G.R. No.

L-44190 October 30, 1980

MANILA GAS CORPORATION, petitioner-appellant,

vs.
COURT OF APPEALS and ISIDRO M. ONGSIP, respondents-appellees.

FACTS:
• Manila Gas Corporation, the petitioner herein, is a public utility company duly authorized
to conduct and operate the gainful business of servicing and supplying gas in the City of
Manila and its suburbs for public necessity and convenience
• Private respondent, Isidro M. Ongsip, is a businessman holding responsible positions in a
number of business firms and associations in the Philippines.
• On May 20, 1964, respondent Ongsip applied for gas service connection with petitioner
Manila Gas Corporation. A 1 x 4 burner gas was installed by petitioner's employees in
respondent's kitchen at his residence at 2685 Park Avenue, Pasay City.
• On July 27, 1965, respondent Ongsip requested petitioner to install additional appliances
as well as additional gas service connections in his 46-door Reyno Apartment located also
in the same compound. In compliance with said request, petitioner installed two 20-gallon
capacity water storage heaters and two heavy-duty gas burners and replaced the original
gas meter with a bigger 50-light capacity gas meter. The installations and connections were
all done solely by petitioner's employees. There was no significant change in the meter
reading despite additional installations.
• In May and June of 1966 no gas consumption was registered in the meter, prompting
petitioner to issue a 'meter order' with instructions to change the gas meter in respondent's
residence.
• On August 17, 1966, at around 1 o'clock in the afternoon, petitioner's employee led by
Mariano Coronal, the then Chief of the Distribution Department, went to Ongsip's place.
After Identifying themselves to the houseboy therein that they are from the Manila Gas
Corporation, but without notifying or informing respondent Ongsip, they changed the gas
meter and installed new tube connections. At the time the work was being undertaken,
private respondent was taking a nap but he was informed afterwards of what had taken
place by his houseboy.
• On that same afternoon, at about 5 o'clock, petitioner's employees returned with a
photographer who took pictures of the premises. Respondent Ongsip inquired from
Coronel why they were taking pictures but the latter simply gave him a calling card with
instructions to go to his (Coronel's) office. There, he was informed about the existence of
a by-pass valve or "jumper" in the gas connection and that unless he gave Coronel
P3,000.00, he would be deported. Respondent Ongsip refused to give the money, saying
that he was not afraid as he had committed no wrong and that he could not be deported

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 because he is already a Filipino citizen. By the end of August, a reading was made on the
new meter and expectedly, it registered a sudden increase in gas consumption.
• Thereafter, in October, 1966, a complaint for qualified theft was filed by petitioner against
respondent Ongsip
• In February, 1967, pending investigation of the criminal complaint, petitioner disconnected
respondent's gas service for alleged failure and/or refusal to pay his gas consumptions from
July, 1965 to January, 1967 in violation of petitioner's regulation agreed upon in the
'Application for Gas Service'
• Subsequently, the complaint was dismissed by the city fiscal of Pasay City
o There is no evidence to establish the fact that there is an illegal installation or
jumper in the premises of Isidro Ongsip”
o Without excavating the premises of Isidro Ongsip it is impossible to conclude with
reasonable certainty that there is a jumper or illegal installation
• Thereafter, respondent Ongsip filed a complaint with the Court of First Instance of Rizal,
Pasay City Branch VII for moral and exemplary damages against petitioner Manila Gas
Corporation based on two causes of action,
o firstly: the malicious, oppressive and malevolent filing of the criminal complaint
o secondly: the illegal closure of respondent Ongsip's gas service connection without
court order and without notice of warning
• On July 19, 1967, petitioner filed a motion to dismiss alleging the complaint states no valid
cause of action. On August 11, 1967, the trial court issued an order denying petitioner's
motion to dismiss
• On May 2, 1972, the trial court rendered its decision in favor of respondent.
• Petitioner appealed to the Court of Appeals. On July 6, 1976, the said Court rendered its
decision in favor of respondent and the award was sustained
o The existence of a 'jumper' was merely a presumption on the part of Coronel. Indeed
the discrepancy or fluctuation in the gas consumption in appellee's place could very
well be attributed to many factors, such as a defective meter or a reduction in the
use of the appliances on the premises considering that the restaurant/hotel business
is transient. Neither can appellant attribute any defect in the installation of the
appliances to the appellee as the installation was undertaken by the former's
employees
o Again, according to the testimony of Delfin Custodia, mechanical engineer of
defendant-appellant, the second meter that was installed on August 11, 1966 was
replaced as being defective because 'some of its parts were worn out and that it was
not properly registering
o It was unlikely for the appellee to install a 'jumper' in the cement wall, a conclusion
which bears support in the report of the City Fiscal, Pasay City that 'Isidro Ongsip
was agreeable to have his place excavated and demolished provided that if there is
no illegal installation or jumper found in the premises, the Manila Gas Corporation

