, whether arising from
consent or ex lege, because that is equivalent to eliminating all distinction between the first
and the fifth paragraphs by practically striking out the first two lines of paragraph one. The
Legislature has deliberately established this distinction, and while we may be unable to see
any reason why it should have been made, it is our duty to apply and interpret the law, and we
are not authorized under the guise of interpretation to virtually repeal part of the statute.
Nor can it be said that the relations between the parties litigant constitute a quasi-contract. In
the first place, quasi- contracts are "lawful and purely voluntary acts by which the authors
thereof become obligated in favor of a third person. . . ." The act which gave rise to the
obligation ex lege relied upon by the plaintiff in the court below is illicit — an unlawful gambling
game. In the second place, the first paragraph of section 412 of the Code of Civil Procedure
does not authorize an attachment in actions arising out of quasi contracts, but only in actions
arising out of contract, express or implied.
I am therefore of the opinion that the court below was without jurisdiction to issue that writ of
attachment and that the writ should be declared null and void.
Avanceña, J., concurs.
Republic of the Philippines SUPREME COURT Manila EN BANC
G.R. No. L-4089 January 12, 1909
ARTURO PELAYO, plaintiff-appellant, vs. MARCELO LAURON, ET AL., defendants-
appellees.
J.H. Junquera, for appellant.
Filemon Sotto, for appellee.
TORRES, J.:
On the 23rd of November, 1906, Arturo Pelayo, a physician residing in Cebu, filed a complaint
against Marcelo Lauron and Juana Abella setting forth that on or about the 13th of October of
said year, at night, the plaintiff was called to the house of the defendants, situated in San
Nicolas, and that upon arrival he was requested by them to render medical assistance to their
daughter-in-law who was about to give birth to a child; that therefore, and after consultation
with the attending physician, Dr. Escaño, it was found necessary, on account of the difficult
birth, to remove the fetus by means of forceps which operation was performed by the plaintiff,
who also had to remove the afterbirth, in which services he was occupied until the following
morning, and that afterwards, on the same day, he visited the patient several times; that the
just and equitable value of the services rendered by him was P500, which the defendants refuse
to pay without alleging any good reason therefor; that for said reason he prayed that the
judgment be entered in his favor as against the defendants, or any of them, for the sum of P500
and costs, together with any other relief that might be deemed proper.
In answer to the complaint counsel for the defendants denied all of the allegation therein
contained and alleged as a special defense, that their daughter-in-law had died in consequence
13
of the said childbirth, and that when she was alive she lived with her husband independently
and in a separate house without any relation whatever with them, and that, if on the day when
she gave birth she was in the house of the defendants, her stay their was accidental and due
to fortuitous circumstances; therefore, he prayed that the defendants be absolved of the
complaint with costs against the plaintiff.
The plaintiff demurred to the above answer, and the court below sustained the demurrer,
directing the defendants, on the 23rd of January, 1907, to amend their answer. In compliance
with this order the defendants presented, on the same date, their amended answer, denying
each and every one of the allegations contained in the complaint, and requesting that the same
be dismissed with costs.
As a result of the evidence adduced by both parties, judgment was entered by the court below
on the 5th of April, 1907, whereby the defendants were absolved from the former complaint,
on account of the lack of sufficient evidence to establish a right of action against the defendants,
with costs against the plaintiff, who excepted to the said judgment and in addition moved for a
new trial on the ground that the judgment was contrary to law; the motion was overruled and
the plaintiff excepted and in due course presented the corresponding bill of exceptions. The
motion of the defendants requesting that the declaration contained in the judgment that the
defendants had demanded therefrom, for the reason that, according to the evidence, no such
request had been made, was also denied, and to the decision the defendants excepted.
Assuming that it is a real fact of knowledge by the defendants that the plaintiff, by virtue of
having been sent for by the former, attended a physician and rendered professional services to
a daughter-in-law of the said defendants during a difficult and laborious childbirth, in order to
decide the claim of the said physician regarding the recovery of his fees, it becomes necessary
to decide who is bound to pay the bill, whether the father and mother-in-law of the patient, or
the husband of the latter.
According to article 1089 of the Civil Code, obligations are created by law, by contracts, by
quasi-contracts, and by illicit acts and omissions or by those in which any kind of fault or
negligence occurs.
Obligations arising from law are not presumed. Those expressly determined in the code or in
special laws, etc., are the only demandable ones. Obligations arising from contracts have legal
force between the contracting parties and must be fulfilled in accordance with their
stipulations. (Arts. 1090 and 1091.)
The rendering of medical assistance in case of illness is comprised among the mutual
obligations to which the spouses are bound by way of mutual support. (Arts. 142 and 143.)
