Torts Full Texts

8/12/2019 Torts Full Texts

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[G.R. No. 116123. March 13, 1997]

SERGIO F. NAGUIAT, doing businessunder the name and styleSERGIO F. NAGUIAT ENT., INC., & CLARK FIELD TAXI,

INC.,petitioners, vs.NATIONAL LABOR

RELATIONSCOMMISSION (THIRD DIVISION), NATIONALORGANIZATION OF WORKINGMEN and its members,LEONARDO T. GALANG, et al.,respondents.

D E C I S I O N

PANGANIBAN, J.:

Are private respondent-employees of petitioner Clark Field Taxi, Inc., whowere separated from service due to the closure of Clark Air Base, entitled toseparation pay and, if so, in what amount? Are officers of corporations ipsofactoliable jointly and severally with the companies they represent for thepayment of separation pay?

These questions are answered by the Court in resolving this petitionfor certiorariunder Rule 65 of the Rules of Court assailing the Resolutions ofthe National Labor Relations Commission (Third Division)[1] promulgated onFebruary 28, 1994,[2]and May 31, 1994.[3]The February 28, 1994 Resolutionaffirmed with modifications the decision [4]of Labor Arbiter Ariel C. Santos inNLRC Case No. RAB-III-12-2477-91. The second Resolution denied themotion for reconsideration of herein petitioners.

The NLRC modified the decision of the labor arbiter by granting separationpay to herein individual respondents in the increased amount of US$120.00for every year of service or its peso equivalent, and holding Sergio F. NaguiatEnterprises, Inc., Sergio F. Naguiat and Antolin T. Naguiat, jointly andseverally liable with Clark Field Taxi, Inc. ("CFTI").

The Facts

The following facts are derived from the records of the case:


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Petitioner CFTI held a concessionaire's contract with the Army Air Force ExchangeServices ("AAFES") for the operation of taxi services within Clark Air Base. SergioF. Naguiat was CFTI's president, while Antolin T. Naguiat was its vice-president. Like Sergio F. Naguiat Enterprises, Incorporated ("Naguiat Enterprises"),

a trading firm, it was a family-owned corporation.

Individual respondents were previously employed by CFTI as taxicab drivers. Duringtheir employment, they were required to pay a daily "boundary fee" in the amount ofUS$26.50 for those working from 1:00 a.m. to 12:00 noon, and US$27.00 for those

working from 12:00 noon to 12:00 midnight. All incidental expenses for the

maintenance of the vehicles they were driving were accounted against them, includinggasoline expenses.

The drivers worked at least three to four times a week, depending on the availabilityof taxicabs. They earned not less than US$15.00 daily. In excess of that amount,

however, they were required to make cash deposits to the company, which they could

later withdraw every fifteen days.

Due to the phase-out of the US military bases in the Philippines, from which Clark AirBase was not spared, the AAFES was dissolved, and the services of individualrespondents were officially terminated on November 26, 1991.

The AAFES Taxi Drivers Association ("drivers' union"), through its local president,Eduardo Castillo, and CFTI held negotiations as regards separation benefits thatshould be awarded in favor of the drivers. They arrived at an agreement that theseparated drivers will be given P500.00 for every year of service as severancepay. Most of the drivers accepted said amount in December 1991 and January1992. However, individual respondents herein refused to accept theirs.

Instead, after disaffiliating themselves from the drivers' union, individual respondents,through the National Organization of Workingmen ("NOWM"), a labor organizationwhich they subsequently joined, filed a complaint[5]against "Sergio F. Naguiat doingbusiness under the name and style Sergio F. Naguiat Enterprises, Inc., Army-Air

Force Exchange Services (AAFES) with Mark Hooper as Area Service Manager,

Pacific Region, and AAFES Taxi Drivers Association with Eduardo Castillo asPresident," for payment of separation pay due to termination/phase-out. Saidcomplaint was later amended[6]to include additional taxi drivers who were similarlysituated as complainants, and CFTI with Antolin T. Naguiat as vice president andgeneral manager, as party respondent.


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In their complaint, herein private respondents alleged that they wereregular employees of Naguiat Enterprises, although theirindividual applications for employment were approved by CFTI. They claimedto have been assigned to Naguiat Enterprises after having been hired byCFTI, and that the former thence managed, controlled and supervised theiremployment. They averred further that they were entitled to separation paybased on their latest daily earnings of US$15.00 for working sixteen (16) daysa month.

In their position paper submitted to the labor arbiter, herein petitionersclaimed that the cessation of business of CFTI on November 26, 1991, wasdue to "great financial losses and lost business opportunity" resulting from thephase-out of Clark Air Base brought about by the Mt. Pinatubo eruption andthe expiration of the RP-US military bases agreement. They admitted thatCFTI had agreed with the drivers' union, through its President Eduardo

Castillo who claimed to have had blanket authority to negotiate with CFTI inbehalf of union members, to grant its taxi driver-employees separation payequivalent to P500.00 for every year of service.

The labor arbiter, finding the individual complainants to be regular workersof CFTI, ordered the latter to pay them P1,200.00 for every year of service "forhumanitarian consideration," setting aside the earlier agreement betweenCFTI and the drivers' union of P500.00 for every year of service. The laborarbiter rejected the allegation of CFTI that it was forced to close business dueto "great financial losses and lost business opportunity" since, at the time it

ceased operations, CFTI was profitably earning and the cessation of itsbusiness was due to the untimely closure of Clark Air Base. In not awardingseparation pay in accordance with the Labor Code, the labor-arbiterexplained:

"To allow respondents exemption from its (sic) obligation to pay separationpay would be inhuman to complainants but to impose a monetary obligation

to an employer whose profitable business was abruptly shot (sic) down by

force majeure would be unfair and unjust to say the least."[7]

and thus, simply awarded an amount for "humanitarian consideration."

Herein individual private respondents appealed to the NLRC. In itsResolution, the NLRC modified the decision of the labor arbiter by grantingseparation pay to the private respondents. The concluding paragraphs of theNLRC Resolution read:

"The contention of complainant is partly correct. One-half month salaryshould be US$120.00 but this amount can not be paid to the complainant inU.S. Dollar which is not the legal tender in the Philippines. Paras, in


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commenting on Art. 1249 of the New Civil Code, defines legal tender as 'thatwhich a debtor may compel a creditor to accept in payment of the debt. Thecomplainants who are the creditors in this instance can be compelled to acceptthe Philippine peso which is the legal tender, in which case, the table of

conversion (exchange rate) at the time of payment or satisfaction of the

judgment should be used. However, since the choice is left to the debtor,

(respondents) they may choose to pay in US dollar.' (Phoenix Assurance Co.

vs. Macondray & Co. Inc., L-25048, May 13, 1975)

In discharging the above obligations, Sergio F. Naguiat Enterprises, which isheaded by Sergio F. Naguiat and Antolin Naguiat, father and son at the sametime the President and Vice-President and General Manager, respectively,should be joined as indispensable party whose liability is joint andseveral. (Sec. 7, Rule 3, Rules of Court)"[8]

As mentioned earlier, the motion for reconsideration of herein petitionerswas denied by the NLRC. Hence, this petition with prayer for issuance of atemporary restraining order. Upon posting by the petitioners of a surety bond,a temporary restraining order[9]was issued by this Court enjoining execution ofthe assailed Resolutions.

Issues

The petitioners raise the following issues before this Court for resolution:

"I. Whether or not public respondent NLRC (3rd Div.) committed graveabuse of discretion amounting to lack of jurisdiction in issuing theappealed resolution;

II.Whether or not Messrs. Teofilo Rafols and Romeo N. Lopez couldvalidly represent herein private respondents; and,

III.Whether or not the resolution issued by public respondent is contraryto law."[10]

Petitioners also submit two additional issues by way of a supplement [11]to

their petition, to Wit: that Petitioners Sergio F. Naguiat and Antolin Naguiatwere denied due process; and that petitioners were not furnished copies ofprivate respondents' appeal to the NLRC. As to the procedural lapse ofinsufficient copies of the appeal, the proper forum before which petitionersshould have raised it is the NLRC. They, however, failed to question this intheir motion for reconsideration. As a consequence, they are deemed to have


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waived the same and voluntarily submitted themselves to the jurisdiction ofthe appellate body.

Anent the first issue raised in their original petition, petitioners contend thatNLRC committed grave abuse of discretion amounting to lack or excess of

jurisdiction in unilaterally increasing the amount of severance pay granted bythe labor arbiter. They claim that this was not supported by substantialevidence since it was based simply on the self-serving allegation ofrespondents that their monthly take-home pay was not lower than $240.00.