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 should answer for whatever damages that may be incurred in connection with its
excavation of the premises "which offer was declined by appellant
o Anent the second assignment of error, it appears that the gas service to appellee's
compound was disconnected on the basis of non-payment of three-months bills,
which were admittedly computed only on the average consumption registered,
without benefit of meter reading, and without previous notice of disconnection or
reminder to pay
o Considering that the availability of the gas service was of utmost importance to
appellee in the pursuit of his business venture (hotel-motel restaurant), it is not
difficult to foresee the losses that the business must have incurred as a consequence
of appellant's unwarranted and arbitrary act.

ISSUE:
Whether or not petitioner is liable for damages

RULING:
Yes.

Article 2217 of the Civil Code states that "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." On the
other hand, Article 2229 provides that "exemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition, to the moral, temperate, liquidated or
compensatory damages"

The first cause of action, for which respondent Ongsip was awarded moral and exemplary damages
in the amount of P50,000.00 and P10,000.00, respectively, is predicated on Article 2219 of the
Civil Code which states that "moral damages may be recovered in the following and analogous
cases: .. . (8) malicious prosecution.

To constitute malicious prosecution, there must be proof that the prosecution was prompted by a
sinister design to vex and humiliate a person that it was initiated deliberately by the defendant
knowing that his charges were false and groundless. Concededly, the mere act of submitting a case
to the authorities for prosecution does not make one liable for malicious prosecution.

In the instant case, however, there is reason to believe that there was malicious intent in the filing
of the complaint for qualified theft. This intent is traceable to that early afternoon of August 17,
1966, when petitioner's employees, upon being ordered, came to private respondent's residence
and changed the defective gas meter and tube connections without notice. In other words,

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respondent Ongsip had no opportunity to observe the works. Nonetheless, if indeed he had
installed an illegal by-pass tube or jumper, he could have easily asked for its immediate removal
soon after his houseboy told him what petitioner's employees did. As established by the facts, he
had not even attempted to refuse entrance to petitioner's employees headed by Mariano Coronel
nor to question their authority upon their return later that same afternoon with a photographer.
Little did he realize that the pictures of the premises that were being taken would be used as
evidence against him. Surprisingly, when respondent Ongsip asked Coronel why they were taking
pictures, Coronel just gave him a calling card and instructed him to go to his office. It was quite
an unusual gesture. Obviously, Coronel had something in mind.

It bears noting that when he was informed as to the existence of a 'jumper' in his gas connection,
respondent Ongsip did not show any sign of fear or remorse and did not yield to the threatening
demand of Coronel. Experience tells us that this is not the attitude of a guilty person. On the
contrary, this is the attitude of someone who knows how to take a firm stand where his principles
and rights are concerned. To prove his innocence, he was even willing to have his place excavated
but petitioner would not dare take the consequences. Besides, Delfin Custodio, petitioner's own
mechanical engineer, testified that the second gas meter was replaced as being defective because
"some of its parts were worn out and that it was not properly registering."