If every obligation consists in giving, doing or not doing something (art. 1088), and spouses are
mutually bound to support each other, there can be no question but that, when either of them
by reason of illness should be in need of medical assistance, the other is under the unavoidable
obligation to furnish the necessary services of a physician in order that health may be restored,
and he or she may be freed from the sickness by which life is jeopardized; the party bound to
furnish such support is therefore liable for all expenses, including the fees of the medical expert
for his professional services. This liability originates from the above-cited mutual obligation
which the law has expressly established between the married couple.
In the face of the above legal precepts it is unquestionable that the person bound to pay the
fees due to the plaintiff for the professional services that he rendered to the daughter-in-law of
the defendants during her childbirth, is the husband of the patient and not her father and
mother- in-law, the defendants herein. The fact that it was not the husband who called the
plaintiff and requested his assistance for his wife is no bar to the fulfillment of the said
obligation, as the defendants, in view of the imminent danger, to which the life of the patient
121
was at that moment exposed, considered that medical assistance was urgently needed, and the
obligation of the husband to furnish his wife in the indispensable services of a physician at
such critical moments is specially established by the law, as has been seen, and compliance
therewith is unavoidable; therefore, the plaintiff, who believes that he is entitled to recover his
fees, must direct his action against the husband who is under obligation to furnish medical
assistance to his lawful wife in such an emergency.
From the foregoing it may readily be understood that it was improper to have brought an action
against the defendants simply because they were the parties who called the plaintiff and
requested him to assist the patient during her difficult confinement, and also, possibly, because
they were her father and mother-in-law and the sickness occurred in their house. The
defendants were not, nor are they now, under any obligation by virtue of any legal provision,
to pay the fees claimed, nor in consequence of any contract entered into between them and the
plaintiff from which such obligation might have arisen.
In applying the provisions of the Civil Code in an action for support, the supreme court of
Spain, while recognizing the validity and efficiency of a contract to furnish support wherein a
person bound himself to support another who was not his relative, established the rule that
the law does impose the obligation to pay for the support of a stranger, but as the liability arose
out of a contract, the stipulations of the agreement must be held. (Decision of May 11, 1897.)
Within the meaning of the law, the father and mother-in-law are strangers with respect to the
obligation that devolves upon the husband to provide support, among which is the furnishing
of medical assistance to his wife at the time of her confinement; and, on the other hand, it does
not appear that a contract existed between the defendants and the plaintiff physician, for which
reason it is obvious that the former can not be compelled to pay fees which they are under no
liability to pay because it does not appear that they consented to bind themselves.
The foregoing suffices to demonstrate that the first and second errors assigned to the judgment
below are unfounded, because, if the plaintiff has no right of action against the defendants, it
is needless to declare whether or not the use of forceps is a surgical operation.
Therefore, in view of the consideration hereinbefore set forth, it is our opinion that the judgment
appealed from should be affirmed with the costs against the appellant. So ordered.
Mapa and Tracey, JJ., concur.
Arellano, C.J., and Carson, J., concurs in the result.
Willard, J., dissents.
SECOND DIVISION [G.R. No. 154259. February 28, 2005]
NIKKO HOTEL MANILA GARDEN and RUBY LIM, petitioners, vs. ROBERTO REYES,
a.k.a. AMAY BISAYA, respondent.
D E C I S I O N | CHICO-NAZARIO, J.:
In this petition for review on certiorari, petitioners Nikko Hotel Manila Garden (Hotel
Nikko)[1] and Ruby Lim assail the Decision[2] of the Court of Appeals dated 26 November 2001
reversing the Decision[3] of the Regional Trial Court (RTC) of Quezon City, Branch 104, as well
as the Resolution[4] of the Court of Appeals dated 09 July 2002 which denied petitioners
motion for reconsideration.
The cause of action before the trial court was one for damages brought under the human
relations provisions of the New Civil Code. Plaintiff thereat (respondent herein) Roberto Reyes,
more popularly known by the screen name Amay Bisaya, alleged that at around 6:00 oclock
in the evening of 13 October 1994, while he was having coffee at the lobby of Hotel
Nikko,[5] he was spotted by his friend of several years, Dr. Violeta Filart, who then approached
14
him.[6] Mrs. Filart invited him to join her in a party at the hotels penthouse in celebration of
the natal day of the hotels manager, Mr. Masakazu Tsuruoka.[7] Mr. Reyes asked if she could
vouch for him for which she replied: of course.[8] Mr. Reyes then went up with the party of Dr.
Filart carrying the basket of fruits which was the latters present for the celebrant.[9] At the
penthouse, they first had their picture taken with the celebrant after which Mr. Reyes sat
with the party of Dr. Filart.[10]After a couple of hours, when the buffet dinner was ready, Mr.
