Jurisprudence: G.R. No. L-20850 November 29, 1965

EN BANC

G.R. No. L-20850           November 29, 1965

THE EDWARD J. NELL COMPANY, petitioner,
vs.
PACIFIC FARMS, INC., respondent.

Agrava & Agrava for petitioner.
Araneta, Mendoza & Papa for respondent.

CONCEPCION, J.:

Appeal by certiorari, taken by Edward J. Nell Co. — hereinafter referred to as appellant — from a decision of the Court of Appeals.

On October 9, 1958, appellant secured in Civil Case No. 58579 of the Municipal Court of Manila against Insular Farms, Inc. — hereinafter referred to as Insular Farms a judgment for the sum of P1,853.80 — representing the unpaid balance of the price of a pump sold by appellant to Insular Farms — with interest on said sum, plus P125.00 as attorney's fees and P84.00 as costs. A writ of execution, issued after the judgment had become final, was, on August 14, 1959, returned unsatisfied, stating that Insular Farms had no leviable property. Soon thereafter, or on November 13, 1959, appellant filed with said court the present action against Pacific Farms, Inc. — hereinafter referred to as appellee — for the collection of the judgment aforementioned, upon the theory that appellee is the alter ego of Insular Farms, which appellee has denied. In due course, the municipal court rendered judgment dismissing appellant's complaint. Appellant appealed, with the same result, to the court of first instance and, subsequently, to the Court of Appeals. Hence this appeal by certiorari, upon the ground that the Court of Appeals had erred: (1) in not holding the appellee liable for said unpaid obligation of the Insular Farms; and (2) in not granting attorney's fees to appellant.

With respect to the first ground, it should be noted that appellant's complaint in the municipal court was anchored upon the theory that appellee is an alter ego of Insular Farms, because the former had purchased all or substantially all of the shares of stock, as well as the real and personal properties of the latter, including the pumping equipment sold by appellant to Insular Farms. The record shows that, on March 21, 1958, appellee purchased 1,000 shares of stock of Insular Farms for P285,126.99; that, thereupon, appellee sold said shares of stock to certain individuals, who forthwith reorganized said corporation; and that the board of directors thereof, as reorganized, then caused its assets, including its leasehold rights over a public land in Bolinao, Pangasinan, to be sold to herein appellee for P10,000.00. We agree with the Court of Appeals that these facts do not prove that the appellee is an alter ego of Insular Farms, or is liable for its debts. The rule is set forth in Fletcher Cyclopedia Corporations, Vol. 15, Sec. 7122, pp. 160-161, as follows:

Generally where one corporation sells or otherwise transfers all of its assets to another corporation, the latter is not liable for the debts and liabilities of the transferor, except: (1) where the purchaser expressly or impliedly agrees to assume such debts; (2) where the transaction amounts to a consolidation or merger of the corporations; (3) where the purchasing corporation is merely a continuation of the selling corporation; and (4) where the transaction is entered into fraudulently in order to escape liability for such debts.

In the case at bar, there is neither proof nor allegation that appellee had expressly or impliedly agreed to assume the debt of Insular Farms in favor of appellant herein, or that the appellee is a continuation of Insular Farms, or that the sale of either the shares of stock or the assets of Insular Farms to the appellee has been entered into fraudulently, in order to escape liability for the debt of the Insular Farms in favor of appellant herein. In fact, these sales took place (March, 1958) not only over six (6) months before the rendition of the judgment (October 9, 1958) sought to be collected in the present action, but, also, over a month before the filing of the case (May 29, 1958) in which said judgment was rendered. Moreover, appellee purchased the shares of stock of Insular Farms as the highest bidder at an auction sale held at the instance of a bank to which said shares had been pledged as security for an obligation of Insular Farms in favor of said bank. It has, also, been established that the appellee had paid P285,126.99 for said shares of stock, apart from the sum of P10,000.00 it, likewise, paid for the other assets of Insular Farms.

Neither is it claimed that these transactions have resulted in the consolidation or merger of the Insular Farms and appellee herein. On the contrary, appellant's theory to the effect that appellee is an alter ego of the Insular Farms negates such consolidation or merger, for a corporation cannot be its own alter ego.

It is urged, however, that said P10,000.00 paid by appellee for other assets of Insular Farms is a grossly inadequate price, because, appellant now claims, said assets were worth around P285,126.99, and that, consequently, the sale must be considered fraudulent. However, the sale was submitted to and approved by the Securities and Exchange Commission. It must be presumed, therefore, that the price paid was fair and reasonable. Moreover, the only issue raised in the court of origin was whether or not appellee is an alter ego of Insular Farms. The question of whether the aforementioned sale of assets for P10,000.00 was fraudulent or not, had not been put in issue in said court. Hence, it may, not be raised on appeal.

Being a mere consequence of the first assignment of error, which is thus clearly untenable, appellant's second assignment of error needs no discussion.

WHEREFORE, the decision appealed from is hereby affirmed, with costs against the appellant. It is so ordered.

Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon. J.P., and Zaldivar, JJ., concur.
Barrera, J., is on leave.

Jurisprudence: G.R. No. 156294 November 29, 2006

SECOND DIVISION

G.R. No. 156294             November 29, 2006

MELVA THERESA ALVIAR GONZALES, Petitioner,
vs.
RIZAL COMMERCIAL BANKING CORPORATION, Respondent.

D E C I S I O N

GARCIA, J.:

An action for a sum of money originating from the Regional Trial Court (RTC) of Makati City, Branch 61, thereat docketed as Civil Case No. 88-1502, was decided in favor of therein plaintiff, now respondent Rizal Commercial Banking Corporation (RCBC). On appeal to the Court of Appeals (CA) in CA-G.R. CV No. 48596, that court, in a decision1 dated August 30, 2002, affirmed the RTC minus the award of attorney’s fees. Upon the instance of herein petitioner Melva Theresa Alviar Gonzales, the case is now before this Court via this petition for review on certiorari, based on the following undisputed facts as unanimously found by the RTC and the CA, which the latter summarized as follows:

Gonzales was an employee of Rizal Commercial Banking Corporation (or RCBC) as New Accounts Clerk in the Retail Banking Department at its Head Office.

A foreign check in the amount of $7,500 was drawn by Dr. Don Zapanta of the Ade Medical Group with address at 569 Western Avenue, Los Angeles, California, against the drawee bank Wilshire Center Bank, N.A., of Los Angeles, California, U.S.A., and payable to Gonzales’ mother, defendant Eva Alviar (or Alviar). Alviar then endorsed this check. Since RCBC gives special accommodations to its employees to receive the check’s value without awaiting the clearing period, Gonzales presented the foreign check to Olivia Gomez, the RCBC’s Head of Retail Banking. After examining this, Olivia Gomez requested Gonzales to endorse it which she did. Olivia Gomez then acquiesced to the early encashment of the check and signed the check but indicated thereon her authority of "up to P17,500.00 only". Afterwards, Olivia Gomez directed Gonzales to present the check to RCBC employee Carlos Ramos and procure his signature. After inspecting the check, Carlos Ramos also signed it with an "ok" annotation. After getting the said signatures Gonzales presented the check to Rolando Zornosa, Supervisor of the Remittance section of the Foreign Department of the RCBC Head Office, who after scrutinizing the entries and signatures therein authorized its encashment. Gonzales then received its peso equivalent of P155,270.85.

RCBC then tried to collect the amount of the check with the drawee bank by the latter through its correspondent bank, the First Interstate Bank of California, on two occasions dishonored the check because of "END. IRREG" or irregular indorsement. Insisting, RCBC again sent the check to the drawee bank, but this time the check was returned due to "account closed". Unable to collect, RCBC demanded from Gonzales the payment of the peso equivalent of the check that she received. Gonzales settled the matter by agreeing that payment be made thru salary deduction. This temporary arrangement for salary deductions was communicated by Gonzales to RCBC through a letter dated November 27, 1987 xxx

x x x           x x x          x x x

The deductions was implemented starting October 1987. On March 7, 1988 RCBC sent a demand letter to Alviar for the payment of her obligation but this fell on deaf ears as RCBC did not receive any response from Alviar. Taking further action to collect, RCBC then conveyed the matter to its counsel and on June 16, 1988, a letter was sent to Gonzales reminding her of her liability as an indorser of the subject check and that for her to avoid litigation she has to fulfill her commitment to settle her obligation as assured in her said letter. On July 1988 Gonzales resigned from RCBC. What had been deducted from her salary was only P12,822.20 covering ten months.

It was against the foregoing factual backdrop that RCBC filed a complaint for a sum of money against Eva Alviar, Melva Theresa Alviar-Gonzales and the latter’s husband Gino Gonzales. The spouses Gonzales filed an Answer with Counterclaim praying for the dismissal of the complaint as well as payment of P10,822.20 as actual damages, P20,000.00 as moral damages, P20,000.00 as exemplary damages, and P20,000.00 as attorney’s fees and litigation expenses. Defendant Eva Alviar, on the other hand, was declared in default for having filed her Answer out of time.

After trial, the RTC, in its three-page decision,2 held two of the three defendants liable as follows:

WHEREFORE, premises above considered and plaintiff having established its case against the defendants as above stated, judgment is hereby rendered for plaintiff and as against defendant EVA. P. ALVIAR as principal debtor and defendants MELVA THERESA ALVIAR GONZLAES as guarantor as follows:

1. To pay plaintiff the amount of P142,648.65 (P155,270.85 less the amount of P12,622.20, as salary deduction of [Gonzales]), representing the outstanding obligation of the defendants with interest of 12% per annum starting February 1987 until fully paid;

2. To pay the amount of P40,000.00 as and for attorney’s fees; and to

3. Pay the costs of this suit.

SO ORDERED.

On appeal, the CA, except for the award of attorney’s fees, affirmed the RTC judgment.

Hence, this recourse by the petitioner on her submission that the CA erred ̶

XXX IN FINDING [PETITIONER], AN ACCOMMODATION PARTY TO A CHECK SUBSEQUENTLY ENDORSED PARTIALLY, LIABLE TO RCBC AS GUARANTOR;

XXX IN FINDING THAT THE SIGNATURE OF GOMEZ, AN RCBC EMPLOYEE, DOES NOT CONSTITUTE AS AN ENDORSEMENT BUT ONLY AN INTER-BANK APPROVAL OF SIGNATURE NECESSARY FOR THE ENCASHMENT OF THE CHECK;

XXX IN NOT FINDING RCBC LIABLE ON THE COUNTERCLAIMS OF [THE PETITIONER].