On the second issue, petitioners aver that NOWM cannot make legalrepresentations in behalf of individual respondents who should, instead, bebound by the decision of the union (AAFES Taxi Drivers Association) of whichthey were members.

As to the third issue, petitioners incessantly insist that Sergio F. Naguiat

Enterprises, Inc. is a separate and distinct juridical entity which cannot be heldjointly and severally liable for the obligations of CFTI. And similarly, Sergio F.Naguiat and Antolin Naguiat were merely officers and stockholders of CFTIand, thus, could not be held personally accountable for corporate debts.

Lastly, Sergio and Antolin Naguiat assail the Resolution of NLRC holdingthem solidarily liable despite not having been impleaded as parties to thecomplaint.

Individual respondents filed a comment separate from that of NOWM. Insum, both aver that petitioners had the opportunity but failed to refute, the taxi

drivers' claim of having an average monthly earning of $240.00; thatindividual respondents became members of NOWM after disaffiliatingthemselves from the AAFES Taxi Drivers Association which, through themanipulations of its President Eduardo Castillo, unconscionably compromisedtheir separation pay; and that Naguiat Enterprises, being their indirectemployer, is solidarily liable under the law for violation of the Labor Code, inthis case, for nonpayment of their separation pay.

The Solicitor General unqualifiedly supports the allegations of privaterespondents. In addition, he submits that the separate personalities of

respondent corporations and their officers should be disregarded andconsidered one and the same as these were used to perpetrate injustice totheir employees.

The Court's Ruling


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As will be discussed below, the petition is partially meritorious.

First Issue:Amount of Separation Pay

Firmly, we reiterate the rule that in a petition for certiorari filed pursuant toRule 65 of the Rules of Court, which is the only way a labor case may reachthe Supreme Court, the petitioner/s must clearly show that the NLRC actedwithout or in excess of jurisdiction or with grave abuse of discretion.[12]

Long-standing and well-settled in Philippine jurisprudence is the judicialdictum that findings of fact of administrative agencies and quasi-judicialbodies, which have acquired expertise because their jurisdiction is confined tospecific matters, are generally accorded not only great respect but evenfinality; and are binding upon this Court unless there is a showing of grave

abuse of discretion, or where it is clearly shown that they were arrived atarbitrarily or in disregard of the evidence on record.[13]

Nevertheless, this Court carefully perused the records of the instant case ifonly to determine whether public respondent committed grave abuse ofdiscretion, amounting to lack of jurisdiction, in granting the clamor of privaterespondents that their separation pay should be based on the amount of$240.00, allegedly their minimum monthly earnings as taxi drivers ofpetitioners.

In their amended complaint before the Regional Arbitration Branch in SanFernando, Pampanga, herein private respondents set forth in detail the workschedule and financial arrangement they had with their employer. Therefromthey inferred that their monthly take-home pay amounted to not less than$240.00. Herein petitioners did not bother to refute nor offer any evidence tocontrovert said allegations. Remaining undisputed, the labor arbiter adoptedsuch facts in his decision. Petitioners did not even appeal from the decision ofthe labor arbiter nor manifest any error in his findings and conclusions. Thus,petitioners are in estoppel for not having questioned such facts when they hadall opportunity to do so. Private respondents, like petitioners, are bound by thefactual findings of Respondent Commission.

Petitioners also claim that the closure of their taxi business was due togreat financial losses brought about by the eruption of Mt. Pinatubo whichmade the roads practically impassable to their taxicabs. Likewise well-settledis the rule that business losses or financial reverses, in order to sustainretrenchment of personnel or closure of business and warrant exemption from


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payment of separation pay, must be proved with clear and satisfactoryevidence.[14]The records, however, are devoid of such evidence.

The labor arbiter; as affirmed by NLRC, correctly found that petitionersstopped their taxi business within Clark Air Base because of the phase-out of

U.S. military presence thereat. It was not due to any great financial lossbecause petitioners' taxi business was earning profitably at the time of itsclosure.

With respect to the amount of separation pay that should be granted,Article 283 of the Labor Code provides:

"x x x In case of retrenchment to prevent losses and in cases of closures orcessation of operations of establishment or undertaking not due to seriousbusiness losses or financial reverses, the separation pay shall be equivalent toone (1) month pay or at least one-half () month pay for every year of

service, whichever is higher. A fraction of at least six (6) months shall beconsidered one (1 ) whole year."

Considering the above, we find that NLRC did not commit grave abuse ofdiscretion in ruling that individual respondents were entitled to separationpay[15] in the amount $120.00 (one-half of $240.00 monthly pay) or its pesoequivalent for every year of service.

Second Issue: NOWM's Personality toRepresent Individual Respondents-Employees

On the question of NOWM's authority to represent private respondents, wehold petitioners in estoppel for not having seasonably raised this issue beforethe labor arbiter or the NLRC. NOWM was already a party-litigant as theorganization representing the taxi driver-complainants before the labor arbiter.But petitioners who were party-respondents in said complaint did not assailthe juridical personality of NOWM and the validity of its representations inbehalf of the complaining taxi drivers before the quasi-judicialbodies. Therefore, they are now estopped from raising such question beforethis Court. In any event, petitioners acknowledged before this Court that thetaxi drivers allegedly represented by NOWM, are themselves parties in thiscase.[16]

Third Issue: Liability of Petitioner-Corporations and Their Respective Officers


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The resolution of this issue involves another factual finding that NaguiatEnterprises actually managed, supervised and controlled employment termsof the taxi drivers, making it their indirect employer. As adverted to earlier,factual findings of quasi-judicial bodies are binding upon the court in theabsence of a showing of grave abuse of discretion.

Unfortunately, the NLRC did not discuss or give any explanation forholding Naguiat Enterprises and its officers jointly and severally liable indischarging CFTI's liability for payment of separation pay. We again remindthose concerned that decisions, however concisely written, must distinctly andclearly set forth the facts and law upon which they are based.[17]This ruleapplies as well to dispositions by quasi-judicial and administrative bodies.

Naguiat Enterprises Not Liable

In impleading Naguiat Enterprises as solidarily liable for the obligations ofCFTI, respondents rely on Articles 106,[18]107[19]and 109[20]of the Labor Code.

Based on factual submissions of the parties, the labor arbiter, however,found that individual respondents were regular employees of CFTI whoreceived wages on a boundary or commission basis.

We find no reason to make a contrary finding. Labor-only contractingexists where: (1) the person supplying workers to an employer does not havesubstantial capital or investment in the form of tools, equipment, machinery,

and work premises, among others; and (2) the workers recruited and placedby such person are performing activities which are directly related to theprincipal business of the employer.[21]Independent contractors, meanwhile, arethose who exercise independent employment, contracting to do a piece ofwork according to their own methods without being subject to control of theiremployer except as to the result of their work.[22]

From the evidence proffered by both parties, there is no substantial basisto hold that Naguiat Enterprises is an indirect employer of individualrespondents much less a labor only contractor. On the contrary, petitioners

submitted documents such as the drivers' applications for employment withCFTI,[23]and social security remittances[24]and payroll[25]of Naguiat Enterprisesshowing that none of the individual respondents were itsemployees. Moreover, in the contract[26]between CFTI and AAFES, theformer, as concessionaire, agreed to purchase from AAFES for a certainamount within a specified period a fleet of vehicles to be "ke(pt) on the road"by CFTI, pursuant to their concessionaire's contract. This indicates that CFTI


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became the owner of the taxicabs which became the principal investment andasset of the company.

Private respondents failed to substantiate their claim that NaguiatEnterprises managed, supervised and controlled their employment. It

appears that they were confused on the personalities of Sergio F. Naguiat asan individual who was the president of CFTI, and Sergio F. NaguiatEnterprises, Inc., as a separate corporate entity with a separatebusiness. They presumed that Sergio F. Naguiat, who was at the same timea stockholder and director[27]of Sergio F. Naguiat Enterprises, Inc., wasmanaging and controlling the taxi business on behalf of the latter. A closerscrutiny and analysis of the records, however, evince the truth of thematter: that Sergio F. Naguiat, in supervising the-taxi drivers and determiningtheir employment terms, was rather carrying out his responsibilities aspresident of CFTI. Hence, Naguiat Enterprises as a separate corporation

does not appear to be involved at all in the taxi business.To illustrate further, we refer to the testimony of a driver-claimant on cross

examination.