Reyes lined-up at the buffet table but, to his great shock, shame and embarrassment, he was
stopped by petitioner herein, Ruby Lim, who claimed to speak for Hotel Nikko as Executive
Secretary thereof.[11] In a loud voice and within the presence and hearing of the other guests
who were making a queue at the buffet table, Ruby Lim told him to leave the party (huwag ka
nang kumain, hindi ka imbitado, bumaba ka na lang).[12] Mr. Reyes tried to explain that he
was invited by Dr. Filart.[13] Dr. Filart, who was within hearing distance, however, completely
ignored him thus adding to his shame and humiliation. [14] Not long after, while he was still
recovering from the traumatic experience, a Makati policeman approached and asked him to
step out of the hotel.[15] Like a common criminal, he was escorted out of the party by the
policeman.[16] Claiming damages, Mr. Reyes asked for One Million Pesos actual damages, One
Million Pesos moral and/or exemplary damages and Two Hundred Thousand Pesos attorneys
fees.[17]
Ruby Lim, for her part, admitted having asked Mr. Reyes to leave the party but not under the
ignominious circumstance painted by the latter. Ms. Lim narrated that she was the Hotels
Executive Secretary for the past twenty (20) years.[18] One of her functions included
organizing the birthday party of the hotels former General Manager, Mr. Tsuruoka.[19] The
year 1994 was no different. For Mr. Tsuruokas party, Ms. Lim generated an exclusive guest
list and extended invitations accordingly.[20] The guest list was limited to approximately sixty
(60) of Mr. Tsuruokas closest friends and some hotel employees and that Mr. Reyes was not
one of those invited.[21] At the party, Ms. Lim first noticed Mr. Reyes at the bar counter
ordering a drink.[22]Mindful of Mr. Tsuruokas wishes to keep the party intimate, Ms. Lim
approached Mr. Boy Miller, the captain waiter, to inquire as to the presence of Mr. Reyes who
was not invited.[23] Mr. Miller replied that he saw Mr. Reyes with the group of Dr. Filart.[24] As
Dr. Filart was engaged in conversation with another guest and as Ms. Lim did not want to
interrupt, she inquired instead from the sister of Dr. Filart, Ms. Zenaida Fruto, who told her
that Dr. Filart did not invite Mr. Reyes.[25] Ms. Lim then requested Ms. Fruto to tell Mr. Reyes
to leave the party as he was not invited.[26] Mr. Reyes, however, lingered prompting Ms. Lim to
inquire from Ms. Fruto who said that Mr. Reyes did not want to leave.[27] When Ms. Lim
turned around, she saw Mr. Reyes conversing with a Captain Batung whom she later
approached.[28] Believing that Captain Batung and Mr. Reyes knew each other, Ms. Lim
requested from him the same favor from Ms. Fruto, i.e., for Captain Batung to tell Mr. Reyes
to leave the party as he was not invited.[29] Still, Mr. Reyes lingered. When Ms. Lim spotted
Mr. Reyes by the buffet table, she decided to speak to him herself as there were no other
guests in the immediate vicinity.[30] However, as Mr. Reyes was already helping himself to the
food, she decided to wait.[31] When Mr. Reyes went to a corner and started to eat, Ms. Lim
approached him and said: alam ninyo, hindo ho kayo dapat nandito. Pero total nakakuha na
ho kayo ng pagkain, ubusin na lang ninyo at pagkatapos kung pwede lang po umalis na
kayo.[32] She then turned around trusting that Mr. Reyes would show enough decency to
leave, but to her surprise, he began screaming and making a big scene, and even threatened
to dump food on her.[33]
Dr. Violeta Filart, the third defendant in the complaint before the lower court, also gave her
version of the story to the effect that she never invited Mr. Reyes to the party.[34] According to
121
her, it was Mr. Reyes who volunteered to carry the basket of fruits intended for the celebrant
as he was likewise going to take the elevator, not to the penthouse but to Altitude
49.[35] When they reached the penthouse, she reminded Mr. Reyes to go down as he was not
properly dressed and was not invited.[36] All the while, she thought that Mr. Reyes already left
the place, but she later saw him at the bar talking to Col. Batung.[37] Then there was a
commotion and she saw Mr. Reyes shouting.[38] She ignored Mr. Reyes.[39] She was
embarrassed and did not want the celebrant to think that she invited him.[40]
After trial on the merits, the court a quo dismissed the complaint,[41] giving more credence to
the testimony of Ms. Lim that she was discreet in asking Mr. Reyes to leave the party. The
trial court likewise ratiocinated that Mr. Reyes assumed the risk of being thrown out of the
party as he was uninvited:
Plaintiff had no business being at the party because he was not a guest of Mr. Tsuruoka, the
birthday celebrant. He assumed the risk of being asked to leave for attending a party to which
he was not invited by the host. Damages are pecuniary consequences which the law imposes
for the breach of some duty or the violation of some right. Thus, no recovery can be had
against defendants Nikko Hotel and Ruby Lim because he himself was at fault (Garciano v.