The recourse is impressed with merit.

The dollar-check3 in question in the amount of $7,500.00 drawn by Don Zapanta of Ade Medical Group (U.S.A.) against a Los Angeles, California bank, Wilshire Center Bank N.A., was dishonored because of "End. Irregular," i.e., an irregular endorsement. While the foreign drawee bank did not specifically state which among the four signatures found on the dorsal portion of the check made the check irregularly endorsed, it is absolutely undeniable that only the signature of Olivia Gomez, an RCBC employee, was a qualified endorsement because of the phrase "up to P17,500.00 only." There can be no other acceptable explanation for the dishonor of the foreign check than this signature of Olivia Gomez with the phrase "up to P17,500.00 only" accompanying it. This Court definitely agrees with the petitioner that the foreign drawee bank would not have dishonored the check had it not been for this signature of Gomez with the same phrase written by her.

The foreign drawee bank, Wilshire Center Bank N.A., refused to pay the bearer of this dollar-check drawn by Don Zapanta because of the defect introduced by RCBC, through its employee, Olivia Gomez. It is, therefore, a useless piece of paper if returned in that state to its original payee, Eva Alviar.

There is no doubt in the mind of the Court that a subsequent party which caused the defect in the instrument cannot have any recourse against any of the prior endorsers in good faith. Eva Alviar’s and the petitioner’s liability to subsequent holders of the foreign check is governed by the Negotiable Instruments Law as follows:

Sec. 66. Liability of general indorser. - Every indorser who indorses without qualification, warrants to all subsequent holders in due course;

(a) The matters and things mentioned in subdivisions (a), (b), and (c) of the next preceding section; and

(b) That the instrument is, at the time of his indorsement, valid and subsisting;

And, in addition, he engages that, on due presentment, it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it.

The matters and things mentioned in subdivisions (a), (b) and (c) of Section 65 are the following:

(a) That the instrument is genuine and in all respects what it purports to be;

(b) That he has a good title to it;

(c) That all prior parties had capacity to contract;

Under Section 66, the warranties for which Alviar and Gonzales are liable as general endorsers in favor of subsequent endorsers extend only to the state of the instrument at the time of their endorsements, specifically, that the instrument is genuine and in all respects what it purports to be; that they have good title thereto; that all prior parties had capacity to contract; and that the instrument, at the time of their endorsements, is valid and subsisting. This provision, however, cannot be used by the party which introduced a defect on the instrument, such as respondent RCBC in this case, which qualifiedly endorsed the same, to hold prior endorsers liable on the instrument because it results in the absurd situation whereby a subsequent party may render an instrument useless and inutile and let innocent parties bear the loss while he himself gets away scot-free. It cannot be over-stressed that had it not been for the qualified endorsement ("up to P17,500.00 only") of Olivia Gomez, who is the employee of RCBC, there would have been no reason for the dishonor of the check, and full payment by drawee bank therefor would have taken place as a matter of course.

Section 66 of the Negotiable Instruments Law which further states that the general endorser additionally engages that, on due presentment, the instrument shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent endorser who may be compelled to pay it, must be read in the light of the rule in equity requiring that those who come to court should come with clean hands. The holder or subsequent endorser who tries to claim under the instrument which had been dishonored for "irregular endorsement" must not be the irregular endorser himself who gave cause for the dishonor. Otherwise, a clear injustice results when any subsequent party to the instrument may simply make the instrument defective and later claim from prior endorsers who have no knowledge or participation in causing or introducing said defect to the instrument, which thereby caused its dishonor.

Courts in this jurisdiction are not only courts of law but also of equity, and therefore cannot unqualifiedly apply a provision of law so as to cause clear injustice which the framers of the law could not have intended to so deliberately cause. In Carceller v. Court of Appeals,4 this Court had occasion to stress:

Courts of law, being also courts of equity, may not countenance such grossly unfair results without doing violence to its solemn obligation to administer fair and equal justice for all.

RCBC, which caused the dishonor of the check upon presentment to the drawee bank, through the qualified endorsement of its employee, Olivia Gomez, cannot hold prior endorsers, Alviar and Gonzales in this case, liable on the instrument.

Moreover, it is a well-established principle in law that as between two parties, he who, by his acts, caused the loss shall bear the same.5 RCBC, in this instance, should therefore bear the loss.

Relative to the petitioner’s counterclaim against RCBC for the amount of P12,822.20 which it admittedly deducted from petitioner’s salary, the Court must order the return thereof to the petitioner, with legal interest of 12% per annum, notwithstanding the petitioner’s apparent acquiescence to such an arrangement. It must be noted that petitioner is not any ordinary client or depositor with whom RCBC had this isolated transaction. Petitioner was a rank-and-file employee of RCBC, being a new accounts clerk thereat. It is easy to understand how a vulnerable Gonzales, who is financially dependent upon RCBC, would rather bite the bullet, so to speak, and expectedly opt for salary deduction rather than lose her job and her entire salary altogether. In this sense, we cannot take petitioner’s apparent acquiescence to the salary deduction as being an entirely free and voluntary act on her part. Additionally, under the obtaining facts and circumstances surrounding the present complaint for collection of sum of money by RCBC against its employee, which may be deemed tantamount to harassment, and the fact that RCBC itself was the one, acting through its employee, Olivia Gomez, which gave reason for the dishonor of the dollar-check in question, RCBC may likewise be held liable for moral and exemplary damages and attorney’s fees by way of damages, in the amount of P20,000.00 for each.

WHEREFORE, the assailed CA Decision dated August 30, 2002 is REVERSED and SET ASIDE and the Complaint in this case DISMISSED for lack of merit. Petitioner’s counterclaim is GRANTED, ordering the respondent RCBC to reimburse petitioner the amount P12,822.20, with legal interest computed from the time of salary deduction up to actual payment, and to pay petitioner the total amount of P60,000.00 as moral and exemplary damages, and attorney’s fees.

Costs against the respondent.

SO ORDERED.

Jurisprudence: G.R. No. L-23145 November 29, 1968

EN BANC

G.R. No. L-23145      November 29, 1968

TESTATE ESTATE OF IDONAH SLADE PERKINS, deceased. RENATO D. TAYAG, ancillary administrator-appellee,
vs.
BENGUET CONSOLIDATED, INC., oppositor-appellant.

Cirilo F. Asperillo, Jr., for ancillary administrator-appellee.
Ross, Salcedo, Del Rosario, Bito and Misa for oppositor-appellant.

FERNANDO, J.:

Confronted by an obstinate and adamant refusal of the domiciliary administrator, the County Trust Company of New York, United States of America, of the estate of the deceased Idonah Slade Perkins, who died in New York City on March 27, 1960, to surrender to the ancillary administrator in the Philippines the stock certificates owned by her in a Philippine corporation, Benguet Consolidated, Inc., to satisfy the legitimate claims of local creditors, the lower court, then presided by the Honorable Arsenio Santos, now retired, issued on May 18, 1964, an order of this tenor: "After considering the motion of the ancillary administrator, dated February 11, 1964, as well as the opposition filed by the Benguet Consolidated, Inc., the Court hereby (1) considers as lost for all purposes in connection with the administration and liquidation of the Philippine estate of Idonah Slade Perkins the stock certificates covering the 33,002 shares of stock standing in her name in the books of the Benguet Consolidated, Inc., (2) orders said certificates cancelled, and (3) directs said corporation to issue new certificates in lieu thereof, the same to be delivered by said corporation to either the incumbent ancillary administrator or to the Probate Division of this Court."1

From such an order, an appeal was taken to this Court not by the domiciliary administrator, the County Trust Company of New York, but by the Philippine corporation, the Benguet Consolidated, Inc. The appeal cannot possibly prosper. The challenged order represents a response and expresses a policy, to paraphrase Frankfurter, arising out of a specific problem, addressed to the attainment of specific ends by the use of specific remedies, with full and ample support from legal doctrines of weight and significance.

The facts will explain why. As set forth in the brief of appellant Benguet Consolidated, Inc., Idonah Slade Perkins, who died on March 27, 1960 in New York City, left among others, two stock certificates covering 33,002 shares of appellant, the certificates being in the possession of the County Trust Company of New York, which as noted, is the domiciliary administrator of the estate of the deceased.2 Then came this portion of the appellant's brief: "On August 12, 1960, Prospero Sanidad instituted ancillary administration proceedings in the Court of First Instance of Manila; Lazaro A. Marquez was appointed ancillary administrator, and on January 22, 1963, he was substituted by the appellee Renato D. Tayag. A dispute arose between the domiciary administrator in New York and the ancillary administrator in the Philippines as to which of them was entitled to the possession of the stock certificates in question. On January 27, 1964, the Court of First Instance of Manila ordered the domiciliary administrator, County Trust Company, to "produce and deposit" them with the ancillary administrator or with the Clerk of Court. The domiciliary administrator did not comply with the order, and on February 11, 1964, the ancillary administrator petitioned the court to "issue an order declaring the certificate or certificates of stocks covering the 33,002 shares issued in the name of Idonah Slade Perkins by Benguet Consolidated, Inc., be declared [or] considered as lost."3

It is to be noted further that appellant Benguet Consolidated, Inc. admits that "it is immaterial" as far as it is concerned as to "who is entitled to the possession of the stock certificates in question; appellant opposed the petition of the ancillary administrator because the said stock certificates are in existence, they are today in the possession of the domiciliary administrator, the County Trust Company, in New York, U.S.A...."4

It is its view, therefore, that under the circumstances, the stock certificates cannot be declared or considered as lost. Moreover, it would allege that there was a failure to observe certain requirements of its by-laws before new stock certificates could be issued. Hence, its appeal.

As was made clear at the outset of this opinion, the appeal lacks merit. The challenged order constitutes an emphatic affirmation of judicial authority sought to be emasculated by the wilful conduct of the domiciliary administrator in refusing to accord obedience to a court decree. How, then, can this order be stigmatized as illegal?

As is true of many problems confronting the judiciary, such a response was called for by the realities of the situation. What cannot be ignored is that conduct bordering on wilful defiance, if it had not actually reached it, cannot without undue loss of judicial prestige, be condoned or tolerated. For the law is not so lacking in flexibility and resourcefulness as to preclude such a solution, the more so as deeper reflection would make clear its being buttressed by indisputable principles and supported by the strongest policy considerations.