Evidently, petitioner Manila Gas Corporation, in failing to recover its lost revenue caused by the
gas meter's incorrect recording, sought to vindicate its financial loss by filing the complaint for
qualified theft against respondent Ongsip knowing it to be false. It was actually intended to vex
and humiliate private respondent and to blacken his reputation not only as a businessman but also
as a person. Qualified theft is a serious offense indicating moral depravity in an individual. To be
accused of such crime without basis is shocking and libelous. The fact that the complaint for
qualified theft was dismissed by the Pasay City fiscal is no consolation. The damage had been
done. Necessarily, indemnification had to be made.

On the first cause of action, the Court give due consideration to respondent Ongsip's social and
financial status as a businessman and the mental anguish he suffered as a result of the false
imputation. However, We also consider petitioner's financial capability. Petitioner is a public
utility corporation whose primary concern is service to the people, the profit motive being merely
secondary. Under the circumstances, We are of the opinion that the award of moral and exemplary
damages should be reduced to P25,000.00 and P5,000.00, respectively. This award is sanctioned
by Article 2234 of the Civil Code which states that: “When the amount of the exemplary damages
need not be proved, the plaintiff show that he is entitled to moral, temperate or compensatory
damages before the court may consider the question of whether or not exemplary damages should
be awarded.”

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On the second cause of action which is based on the illegal disconnection of respondent Ongsip's
gas service constituting breach of contract, petitioner's act in disconnecting respondent Ongsip's
gas service without prior notice constitutes breach of contract amounting to an independent tort.
The prematurity of the action is indicative of an intent to cause additional mental and moral
suffering to private respondent. This is a clear violation of Article 21. Petitioner should have at
least accorded him the courtesy, if not the right, as per contract, of being notified before effecting
disconnection so that he could take steps or initiate measures to avoid such embarrassment.
Apparently, such misconduct or omission on the part of petitioner formed part of a malevolent
scheme to harass and humiliate private respondent, exposing him to further ignominy and greater
mental torture. Hence, the Court reduce the amount of moral damages to P15,000.00 The award
of P5,000.00 as exemplary damages, on the other hand, is sustained.

The award of attorney's fees in the amount of P10,000.00 is justified under the circumstances.

WHEREFORE, PETITIONER MANILA GAS CORPORATION IS HEREBY DIRECTED TO

PAY
(1) RESPONDENT ISIDRO M. ONGSIP P25,000.00 AS MORAL DAMAGES AND P5,000.00
AS EXEMPLARY DAMAGES FOR THE FIRST CAUSE OF ACTION, P15,000.00 AS
MORAL DAMAGES AND P5,000.00 AS EXEMPLARY DAMAGES FOR THE SECOND
CAUSE OF ACTION, AND P10,000.00 AS ATTORNEY'S FEES; AND

(2) THE COSTS.

MODIFIED AS ABOVE STATED, THE DECISION OF RESPONDENT COURT OF APPEALS

IS HEREBY AFFIRMED IN ALL OTHER RESPECTS.

Jagolino (3LM2)
G.R. No. 151866 September 9, 2004

SOLEDAD CARPIO, petitioner,

vs.
LEONORA A. VALMONTE, respondent.