Court of Appeals, 212 SCRA 436). He knew that it was not the party of defendant Violeta
Filart even if she allowed him to join her and took responsibility for his attendance at the
party. His action against defendants Nikko Hotel and Ruby Lim must therefore fail.[42]
On appeal, the Court of Appeals reversed the ruling of the trial court as it found more
commanding of belief the testimony of Mr. Reyes that Ms. Lim ordered him to leave in a loud
voice within hearing distance of several guests:
In putting appellant in a very embarrassing situation, telling him that he should not finish
his food and to leave the place within the hearing distance of other guests is an act which is
contrary to morals, good customs . . ., for which appellees should compensate the appellant
for the damage suffered by the latter as a consequence therefore (Art. 21, New Civil Code).
The liability arises from the acts which are in themselves legal or not prohibited, but contrary
to morals or good customs. Conversely, even in the exercise of a formal right, [one] cannot
with impunity intentionally cause damage to another in a manner contrary to morals or good
customs.[43]
The Court of Appeals likewise ruled that the actuation of Ms. Lim in approaching several
people to inquire into the presence of Mr. Reyes exposed the latter to ridicule and was
uncalled for as she should have approached Dr. Filart first and both of them should have
talked to Mr. Reyes in private:
Said acts of appellee Lim are uncalled for. What should have been done by appellee Lim was
to approach appellee Mrs. Filart and together they should have told appellant Reyes in private
that the latter should leave the party as the celebrant only wanted close friends around. It is
necessary that Mrs. Filart be the one to approach appellant because it was she who invited
appellant in that occasion. Were it not for Mrs. Filarts invitation, appellant could not have
suffered such humiliation. For that, appellee Filart is equally liable.
...
The acts of [appellee] Lim are causes of action which are predicated upon mere rudeness or
lack of consideration of one person, which calls not only protection of human dignity but
respect of such dignity. Under Article 20 of the Civil Code, every person who violates this duty
becomes liable for damages, especially if said acts were attended by malice or bad faith. Bad
faith does not simply connote bad judgment or simple negligence. It imports a dishonest
purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty to
15
some motive or interest or ill-will that partakes of the nature of fraud (Cojuangco, Jr. v. CA, et
al., 309 SCRA 603).[44]
Consequently, the Court of Appeals imposed upon Hotel Nikko, Ruby Lim and Dr. Violeta
Filart the solidary obligation to pay Mr. Reyes (1) exemplary damages in the amount of Two
Hundred Thousand Pesos (P200,000); (2) moral damages in the amount of Two Hundred
Thousand Pesos (P200,000); and (3) attorneys fees in the amount of Ten Thousand Pesos
(P10,000).[45] On motion for reconsideration, the Court of Appeals affirmed its earlier decision
as the argument raised in the motion had been amply discussed and passed upon in the
decision sought to be reconsidered.[46]
Thus, the instant petition for review. Hotel Nikko and Ruby Lim contend that the Court of
Appeals seriously erred in
I.
NOT APPLYING THE DOCTRINE OF VOLENTI NON FIT INJURIA CONSIDERING THAT BY ITS
OWN FINDINGS, AMAY BISAYA WAS A GATE-CRASHER
II.
HOLDING HOTEL NIKKO AND RUBY LIM JOINTLY AND SEVERALLY LIABLE WITH DR.
FILART FOR DAMAGES SINCE BY ITS OWN RULING, AMAY BISAYA COULD NOT HAVE
SUFFERED SUCH HUMILIATION, WERE IT NOT FOR DR. FILARTS INVITATION
III.
DEPARTING FROM THE FINDINGS OF FACT OF THE TRIAL COURT AS REGARDS THE
CIRCUMSTANCES THAT ALLEGEDLY CAUSED THE HUMILIATION OF AMAY BISAYA
IV.
IN CONCLUDING THAT AMAY BISAYA WAS TREATED UNJUSTLY BECAUSE OF HIS
POVERTY, CONSIDERING THAT THIS WAS NEVER AN ISSUE AND NO EVIDENCE WAS
PRESENTED IN THIS REGARD
V.
IN FAILING TO PASS UPON THE ISSUE ON THE DEFECTS OF THE APPELLANTS BRIEF,
THEREBY DEPARTING FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS
Petitioners Lim and Hotel Nikko contend that pursuant to the doctrine of volenti non fit
injuria, they cannot be made liable for damages as respondent Reyes assumed the risk of
being asked to leave (and being embarrassed and humiliated in the process) as he was a gate-
crasher.
The doctrine of volenti non fit injuria (to which a person assents is not esteemed in law as
injury[47]) refers to self-inflicted injury[48] or to the consent to injury[49] which precludes the
recovery of damages by one who has knowingly and voluntarily exposed himself to danger,
even if he is not negligent in doing so.[50] As formulated by petitioners, however, this doctrine
does not find application to the case at bar because even if respondent Reyes assumed the
risk of being asked to leave the party, petitioners, under Articles 19 and 21 of the New Civil
Code, were still under obligation to treat him fairly in order not to expose him to unnecessary
ridicule and shame.