"Atty. Suarez

Is it not true that you applied not with Sergio F. Naguiat but with Clark Field Taxi?

Witness

I applied for (sic) Sergio F. Naguiat

Atty. Suarez

Sergio F. Naguiat as an individual or the corporation?

Witness

'Sergio F. Naguiat na tao.'

Atty. Suarez

Who is Sergio F. Naguiat?

Witness

He is the one managing the Sergio F. Naguiat Enterprises and he is the one whomwe believe as our employer.

Atty. Suarez

What is exactly the position of Sergio F. Naguiat with the Sergio F. NaguiatEnterprises?

Witness

He is the owner, sir.

Atty. Suarez


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How about with Clark Field Taxi Incorporated what is the position of Mr. Naguiat?

Witness

What I know is that he is a concessionaire.

xxx xxx

xxxAtty. Suarez

But do you also know that Sergio F. Naguiat is the President of Clark Field Taxi,Incorporated?

Witness

Yes. sir.

Atty. Suarez

How about Mr. Antolin Naguiat what is his role in the taxi services, the operation of

the Clark Field Taxi, Incorporated?Witness

He is the vice president." [28]

And, although the witness insisted that Naguiat Enterprises was hisemployer, he could not deny that he received his salary from the office ofCFTI inside the base.[29]

Another driver-claimant admitted, upon the prodding of counsel for thecorporations, that Naguiat Enterprises was in the trading business while CFTIwas in taxi services.[30]

In addition, the Constitution[31]of CFTI-AAFES Taxi Drivers Associationwhich, admittedly, was the union of individual respondents while still workingat Clark Air Base, states that members thereof are the employees of CFTI and"(f)or collective bargaining purposes, the definite employer is the Clark FieldTaxi Inc."

From the foregoing, the ineludible conclusion is that CFTI was the actualand direct employer of individual respondents, and that Naguiat Enterpriseswas neither their indirect employer nor labor-only contractor. It was notinvolved at all in the taxi business.

CFTI president solidarily liable

Petitioner-corporations would likewise want to avoid the solidary liability oftheir officers. To bolster their position, Sergio F. Naguiat and Antolin T.


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Naguiat specifically aver that they were denied due process since they werenot parties to the complaint below.[32] In the broader interest of justice, we,however, hold that Sergio F. Naguiat, in his capacity as president of CFTI,cannot be exonerated from joint and several liability in the payment ofseparation pay to individual respondents.

A.C. Ransom Labor Union-CCLU vs. NLRC[33]is the case in point. A.C.Ransom Corporation was a family corporation, the stockholders of which weremembers of the Hernandez family. In 1973, it filed an application forclearance to close or cease operations, which was duly granted by theMinistry of Labor and Employment, without prejudice to the right of employeesto seek redress of grievance, if any. Backwages of 22 employees, whoengaged in a strike prior to the closure, were subsequently computedat P164,984.00. Up to September 1976, the union filed about ten (10)motions for execution against the corporation, but none could be

implemented, presumably for failure to find leviable assets of saidcorporation. In its last motion for execution, the union asked that officers andagents of the company be held personally liable for payment of thebackwages. This was granted by the labor arbiter. In the corporation's appealto the NLRC, one of the issues raised was: "Is the judgment against acorporation to reinstate its dismissed employees with backwages, enforceableagainst its officer and agents, in their individual, private and personalcapacities, who were not parties in the case where the judgment wasrendered?" The NLRC answered in the negative, on the ground that officersof a corporation are not liable personally for official acts unless they exceeded

the scope of their authority.

On certiorari, this Court reversed the NLRC and upheld the laborarbiter. In imposing joint and several liability upon the company president, theCourt, speaking through Mme. Justice Ameurfina Melencio-Herrera,ratiocinated this wise:

"(b) How can the foregoing (Articles 265 and 273 of the Labor Code)provisions be implemented when the employer is a corporation? The answeris found in Article 212(c) of the Labor Code which provides:

'(c) 'Employer' includes any person acting in the interest of an employer,directly or indirectly. The term shall not include any labor organization or any of itsofficers or agents except when acting as employer.'

The foregoing was culled from Section 2 of RA 602, the Minimum WageLaw. Since RANSOM is an artificial person, it must have an officerwho canbe presumed to be the employer, being the 'person acting in the interest of


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(the) employer' RANSOM. The corporation, only in the technical sense, isthe employer.

The responsible officer of an employer corporation can be held personally, notto say even criminally, liable for nonpayment of back wages. That is the

policy of the law. x x x

(c) If the policy of the law were otherwise, the corporation employer can havedevious ways for evading payment of back wages. x x x

(d) The record does not clearly identify 'the officer or officers' of RANSOMdirectly responsible for failure to pay the back wages of the 22 strikers. In theabsence of definite proof in that regard, we believe it should be presumed that theresponsible officer is the President of the corporation who can be deemed the chiefoperation officer thereof. Thus, in RA 602, criminal responsibility is with

the 'Manageror in his default, the person acting as such.' In RANSOM, the Presidentappears to be the Manager." (Underscoring supplied.)

Sergio F. Naguiat, admittedly, was the president of CFTI who activelymanaged the business. Thus, applying the ruling inA. C. Ransom, he fallswithin the meaning of an "employer" as contemplated by the Labor Code, whomay be held jointly and severally liable for the obligations of the corporation toits dismissed employees.

Moreover, petitioners also conceded that both CFTI and NaguiatEnterprises were "close family corporations"[34]owned by the Naguiat

family. Section 100, paragraph 5, (under Title XII on Close Corporations) ofthe Corporation Code, states:

"(5) To the extent that the stockholders are actively engage(d) in themanagement or operation of the business and affairs of a close corporation,the stockholders shall be held to strict fiduciary duties to each other andamong themselves. Said stockholders shall be personally liable for corporatetorts unless the corporation has obtained reasonably adequate liabilityinsurance." (underscoring supplied)

Nothing in the records show whether CFTI obtained "reasonably adequateliability insurance;" thus, what remains is to determine whether there wascorporate tort.

Our jurisprudence is wanting as to the definite scope of "corporatetort." Essentially, "tort" consists in the violation of a right given or the omissionof a duty imposed by law.[35]Simply stated, tort is a breach of a legalduty.[36]Article 283 of the Labor Code mandates the employer to grant


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separation pay to employees in case of closure or cessation of operations ofestablishment or undertaking not due to serious business losses or financialreverses, which is the condition obtaining at bar. CFTI failed to comply withthis law-imposed duty or obligation. Consequently, its stockholder who wasactively engaged in the management or operation of the business should be

held personally liable.

Furthermore, in MAM Realty Developmentvs. NLRC,[37]the Courtrecognized that a director or officer may still be held solidarily liable with acorporation by specific provision of law. Thus:

"x x x A corporation, being a juridical entity, may act only through itsdirectors, officers and employees. Obligations incurred by them, acting assuch corporate agents, are not theirs but the direct accountabilities of thecorporation they represent. True, solidary liabilities may at times be incurredbut only when exceptional circumstances warrant such as, generally, in thefollowing cases:

xxx xxxxxx

4. When a director, trustee or officer is made, by specific provision of law,personally liable for his corporate action." (footnotes omitted)

As pointed out earlier, the fifth paragraph of Section 100 of theCorporation Code specifically imposes personal liability upon the stockholder

actively managing or operating the business and affairs of the closecorporation.

In fact, in posting the surety bond required by this Court for the issuance ofa temporary restraining order enjoining the execution of the assailed NLRCResolutions, only Sergio F. Naguiat, in his individual and personal capacity,principally bound himself to comply with the obligation thereunder, i.e., "toguarantee the payment to private respondents of any damages which theymay incur by reason of the issuance of a temporary restraining order sought, ifit should be finally adjudged that said principals were not entitled thereto."[38]

The Court here finds no application to the rule that a corporate officercannot be held solidarily liable with a corporation in the absence of evidencethat he had acted in bad faith or with malice.[39] In the present case, SergioNaguiat is held solidarily liable for corporate tort because he had activelyengaged in the management and operation of CFTI, a close corporation.


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Antolin Naguiat not personally liable

Antolin T. Naguiat was the vice president of the CFTI. Although he carriedthe title of "general manager" as well, it had not been shown that he had acted

in such capacity. Furthermore, no evidence on the extent of his participation inthe management or operation of the business was proffered. In this light, hecannot be held solidarily liable for the obligations of CFTI and Sergio Naguiatto the private respondents.