It can truly be said then that the result arrived at upheld and vindicated the honor of the judiciary no less than that of the country. Through this challenged order, there is thus dispelled the atmosphere of contingent frustration brought about by the persistence of the domiciliary administrator to hold on to the stock certificates after it had, as admitted, voluntarily submitted itself to the jurisdiction of the lower court by entering its appearance through counsel on June 27, 1963, and filing a petition for relief from a previous order of March 15, 1963.

Thus did the lower court, in the order now on appeal, impart vitality and effectiveness to what was decreed. For without it, what it had been decided would be set at naught and nullified. Unless such a blatant disregard by the domiciliary administrator, with residence abroad, of what was previously ordained by a court order could be thus remedied, it would have entailed, insofar as this matter was concerned, not a partial but a well-nigh complete paralysis of judicial authority.

1. Appellant Benguet Consolidated, Inc. did not dispute the power of the appellee ancillary administrator to gain control and possession of all assets of the decedent within the jurisdiction of the Philippines. Nor could it. Such a power is inherent in his duty to settle her estate and satisfy the claims of local creditors.5 As Justice Tuason speaking for this Court made clear, it is a "general rule universally recognized" that administration, whether principal or ancillary, certainly "extends to the assets of a decedent found within the state or country where it was granted," the corollary being "that an administrator appointed in one state or country has no power over property in another state or country."6

It is to be noted that the scope of the power of the ancillary administrator was, in an earlier case, set forth by Justice Malcolm. Thus: "It is often necessary to have more than one administration of an estate. When a person dies intestate owning property in the country of his domicile as well as in a foreign country, administration is had in both countries. That which is granted in the jurisdiction of decedent's last domicile is termed the principal administration, while any other administration is termed the ancillary administration. The reason for the latter is because a grant of administration does not ex proprio vigore have any effect beyond the limits of the country in which it is granted. Hence, an administrator appointed in a foreign state has no authority in the [Philippines]. The ancillary administration is proper, whenever a person dies, leaving in a country other than that of his last domicile, property to be administered in the nature of assets of the deceased liable for his individual debts or to be distributed among his heirs."7

It would follow then that the authority of the probate court to require that ancillary administrator's right to "the stock certificates covering the 33,002 shares ... standing in her name in the books of [appellant] Benguet Consolidated, Inc...." be respected is equally beyond question. For appellant is a Philippine corporation owing full allegiance and subject to the unrestricted jurisdiction of local courts. Its shares of stock cannot therefore be considered in any wise as immune from lawful court orders.

Our holding in Wells Fargo Bank and Union v. Collector of Internal Revenue8 finds application. "In the instant case, the actual situs of the shares of stock is in the Philippines, the corporation being domiciled [here]." To the force of the above undeniable proposition, not even appellant is insensible. It does not dispute it. Nor could it successfully do so even if it were so minded.

2. In the face of such incontrovertible doctrines that argue in a rather conclusive fashion for the legality of the challenged order, how does appellant, Benguet Consolidated, Inc. propose to carry the extremely heavy burden of persuasion of precisely demonstrating the contrary? It would assign as the basic error allegedly committed by the lower court its "considering as lost the stock certificates covering 33,002 shares of Benguet belonging to the deceased Idonah Slade Perkins, ..."9 More specifically, appellant would stress that the "lower court could not "consider as lost" the stock certificates in question when, as a matter of fact, his Honor the trial Judge knew, and does know, and it is admitted by the appellee, that the said stock certificates are in existence and are today in the possession of the domiciliary administrator in New York."10

There may be an element of fiction in the above view of the lower court. That certainly does not suffice to call for the reversal of the appealed order. Since there is a refusal, persistently adhered to by the domiciliary administrator in New York, to deliver the shares of stocks of appellant corporation owned by the decedent to the ancillary administrator in the Philippines, there was nothing unreasonable or arbitrary in considering them as lost and requiring the appellant to issue new certificates in lieu thereof. Thereby, the task incumbent under the law on the ancillary administrator could be discharged and his responsibility fulfilled.

Any other view would result in the compliance to a valid judicial order being made to depend on the uncontrolled discretion of the party or entity, in this case domiciled abroad, which thus far has shown the utmost persistence in refusing to yield obedience. Certainly, appellant would not be heard to contend in all seriousness that a judicial decree could be treated as a mere scrap of paper, the court issuing it being powerless to remedy its flagrant disregard.

It may be admitted of course that such alleged loss as found by the lower court did not correspond exactly with the facts. To be more blunt, the quality of truth may be lacking in such a conclusion arrived at. It is to be remembered however, again to borrow from Frankfurter, "that fictions which the law may rely upon in the pursuit of legitimate ends have played an important part in its development."11

Speaking of the common law in its earlier period, Cardozo could state fictions "were devices to advance the ends of justice, [even if] clumsy and at times offensive."12 Some of them have persisted even to the present, that eminent jurist, noting "the quasi contract, the adopted child, the constructive trust, all of flourishing vitality, to attest the empire of "as if" today."13 He likewise noted "a class of fictions of another order, the fiction which is a working tool of thought, but which at times hides itself from view till reflection and analysis have brought it to the light."14

What cannot be disputed, therefore, is the at times indispensable role that fictions as such played in the law. There should be then on the part of the appellant a further refinement in the catholicity of its condemnation of such judicial technique. If ever an occasion did call for the employment of a legal fiction to put an end to the anomalous situation of a valid judicial order being disregarded with apparent impunity, this is it. What is thus most obvious is that this particular alleged error does not carry persuasion.

3. Appellant Benguet Consolidated, Inc. would seek to bolster the above contention by its invoking one of the provisions of its by-laws which would set forth the procedure to be followed in case of a lost, stolen or destroyed stock certificate; it would stress that in the event of a contest or the pendency of an action regarding ownership of such certificate or certificates of stock allegedly lost, stolen or destroyed, the issuance of a new certificate or certificates would await the "final decision by [a] court regarding the ownership [thereof]."15

Such reliance is misplaced. In the first place, there is no such occasion to apply such by-law. It is admitted that the foreign domiciliary administrator did not appeal from the order now in question. Moreover, there is likewise the express admission of appellant that as far as it is concerned, "it is immaterial ... who is entitled to the possession of the stock certificates ..." Even if such were not the case, it would be a legal absurdity to impart to such a provision conclusiveness and finality. Assuming that a contrariety exists between the above by-law and the command of a court decree, the latter is to be followed.

It is understandable, as Cardozo pointed out, that the Constitution overrides a statute, to which, however, the judiciary must yield deference, when appropriately invoked and deemed applicable. It would be most highly unorthodox, however, if a corporate by-law would be accorded such a high estate in the jural order that a court must not only take note of it but yield to its alleged controlling force.

The fear of appellant of a contingent liability with which it could be saddled unless the appealed order be set aside for its inconsistency with one of its by-laws does not impress us. Its obedience to a lawful court order certainly constitutes a valid defense, assuming that such apprehension of a possible court action against it could possibly materialize. Thus far, nothing in the circumstances as they have developed gives substance to such a fear. Gossamer possibilities of a future prejudice to appellant do not suffice to nullify the lawful exercise of judicial authority.

4. What is more the view adopted by appellant Benguet Consolidated, Inc. is fraught with implications at war with the basic postulates of corporate theory.

We start with the undeniable premise that, "a corporation is an artificial being created by operation of law...."16 It owes its life to the state, its birth being purely dependent on its will. As Berle so aptly stated: "Classically, a corporation was conceived as an artificial person, owing its existence through creation by a sovereign power."17 As a matter of fact, the statutory language employed owes much to Chief Justice Marshall, who in the Dartmouth College decision defined a corporation precisely as "an artificial being, invisible, intangible, and existing only in contemplation of law."18

The well-known authority Fletcher could summarize the matter thus: "A corporation is not in fact and in reality a person, but the law treats it as though it were a person by process of fiction, or by regarding it as an artificial person distinct and separate from its individual stockholders.... It owes its existence to law. It is an artificial person created by law for certain specific purposes, the extent of whose existence, powers and liberties is fixed by its charter."19 Dean Pound's terse summary, a juristic person, resulting from an association of human beings granted legal personality by the state, puts the matter neatly.20

There is thus a rejection of Gierke's genossenchaft theory, the basic theme of which to quote from Friedmann, "is the reality of the group as a social and legal entity, independent of state recognition and concession."21 A corporation as known to Philippine jurisprudence is a creature without any existence until it has received the imprimatur of the state according to law. It is logically inconceivable therefore that it will have rights and privileges of a higher priority than that of its creator. More than that, it cannot legitimately refuse to yield obedience to acts of its state organs, certainly not excluding the judiciary, whenever called upon to do so.

As a matter of fact, a corporation once it comes into being, following American law still of persuasive authority in our jurisdiction, comes more often within the ken of the judiciary than the other two coordinate branches. It institutes the appropriate court action to enforce its right. Correlatively, it is not immune from judicial control in those instances, where a duty under the law as ascertained in an appropriate legal proceeding is cast upon it.

To assert that it can choose which court order to follow and which to disregard is to confer upon it not autonomy which may be conceded but license which cannot be tolerated. It is to argue that it may, when so minded, overrule the state, the source of its very existence; it is to contend that what any of its governmental organs may lawfully require could be ignored at will. So extravagant a claim cannot possibly merit approval.

5. One last point. In Viloria v. Administrator of Veterans Affairs,22 it was shown that in a guardianship proceedings then pending in a lower court, the United States Veterans Administration filed a motion for the refund of a certain sum of money paid to the minor under guardianship, alleging that the lower court had previously granted its petition to consider the deceased father as not entitled to guerilla benefits according to a determination arrived at by its main office in the United States. The motion was denied. In seeking a reconsideration of such order, the Administrator relied on an American federal statute making his decisions "final and conclusive on all questions of law or fact" precluding any other American official to examine the matter anew, "except a judge or judges of the United States court."23 Reconsideration was denied, and the Administrator appealed.

In an opinion by Justice J.B.L. Reyes, we sustained the lower court. Thus: "We are of the opinion that the appeal should be rejected. The provisions of the U.S. Code, invoked by the appellant, make the decisions of the U.S. Veterans' Administrator final and conclusive when made on claims property submitted to him for resolution; but they are not applicable to the present case, where the Administrator is not acting as a judge but as a litigant. There is a great difference between actions against the Administrator (which must be filed strictly in accordance with the conditions that are imposed by the Veterans' Act, including the exclusive review by United States courts), and those actions where the Veterans' Administrator seeks a remedy from our courts and submits to their jurisdiction by filing actions therein. Our attention has not been called to any law or treaty that would make the findings of the Veterans' Administrator, in actions where he is a party, conclusive on our courts. That, in effect, would deprive our tribunals of judicial discretion and render them mere subordinate instrumentalities of the Veterans' Administrator."