Thus, the threshold issue is whether or not Ruby Lim acted abusively in asking Roberto
Reyes, a.k.a. Amay Bisaya, to leave the party where he was not invited by the celebrant
thereof thereby becoming liable under Articles 19 and 21 of the Civil Code. Parenthetically,
and if Ruby Lim were so liable, whether or not Hotel Nikko, as her employer, is solidarily
liable with her.
As the trial court and the appellate court reached divergent and irreconcilable conclusions
concerning the same facts and evidence of the case, this Court is left without choice but to
121
use its latent power to review such findings of facts. Indeed, the general rule is that we are
not a trier of facts as our jurisdiction is limited to reviewing and revising errors of law.[51] One
of the exceptions to this general rule, however, obtains herein as the findings of the Court of
Appeals are contrary to those of the trial court.[52] The lower court ruled that Ms. Lim did not
abuse her right to ask Mr. Reyes to leave the party as she talked to him politely and
discreetly. The appellate court, on the other hand, held that Ms. Lim is liable for damages as
she needlessly embarrassed Mr. Reyes by telling him not to finish his food and to leave the
place within hearing distance of the other guests. Both courts, however, were in agreement
that it was Dr. Filarts invitation that brought Mr. Reyes to the party.
The consequential question then is: Which version is credible?
From an in depth review of the evidence, we find more credible the lower courts findings of
fact.
First, let us put things in the proper perspective.
We are dealing with a formal party in a posh, five-star hotel,[53] for-invitation-only, thrown for
the hotels former Manager, a Japanese national. Then came a person who was clearly
uninvited (by the celebrant)[54] and who could not just disappear into the crowd as his face is
known by many, being an actor. While he was already spotted by the organizer of the party,
Ms. Lim, the very person who generated the guest list, it did not yet appear that the celebrant
was aware of his presence. Ms. Lim, mindful of the celebrants instruction to keep the party
intimate, would naturally want to get rid of the gate-crasher in the most hush-hush manner
in order not to call attention to a glitch in an otherwise seamless affair and, in the process,
risk the displeasure of the celebrant, her former boss. To unnecessarily call attention to the
presence of Mr. Reyes would certainly reflect badly on Ms. Lims ability to follow the
instructions of the celebrant to invite only his close friends and some of the hotels personnel.
Mr. Reyes, upon whom the burden rests to prove that indeed Ms. Lim loudly and rudely
ordered him to leave, could not offer any satisfactory explanation why Ms. Lim would do that
and risk ruining a formal and intimate affair. On the contrary, Mr. Reyes, on cross-
examination, had unwittingly sealed his fate by admitting that when Ms. Lim talked to him,
she was very close. Close enough for him to kiss:
Q: And, Mr. Reyes, you testified that Miss Lim approached you while you were at the buffet
table? How close was she when she approached you?
A: Very close because we nearly kissed each other.
Q: And yet, she shouted for you to go down? She was that close and she shouted?
A: Yes. She said, wag kang kumain, hindi ka imbitado dito, bumaba ka na lang.
Q: So, you are testifying that she did this in a loud voice?
...
A: Yes. If it is not loud, it will not be heard by many.[55]
In the absence of any proof of motive on the part of Ms. Lim to humiliate Mr. Reyes and
expose him to ridicule and shame, it is highly unlikely that she would shout at him from a
very close distance. Ms. Lim having been in the hotel business for twenty years wherein being
polite and discreet are virtues to be emulated, the testimony of Mr. Reyes that she acted to
the contrary does not inspire belief and is indeed incredible. Thus, the lower court was
correct in observing that
Considering the closeness of defendant Lim to plaintiff when the request for the latter to leave
the party was made such that they nearly kissed each other, the request was meant to be
heard by him only and there could have been no intention on her part to cause
embarrassment to him. It was plaintiffs reaction to the request that must have made the
other guests aware of what transpired between them. . .
16
Had plaintiff simply left the party as requested, there was no need for the police to take him
out.[56]
Moreover, another problem with Mr. Reyess version of the story is that it is unsupported. It is
a basic rule in civil cases that he who alleges proves. Mr. Reyes, however, had not presented
any witness to back his story up. All his witnesses Danny Rodinas, Pepito Guerrero and
Alexander Silva - proved only that it was Dr. Filart who invited him to the party.[57]
Ms. Lim, not having abused her right to ask Mr. Reyes to leave the party to which he was not
invited, cannot be made liable to pay for damages under Articles 19 and 21 of the Civil Code.
Necessarily, neither can her employer, Hotel Nikko, be held liable as its liability springs from
that of its employee.[58]
Article 19, known to contain what is commonly referred to as the principle of abuse of
rights,[59] is not a panacea for all human hurts and social grievances. Article 19 states:
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and good faith.