Fourth Issue: No Denial of Due Process

Lastly, in petitioners' Supplement to their original petition, they assail theNLRC Resolution holding Sergio F. Naguiat and Antolin T. Naguiat jointly and

severally liable with petitioner-corporations in the payment of separation pay,averring denial of due process since the individual Naguiats were notimpleaded as parties to the complaint.

We advert to the case ofA.C. Ransom once more. The officers of thecorporation were not parties to the case when the judgment in favor of theemployees was rendered. The corporate officers raised this issue when thelabor arbiter granted the motion of the employees to enforce the judgmentagainst them. In spite of this, the Court held the corporation presidentsolidarily liable with the corporation.

Furthermore, Sergio and Antolin Naguiat voluntarily submitted themselvesto the jurisdiction of the labor arbiter when they, in their individual capacities,filed a position paper[40]together with CFTI, before the arbiter. They cannotnow claim to have been denied due process since they availed of theopportunity to present their positions.

WHEREFORE,the foregoing premises considered, the petition is PARTLYGRANTED. The assailed February 28, 1994 Resolution of the NLRC ishereby MODIFIEDas follows:

(1) Petitioner Clark Field Taxi, Incorporated, and Sergio F. Naguiat, president andco-owner thereof, are ORDEREDto pay, jointly and severally, the individualrespondents their separation pay computed at US$120.00 for every year of service, orits peso equivalent at the time of payment or satisfaction of the judgment;


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(2) Petitioner Sergio F. Naguiat Enterprises, Incorporated, and Antolin T. NaguiatareABSOLVEDfrom liability in the payment of separation pay to individualrespondents.

SO ORDERED.

Narvasa, C.J., (Chairman), Davide, Jr., Melo, andFrancisco, JJ., concur.


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G.R. No. L-27155 May 18, 1978

PHILIPPINE NATIONAL BANK, petitioner,vs.THE COURT OF APPEALS, RITA GUECO TAPNIO, CECILIO GUECO and THE PHILIPPINEAMERICAN GENERAL INSURANCE COMPANY, INC., respondents.

Medina, Locsin, Corua, & Sumbillo for petitioner.

Manuel Lim & Associates for private respondents.

ANTONIO, J.:

Certiorari to review the decision of the Court of Appeals which affirmed the judgment of the Court ofFirst Instance of Manila in Civil Case No. 34185, ordering petitioner, as third-party defendant, to payrespondent Rita Gueco Tapnio, as third-party plaintiff, the sum of P2,379.71, plus 12% interest per

annum from September 19, 1957 until the same is fully paid, P200.00 attorney's fees and costs, thesame amounts which Rita Gueco Tapnio was ordered to pay the Philippine American GeneralInsurance Co., Inc., to be paid directly to the Philippine American General Insurance Co., Inc. in fullsatisfaction of the judgment rendered against Rita Gueco Tapnio in favor of the former; plus P500.00attorney's fees for Rita Gueco Tapnio and costs. The basic action is the complaint filed byPhilamgen (Philippine American General Insurance Co., Inc.) as surety against Rita Gueco Tapnioand Cecilio Gueco, for the recovery of the sum of P2,379.71 paid by Philamgen to the Philippine

National Bank on behalf of respondents Tapnio and Gueco, pursuant to an indemnity agreement.Petitioner Bank was made third-party defendant by Tapnio and Gueco on the theory that their failureto pay the debt was due to the fault or negligence of petitioner.

The facts as found by the respondent Court of Appeals, in affirming the decision of the Court of First

Instance of Manila, are quoted hereunder:

Plaintiff executed its Bond, Exh. A, with defendant Rita Gueco Tapnio as principal, in

favor of the Philippine National Bank Branch at San Fernando, Pampanga, toguarantee the payment of defendant Rita Gueco Tapnio's account with said Bank. Inturn, to guarantee the payment of whatever amount the bonding company would payto the Philippine National Bank, both defendants executed the indemnity agreement,Exh. B. Under the terms and conditions of this indemnity agreement, whateveramount the plaintiff would pay would earn interest at the rate of 12% per annum, plusattorney's fees in the amount of 15 % of the whole amount due in case of courtlitigation.

The original amount of the bond was for P4,000.00; but the amount was laterreduced to P2,000.00.

It is not disputed that defendant Rita Gueco Tapnio was indebted to the bank in thesum of P2,000.00, plus accumulated interests unpaid, which she failed to pay despitedemands. The Bank wrote a letter of demand to plaintiff, as per Exh. C; whereupon,plaintiff paid the bank on September 18, 1957, the full amount due and owing in thesum of P2,379.91, for and on account of defendant Rita Gueco's obligation (Exhs. Dand D-1).


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Plaintiff, in turn, made several demands, both verbal and written, upon defendants(Exhs. E and F), but to no avail.

Defendant Rita Gueco Tapnio admitted all the foregoing facts. She claims, however,when demand was made upon her by plaintiff for her to pay her debt to the Bank,that she told the Plaintiff that she did not consider herself to be indebted to the Bank

at all because she had an agreement with one Jacobo-Nazon whereby she hadleased to the latter her unused export sugar quota for the 1956-1957 agriculturalyear, consisting of 1,000 piculs at the rate of P2.80 per picul, or for a total ofP2,800.00, which was already in excess of her obligation guaranteed by plaintiff'sbond, Exh. A. This lease agreement, according to her, was with the knowledge of thebank. But the Bank has placed obstacles to the consummation of the lease, and thedelay caused by said obstacles forced 'Nazon to rescind the lease contract. Thus,Rita Gueco Tapnio filed her third-party complaint against the Bank to recover fromthe latter any and all sums of money which may be adjudged against her and in favorof the plaitiff plus moral damages, attorney's fees and costs.

Insofar as the contentions of the parties herein are concerned, we quote with

approval the following findings of the lower court based on the evidence presented atthe trial of the case:

It has been established during the trial that Mrs. Tapnio had an exportsugar quota of 1,000 piculs for the agricultural year 1956-1957 whichshe did not need. She agreed to allow Mr. Jacobo C. Tuazon to usesaid quota for the consideration of P2,500.00 (Exh. "4"-Gueco). Thisagreement was called a contract of lease of sugar allotment.

At the time of the agreement, Mrs. Tapnio was indebted to thePhilippine National Bank at San Fernando, Pampanga. Herindebtedness was known as a crop loan and was secured by amortgage on her standing crop including her sugar quota allocationfor the agricultural year corresponding to said standing crop. Thisarrangement was necessary in order that when Mrs. Tapnio harvests,the P.N.B., having a lien on the crop, may effectively enforcecollection against her. Her sugar cannot be exported without sugarquota allotment Sometimes, however, a planter harvest less sugarthan her quota, so her excess quota is utilized by another who paysher for its use. This is the arrangement entered into between Mrs.Tapnio and Mr. Tuazon regarding the former's excess quota for 1956-1957 (Exh. "4"-Gueco).

Since the quota was mortgaged to the P.N.B., the contract of leasehad to be approved by said Bank, The same was submitted to

the branch manager at San Fernando, Pampanga. The latterrequired the parties to raise the consideration of P2.80 per picul or atotal of P2,800.00 (Exh. "2-Gueco") informing them that "the minimumlease rental acceptable to the Bank, is P2.80 per picul." In a letteraddressed to the branch manager on August 10, 1956, Mr. Tuazoninformed the manager that he was agreeable to raising theconsideration to P2.80 per picul. He further informed the managerthat he was ready to pay said amount as the funds were in his folderwhich was kept in the bank.


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Explaining the meaning of Tuazon's statement as to the funds, it wasstated by him that he had an approved loan from the bank but he hadnot yet utilized it as he was intending to use it to pay for the quota.Hence, when he said the amount needed to pay Mrs. Tapnio was inhis folder which was in the bank, he meant and the managerunderstood and knew he had an approved loan available to be used

in payment of the quota. In said Exh. "6-Gueco", Tuazon alsoinformed the manager that he would want for a notice from themanager as to the time when the bank needed the money so thatTuazon could sign the corresponding promissory note.

Further Consideration of the evidence discloses that when the branch manager ofthe Philippine National Bank at San Fernando recommended the approval of thecontract of lease at the price of P2.80 per picul (Exh. 1 1-Bank), whoserecommendation was concurred in by the Vice-president of said Bank, J. V.Buenaventura, the board of directors required that the amount be raised to 13.00 perpicul. This act of the board of directors was communicated to Tuazon, who in turnasked for a reconsideration thereof. On November 19, 1956, the branch managersubmitted Tuazon's request for reconsideration to the board of directors with anotherrecommendation for the approval of the lease at P2.80 per picul, but the boardreturned the recommendation unacted upon, considering that the current priceprevailing at the time was P3.00 per picul (Exh. 9-Bank).