It is bad enough as the Viloria decision made patent for our judiciary to accept as final and conclusive, determinations made by foreign governmental agencies. It is infinitely worse if through the absence of any coercive power by our courts over juridical persons within our jurisdiction, the force and effectivity of their orders could be made to depend on the whim or caprice of alien entities. It is difficult to imagine of a situation more offensive to the dignity of the bench or the honor of the country.

Yet that would be the effect, even if unintended, of the proposition to which appellant Benguet Consolidated seems to be firmly committed as shown by its failure to accept the validity of the order complained of; it seeks its reversal. Certainly we must at all pains see to it that it does not succeed. The deplorable consequences attendant on appellant prevailing attest to the necessity of negative response from us. That is what appellant will get.

That is all then that this case presents. It is obvious why the appeal cannot succeed. It is always easy to conjure extreme and even oppressive possibilities. That is not decisive. It does not settle the issue. What carries weight and conviction is the result arrived at, the just solution obtained, grounded in the soundest of legal doctrines and distinguished by its correspondence with what a sense of realism requires. For through the appealed order, the imperative requirement of justice according to law is satisfied and national dignity and honor maintained.

WHEREFORE, the appealed order of the Honorable Arsenio Santos, the Judge of the Court of First Instance, dated May 18, 1964, is affirmed. With costs against oppositor-appelant Benguet Consolidated, Inc.

Makalintal, Zaldivar and Capistrano, JJ., concur.
Concepcion, C.J., Reyes, J.B.L., Dizon, Sanchez and Castro, JJ., concur in the result.

Jurisprudence: G.R. No. 116320 November 29, 1999

THIRD DIVISION

G.R. No. 116320 November 29, 1999

ADALIA FRANCISCO, petitioner,
vs.
COURT OF APPEALS, HERBY COMMERCIAL & CONSTRUCTION CORPORATION AND JAIME C. ONG, respondents.



GONZAGA-REYES, J.:

Assailed in this petition for review on certiorari is the decision 1 of the Court of Appeals affirming the decision 2 rendered by Branch 168 of the Regional Trial Court of Pasig in Civil Case No. 35231 in favor of private respondents.

The controversy before this Court finds its origins in a Land Development and Construction Contract which was entered into on June 23, 1977 by A. Francisco Realty & Development Corporation (AFRDC), of which petitioner Adalia Francisco (Francisco) is the president, and private respondent Herby Commercial & Construction Corporation (HCCC), represented by its President and General Manager private respondent Jaime C. Ong (Ong), pursuant to a housing project of AFRDC at San Jose del Monte, Bulacan, financed by the Government Service Insurance System (GSIS). Under the contract, HCCC agreed to undertake the construction of 35 housing units and the development of 35 hectares of land. The payment of HCCC for its services was on a turn-key basis, that is, HCCC was to be paid on the basis of the completed houses and developed lands delivered to and accepted by AFRDC and the GSIS. To facilitate payment, AFRDC executed a Deed of Assignment in favor of HCCC to enable the latter to collect payments directly from the GSIS. Furthermore, the GSIS and AFRDC put up an Executive Committee Account with the Insular Bank of Asia & America (IBAA) in the amount of P4,000,000.00 from which checks would be issued and co-signed by petitioner Francisco and the GSIS Vice-President Armando Diaz (Diaz).

On February 10, 1978, HCCC filed a complaint 3 with the Regional Trial Court of Quezon City against Francisco, AFRDC and the GSIS for the collection of the unpaid balance under the Land Development and Construction Contract in the amount of P515,493.89 for completed and delivered housing units and land development. However, the parties eventually arrived at an amicable settlement of their differences, which was embodied in a Memorandum Agreement executed by HCCC and AFRDC on July 21, 1978. Under the agreement, the parties stipulated that HCCC had turned over 83 housing units which have been accepted and paid for by the GSIS. The GSIS acknowledged that it still owed HCCC P520,177.50 representing incomplete construction of housing units, incomplete land development and 5% retention, which amount will be discharged when the defects and deficiencies are finally completed by HCCC. It was also provided that HCCC was indebted to AFRDC in the amount of P180,234.91 which the former agreed would be paid out of the proceeds from the 40 housing units still to be turned over by HCCC or from any amount due to HCCC from the GSIS. Consequently, the trial court dismissed the case upon the filing by the parties of a joint motion to dismiss.

Sometime in 1979, after an examination of the records of the GSIS, Ong discovered that Diaz and Francisco had executed and signed seven checks 4, of various dates and amounts, drawn against the IBAA and payable to HCCC for completed and delivered work under the contract. Ong, however, claims that these checks were never delivered to HCCC. Upon inquiry with Diaz, Ong learned that the GSIS gave Francisco custody of the checks since she promised that she would deliver the same to HCCC. Instead, Francisco forged the signature of Ong, without his knowledge or consent, at the dorsal portion of the said checks to make it appear that HCCC had indorsed the checks; Francisco then indorsed the checks for a second time by signing her name at the back of the checks and deposited the checks in her IBAA savings account. IBAA credited Francisco's account with the amount of the checks and the latter withdrew the amount so credited.

On June 7, 1979, Ong filed complaints with the office of the city fiscal of Quezon City, charging Francisco with estafa thru falsification of commercial documents. Francisco denied having forged Ong's signature on the checks, claiming that Ong himself indorsed the seven checks in behalf of HCCC and delivered the same to Francisco in payment of the loans extended by Francisco to HCCC. According to Francisco, she agreed to grant HCCC the loans in the total amount of P585,000.00 and covered by eighteen promissory notes in order to obviate the risk of the non-completion of the project. As a means of repayment, Ong allegedly issued a Certification authorizing Francisco to collect HCCC's receivables from the GSIS. Assistant City Fiscal Ramon M. Gerona gave credence to Francisco's claims and accordingly, dismissed the complaints, which dismissal was affirmed by the Minister of Justice in a resolution issued on June 5, 1981.

The present case was brought by private respondents on November 19, 1979 against Francisco and IBAA for the recovery of P370,475.00, representing the total value of the seven checks, and for damages, attorney's fees, expenses of litigation and costs. After trial on the merits, the trial court rendered its decision in favor of private respondents, the dispositive portion of which provides —

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against the defendants INSULAR BANK OF ASIA & AMERICA and ATTY. ADALIA FRANCISCO, to jointly and severally pay the plaintiffs the amount of P370.475.00 plus interest thereon at the rate of 12% per annum from the date of the filing of the complaint until the full amount is paid; moral damages to plaintiff Jaime Ong in the sum of P50,000.00; exemplary damages of P50,000.00; litigation expenses of P5,000.00; and attorney's fees of P50,000.00.

With respect to the cross-claim of the defendant IBAA against its co-defendant Atty. Adalia Francisco, the latter is ordered to reimburse the former for the sums that the Bank shall pay to the plaintiff on the forged checks including the interests paid thereon.

Further, the defendants are ordered to pay the costs.

Based upon the findings of handwriting experts from the National Bureau of Investigation (NBI), the trial court held that Francisco had indeed forged the signature of Ong to make it appear that he had indorsed the checks. Also, the court ruled that there were no loans extended, reasoning that it was unbelievable that HCCC was experiencing financial difficulties so as to compel it to obtain the loans from AFRDC in view of the fact that the GSIS had issued checks in favor of HCCC at about the same time that the alleged advances were made. The trial court stated that it was plausible that Francisco concealed the fact of issuance of the checks from private respondents in order to make it appear as if she were accommodating private respondents, when in truth she was lending HCCC its own money.

With regards to the Memorandum Agreement entered into between AFRDC and HCCC in Civil Case No. Q-24628, the trial court held that the same did not make any mention of the forged checks since private respondents were as of yet unaware of their existence, that fact having been effectively concealed by Francisco, until private respondents acquired knowledge of Francisco's misdeeds in 1979.

IBAA was held liable to private respondents for having honored the checks despite such obvious irregularities as the lack of initials to validate the alterations made on the check, the absence of the signature of a co-signatory in the corporate checks of HCCC and the deposit of the checks on a second indorsement in the savings account of Francisco. However, the trial court allowed IBAA recourse against Francisco, who was ordered to reimburse the IBAA for any sums it shall have to pay to private respondents. 5

Both Francisco and IBAA appealed the trial court's decision, but the Court of Appeals dismissed IBAA's appeal for its failure to file its brief within the 45-day extension granted by the appellate court. IBAA's motion for reconsideration and petition for review on certiorari filed with this Court were also similarly denied. On November 21, 1989, IBAA and HCCC entered into a Compromise Agreement which was approved by the trial court, wherein HCCC acknowledged receipt of the amount of P370,475.00 in full satisfaction of its claims against IBAA, without prejudice to the right of the latter to pursue its claims against Francisco.

On June 29, 1992, the Court of Appeals affirmed the trial court's ruling, hence this petition for review on certiorari filed by petitioner, assigning the following errors to the appealed decision —

1. The respondent Court of Appeals erred in concluding that private respondents did not owe Petitioner the sum covered by the Promissory Notes Exh. 2-2-A-2-P (FRANCISCO). Such conclusion was based mainly on conjectures, surmises and speculation contrary to the unrebutted pleadings and evidence presented by petitioner.

2. The respondent Court of Appeals erred in holding that Petitioner falsified the signature of private respondent ONG on the checks in question without any authority therefor which is patently contradictory to the unrebutted pleading and evidence that petitioner was expressly authorized by respondent HERBY thru ONG to collect all receivables of HERBY from GSIS to pay the loans extended to them. (Exhibit 3).

3. That respondent Court of Appeals erred in holding that the seven checks in question were not taken up in the liquidation and reconciliation of all outstanding account between AFRDC and HERBY as acknowledged by the parties in Memorandum Agreement (Exh. 5) is a pure conjecture, surmise and speculation contrary to the unrebutted evidence presented by petitioners. It is an inference made which is manifestly mistaken.