Elsewhere, we explained that when a right is exercised in a manner which does not conform
with the norms enshrined in Article 19 and results in damage to another, a legal wrong is
thereby committed for which the wrongdoer must be responsible.[60] The object of this article,
therefore, is to set certain standards which must be observed not only in the exercise of ones
rights but also in the performance of ones duties.[61] These standards are the following: act
with justice, give everyone his due and observe honesty and good faith.[62] Its antithesis,
necessarily, is any act evincing bad faith or intent to injure. Its elements are the following: (1)
There is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of
prejudicing or injuring another.[63] When Article 19 is violated, an action for damages is
proper under Articles 20 or 21 of the Civil Code. Article 20 pertains to damages arising from a
violation of law[64] which does not obtain herein as Ms. Lim was perfectly within her right to
ask Mr. Reyes to leave. Article 21, on the other hand, states:
Art. 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the damage.
Article 21[65] refers to acts contra bonus mores and has the following elements: (1) There is an
act which is legal; (2) but which is contrary to morals, good custom, public order, or public
policy; and (3) it is done with intent to injure.[66]
A common theme runs through Articles 19 and 21,[67] and that is, the act complained of must
be intentional.[68]
As applied to herein case and as earlier discussed, Mr. Reyes has not shown that Ms. Lim
was driven by animosity against him. These two people did not know each other personally
before the evening of 13 October 1994, thus, Mr. Reyes had nothing to offer for an
explanation for Ms. Lims alleged abusive conduct except the statement that Ms. Lim, being
single at 44 years old, had a very strong bias and prejudice against (Mr. Reyes) possibly
influenced by her associates in her work at the hotel with foreign businessmen.[69] The
lameness of this argument need not be belabored. Suffice it to say that a complaint based on
Articles 19 and 21 of the Civil Code must necessarily fail if it has nothing to recommend it
but innuendos and conjectures.
Parenthetically, the manner by which Ms. Lim asked Mr. Reyes to leave was likewise
acceptable and humane under the circumstances. In this regard, we cannot put our
imprimatur on the appellate courts declaration that Ms. Lims act of personally approaching
Mr. Reyes (without first verifying from Mrs. Filart if indeed she invited Mr. Reyes) gave rise to
a cause of action predicated upon mere rudeness or lack of consideration of one person,
which calls not only protection of human dignity but respect of such dignity.[70] Without proof
121
of any ill-motive on her part, Ms. Lims act of by-passing Mrs. Filart cannot amount to abusive
conduct especially because she did inquire from Mrs. Filarts companion who told her that
Mrs. Filart did not invite Mr. Reyes.[71] If at all, Ms. Lim is guilty only of bad judgment which,
if done with good intentions, cannot amount to bad faith.
Not being liable for both actual and moral damages, neither can petitioners Lim and Hotel
Nikko be made answerable for exemplary damages[72] especially for the reason stated by the
Court of Appeals. The Court of Appeals held
Not a few of the rich people treat the poor with contempt because of the latters lowly station
in life. This has to be limited somewhere. In a democracy, such a limit must be established.
Social equality is not sought by the legal provisions under consideration, but due regard for
decency and propriety (Code Commission, pp. 33-34). And by way of example or correction for
public good and to avert further commission of such acts, exemplary damages should be
imposed upon appellees.[73]
The fundamental fallacy in the above-quoted findings is that it runs counter with the very
facts of the case and the evidence on hand. It is not disputed that at the time of the incident
in question, Mr. Reyes was an actor of long standing; a co-host of a radio program over
DZRH; a Board Member of the Music Singer Composer (MUSICO) chaired by popular singer
Imelda Papin; a showbiz Coordinator of Citizen Crime Watch; and 1992 official candidate of
the KBL Party for Governor of Bohol; and an awardee of a number of humanitarian
organizations of the Philippines.[74] During his direct examination on rebuttal, Mr. Reyes
stressed that he had income[75] and nowhere did he say otherwise. On the other hand, the
records are bereft of any information as to the social and economic standing of petitioner
Ruby Lim. Consequently, the conclusion reached by the appellate court cannot withstand
scrutiny as it is without basis.
All told, and as far as Ms. Lim and Hotel Nikko are concerned, any damage which Mr. Reyes
might have suffered through Ms. Lims exercise of a legitimate right done within the bounds of
propriety and good faith, must be his to bear alone.
WHEREFORE, premises considered, the petition filed by Ruby Lim and Nikko Hotel Manila
Garden is GRANTED. The Decision of the Court of Appeals dated 26 November 2001 and its
Resolution dated 09 July 2002 are hereby REVERSED and SET ASIDE. The Decision of the
Regional Trial Court of Quezon City, Branch 104, dated 26 April 1999 is hereby AFFIRMED.