The parties were notified of the refusal on the part of the board of directors of theBank to grant the motion for reconsideration. The matter stood as it was untilFebruary 22, 1957, when Tuazon wrote a letter (Exh. 10-Bank informing the Bankthat he was no longer interested to continue the deal, referring to the lease of sugarquota allotment in favor of defendant Rita Gueco Tapnio. The result is that the latterlost the sum of P2,800.00 which she should have received from Tuazon and whichshe could have paid the Bank to cancel off her indebtedness,

The court below held, and in this holding we concur that failure of the negotiation forthe lease of the sugar quota allocation of Rita Gueco Tapnio to Tuazon was due tothe fault of the directors of the Philippine National Bank, The refusal on the part ofthe bank to approve the lease at the rate of P2.80 per picul which, as stated above,would have enabled Rita Gueco Tapnio to realize the amount of P2,800.00 whichwas more than sufficient to pay off her indebtedness to the Bank, and its insistenceon the rental price of P3.00 per picul thus unnecessarily increasing the value by onlya difference of P200.00. inevitably brought about the rescission of the lease contractto the damage and prejudice of Rita Gueco Tapnio in the aforesaid sum ofP2,800.00. The unreasonableness of the position adopted by the board of directorsof the Philippine National Bank in refusing to approve the lease at the rate of P2.80per picul and insisting on the rate of P3.00 per picul, if only to increase the retailvalue by only P200.00 is shown by the fact that all the accounts of Rita GuecoTapnio with the Bank were secured by chattel mortgage on standing crops,assignment of leasehold rights and interests on her properties, and surety bonds,aside from the fact that from Exh. 8-Bank, it appears that she was offering to executea real estate mortgage in favor of the Bank to replace the surety bond This statementis further bolstered by the fact that Rita Gueco Tapnio apparently had the means topay her obligation fact that she has been granted several value of almost P80,000.00for the agricultural years from 1952 to 56. 1


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from the Bank which he intended to use in paying for the use of the sugar quota. The BranchManager submitted the contract of lease of sugar quota allocation to the Head Office on September7, 1956, with a recommendation for approval, which recommendation was concurred in by the Vice-President of the Bank, Mr. J. V. Buenaventura. This notwithstanding, the Board of Directors ofpetitioner required that the consideration be raised to P3.00 per picul.

Tuazon, after being informed of the action of the Board of Directors, asked for a reconsiderationthereof. On November 19, 1956, the Branch Manager submitted the request for reconsideration andagain recommended the approval of the lease at P2.80 per picul, but the Board returned therecommendation unacted, stating that the current price prevailing at that time was P3.00 per picul.

On February 22, 1957, Tuazon wrote a letter, informing the Bank that he was no longer interested incontinuing the lease of sugar quota allotment. The crop year 1956-1957 ended and Mrs. Tapniofailed to utilize her sugar quota, resulting in her loss in the sum of P2,800.00 which she should havereceived had the lease in favor of Tuazon been implemented.

It has been clearly shown that when the Branch Manager of petitioner required the parties to raisethe consideration of the lease from P2.50 to P2.80 per picul, or a total of P2,800-00, they readily

agreed. Hence, in his letter to the Branch Manager of the Bank on August 10, 1956, Tuazoninformed him that the minimum lease rental of P2.80 per picul was acceptable to him and that heeven offered to use the loan secured by him from petitioner to pay in full the sum of P2,800.00 whichwas the total consideration of the lease. This arrangement was not only satisfactory to the BranchManager but it was also approves by Vice-President J. V. Buenaventura of the PNB. Under thatarrangement, Rita Gueco Tapnio could have realized the amount of P2,800.00, which was morethan enough to pay the balance of her indebtedness to the Bank which was secured by the bond ofPhilamgen.

There is no question that Tapnio's failure to utilize her sugar quota for the crop year 1956-1957 wasdue to the disapproval of the lease by the Board of Directors of petitioner. The issue, therefore, iswhether or not petitioner is liable for the damage caused.

As observed by the trial court, time is of the essence in the approval of the lease of sugar quotaallotments, since the same must be utilized during the milling season, because any allotment whichis not filled during such milling season may be reallocated by the Sugar Quota Administration toother holders of allotments. 3There was no proof that there was any other person at that time willing tolease the sugar quota allotment of private respondents for a price higher than P2.80 per picul. "The factthat there were isolated transactions wherein the consideration for the lease was P3.00 a picul",according to the trial court, "does not necessarily mean that there are always ready takers of said price. "The unreasonableness of the position adopted by the petitioner's Board of Directors is shown by the factthat the difference between the amount of P2.80 per picul offered by Tuazon and the P3.00 per piculdemanded by the Board amounted only to a total sum of P200.00. Considering that all the accounts ofRita Gueco Tapnio with the Bank were secured by chattel mortgage on standing crops, assignment ofleasehold rights and interests on her properties, and surety bonds and that she had apparently "themeans to pay her obligation to the Bank, as shown by the fact that she has been granted several sugar

crop loans of the total value of almost P80,000.00 for the agricultural years from 1952 to 1956", there wasno reasonable basis for the Board of Directors of petitioner to have rejected the lease agreement becauseof a measly sum of P200.00.

While petitioner had the ultimate authority of approving or disapproving the proposed lease since thequota was mortgaged to the Bank, the latter certainly cannot escape its responsibility of observing,for the protection of the interest of private respondents, that degree of care, precaution and vigilancewhich the circumstances justly demand in approving or disapproving the lease of said sugar quota.The law makes it imperative that every person "must in the exercise of his rights and in the


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performance of his duties, act with justice, give everyone his due, and observe honesty and goodfaith, 4This petitioner failed to do. Certainly, it knew that the agricultural year was about to expire, that byits disapproval of the lease private respondents would be unable to utilize the sugar quota in question. Infailing to observe the reasonable degree of care and vigilance which the surrounding circumstancesreasonably impose, petitioner is consequently liable for the damages caused on private respondents.Under Article 21 of the New Civil Code, "any person who wilfully causes loss or injury to another in a

manner that is contrary to morals, good customs or public policy shall compensate the latter for thedamage." The afore-cited provisions on human relations were intended to expand the concept of torts inthis jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which isimpossible for human foresight to specifically provide in the statutes. 5

A corporation is civilly liable in the same manner as natural persons for torts, because "generallyspeaking, the rules governing the liability of a principal or master for a tort committed by an agent orservant are the same whether the principal or master be a natural person or a corporation, andwhether the servant or agent be a natural or artificial person. All of the authorities agree that aprincipal or master is liable for every tort which he expressly directs or authorizes, and this is just astrue of a corporation as of a natural person, A corporation is liable, therefore, whenever a tortious actis committed by an officer or agent under express direction or authority from the stockholders ormembers acting as a body, or, generally, from the directors as the governing body." 6

WHEREFORE, in view of the foregoing, the decision of the Court of Appeals is hereby AFFIRMED.

Fernando, Aquino, Concepcion, Jr., and Santos, JJ., concur.

Separate Opinions

BARREDO, J., concurring:

concurs on the basis of Article 19 of the Civil Code, or at least, of equity. He reserves his opinion onthe matter of torts relied upon in the main opinion.

Separate Opinions

BARREDO, J., concurring:

concurs on the basis of Article 19 of the Civil Code, or at least, of equity. He reserves his opinion onthe matter of torts relied upon in the main opinion.


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G.R. No. L-24803 May 26, 1977

PEDRO ELCANO and PATRICIA ELCANO, in their capacity as Ascendants of Agapito Elcano,deceased,plaintiffs-appellants,vs.REGINALD HILL, minor, and MARVIN HILL, as father and Natural Guardian of said

minor, defendants-appellees.

Cruz & Avecilla for appellants.

Marvin R. Hill & Associates for appellees.

BARREDO, J.:

Appeal from the order of the Court of First Instance of Quezon City dated January 29, 1965 in Civil

Case No. Q-8102, Pedro Elcano et al. vs. Reginald Hill et al. dismissing, upon motion to dismiss ofdefendants, the complaint of plaintiffs for recovery of damages from defendant Reginald Hill, aminor, married at the time of the occurrence, and his father, the defendant Marvin Hill, with whom hewas living and getting subsistence, for the killing by Reginald of the son of the plaintiffs, named

Agapito Elcano, of which, when criminally prosecuted, the said accused was acquitted on the groundthat his act was not criminal, because of "lack of intent to kill, coupled with mistake."