4. The respondent Court of Appeals erred in affirming the decision of the lower court and dismissing the appeal. 6

The pivotal issue in this case is whether or not Francisco forged the signature of Ong on the seven checks. In this connection, we uphold the lower courts' finding that the subject matter of the present case, specifically the seven checks, drawn by GSIS and AFRDC, dated between October to November 1977, in the total amount of P370,475.00 and payable to HCCC, was not included in the Memorandum Agreement executed by HCCC and AFRDC in Civil Case No. Q-24628. As observed by the trial court, aside from there being absolutely no mention of the checks in the said agreement, the amounts represented by said checks could not have been included in the Memorandum Agreement executed in 1978 because private respondents only discovered Francisco's acts of forgery in 1979. The lower courts found that Francisco was able to easily conceal from private respondents even the fact of the issuance of the checks since she was a co-signatory thereof. 7 We also note that Francisco had custody of the checks, as proven by the check vouchers bearing her uncontested signature, 8 by which she, in effect, acknowledged having received the checks intended for HCCC. This contradicts Francisco's claims that the checks were issued to Ong who delivered them to Francisco already indorsed. 9

As regards the forgery, we concur with the lower courts', finding that Francisco forged the signature of Ong on the checks to make it appear as if Ong had indorsed said checks and that, after indorsing the checks for a second time by signing her name at the back of the checks, Francisco deposited said checks in her savings account with IBAA. The forgery was satisfactorily established in the trial court upon the strength of the findings of the NBI handwriting expert. 10 Other than petitioner's self-serving denials, there is nothing in the records to rebut the NBI's findings. Well-entrenched is the rule that findings of trial courts which are factual in nature, especially when affirmed by the Court of Appeals, deserve to be respected and affirmed by the Supreme Court, provided it is supported by substantial evidence on record, 11 as it is in the case at bench.

Petitioner claims that she was, in any event, authorized to sign Ong's name on the checks by virtue of the Certification executed by Ong in her favor giving her the authority to collect all the receivables of HCCC from the GSIS, including the questioned checks. 12 Petitioner's alternative defense must similarly fail. The Negotiable Instruments Law provides that where any person is under obligation to indorse in a representative capacity, he may indorse in such terms as to negative personal liability. 13 An agent, when so signing, should indicate that he is merely signing in behalf of the principal and must disclose the name of his principal; otherwise he shall be held personally liable. 14 Even assuming that Francisco was authorized by HCCC to sign Ong's name, still, Francisco did not indorse the instrument in accordance with law. Instead of signing Ong's name, Francisco should have signed her own name and expressly indicated that she was signing as an agent of HCCC. Thus, the Certification cannot be used by Francisco to validate her act of forgery.

Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. 15 Due to her forgery of Ong's signature which enabled her to deposit the checks in her own account, Francisco deprived HCCC of the money due it from the GSIS pursuant to the Land Development and Construction Contract. Thus, we affirm respondent court's award of compensatory damages in the amount of P370,475.00, but with a modification as to the interest rate which shall be six percent (6%) per annum, to be computed from the date of the filing of the complaint since the amount of damages was alleged in the complaint; 16 however, the rate of interest shall be twelve percent (12%) per annum from the time the judgment in this case becomes final and executory until its satisfaction and the basis for the computation of this twelve percent (12%) rate of interest shall be the amount of P370,475.00. This is in accordance with the doctrine enunciated in Eastern Shipping Lines, Inc. vs. Court of Appeals, et al., 17 which was reiterated in Philippine National Bank vs. Court of Appeals, 18 Philippine Airlines, Inc. vs. Court of Appeals 19 and in Keng Hua Paper Products Co., Inc. vs. Court of Appeals, 20 which provides that —

1. When an obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of six percent (6%) per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be twelve percent (12%) per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

We also sustain the award of exemplary damages in the amount of P50,000.00. Under Article 2229 of the Civil Code, exemplary damages are imposed by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. Considering petitioner's fraudulent act, we hold that an award of P50,000.00 would be adequate, fair and reasonable. The grant of exemplary damages justifies the award of attorney's fees in the amount of P50,000.00, and the award of P5,000.00 for litigation
expenses. 21

The appellate court's award of P50,000.00 in moral damages is warranted. Under Article 2217 of the Civil Code, moral damages may be granted upon proof of physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. 22 Ong testitified that he suffered sleepless nights, embarrassment, humiliation and anxiety upon discovering that the checks due his company were forged by petitioner and that petitioner had filed baseless criminal complaints against him before the fiscal's office of Quezon City which disrupted HCCC's business operations. 23

WHEREFORE, we AFFIRM the respondent court's decision promulgated on June 29, 1992, upholding the February 16, 1988 decision of the trial court in favor of private respondents, with the modification that the interest upon the actual damages awarded shall be at six percent (6%) per annum, which interest rate shall be computed from the time of the filing of the complaint on November 19, 1979. However, the interest rate shall be twelve percent (12%) per annum from the time the judgment in this case becomes final and executory and until such amount is fully paid. The basis for computation of the six percent and twelve percent rates of interest shall be the amount of P370,475.00. No pronouncement as to costs.

SO ORDERED.

Jurisprudence: G.R. No. 165842 November 29, 2005

SECOND DIVISION

G.R. No. 165842 November 29, 2005

Eduardo P. Manuel v. People of the philippines

D E C I S I O N

CALLEJO, SR., J.:

          Before us is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R. CR No. 26877, affirming the Decision[2] of the Regional Trial Court (RTC) of Baguio City, Branch 3, convicting Eduardo P. Manuel of bigamy in Criminal Case No. 19562-R.

          Eduardo was charged with bigamy in an Information filed on November 7, 2001, the accusatory portion of which reads:

That on or about the 22nd day of April, 1996, in the City of Baguio, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused EDUARDO P. MANUEL, being then previously and legally  married to RUBYLUS [GAÑA] and without the said marriage having been legally dissolved, did then and there willfully, unlawfully and feloniously contract a second marriage with TINA GANDALERA-MANUEL, herein complainant, who does not know the existence of the first marriage of said EDUARDO P. MANUEL to Rubylus [Gaña].

            CONTRARY TO LAW. [3]

          The prosecution adduced evidence that on July 28, 1975, Eduardo was married to Rubylus Gaña before Msgr. Feliciano Santos in Makati, which was then still a municipality of the Province of Rizal.[4]  He met the private complainant Tina B. Gandalera in Dagupan City sometime in January 1996.  She stayed in Bonuan, Dagupan City for two days looking for a friend.  Tina was then 21 years old, a Computer Secretarial student, while Eduardo was 39.  Afterwards, Eduardo went to Baguio City to visit her. Eventually, as one thing led to another, they went to a motel where, despite Tina’s resistance, Eduardo succeeded in having his way with her.  Eduardo proposed marriage on several occasions, assuring her that he was single.  Eduardo even brought his parents to Baguio City to meet Tina’s parents, and was assured by them that their son was still single.

Tina finally agreed to marry Eduardo sometime in the first week of March 1996.  They were married on April 22, 1996 before Judge Antonio C. Reyes, the Presiding Judge of the RTC of Baguio City, Branch 61.[5]  It appeared in their marriage contract that Eduardo was “single.”

The couple was happy during the first three years of their married life.  Through their joint efforts, they were able to build their home in Cypress Point, Irisan, Baguio City.  However, starting 1999, Manuel started making himself scarce and went to their house only twice or thrice a year.  Tina was jobless, and whenever she asked money from Eduardo, he would slap her.[6]  Sometime in January 2001, Eduardo took all his clothes, left, and did not return.  Worse, he stopped giving financial support.

Sometime in August 2001, Tina became curious and made inquiries from the National Statistics Office (NSO) in Manila where she learned that Eduardo had been previously married.  She secured an NSO-certified copy of the marriage contract.[7]  She was so embarrassed and humiliated when she learned that Eduardo was in fact already married when they exchanged their own vows.[8]

          For his part, Eduardo testified that he met Tina sometime in 1995 in a bar where she worked as a Guest Relations Officer (GRO).  He fell in love with her and married her.  He informed Tina of his previous marriage to Rubylus Gaña, but she nevertheless agreed to marry him.  Their marital relationship was in order until this one time when he noticed that she had a “love-bite” on her neck.  He then abandoned her. Eduardo further testified that he declared he was “single” in his marriage contract with Tina because he believed in good faith that his first marriage was invalid.  He did not know that he had to go to court to seek for the nullification of his first marriage before marrying Tina.

Eduardo further claimed that he was only forced to marry his first wife because she threatened to commit suicide unless he did so.  Rubylus was charged with estafa in 1975 and thereafter imprisoned.  He visited her in jail after three months and never saw her again.  He insisted that he married Tina believing that his first marriage was no longer valid because he had not heard from Rubylus for more than 20 years.

          After trial, the court rendered judgment on July 2, 2002 finding Eduardo guilty beyond reasonable doubt of bigamy.  He was sentenced to an indeterminate penalty of from six (6) years and ten (10) months, as minimum, to ten (10) years, as maximum, and directed to indemnify the private complainant Tina Gandalera the amount of P200,000.00 by way of moral damages, plus costs of suit.[9]

          The trial court ruled that the prosecution was able to prove beyond reasonable doubt all the elements of bigamy under Article 349 of the Revised Penal Code.  It declared that Eduardo’s belief, that his first marriage had been dissolved because of his first wife’s 20-year absence, even if true, did not exculpate him from liability for bigamy.  Citing the ruling of this Court in People v. Bitdu,[10] the trial court further ruled that even if the private complainant had known that Eduardo had been previously married, the latter would still be criminally liable for bigamy.

        

Eduardo appealed the decision to the CA.  He alleged that he was not criminally liable for bigamy because when he married the private complainant, he did so in good faith and without any malicious intent.  He maintained that at the time that he married the private complainant, he was of the honest belief that his first marriage no longer subsisted.  He insisted that conformably to Article 3 of the Revised Penal Code, there must be malice for one to be criminally liable for a felony.  He was not motivated by malice in marrying the private complainant because he did so only out of his overwhelming desire to have a fruitful marriage.  He posited that the trial court should have taken into account Article 390 of the New Civil Code. To support his view, the appellant cited the rulings of this Court in United States v. Peñalosa[11] and Manahan, Jr. v. Court of Appeals.[12]

The Office of the Solicitor General (OSG) averred that Eduardo’s defense of good faith and reliance on the Court’s ruling in United States v. Enriquez[13] were misplaced; what is applicable is Article 41 of the Family Code, which amended Article 390 of the Civil Code.  Citing the ruling of this Court in Republic v. Nolasco,[14] the OSG further posited that as provided in Article 41 of the Family Code, there is a need for a judicial declaration of presumptive death of the absent spouse to enable the present spouse to marry.  Even assuming that the first marriage was void, the parties thereto should not be permitted to judge for themselves the nullity of the marriage;

the matter should be submitted to the proper court for resolution.  Moreover, the OSG maintained, the private complainant’s knowledge of the first marriage would not afford any relief since bigamy is an offense against the State and not just against the private complainant.