No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
FIRST DIVISION [G.R. No. 143363. February 6, 2002]
ST. MARYS ACADEMY, petitioner, vs. WILLIAM CARPITANOS and LUCIA S.
CARPITANOS, GUADA DANIEL, JAMES DANIEL II, JAMES DANIEL, SR., and VIVENCIO
VILLANUEVA, respondents.
DECISION
PARDO, J.:
The Case
The case is an appeal via certiorari from the decision[1] of the Court of Appeals as well as the
resolution denying reconsideration, holding petitioner liable for damages arising from an
accident that resulted in the death of a student who had joined a campaign to visit the public
schools in Dipolog City to solicit enrollment.
The Facts
17
The facts, as found by the Court of Appeals, are as follows:
Claiming damages for the death of their only son, Sherwin Carpitanos, spouses William
Carpitanos and Lucia Carpitanos filed on June 9, 1995 a case against James Daniel II and
his parents, James Daniel Sr. and Guada Daniel, the vehicle owner, Vivencio Villanueva and
St. Marys Academy before the Regional Trial Court of Dipolog City.
On 20 February 1997, Branch 6 of the Regional Trial Court of Dipolog City rendered its
decision the dispositive portion of which reads as follows:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in the following
manner:
1. Defendant St. Marys Academy of Dipolog City, is hereby ordered to pay plaintiffs William
Carpitanos and Luisa Carpitanos, the following sums of money:
a. FIFTY THOUSAND PESOS (P50,000.00) indemnity for the loss of life of Sherwin S.
Carpitanos;
b. FORTY THOUSAND PESOS (P40,000.00) actual damages incurred by plaintiffs for burial
and related expenses;
c. TEN THOUSAND PESOS (P10,000.00) for attorneys fees;
d. FIVE HUNDRED THOUSAND PESOS (P500,000.00) for moral damages; and to pay costs.
2. Their liability being only subsidiary, defendants James Daniel, Sr. and Guada Daniel are
hereby ordered to pay herein plaintiffs the amount of damages above-stated in the event of
insolvency of principal obligor St. Marys Academy of Dipolog City;
3. Defendant James Daniel II, being a minor at the time of the commission of the tort and
who was under special parental authority of defendant St. Marys Academy, is ABSOLVED
from paying the above-stated damages, same being adjudged against defendants St. Marys
Academy, and subsidiarily, against his parents;
4. Defendant Vivencio Villanueva is hereby ABSOLVED of any liability. His counterclaim not
being in order as earlier discussed in this decision, is hereby DISMISSED.
IT IS SO ORDERED. (Decision, pp. 32-33; Records, pp. 205-206).
From the records it appears that from 13 to 20 February 1995, defendant-appellant St. Marys
Academy of Dipolog City conducted an enrollment drive for the school year 1995-1996. A
facet of the enrollment campaign was the visitation of schools from where prospective
enrollees were studying. As a student of St. Marys Academy, Sherwin Carpitanos was part of
the campaigning group. Accordingly, on the fateful day, Sherwin, along with other high school
students were riding in a Mitsubishi jeep owned by defendant Vivencio Villanueva on their
way to Larayan Elementary School, Larayan, Dapitan City. The jeep was driven by James
Daniel II then 15 years old and a student of the same school. Allegedly, the latter drove the
jeep in a reckless manner and as a result the jeep turned turtle.
Sherwin Carpitanos died as a result of the injuries he sustained from the accident.[2]
In due time, petitioner St. Marys academy appealed the decision to the Court of Appeals.[3]
On February 29, 2000, the Court of Appeals promulgated a decision reducing the actual
damages to P25,000.00 but otherwise affirming the decision a quo, in toto.[4]
On February 29, 2000, petitioner St. Marys Academy filed a motion for reconsideration of the
decision. However, on May 22, 2000, the Court of Appeals denied the motion.[5]
Hence, this appeal.[6]
The Issues
1) Whether the Court of Appeals erred in holding the petitioner liable for damages for the
death of Sherwin Carpitanos.
2) Whether the Court of Appeals erred in affirming the award of moral damages against the
petitioner.
121
The Courts Ruling
We reverse the decision of the Court of Appeals.
The Court of Appeals held petitioner St. Marys Academy liable for the death of Sherwin
Carpitanos under Articles 218[7] and 219[8] of the Family Code, pointing out that petitioner
was negligent in allowing a minor to drive and in not having a teacher accompany the minor
students in the jeep.