Actually, the motion to dismiss based on the following grounds:

1. The present action is not only against but a violation of section 1, Rule 107, whichis now Rule III, of the Revised Rules of Court;

2. The action is barred by a prior judgment which is now final and or in res-adjudicata;

3. The complaint had no cause of action against defendant Marvin Hill, because hewas relieved as guardian of the other defendant through emancipation by marriage.

(P. 23, Record [p. 4, Record on Appeal.])

was first denied by the trial court. It was only upon motion for reconsideration of the defendants ofsuch denial, reiterating the above grounds that the following order was issued:

Considering the motion for reconsideration filed by the defendants on January 14,1965 and after thoroughly examining the arguments therein contained, the Courtfinds the same to be meritorious and well-founded.

WHEREFORE, the Order of this Court on December 8, 1964 is hereby reconsideredby ordering the dismissal of the above entitled case.

SO ORDERED.


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Quezon City, Philippines, January 29, 1965. (p. 40, Record [p. 21, Record onAppeal.)

Hence, this appeal where plaintiffs-appellants, the spouses Elcano, are presenting for Our resolutionthe following assignment of errors:

THE LOWER COURT ERRED IN DISMISSING THE CASE BY UPHOLDING THECLAIM OF DEFENDANTS THAT -

I

THE PRESENT ACTION IS NOT ONLY AGAINST BUT ALSO A VIOLATION OFSECTION 1, RULE 107, NOW RULE 111, OF THE REVISED RULES OF COURT,

AND THAT SECTION 3(c) OF RULE 111, RULES OF COURT IS APPLICABLE;

II

THE ACTION IS BARRED BY A PRIOR JUDGMENT WHICH IS NOW FINAL OR

RES-ADJUDICTA;

III

THE PRINCIPLES OF QUASI-DELICTS, ARTICLES 2176 TO 2194 OF THE CIVILCODE, ARE INAPPLICABLE IN THE INSTANT CASE; and

IV

THAT THE COMPLAINT STATES NO CAUSE OF ACTION AGAINST DEFENDANTMARVIN HILL BECAUSE HE WAS RELIEVED AS GUARDIAN OF THE OTHERDEFENDANT THROUGH EMANCIPATION BY MARRIAGE. (page 4, Record.)

It appears that for the killing of the son, Agapito, of plaintiffs-appellants, defendant- appelleeReginald Hill was prosecuted criminally in Criminal Case No. 5102 of the Court of First Instance ofQuezon City. After due trial, he was acquitted on the ground that his act was not criminal because of"lack of intent to kill, coupled with mistake." Parenthetically, none of the parties has favored Us with acopy of the decision of acquittal, presumably because appellants do not dispute thatsuch indeed was the basis stated in the court's decision. And so, when appellants filed theircomplaint against appellees Reginald and his father, Atty. Marvin Hill, on account of the death oftheir son, the appellees filed the motion to dismiss above-referred to.

As We view the foregoing background of this case, the two decisive issues presented for Ourresolution are:

1. Is the present civil action for damages barred by the acquittal of Reginald in the criminal casewherein the action for civil l iability, was not reversed?

2. May Article 2180 (2nd and last paragraphs) of the Civil Code he applied against Atty. Hill,notwithstanding the undisputed fact that at the time of the occurrence complained of. Reginald,though a minor, living with and getting subsistenee from his father, was already legally married?


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such full-grown development as culpa aquilianaor cuasi-delito, which is conservedand made enduring in articles 1902 to 1910 of the Spanish Civil Code.

Secondary, to find the accused guilty in a criminal case, proof of guilt beyondreasonable doubt is required, while in a civil case, preponderance of evidence issufficient to make the defendant pay in damages. There are numerous cases of

criminal negligence which can not be shown beyond reasonable doubt, but can beproved by a preponderance of evidence. In such cases, the defendant can andshould be made responsible in a civil action under articles 1902 to 1910 of the CivilCode. Otherwise. there would be many instances of unvindicated civil wrongs. "Ubi

jus Idemnified remedium." (p. 620,73 Phil.)

Fourthly, because of the broad sweep of the provisions of both the Penal Code andthe Civil Code on this subject, which has given rise to the overlapping or concurrenceof spheres already discussed, and for lack of understanding of the character andefficacy of the action for culpa aquiliana, there has grown up a common practice toseek damages only by virtue of the civil responsibility arising from a crime, forgettingthat there is another remedy, which is by invoking articles 1902-1910 of the CivilCode. Although this habitual method is allowed by, our laws, it has neverthelessrendered practically useless and nugatory the more expeditious and effective remedybased on culpa aquiliana or culpa extra-contractual. In the present case, we areasked to help perpetuate this usual course. But we believe it is high time we pointedout to the harms done by such practice and to restore the principle of responsibilityfor fault or negligence under articles 1902 et seq. of the Civil Code to its full rigor. It ishigh time we caused the stream of quasi-delict or culpa aquilianato flow on its ownnatural channel, so that its waters may no longer be diverted into that of a crimeunder the Penal Code. This will, it is believed, make for the better safeguarding orprivate rights because it realtor, an ancient and additional remedy, and for the furtherreason that an independent civil action, not depending on the issues, limitations andresults of a criminal prosecution, and entirely directed by the party wronged or hiscounsel, is more likely to secure adequate and efficacious redress. (p. 621, 73 Phil.)

Contrary to an immediate impression one might get upon a reading of the foregoing excerpts fromthe opinion in Garcia that the concurrence of the Penal Code and the Civil Code therein referred tocontemplate only acts of negligence and not intentional voluntary acts - deeper reflection wouldreveal that the thrust of the pronouncements therein is not so limited, but that in fact it actuallyextends to fault or culpa. This can be seen in the reference made therein to the Sentence of theSupreme Court of Spain of February 14, 1919, supra, which involved a case of fraud or estafa, not anegligent act. Indeed, Article 1093 of the Civil Code of Spain, in force here at the time of Garcia,provided textually that obligations "which are derived from acts or omissions in which fault ornegligence, not punishable by law, intervene shall be the subject of Chapter II, Title XV of this book(which refers to quasi-delicts.)" And it is precisely the underline qualification, "not punishable by law",that Justice Bocobo emphasized could lead to an ultimo construction or interpretation of the letter ofthe law that "killeth, rather than the spirit that giveth lift- hence, the ruling that "(W)e will not use theliteral meaning of the law to smother and render almost lifeless a principle of such ancient origin andsuch full-grown development as culpa aquilianaorquasi-delito, which is conserved and madeenduring in articles 1902 to 1910 of the Spanish Civil Code." And so, because Justice Bacobo wasChairman of the Code Commission that drafted the original text of the new Civil Code, it is to benoted that the said Code, which was enacted after the Garcia doctrine, no longer uses the term, 11not punishable by law," thereby making it clear that the concept of culpa aquiliana includes actswhich are criminal in character or in violation of the penal law, whether voluntary or matter. Thus, thecorresponding provisions to said Article 1093 in the new code, which is Article 1162, simply says,"Obligations derived from quasi-delicto shall be governed by the provisions of Chapter 2, Title XVII of


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this Book, (on quasi-delicts) and by special laws." More precisely, a new provision, Article 2177 ofthe new code provides:

ART. 2177. Responsibility for fault or negligence under the preceding article isentirely separate and distinct from the civil liability arising from negligence under thePenal Code. But the plaintiff cannot recover damages twice for the same act or

omission of the defendant.

According to the Code Commission: "The foregoing provision (Article 2177) through at first sightstartling, is not so novel or extraordinary when we consider the exact nature of criminal and civilnegligence. The former is a violation of the criminal law, while the latter is a "culpa aquiliana" orquasi-delict, of ancient origin, having always had its own foundation and individuality, separate fromcriminal negligence. Such distinction between criminal negligence and "culpa extracontractual" or"cuasi-delito" has been sustained by decision of the Supreme Court of Spain and maintained asclear, sound and perfectly tenable by Maura, an outstanding Spanish jurist. Therefore, under theproposed Article 2177, acquittal from an accusation of criminal negligence, whether on reasonabledoubt or not, shall not be a bar to a subsequent civil action, not for civil liability arising from criminalnegligence, but for damages due to a quasi-delict or 'culpa aquiliana'. But said article forestalls adouble recovery.", (Report of the Code) Commission, p. 162.)

Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the sameargument of Justice Bacobo about construction that upholds "the spirit that giveth lift- rather than thatwhich is literal that killeth the intent of the lawmaker should be observed in applying the same. Andconsidering that the preliminary chapter on human relations of the new Civil Code definitelyestablishes the separability and independence of liability in a civil action for acts criminal in character(under Articles 29 to 32) from the civil responsibility arising from crime fixed by Article 100 of theRevised Penal Code, and, in a sense, the Rules of Court, under Sections 2 and 3 (c), Rule 111,contemplate also the same separability, it is "more congruent with the spirit of law, equity and justice,and more in harmony with modern progress"- to borrow the felicitous relevant language in Rakes vs.

Atlantic. Gulf and Pacific Co., 7 Phil. 359, to hold, as We do hold, that Article 2176, where it refers to"fault or negligencia covers not only acts "not punishable by law" but also acts criminal in character,

whether intentional and voluntary or negligent. Consequently, a separate civil action lies against theoffender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted,provided that the offended party is not allowed, if he is actually charged also criminally, to recoverdamages on both scores, and would be entitled in such eventuality only to the bigger award of thetwo, assuming the awards made in the two cases vary. In other words, the extinction of civil liabilityreferred to in Par. (e) of Section 3, Rule 111, refers exclusively to civil liability founded on Article 100of the Revised Penal Code, whereas the civil liability for the same act considered as a quasi-delictonly and not as a crime is not estinguished even by a declaration in the criminal case that thecriminal act charged has not happened or has not been committed by the accused. Briefly stated,We here hold, in reiteration of Garcia, thatculpa aquiliana includes voluntary and negligent actswhich may be punishable by law.4

It results, therefore, that the acquittal of Reginal Hill in the criminal case has not extinguished hisliability for quasi-delict, hence that acquittal is not a bar to the instant action against him.

Coming now to the second issue about the effect of Reginald's emancipation by marriage on thepossible civil liability of Atty. Hill, his father, it is also Our considered opinion that the conclusion ofappellees that Atty. Hill is already free from responsibility cannot be upheld.

While it is true that parental authority is terminated upon emancipation of the child (Article 327, CivilCode), and under Article 397, emancipation takes place "by the marriage of the minor (child)", it is,


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however, also clear that pursuant to Article 399, emancipation by marriage of the minor is not reallyfull or absolute. Thus "(E)mancipation by marriage or by voluntary concession shall terminateparental authority over the child's person. It shall enable the minor to administer his property asthough he were of age, but he cannot borrow money or alienate or encumber real property withoutthe consent of his father or mother, or guardian. He can sue and be sued in court only with theassistance of his father, mother or guardian."

Now under Article 2180, "(T)he obligation imposed by article 2176 is demandable not only for one'sown acts or omissions, but also for those of persons for whom one is responsible. The father and, incase of his death or incapacity, the mother, are responsible. The father and, in case of his death orincapacity, the mother, are responsible for the damages caused by the minor children who live intheir company." In the instant case, it is not controverted that Reginald, although married, was livingwith his father and getting subsistence from him at the time of the occurrence in question. Factually,therefore, Reginald was still subservient to and dependent on his father, a situation which is notunusual.

It must be borne in mind that, according to Manresa, the reason behind the joint and solidary liabilityof presuncion with their offending child under Article 2180 is that is the obligation of the parent tosupervise their minor children in order to prevent them from causing damage to third persons. 5Onthe other hand, the clear implication of Article 399, in providing that a minor emancipated by marriagemay not, nevertheless, sue or be sued without the assistance of the parents, is that such emancipationdoes not carry with it freedom to enter into transactions or do any act that can give rise to judiciallitigation. (See Manresa, Id., Vol. II, pp. 766-767, 776.) And surely, killing someone else invites judicialaction. Otherwise stated, the marriage of a minor child does not relieve the parents of the duty to see to itthat the child, while still a minor, does not give answerable for the borrowings of money and alienation orencumbering of real property which cannot be done by their minor married child without their consent.(Art. 399; Manresa, supra.)

Accordingly, in Our considered view, Article 2180 applies to Atty. Hill notwithstanding theemancipation by marriage of Reginald. However, inasmuch as it is evident that Reginald is now ofage, as a matter of equity, the liability of Atty. Hill has become milling, subsidiary to that of his son.

WHEREFORE, the order appealed from is reversed and the trial court is ordered to proceed inaccordance with the foregoing opinion. Costs against appellees.

Fernando (Chairman), Antonio, and Martin, JJ., concur.

Concepcion Jr., J, is on leave.

Martin, J, was designated to sit in the Second Division.

Separate Opinions

AQUINO, J, concurring:


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Article 2176 of the Civil Code comprehends any culpable act, which is blameworthy, when judged byaccepted legal standards. "The Idea thus expressed is undoubtedly board enough to include anyrational conception of liability for the tortious acts likely to be developed in any society." (Street, J. inDaywalt vs. Corporacion de PP. Agustinos Recoletos, 39 Phil. 587, 600). See article 38, Civil Codeand the ruling that "the infant tortfeasor is liable in a civil action to the injured person in the samemanner and to the same extent as an adult" (27 Am. Jur. 812 cited by Bocobo, J., in Magtibay vs.

Tiangco, 74 Phil. 576, 579).

Separate Opinions

AQUINO, J, concurring:

Article 2176 of the Civil Code comprehends any culpable act, which is blameworthy, when judged byaccepted legal standards. "The Idea thus expressed is undoubtedly board enough to include any

rational conception of liability for the tortious acts likely to be developed in any society." (Street, J. inDaywalt vs. Corporacion de PP. Agustinos Recoletos, 39 Phil. 587, 600). See article 38, Civil Codeand the ruling that "the infant tortfeasor is liable in a civil action to the injured person in the samemanner and to the same extent as an adult" (27 Am. Jur. 812 cited by Bocobo, J., in Magtibay vs.Tiangco, 74 Phil. 576, 579).


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G.R. No. 88694 January 11, 1993

ALBENSON ENTERPRISES CORP., JESSE YAP, AND BENJAMIN MENDIONA, petitioners,vs.THE COURT OF APPEALS AND EUGENIO S. BALTAO, respondents.

Puruganan, Chato, Chato & Tan for petitioners.

Lino M. Patajo, Francisco Ma. Chanco, Ananiano Desierto and Segundo Mangohig for privaterespondent.

BIDIN, J.:

This petition assails the decision of respondent Court of Appeals inCA-GR CV No. 14948 entitled "Eugenio S. Baltao, plaintiff-appellee vs. Albenson EnterprisesCorporation, et al, defendants-appellants", which modified the judgment of the Regional Trial

Court of Quezon City, Branch XCVIII in Civil Case No. Q-40920 and ordered petitioner to pay privaterespondent, among others, the sum of P500,000.00 as moral damages and attorney's fees in theamount of P50,000.00.

The facts are not disputed.

In September, October, and November 1980, petitioner Albenson Enterprises Corporation (Albensonfor short) delivered to Guaranteed Industries, Inc. (Guaranteed for short) located at 3267 V. MapaStreet, Sta. Mesa, Manila, the mild steel plates which the latter ordered. As part payment thereof,

Albenson was given Pacific Banking Corporation Check No. 136361 in the amount of P2,575.00 anddrawn against the account of E.L. Woodworks (Rollo, p. 148).

When presented for payment, the check was dishonored for the reason "Account Closed."Thereafter, petitioner Albenson, through counsel, traced the origin of the dishonored check. Fromthe records of the Securities and Exchange Commission (SEC), Albenson discovered that thepresident of Guaranteed, the recipient of the unpaid mild steel plates, was one "Eugenio S. Baltao."Upon further inquiry, Albenson was informed by the Ministry of Trade and Industry that E.L.Woodworks, a single proprietorship business, was registered in the name of one "Eugenio Baltao".In addition, upon verification with the drawee bank, Pacific Banking Corporation, Albenson wasadvised that the signature appearing on the subject check belonged to one "Eugenio Baltao."

After obtaining the foregoing information, Albenson, through counsel, made an extrajudicial demandupon private respondent Eugenio S. Baltao, president of Guaranteed, to replace and/or make goodthe dishonored check.

Respondent Baltao, through counsel, denied that he issued the check, or that the signatureappearing thereon is his. He further alleged that Guaranteed was a defunct entity and hence, couldnot have transacted business with Albenson.