FACTS:
• Respondent Leonora Valmonte is a wedding coordinator.
• Michelle del Rosario and Jon Sierra engaged her services for their church wedding on 10
October 1996. At about 4:30 p.m. on that day, Valmonte went to the Manila Hotel where
the bride and her family were billeted. When she arrived at Suite 326-A, several persons
were already there including the bride, the bride’s parents and relatives, the make-up artist
and his assistant, the official photographers, and the fashion designer. Among those present
was petitioner Soledad Carpio, an aunt of the bride who was preparing to dress up for the
occasion.
• After reporting to the bride, Valmonte went out of the suite carrying the items needed for
the wedding rites and the gifts from the principal sponsors. She proceeded to the Maynila
Restaurant where the reception was to be held. She paid the suppliers, gave the meal
allowance to the band, and went back to the suite.
• Upon entering the suite, Valmonte noticed the people staring at her. It was at this juncture
that petitioner allegedly uttered the following words to Valmonte: "Ikaw lang ang lumabas
ng kwarto, nasaan ang dala mong bag? Saan ka pumunta? Ikaw lang and lumabas ng
kwarto, ikaw ang kumuha."
• Petitioner then ordered one of the ladies to search Valmonte’s bag. It turned out that after
Valmonte left the room to attend to her duties, petitioner discovered that the pieces of
jewelry which she placed inside the comfort room in a paper bag were lost. The jewelry
pieces consist of two (2) diamond rings, one (1) set of diamond earrings, bracelet and
necklace with a total value of about one million pesos. The hotel security was called in to
help in the search. The bags and personal belongings of all the people inside the room were
searched. Valmonte was allegedly bodily searched, interrogated and trailed by a security
guard throughout the evening.
• Later, police officers arrived and interviewed all persons who had access to the suite and
fingerprinted them including Valmonte. During all the time Valmonte was being
interrogated by the police officers, petitioner kept on saying the words "Siya lang ang
lumabas ng kwarto." Valmonte’s car which was parked at the hotel premises was also
searched but the search yielded nothing.
• On 20 February 1997, Valmonte filed a suit for damages against her before the Regional
Trial Court (RTC) of Pasig City. In her complaint, Valmonte prayed that petitioner be
ordered to pay actual, moral and exemplary damages, as well as attorney’s fees.

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 • Responding to the complaint, petitioner denied having uttered words or done any act to
confront or single out Valmonte during the investigation and claimed that everything that
transpired after the theft incident was purely a police matter in which she had no
participation.
• Trial court rendered its Decision on 21 August 2000, dismissing Valmonte’s complaint for
damages
o It ruled that when petitioner sought investigation for the loss of her jewelry, she
was merely exercising her right and if damage results from a person exercising his
legal right, it is damnum absque injuria.
o It added that no proof was presented by Valmonte to show that petitioner acted
maliciously and in bad faith in pointing to her as the culprit.
• Respondent appealed to the Court of Appeals alleging that the trial court erred in finding
that petitioner did not slander her good name and reputation and in disregarding the
evidence she presented.
• The Court of Appeals ruled differently. It opined that Valmonte has clearly established that
she was singled out by petitioner as the one responsible for the loss of her jewelry.
o The court concluded that petitioner’s verbal assault upon Valmonte was done with
malice and in bad faith since it was made in the presence of many people without
any solid proof except petitioner’s suspicion. Such unfounded accusation entitles
Valmonte to an award of moral damages in the amount of ₱100,000.00 for she was
publicly humiliated, deeply insulted, and embarrassed.
• Petitioner contends that the appellate court’s conclusion that she publicly humiliated
respondent does not conform to the evidence presented. She adds that even on the
assumption that she uttered the words complained of, it was not shown that she did so with
malice and in bad faith.

ISSUE:
Whether or not petitioner’s verbal assault upon Valmonte was done with malice and in bad faith

RULING:
Yes.

The Court find sufficient evidence on record tending to prove that petitioner’s imputations against
respondent was made with malice and in bad faith. Petitioner’s testimony was shorn of substance
and consists mainly of denials. She claimed not to have uttered the words imputing the crime of
theft to respondent or to have mentioned the latter’s name to the authorities as the one responsible
for the loss of her jewelry. Well-settled is the rule that denials, if unsubstantiated by clear and
convincing evidence, are negative and self-serving which merit no weight in law and cannot be
given greater evidentiary value over the testimony of credible witnesses who testify on affirmative
matters.

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Respondent, however, has successfully refuted petitioner’s testimony. Quite credibly, she has
narrated in great detail her distressing experience on that fateful day. She testified as to how rudely
she was treated by petitioner right after she returned to the room. Worse, during the reception, she
was once more asked by the hotel security to go to the ladies room and she was again bodily
searched.