However, the OSG agreed with the appellant that the penalty imposed by the trial court was erroneous and sought the affirmance of the decision appealed from with modification.

          On June 18, 2004, the CA rendered judgment affirming the decision of the RTC with modification as to the penalty of the accused.  It ruled that the prosecution was able to prove all the elements of bigamy.  Contrary to the contention of the appellant, Article 41 of the Family Code should apply.  Before Manuel could lawfully marry the private complainant, there should have been a judicial declaration of Gaña’s presumptive death as the absent spouse.  The appellate court cited the rulings of this Court in Mercado v. Tan[15] and Domingo v. Court of Appeals[16] to support its ruling.  The dispositive portion of the decision reads:

WHEREFORE, in the light of the foregoing, the Decision promulgated on July 31, 2002 is hereby MODIFIED to reflect, as it hereby reflects, that accused-appellant is sentenced to an indeterminate penalty of two (2) years, four (4) months and one (1) day of prision correccional, as minimum, to ten (10) years of prision mayor as maximum. Said Decision is AFFIRMED in all other respects.

SO ORDERED.[17]

Eduardo, now the petitioner, filed the instant petition for review on certiorari, insisting that:

I

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW WHEN IT RULED THAT PETITIONER’S FIRST WIFE CANNOT BE LEGALLY PRESUMED DEAD UNDER ARTICLE 390 OF THE CIVIL CODE AS THERE WAS NO JUDICIAL DECLARATION OF PRESUMPTIVE DEATH AS PROVIDED FOR UNDER ARTICLE 41 OF THE FAMILY CODE.

II

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW WHEN IT AFFIRMED THE AWARD OF PHP200,000.00 AS MORAL DAMAGES AS IT HAS NO BASIS IN FACT AND IN LAW.[18]

          The petitioner maintains that the prosecution failed to prove the second element of the felony, i.e., that the marriage has not been legally dissolved or, in case his/her spouse is absent, the absent spouse could not yet be presumed dead under the Civil Code.  He avers that when he married Gandalera in 1996, Gaña had been “absent” for 21 years since 1975; under Article 390 of the Civil Code, she was presumed dead as a matter of law.  He points out that, under the first paragraph of Article 390 of the Civil Code, one who has been absent for seven years, whether or not he/she is still alive, shall be presumed dead for all purposes except for succession, while the second paragraph refers to the rule on legal presumption of death with respect to succession.

The petitioner asserts that the presumptive death of the absent spouse arises by operation of law upon the satisfaction of two requirements: the

specified period and the present spouse’s reasonable belief that the absentee is dead.  He insists that he was able to prove that he had not heard from his first wife since 1975 and that he had no knowledge of her whereabouts or whether she was still alive; hence, under Article 41 of the Family Code, the presumptive death of Gaña had arisen by operation of law, as the two requirements of Article 390 of the Civil Code are present.  The petitioner concludes that he should thus be acquitted of the crime of bigamy.

The petitioner insists that except for the period of absences provided for in Article 390 of the Civil Code, the rule therein on legal presumptions remains valid and effective.  Nowhere under Article 390 of the Civil Code does it require that there must first be a judicial declaration of death before the rule on presumptive death would apply.  He further asserts that contrary to the rulings of the trial and appellate courts, the requirement of a judicial declaration of presumptive death under Article 41 of the Family Code is only a requirement for the validity of the subsequent or second marriage.

          The petitioner, likewise, avers that the trial court and the CA erred in awarding moral damages in favor of the private complainant.  The private complainant was a “GRO” before he married her, and even knew that he was already married.  He genuinely loved and took care of her and gave her financial support.  He also pointed out that she had an illicit relationship with a lover whom she brought to their house.

          In its comment on the petition, the OSG maintains that the decision of the CA affirming the petitioner’s conviction is in accord with the law, jurisprudence and the evidence on record.  To bolster its claim, the OSG cited the ruling of this Court in Republic v. Nolasco.[19]

The petition is denied for lack of merit.

          Article 349 of the Revised Penal Code, which defines and penalizes bigamy, reads:

            Art. 349. Bigamy. – The penalty of prision mayor shall be imposed upon any person who shall contract a second or subsequent marriage before the former marriage has been legally dissolved, or before the absent spouse has been declared presumptively dead by means of a judgment rendered in the proper proceedings.

        

          The provision was taken from Article 486 of the Spanish Penal Code, to wit:

            El que contrajere Segundo o ulterior matrimonio sin hallarse legítimamente disuelto el anterior, será castigado con la pena de prision mayor. xxx

          The reason why bigamy is considered a felony is to preserve and ensure the juridical tie of marriage established by law.[20] The phrase “or before the absent spouse had been declared presumptively dead by means of a judgment rendered in the proper proceedings” was incorporated in the Revised Penal Code because the drafters of the law were of the impression that “in consonance with the civil law which provides for the presumption of death after an absence of a number of years, the judicial declaration of presumed death like annulment of marriage should be a justification for bigamy.”[21]

          For the accused to be held guilty of bigamy, the prosecution is burdened to prove the felony: (a) he/she has been legally married; and       (b) he/she contracts a subsequent marriage without the former marriage having been lawfully dissolved.  The felony is consummated on the celebration of the second marriage or subsequent marriage.[22]  It is essential in the prosecution for bigamy that the alleged second marriage, having all the essential requirements, would be valid were it not for the subsistence of the first marriage.[23]  Viada avers that a third element of the crime is that the second marriage must be entered into with fraudulent intent (intencion fraudulente) which is an essential element of a felony by dolo.[24]  On the other hand, Cuello Calon is of the view that there are only two elements of bigamy: (1) the existence of a marriage that has not been lawfully dissolved; and (2) the celebration of a second marriage.  It does not matter whether the first marriage is void or voidable because such marriages have juridical effects until lawfully dissolved by a court of competent jurisdiction.[25]  As the Court ruled in Domingo v. Court of Appeals[26] and Mercado v. Tan,[27] under the Family Code of the Philippines, the judicial declaration of nullity of a previous marriage is a defense.

In his commentary on the Revised Penal Code,  Albert is of the same          view as Viada and declared that there are three (3) elements of bigamy:      (1) an undissolved marriage; (2) a new marriage; and (3) fraudulent intention constituting the felony of the act.[28]  He explained that:

            … This last element is not stated in Article 349, because it is undoubtedly incorporated in the principle antedating all codes, and, constituting one of the landmarks of our Penal Code, that, where there is no willfulness there is no crime.  There is no willfulness if the subject

believes that the former marriage has been dissolved; and this must be supported by very strong evidence, and if this be produced, the act shall be deemed not to constitute a crime.  Thus, a person who contracts a second marriage in the reasonable and well-founded belief that his first wife is dead, because of the many years that have elapsed since he has had any news of her whereabouts, in spite of his endeavors to find her, cannot be deemed guilty of the crime of bigamy, because there is no fraudulent intent which is one of the essential elements of the crime.[29]

          As gleaned from the Information in the RTC, the petitioner is charged with bigamy, a felony by dolo (deceit).  Article 3, paragraph 2 of the Revised Penal Code provides that there is deceit when the act is performed with deliberate intent. Indeed, a felony cannot exist without intent. Since a felony by dolo is classified as an intentional felony, it is deemed voluntary.[30]  Although the words “with malice” do not appear in Article 3 of the Revised Penal Code, such phrase is included in the word “voluntary.”[31]

Malice is a mental state or condition prompting the doing of an overt act without legal excuse or justification from which another suffers injury.[32]  When the act or omission defined by law as a felony is proved to have been done or committed by the accused, the law presumes it to have been intentional.[33]  Indeed, it is a legal presumption of law that every man intends the natural or probable consequence of his voluntary act in the absence of proof to the contrary, and such presumption must prevail unless a reasonable doubt exists from a consideration of the whole evidence.[34]

          For one to be criminally liable for a felony by dolo, there must be a confluence of both an evil act and an evil intent.  Actus non facit reum, nisi mens sit rea.[35]

          In the present case, the prosecution proved that the petitioner was married to Gaña in 1975, and such marriage was not judicially declared a nullity; hence, the marriage is presumed to subsist.[36]  The prosecution also proved that the petitioner married the private complainant in 1996, long after the effectivity of the Family Code.

The petitioner is presumed to have acted with malice or evil intent when he married the private complainant.  As a general rule, mistake of fact or good faith of the accused is a valid defense in a prosecution for a felony by dolo; such defense negates malice or criminal intent.  However, ignorance of the law is not an excuse because everyone is presumed to know the law.  Ignorantia legis neminem excusat.

It was the burden of the petitioner to prove his defense that when he married the private complainant in 1996, he was of the well-grounded belief

that his first wife was already dead, as he had not heard from her for more than 20 years since 1975.  He should have adduced in evidence a decision of a competent court declaring the presumptive death of his first wife as required by Article 349 of the Revised Penal Code, in relation to Article 41 of the Family Code.  Such judicial declaration also constitutes proof that    the petitioner acted in good faith, and would negate criminal                               intent on his part when he married the private complainant and, as a consequence, he could not be held guilty of bigamy in such case.  The petitioner, however, failed to discharge his burden.

The phrase “or before the absent spouse has been declared presumptively dead by means of a judgment rendered on the proceedings” in Article 349 of the Revised Penal Code was not an aggroupment of empty or useless words.  The requirement for a judgment of the presumptive death of the absent spouse is for the benefit of the spouse present, as protection from the pains and the consequences of a second marriage, precisely because he/she could be charged and convicted of bigamy if the defense of good faith based on mere testimony is found incredible.

The requirement of judicial declaration is also for the benefit of the State.  Under Article II, Section 12 of the Constitution, the “State shall protect and strengthen the family as a basic autonomous social institution.”  Marriage is a social institution of the highest importance.  Public policy, good morals and the interest of society require that the marital relation should be surrounded with every safeguard and its severance only in the manner prescribed and the causes specified by law.[37]  The laws regulating civil marriages are necessary to serve the interest, safety, good order, comfort or general welfare of the community and the parties can waive nothing essential to the validity of the proceedings.  A civil marriage anchors an ordered society by encouraging stable relationships over transient ones; it enhances the welfare of the community.