On February 14, 1983, Albenson filed with the Office of the Provincial Fiscal of Rizal a complaintagainst Eugenio S. Baltao for violation of Batas Pambansa Bilang 22. Submitted to support saidcharges was an affidavit of petitioner Benjamin Mendiona, an employee of Albenson. In saidaffidavit, the above-mentioned circumstances were stated.


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It appears, however, that private respondent has a namesake, his son Eugenio Baltao III, whomanages a business establishment, E.L. Woodworks, on the ground floor of the Baltao Building,3267 V. Mapa Street, Sta. Mesa, Manila, the very same business address of Guaranteed.

On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed an information against Eugenio S.Baltao for Violation of Batas Pambansa Bilang 22. In filing said information, Fiscal Sumaway claimed

that he had given Eugenio S. Baltao opportunity to submit controverting evidence, but the latterfailed to do so and therefore, was deemed to have waived his right.

Respondent Baltao, claiming ignorance of the complaint against him, immediately filed with theProvincial Fiscal of Rizal a motion for reinvestigation, alleging that it was not true that he had beengiven an opportunity to be heard in the preliminary investigation conducted by Fiscal Sumaway, andthat he never had any dealings with Albenson or Benjamin Mendiona, consequently, the check forwhich he has been accused of having issued without funds was not issued by him and the signaturein said check was not his.

On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal reversed the finding of FiscalSumaway and exonerated respondent Baltao. He also instructed the Trial Fiscal to move for

dismissal of the information filed against Eugenio S. Baltao. Fiscal Castro found that the signature inPBC Check No. 136361 is not the signature of Eugenio S. Baltao. He also found that there is noshowing in the records of the preliminary investigation that Eugenio S. Baltao actually receivednotice of the said investigation. Fiscal Castro then castigated Fiscal Sumaway for failing to exercisecare and prudence in the performance of his duties, thereby causing injustice to respondent whowas not properly notified of the complaint against him and of the requirement to submit his counterevidence.

Because of the alleged unjust filing of a criminal case against him for allegedly issuing a check whichbounced in violation of Batas Pambansa Bilang 22 for a measly amount of P2,575.00, respondentBaltao filed before the Regional Trial Court of Quezon City a complaint for damages against hereinpetitioners Albenson Enterprises, Jesse Yap, its owner, and Benjamin Mendiona, its employee.

In its decision, the lower court observed that "the check is drawn against the account of "E.L.Woodworks," not of Guaranteed Industries of which plaintiff used to be President. GuaranteedIndustries had been inactive and had ceased to exist as a corporation since 1975. . . . . Thepossibility is that it was with Gene Baltao or Eugenio Baltao III, a son of plaintiff who had a businesson the ground floor of Baltao Building located on V. Mapa Street, that the defendants may have beendealing with . . . ." (Rollo, pp. 41-42).

The dispositive portion of the trial court 's decision reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and againstdefendants ordering the latter to pay plaintiff jointly and severally:

1. actual or compensatory damages of P133,350.00;

2. moral damages of P1,000,000.00 (1 million pesos);

3. exemplary damages of P200,000.00;

4. attorney's fees of P100,000.00;


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5 costs.

Defendants' counterclaim against plaintiff and claim for damages againstMercantile Insurance Co. on the bond for the issuance of the writ of attachment atthe instance of plaintiff are hereby dismissed for lack of merit. (Rollo, pp. 38-39).

On appeal, respondent court modified the trial court's decision as follows:

WHEREFORE, the decision appealed from is MODIFIED by reducing the moraldamages awarded therein from P1,000,000.00 to P500,000.00 and the attorney'sfees from P100,000.00 to P50,000.00, said decision being hereby affirmed in all itsother aspects. With costs against appellants. (Rollo, pp. 50-51)

Dissatisfied with the above ruling, petitioners Albenson Enterprises Corp., Jesse Yap, and BenjaminMendiona filed the instant Petition, alleging that the appellate court erred in:

1. Concluding that private respondent's cause of action is not one based onmalicious prosecution but one for abuse of rights under Article 21 of the Civil Code

notwithstanding the fact that the basis of a civil action for malicious prosecution isArticle 2219 in relation to Article 21 or Article 2176 of the Civil Code . . . .

2. Concluding that "hitting at and in effect maligning (private respondent) with anunjust criminal case was, without more, a plain case of abuse of rights bymisdirection" and "was therefore, actionable by itself," and which "becameinordinately blatant and grossly aggravated when . . . (private respondent) wasdeprived of his basic right to notice and a fair hearing in the so-called preliminaryinvestigation . . . . "

3. Concluding that petitioner's "actuations in this case were coldly deliberate andcalculated", no evidence having been adduced to support such a sweeping

statement.

4. Holding the petitioner corporation, petitioner Yap and petitioner Mendiona jointlyand severally liable without sufficient basis in law and in fact.

5. Awarding respondents

5.1. P133,350.00 as actual or compensatory damages, even in theabsence of sufficient evidence to show that such was actuallysuffered.

5.2. P500,000.00 as moral damages considering that the evidence in

this connection merely involved private respondent's allegedcelebrated status as a businessman, there being no showing that theact complained of adversely affected private respondent's reputationor that it resulted to material loss.

5.3. P200,000.00 as exemplary damages despite the fact thatpetitioners were duly advised by counsel of their legal recourse.


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5.4. P50,000.00 as attorney's fees, no evidence having beenadduced to justify such an award (Rollo, pp. 4-6).

Petitioners contend that the civil case filed in the lower court was one for malicious prosecution.Citing the case ofMadera vs. Lopez(102 SCRA 700 [1981]), they assert that the absence of maliceon their part absolves them from any liability for malicious prosecution. Private respondent, on the

other hand, anchored his complaint for Damages on Articles 19, 20, and 21 **of the Civil Code.

Article 19, known to contain what is commonly referred to as the principle of abuse of rights, setscertain standards which may be observed not only in the exercise of one's rights but also in theperformance of one's duties. These standards are the following: to act with justice; to give everyonehis due; and to observe honesty and good faith. The law, therefore, recognizes the primordiallimitation on all rights: that in their exercise, the norms of human conduct set forth in Article 19 mustbe observed. A right, though by itself legal because recognized or granted by law as such, maynevertheless become the source of some illegality. When a right is exercised in a manner whichdoes not conform with the norms enshrined in Article 19 and results in damage to another, a legalwrong is thereby committed for which the wrongdoer must be held responsible. Although therequirements of each provision is different, these three (3) articles are all related to each other. Asthe eminent Civilist Senator Arturo Tolentino puts it: "With this article (Article 21), combined witharticles 19 and 20, the scope of our law on civil wrongs has been very greatly broadened; it hasbecome much more supple and adaptable than the Anglo-American law on torts. It is now difficult toconceive of any malevolent exercise of a right which could not be checked by the application ofthese articles" (Tolentino, 1 Civil Code of the Philippines 72).

There is however, no hard and fast rule which can be applied to determine whether or not theprinciple of abuse of rights may be invoked. The question of whether or not the principle of abuse ofrights has been violated, resulting in damages under Articles 20 and 21 or other applicable provisionof law, depends on the circumstances of each case. (Globe Mackay Cable and Radio Corporationvs. Court of Appeals, 176 SCRA 778 [1989]).

The elements of an abuse of right under Article 19 are the following: (1) There is a legal right or duty;

(2) which is exercised in bad faith; (3) for the sole intentof prejudicing or injuring another. Article 20speaks of the general sanction for all other provisions of law which do not especially provide for theirown sanction (Tolentino, supra, p. 71). Thus, anyone who, whether willfullyor negligently, in theexercise of his legal right or duty, causes damage to another, shall indemnify his victim for injuriessuffered thereby. Article 21 deals with acts contra bonus mores, and has the following elements: 1)There is an act which is legal; 2) but which is contrary to morals, good custom, public order, or publicpolicy; 3) and it is done with intentto injure.

Thus, under any of these three (3) provisions of law, an act which causes injury to another may bemade the basis for an award of damages.

There is a common element under Articles 19 and 21, and that is, the act must be intentional.

However, Article 20 does not distinguish: the act may be done either "willfully", or "negligently". Thetrial court as well as the respondent appellate court mistakenly lumped these three (3) articlestogether, and cited the same as the bases for the award of damages in the civil complaint filedagainst petitioners, thus:

With the foregoing legal provisions (Articles 19, 20, and 21) in focus, there is notmuch difficulty in ascertaining the means by which appellants' first assigned errorshould be resolved, given the admitted fact that when there was an attempt to collectthe amount of P2,575.00, the defendants were ex

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