Sereña Manding, a make-up artist, corroborated respondent’s testimony. She testified that
petitioner confronted respondent in the presence of all the people inside the suite accusing her of
being the only one who went out of the comfort room before the loss of the jewelry. Manding
added that respondent was embarrassed because everybody else in the room thought she was a
thief.

Jaime Papio, Security Supervisor at Manila Hotel, likewise contradicted petitioner’s allegation that
she did not suspect or mention the name of respondent as her suspect in the loss of the jewelry.

In the case at bar, petitioner’s verbal reproach against respondent was certainly uncalled for
considering that by her own account nobody knew that she brought such kind and amount of
jewelry inside the paper bag. This being the case, she had no right to attack respondent with her
innuendos which were not merely inquisitive but outrightly accusatory. By openly accusing
respondent as the only person who went out of the room before the loss of the jewelry in the
presence of all the guests therein, and ordering that she be immediately bodily searched, petitioner
virtually branded respondent as the thief. True, petitioner had the right to ascertain the identity of
the malefactor, but to malign respondent without an iota of proof that she was the one who actually
stole the jewelry is an act which, by any standard or principle of law is impermissible. Petitioner
had willfully caused injury to respondent in a manner which is contrary to morals and good
customs. Her firmness and resolve to find her missing jewelry cannot justify her acts toward
respondent. She did not act with justice and good faith for apparently, she had no other purpose in
mind but to prejudice respondent. Certainly, petitioner transgressed the provisions of Article 19 in
relation to Article 21 for which she should be held accountable.

The Court sustain the findings of the trial court and the appellate court that respondent’s claim for
actual damages has not been substantiated with satisfactory evidence during the trial and must
therefore be denied. To be recoverable, actual damages must be duly proved with reasonable
degree of certainty and the courts cannot rely on speculation, conjecture or guesswork.

Respondent, however, is clearly entitled to an award of moral damages. Moral damages may be
awarded whenever the defendant’s wrongful act or omission is the proximate cause of the
plaintiff’s physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury in the cases specified or

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analogous to those provided in Article 2219 of the Civil Code.21 Though no proof of pecuniary
loss is necessary in order that moral damages may be adjudicated, courts are mandated to take into
account all the circumstances obtaining in the case and assess damages according to their
discretion.

Based on the foregoing jurisprudential pronouncements, we rule that the appellate court did not
err in awarding moral damages. Considering respondent’s social standing, and the fact that her
profession is based primarily on trust reposed in her by her clients, the seriousness of the
imputations made by petitioner has greatly tarnished her reputation and will in one way or the
other, affect her future dealings with her clients, the award of ₱100,000.00 as moral damages
appears to be a fair and reasonable assessment of respondent’s damages.

WHEREFORE, the instant Petition is DENIED. Costs against petitioner.

Jagolino (3LM2)
G.R. No. 152411 September 29, 2004

UNIVERSITY OF THE PHILIPPINES, petitioner, vs.

PHILAB INDUSTRIES, INC., respondent.