In a real sense, there are three parties to every civil marriage; two willing spouses and an approving State.  On marriage, the parties assume new relations to each other and the State touching nearly on every aspect of life and death.  The consequences of an invalid marriage to the parties, to innocent parties and to society, are so serious that the law may well take means calculated to ensure the procurement of the most positive evidence of death of the first spouse or of the presumptive death of the absent spouse[38] after the lapse of the period provided for under the law.  One such means is the requirement of the declaration by a competent court of the presumptive death of an absent spouse as proof that the present spouse contracts a subsequent marriage on a well-grounded belief of the death of the first spouse.  Indeed, “men readily believe what they wish to be true,” is a maxim of the old jurists.  To sustain a second marriage and to vacate a first because one of the parties believed the other to be dead would make the existence of the marital relation determinable, not by certain extrinsic facts, easily capable of forensic ascertainment and proof, but by the subjective condition of individuals.[39] Only with such proof can marriage be treated as so dissolved as to permit second marriages.[40]  Thus, Article 349 of the Revised Penal Code has made the dissolution of marriage dependent not only upon the personal belief of parties, but upon certain objective facts easily capable of accurate judicial cognizance,[41] namely, a judgment of the presumptive death of the absent spouse.

 The petitioner’s sole reliance on Article 390 of the Civil Code as basis for his acquittal for bigamy is misplaced.

Articles 390 and 391 of the Civil Code provide –

            Art. 390.  After an absence of seven years, it being unknown whether or not, the absentee still lives, he shall be presumed dead for all purposes, except for those of succession.

            The absentee shall not be presumed dead for the purpose of opening his succession till after an absence of ten years.  If he disappeared after the age of seventy-five years, an absence of five years shall be sufficient in order that his succession may be opened.

            Art. 391.  The following shall be presumed dead for all purposes, including the division of the estate among the heirs:

(1)       A person on board a vessel lost during a sea voyage, or an aeroplane which is missing, who has not been heard of for four years since the loss of the vessel or aeroplane;

(2)       A person in the armed forces who has taken part in war, and has been missing for four years;

(3)       A person who has been in danger of death under other circumstances and his existence has not been known for four years.

The presumption of death of the spouse who had been absent for seven years, it being unknown whether or not the absentee still lives, is created by law and arises without any necessity of judicial declaration.[42]   However, Article 41 of the Family Code, which amended the foregoing rules on presumptive death, reads:

            Art. 41.  A marriage contracted by any person during the subsistence of a previous marriage shall be null and void, unless before the celebration of the subsequent marriage, the prior spouse had been absent for four consecutive years and the spouse present had a well-founded belief that the absent spouse was already dead.  In case of disappearance where there is danger of death under the circumstances set forth in the provisions of Article 391 of the Civil Code, an absence of only two years shall be sufficient.

            For the purpose of contracting the subsequent marriage under the preceding paragraph, the spouse present must institute a summary proceeding as provided in this Court for the declaration of presumptive death of the absentee, without prejudice to the effect of reappearance of the absent spouse.[43]

With the effectivity of the Family Code,[44] the period of seven years under the first paragraph of Article 390 of the Civil Code was reduced to four consecutive years.  Thus, before the spouse present may contract a subsequent marriage, he or she must institute summary proceedings for the declaration of the presumptive death of the absentee spouse,[45] without prejudice to the effect of the reappearance of the absentee spouse.  As explained by this Court in Armas v. Calisterio:[46]

In contrast, under the 1988 Family Code, in order that a subsequent bigamous marriage may exceptionally be considered valid, the following conditions must concur, viz.: (a) The prior spouse of the contracting party must have been absent for four consecutive years, or two years where there is danger of death under the circumstances stated in Article 391 of the Civil Code at the time of disappearance; (b) the spouse present has a well-founded belief that the absent spouse is already dead; and (c) there is, unlike the old rule, a judicial declaration of presumptive death of the absentee for which purpose the spouse present can institute a summary proceeding in court to ask for that declaration.  The last condition is consistent and in consonance with the requirement of judicial intervention in subsequent marriages as so provided in Article 41, in relation to Article 40, of the Family Code.

The Court rejects petitioner’s contention that the requirement of instituting a petition for declaration of presumptive death under Article 41 of the Family Code is designed merely to enable the spouse present to contract a valid second marriage and not for the acquittal of one charged with bigamy.  Such provision was designed to harmonize civil law and Article 349 of the Revised Penal Code, and put to rest the confusion spawned by the rulings of this Court and comments of eminent authorities on Criminal Law.

As early as March 6, 1937, this Court ruled in Jones v. Hortiguela[47] that, for purposes of the marriage law, it is not necessary to have the former spouse judicially declared an absentee before the spouse present may contract a subsequent marriage.  It held that the declaration of absence made in accordance with the provisions of the Civil Code has for its sole purpose the taking of the necessary precautions for the administration of the estate of the absentee.  For the celebration of civil marriage, however, the law only requires that the former spouse had been absent for seven consecutive years at the time of the second marriage, that the spouse present does not know his or her former spouse to be living, that such former spouse is generally reputed to be dead and the spouse present so believes at the time of the celebration of the marriage.[48]  In In Re Szatraw,[49] the Court declared that a judicial declaration that a person is presumptively dead, because he or she had been unheard from in seven years, being a presumption juris tantum only, subject to contrary proof, cannot reach the stage of finality or become final; and that proof of actual death of the person presumed dead being unheard from in seven years, would have to be made in another proceeding to have such particular fact finally determined.  The Court ruled that if a judicial decree declaring a person presumptively dead because he or she had not been heard from in seven years cannot become final and executory even after the lapse of the reglementary period within which an appeal may be taken, for such presumption is still disputable and remains subject to contrary proof, then a petition for such a declaration is useless, unnecessary, superfluous and of no benefit to the petitioner.  The Court stated that it should not waste its valuable time and be made to perform a superfluous and meaningless act.[50]  The Court also took note that a petition for a declaration of the presumptive death of an absent spouse may even be made in collusion with the other spouse.

In Lukban v. Republic of the Philippines,[51] the Court declared that the words “proper proceedings” in Article 349 of the Revised Penal Code can only refer to those authorized by law such as Articles 390 and 391 of the Civil Code which refer to the administration or settlement of the estate of a deceased person.  In Gue v. Republic of the Philippines,[52] the Court rejected the contention of the petitioner therein that, under Article 390 of the Civil Code, the courts are authorized to declare the presumptive death of a person after an absence of seven years.  The Court reiterated its rulings in Szatraw, Lukban and Jones.

Former Chief Justice Ramon C. Aquino was of the view that “the provision of Article 349 or “before the absent spouse has been declared presumptively dead by means of a judgment reached in the proper proceedings” is erroneous and should be considered as not written.  He opined that such provision presupposes that, if the prior marriage has not been legally dissolved and the absent first spouse has not been declared presumptively dead in a proper court proceedings, the subsequent marriage is bigamous.  He maintains that the supposition is not true.[53]  A second marriage is bigamous only when the circumstances in paragraphs 1 and 2 of Article 83 of the Civil Code are not present.[54]  Former Senator Ambrosio Padilla was, likewise, of the view that Article 349 seems to require judicial decree of dissolution or judicial declaration of absence but even with such decree, a second marriage in good faith will not constitute bigamy.  He posits that a second marriage, if not illegal, even if it be annullable, should not give rise to bigamy.[55]  Former Justice Luis B. Reyes, on the other hand, was of the view that in the case of an absent spouse who could not yet be presumed dead according to the Civil Code, the spouse present cannot be charged and convicted of bigamy in case he/she contracts a second marriage.[56]

The Committee tasked to prepare the Family Code proposed the amendments of Articles 390 and 391 of the Civil Code to conform to Article 349 of the Revised Penal Code, in that, in a case where a spouse is absent for the requisite period, the present spouse may contract a subsequent marriage only after securing a judgment declaring the presumptive death of the absent spouse to avoid being charged and convicted of bigamy; the present spouse will have to adduce evidence that he had a well-founded belief that the absent spouse was already dead.[57]  Such judgment is proof of the good faith of the present spouse who contracted a subsequent marriage; thus, even if the present spouse is later charged with bigamy if the absentee spouse reappears, he cannot be convicted of the crime.  As explained by former Justice Alicia Sempio-Diy:

            … Such rulings, however, conflict with Art. 349 of the Revised Penal Code providing that the present spouse must first ask for a declaration of presumptive death of the absent spouse in order not to be guilty of bigamy in case he or she marries again.

The above Article of the Family Code now clearly provides that for the purpose of the present spouse contracting a second marriage, he or she must file a summary proceeding as provided in the Code for the declaration of the presumptive death of the absentee, without prejudice to the latter’s reappearance. This provision is intended to protect the present spouse from a criminal prosecution for bigamy under Art. 349 of the Revised Penal Code because with the judicial declaration that the missing spouses presumptively dead, the good faith of the present spouse in contracting a second marriage is already established.[58]

Of the same view is former Dean Ernesto L. Pineda (now Undersecretary of Justice) who wrote that things are now clarified.  He says judicial declaration of presumptive death is now authorized for purposes of

remarriage.  The present spouse must institute a summary proceeding for declaration of presumptive death of the absentee, where the ordinary rules of procedure in trial will not be followed.  Affidavits will suffice, with possible clarificatory examinations of affiants if the Judge finds it necessary for a full grasp of the facts.  The judgment declaring an absentee as presumptively dead is without prejudice to the effect of reappearance of the said absentee.

Dean Pineda further states that before, the weight of authority is that the clause “before the absent spouse has been declared presumptively dead x x x” should be disregarded because of Article 83, paragraph 3 of the Civil Code.  With the new law, there is a need to institute a summary proceeding for the declaration of the presumptive death of the absentee, otherwise, there is bigamy.[59]

          According to Retired Supreme Court Justice Florenz D. Regalado, an eminent authority on Criminal Law, in some cases where an absentee spouse is believed to be dead, there must be a judicial declaration of presumptive death, which could then be made only in the proceedings for the settlement of his estate.[60]  Before such declaration, it was held that the remarriage of the other spouse is bigamous even if done in good faith.[61]  Justice Regalado opined that there were contrary views because of the ruling in Jones and the provisions of Article 83(2) of the Civil Code, which, however, appears to have been set to rest by Article 41 of the Family Code, “which requires a summary hearing for the declaration of presumptive death of the absent spouse before the other spouse can remarry.”