Under Article 218 of the Family Code, the following shall have special parental authority over
a minor child while under their supervision, instruction or custody: (1) the school, its
administrators and teachers; or (2) the individual, entity or institution engaged in child
care. This special parental authority and responsibility applies to all authorized activities,
whether inside or outside the premises of the school, entity or institution. Thus, such
authority and responsibility applies to field trips, excursions and other affairs of the pupils
and students outside the school premises whenever authorized by the school or its
teachers.[9]
Under Article 219 of the Family Code, if the person under custody is a minor, those
exercising special parental authority are principally and solidarily liable for damages caused
by the acts or omissions of the unemancipated minor while under their supervision,
instruction, or custody.[10]
However, for petitioner to be liable, there must be a finding that the act or omission
considered as negligent was the proximate cause of the injury caused because the negligence
must have a causal connection to the accident.[11]
In order that there may be a recovery for an injury, however, it must be shown that the injury
for which recovery is sought must be the legitimate consequence of the wrong done; the
connection between the negligence and the injury must be a direct and natural sequence of
events, unbroken by intervening efficient causes. In other words, the negligence must be the
proximate cause of the injury. For, negligence, no matter in what it consists, cannot create a
right of action unless it is the proximate cause of the injury complained of. And the proximate
cause of an injury is that cause, which, in natural and continuous sequence, unbroken by
any efficient intervening cause, produces the injury, and without which the result would not
have occurred.[12]
In this case, the respondents failed to show that the negligence of petitioner was the
proximate cause of the death of the victim.
Respondents Daniel spouses and Villanueva admitted that the immediate cause of the
accident was not the negligence of petitioner or the reckless driving of James Daniel II, but
the detachment of the steering wheel guide of the jeep.
In their comment to the petition, respondents Daniel spouses and Villanueva admitted the
documentary exhibits establishing that the cause of the accident was the detachment of the
steering wheel guide of the jeep. Hence, the cause of the accident was not the recklessness of
James Daniel II but the mechanical defect in the jeep of Vivencio Villanueva. Respondents,
including the spouses Carpitanos, parents of the deceased Sherwin Carpitanos, did not
dispute the report and testimony of the traffic investigator who stated that the cause of the
accident was the detachment of the steering wheel guide that caused the jeep to turn turtle.
Significantly, respondents did not present any evidence to show that the proximate cause of
the accident was the negligence of the school authorities, or the reckless driving of James
Daniel II. Hence, the respondents reliance on Article 219 of the Family Code that those given
the authority and responsibility under the preceding Article shall be principally and solidarily
liable for damages caused by acts or omissions of the unemancipated minor was unfounded.
18
Further, there was no evidence that petitioner school allowed the minor James Daniel II to
drive the jeep of respondent Vivencio Villanueva. It was Ched Villanueva, grandson of
respondent Vivencio Villanueva, who had possession and control of the jeep. He was driving
the vehicle and he allowed James Daniel II, a minor, to drive the jeep at the time of the
accident.
Hence, liability for the accident, whether caused by the negligence of the minor driver or
mechanical detachment of the steering wheel guide of the jeep, must be pinned on the minors
parents primarily. The negligence of petitioner St. Marys Academy was only a remote cause of
the accident. Between the remote cause and the injury, there intervened the negligence of the
minors parents or the detachment of the steering wheel guide of the jeep.
The proximate cause of an injury is that cause, which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the injury, and without which the
result would not have occurred.[13]
Considering that the negligence of the minor driver or the detachment of the steering wheel
guide of the jeep owned by respondent Villanueva was an event over which petitioner St.
Marys Academy had no control, and which was the proximate cause of the accident,
petitioner may not be held liable for the death resulting from such accident.
Consequently, we find that petitioner likewise cannot be held liable for moral damages in the
amount of P500,000.00 awarded by the trial court and affirmed by the Court of Appeals.
Though incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendants wrongful act or omission.[14] In this case, the proximate
cause of the accident was not attributable to petitioner.
For the reason that petitioner was not directly liable for the accident, the decision of the
Court of Appeals ordering petitioner to pay death indemnity to respondent Carpitanos must
be deleted. Moreover, the grant of attorneys fees as part of damages is the exception rather
than the rule.[15] The power of the court to award attorneys fees under Article 2208 of the
Civil Code demands factual, legal and equitable justification.[16] Thus, the grant of attorneys
fees against the petitioner is likewise deleted.
Incidentally, there was no question that the registered owner of the vehicle was respondent
Villanueva. He never denied and in fact admitted this fact. We have held that the registered
owner of any vehicle, even if not used for public service, would primarily be responsible to the
public or to third persons for injuries caused the latter while the vehicle was being driven on
the highways or streets.[17] Hence, with the overwhelming evidence presented by petitioner
and the respondent Daniel spouses that the accident occurred because of the detachment of
the steering wheel guide of the jeep, it is not the school, but the registered owner of the
vehicle who shall be held responsible for damages for the death of Sherwin Carpitanos.
The Fallo
WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of
Appeals[18] and that of the trial court.[19] The Court remands the case to the trial court for
determination of the liability of defendants, excluding petitioner St. Marys
Academy, Dipolog City. No costs. SO ORDERED.