Under Article 238 of the Family Code, a petition for a declaration of the presumptive death of an absent spouse under Article 41 of the Family Code may be filed under Articles 239 to 247 of the same Code.[62]

          On the second issue, the petitioner, likewise, faults the trial court and the CA for awarding moral damages in favor of the private complainant.  The petitioner maintains that moral damages may be awarded only in any of the cases provided in Article 2219 of the Civil Code, and bigamy is not one of them.  The petitioner asserts that the appellate court failed to apply its ruling in People v. Bondoc,[63] where an award of moral damages for bigamy was disallowed. In any case, the petitioner maintains, the private complainant failed to adduce evidence to prove moral damages.

The appellate court awarded moral damages to the private complainant on its finding that she adduced evidence to prove the same.  The appellate court ruled that while bigamy is not included in those cases enumerated in Article 2219 of the Civil Code, it is not proscribed from awarding moral damages against the petitioner.  The appellate court ruled that it is not bound by the following ruling in People v. Bondoc:

... Pero si en dichos asuntos se adjudicaron daños, ello se debió indedublamente porque el articulo 2219 del Código Civil de Filipinas autoriza la adjudicación de daños morales en los delitos de estupro, rapto, violación, adulterio o concubinato, y otros actos lascivos, sin incluir en esta enumeración el delito de bigamia.  No existe, por consiguiente, base legal para adjudicar aquí los daños de P5,000.00 arriba mencionados.[64]

The OSG posits that the findings and ruling of the CA are based on the evidence and the law.  The OSG, likewise, avers that the CA was not bound by its ruling in People v. Rodeo.

The Court rules against the petitioner.

Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.  Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant’s wrongful act or omission.[65]  An award for moral damages requires the confluence of the following conditions: first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; second, there must be culpable act or omission factually established; third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and  fourth, the award of damages is predicated on any of the cases stated in Article 2219 or Article 2220 of the Civil Code.[66]

Moral damages may be awarded in favor of the offended party only in criminal cases enumerated in Article 2219, paragraphs 1, 3, 4, 5 and 7 of the Civil Code and analogous cases, viz.:

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

(1)   A criminal offense resulting in physical injuries;

(2)   Quasi-delicts causing physical injuries;

(3)   Seduction, abduction, rape, or other lascivious acts;

(4)   Adultery or concubinage;

(5)   Illegal or arbitrary detention or arrest;

(6)   Illegal search;

(7)   Libel, slander or any other form of defamation;

(8)   Malicious prosecution;

(9)   Acts mentioned in article 309;

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

The   parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article in the order named.

          Thus, the law does not intend that moral damages should be awarded in all cases where the aggrieved party has suffered mental anguish, fright, moral anxieties, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury arising out of an act or omission of  another, otherwise, there would not have been any reason for the inclusion of specific acts in Article 2219[67] and analogous cases (which refer to those cases bearing analogy or resemblance, corresponds to some others or resembling, in other respects, as in form, proportion, relation, etc.)[68]

Indeed, bigamy is not one of those specifically mentioned in Article 2219 of the Civil Code in which the offender may be ordered to pay moral damages to the private complainant/offended party.  Nevertheless, the petitioner is liable to the private complainant for moral damages under Article 2219 in relation to Articles 19, 20 and 21 of the Civil Code.

According to Article 19, “every person must, in the exercise of his rights and in the performance of his act with justice, give everyone his due, and observe honesty and good faith.” This provision contains what is commonly referred to as the principle of abuse of rights, and sets certain standards which must be observed not only in the exercise of one’s rights but also in the performance of one’s duties.  The standards are the following: act with justice; give everyone his due; and observe honesty and good faith.  The elements for abuse of rights are: (a) there is a legal right or duty;         (b) exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another.[69]

Article 20 speaks of the general sanctions of all other provisions of law which do not especially provide for its own sanction.  When a right is exercised in a manner which does not conform to the standards set forth in the said provision and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be responsible.[70]  If the provision does not provide a remedy for its violation, an action for damages under either Article 20 or Article 21 of the Civil Code would be proper.  Article 20 provides that “every person who, contrary to law, willfully or negligently causes damage to another shall indemnify the latter for the same.”  On the other hand, Article 21 provides that “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 damages.”  The latter provision

is adopted to remedy “the countless gaps in the statutes which leave so many victims of moral wrongs helpless, even though they have actually suffered material and moral injury should vouchsafe adequate legal remedy for that untold number of moral wrongs which it is impossible for human foresight to prove for specifically in the statutes.”  Whether or not the principle of abuse of rights has been violated resulting in damages under Article 20 or Article 21 of the Civil Code or other applicable provisions of law depends upon the circumstances of each case.[71]

          In the present case, the petitioner courted the private complainant and proposed to marry her.  He assured her that he was single.  He even brought his parents to the house of the private complainant where he and his parents made the same assurance – that he was single.  Thus, the private complainant agreed to marry the petitioner, who even stated in the certificate of marriage that he was single.  She lived with the petitioner and dutifully performed her duties as his wife, believing all the while that he was her lawful husband. For two years or so until the petitioner heartlessly abandoned her, the private complainant had no inkling that he was already married to another before they were married.

Thus, the private complainant was an innocent victim of the petitioner’s chicanery and heartless deception, the fraud consisting not of a single act alone, but a continuous series of acts.  Day by day, he maintained the appearance of being a lawful husband to the private complainant, who

changed her status from a single woman to a married woman, lost the consortium, attributes and support of a single man she could have married lawfully and endured mental pain and humiliation, being bound to a man who it turned out was not her lawful husband.[72]

The Court rules that the petitioner’s collective acts of fraud and deceit before, during and after his marriage with the private complainant were willful, deliberate and with malice and caused injury to the latter.  That she did not sustain any physical injuries is not a bar to an award for moral damages.  Indeed, in Morris v. Macnab,[73] the New Jersey Supreme Court ruled:

xxx The defendant cites authorities which indicate that, absent physical injuries, damages for shame, humiliation, and mental anguish are not recoverable where the actor is simply negligent.  See Prosser, supra, at p. 180; 2 Harper & James, Torts, 1031 (1956).  But the authorities all recognize that where the wrong is willful rather than negligent, recovery may be had for the ordinary, natural, and proximate consequences though they consist of shame, humiliation, and mental anguish.  See Spiegel v. Evergreen Cemetery Co., 117 NJL 90, 94, 186 A 585 (Sup. Ct. 1936); Kuzma v. Millinery Workers, etc., Local 24, 27 N.J. Super, 579, 591, 99 A.2d 833 (App. Div. 1953); Prosser, supra, at p. 38.  Here the defendant’s conduct was not merely negligent, but was willfully and maliciously wrongful.  It was bound to result in shame, humiliation, and mental anguish for the plaintiff, and when such result did ensue the plaintiff became entitled not only to compensatory but also to punitive damages.  See Spiegel v. Evergreen Cemetery Co., supra; Kuzma v Millinery Workers, etc., Local 24, supra. CF. Note, “Exemplary Damages in the Law of Torts,” 70 Harv. L. Rev. 517 (1957).  The plaintiff testified that because of the defendant’s bigamous marriage to her and the attendant publicity she not only was embarrassed and “ashamed to go out” but “couldn’t sleep” but “couldn’t eat,” had terrific headaches” and “lost quite a lot of weight.”  No just basis appears for judicial interference with the jury’s reasonable allowance of $1,000 punitive damages on the first count.  See Cabakov v. Thatcher, 37 N.J. Super 249, 117 A.2d 298 (App. Div.[74] 1955).

          The Court thus declares that the petitioner’s acts are against public policy as they undermine and subvert the family as a social institution, good morals and the interest and general welfare of society.

Because the private complainant was an innocent victim of the petitioner’s perfidy, she is not barred from claiming moral damages.  Besides, even considerations of public policy would not prevent her from recovery.  As held in Jekshewitz v. Groswald:[75]

            Where a person is induced by the fraudulent representation of another to do an act which, in consequence of such misrepresentation, he believes to be neither illegal nor immoral, but which is in fact a criminal offense, he has a right of action against the person so inducing him for damages sustained by him in consequence of his having done such act.  Burrows v. Rhodes, [1899] 1 Q.B. 816.  In Cooper v. Cooper, 147 Mass. 370, 17 N.E. 892, 9 Am. St. Rep. 721, the court said that a false representation by the defendant that he was divorced from his former wife, whereby the plaintiff was induced to marry him, gave her a remedy in tort for deceit.  It seems to have been assumed that the fact that she had unintentionally violated the law or innocently committed a crime by cohabiting with him would be no bar to the action, but rather that it might be a ground for enhancing her damages.  The injury to the plaintiff was said to be in her being led by the promise to give the fellowship and assistance of a wife to one who was not her husband and to assume and act in a relation and condition that proved to be false and ignominious.  Damages for such an injury were held to be recoverable in Sherman v. Rawson, 102 Mass. 395 and Kelley v. Riley, 106 Mass. 339, 343, 8 Am. Rep. 336.

            Furthermore, in the case at bar the plaintiff does not base her cause of action upon any transgression of the law by herself but upon the defendant’s misrepresentation.  The criminal relations which followed, innocently on her part, were but one of the incidental results of the defendant’s fraud for which damages may be assessed.

[7] Actions for deceit for fraudulently inducing a woman to enter into the marriage relation have been maintained in other jurisdictions.  Sears v. Wegner, 150 Mich. 388, 114 N.W. 224, 17 L.R. A. (N.S.) 819; Larson v. McMillan, 99 Wash. 626, 170 P. 324; Blossom v. Barrett, 37 N.Y. 434, 97 Am. Dec. 747; Morril v. Palmer, 68 Vt. 1, 33 A. 829, 33 L.R.A. 411.  Considerations of public policy would not prevent recovery where the circumstances are such that the plaintiff was conscious of no moral turpitude, that her illegal action was induced solely by the defendant’s misrepresentation, and that she does not base her cause of action upon any transgression of the law by herself.  Such considerations

distinguish this case from cases in which the court has refused to lend its aid to the enforcement of a contract illegal on its face or to one who has consciously and voluntarily become a party to an illegal act upon which the cause of action is founded.  Szadiwicz v. Cantor, 257 Mass. 518, 520, 154 N.E. 251, 49 A. L. R. 958.[76]

          Considering the attendant circumstances of the case, the Court finds the award of P200,000.00 for moral damages to be just and reasonable.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED.  The assailed decision of the Court of Appeals is AFFIRMED.  Costs against the petitioner.

SO ORDERED.