FACTS:
• Sometime in 1979, the University of the Philippines (UP) decided to construct an integrated
system of research organization known as the Research Complex. As part of the project,
laboratory equipment and furniture were purchased for the National Institute of
Biotechnology and Applied Microbiology (BIOTECH) at the UP Los Baños.
• Providentially, the Ferdinand E. Marcos Foundation (FEMF) came forward and agreed to
fund the acquisition of the laboratory furniture, including the fabrication thereof.
• Renato E. Lirio, the Executive Assistant of the FEMF, gave the go-signal to BIOTECH to
contact a corporation to accomplish the project. On July 23, 1982, Dr. William Padolina,
the Executive Deputy Director of BIOTECH, arranged for Philippine Laboratory
Industries, Inc. (PHILAB), to fabricate the laboratory furniture and deliver the same to
BIOTECH for the BIOTECH Building Project, for the account of the FEMF. Lirio directed
Padolina to give the go-signal to PHILAB to proceed with the fabrication of the laboratory
furniture, and requested Padolina to forward the contract of the project to FEMF for its
approval.
• Padolina informed Hector Navasero, the President of PHILAB, to proceed with the
fabrication of the laboratory furniture, per the directive of FEMF Executive Assistant Lirio.
Padolina also requested for copies of the shop drawings and a sample contract for the
project, and that such contract and drawings had to be finalized before the down payment
could be remitted to the PHILAB the following week. However, PHILAB failed to forward
any sample contract.
• On August 24, 1982, FEMF remitted ₱600,000 to PHILAB as downpayment for the
laboratory furniture for the BIOTECH project. On October 22, 1982, FEMF made another
partial payment of ₱800,000 to PHILAB. The remittances were in the form of checks
drawn by FEMF and delivered to PHILAB, through Padolina.
• On October 16, 1982, UP, through Emil Q. Javier, the Chancellor of UP Los Baños and
FEMF, represented by its Executive Officer, Rolando Gapud, executed a Memorandum of
Agreement (MOA) in which FEMF agreed to grant financial support and donate sums of
money to UP for the construction of buildings, installation of laboratory and other
capitalization for the project, not to exceed ₱29,000,000.00
• Navasero promised to submit the contract for the installation of laboratory furniture to
BIOTECH, by January 12, 1983. However, Navasero failed to do so.
• By May 1983, PHILAB had completed 78% of the project, amounting to ₱2,288,573.74
out of the total cost of ₱2,934,068.90.

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• On May 12, 1983, Padolina wrote Lirio and furnished him the progress billing from
PHILAB. On August 11, 1983, the FEMF made another partial payment of ₱836,119.52
representing the already delivered laboratory and office furniture.
• On July 1, 1984, PHILAB submitted to BIOTECH Invoice No. 01643 in the amount of
₱702,939.40 for the final payment of laboratory furniture. BIOTECH forwarded the
invoice to Lirio on December 18, 1984 for its payment. Lirio, in turn, forwarded the invoice
to Gapud, presumably sometime in the early part of 1985. However, the FEMF failed to
pay the bill.
• PHILAB reiterated its request for payment through a letter on May 9, 1985.
• BIOTECH again wrote Lirio on March 21, 1985, requesting the payment of PHILAB’s
bill. It sent another letter to Gapud, on November 22, 1985, again appealing for the payment
of PHILAB’s bill. In a Letter to BIOTECH dated December 5, 1985, PHILAB requested
payment of ₱702,939.40 plus interest thereon of ₱224,940.61.16 There was, however, no
response from the FEMF.
• On February 24, 1986, PHILAB wrote BIOTECH, appealing for the payment of its bill
even on installment basis.
• President Marcos was ousted from office during the February 1986 EDSA Revolution. On
March 26, 1986, Navasero wrote BIOTECH requesting for its much-needed assistance for
the payment of the balance already due plus interest of ₱295,234.55 for its fabrication and
supply of laboratory furniture.
• On April 22, 1986, PHILAB wrote President Corazon C. Aquino asking her help to secure
the payment of the amount due from the FEMF. The letter was referred to then Budget
Minister Alberto Romulo, who referred the letter to then UP President Edgardo Angara on
June 9, 1986. On September 30, 1986, Raul P. de Guzman, the Chancellor of UP Los
Baños, wrote then Chairman of the Presidential Commission on Good Government
(PCGG) Jovito Salonga, submitting PHILAB’s claim to be officially entered as "accounts
payable" as soon as the assets of FEMF were liquidated by the PCGG.
• In the meantime, the PCGG wrote UP requesting for a copy of the relevant contract and
the MOA for its perusal. Chancellor De Guzman wrote Navasero requesting for a copy of
the contract executed between PHILAB and FEMF. In a Letter dated October 20, 1987,
Navasero informed De Guzman that PHILAB and FEMF did not execute any contract
regarding the fabrication and delivery of laboratory furniture to BIOTECH.
• Exasperated, PHILAB filed a complaint for sum of money and damages against UP
• In its answer, UP denied liability and alleged that PHILAB had no cause of action against
it because it was merely the donee/beneficiary of the laboratory furniture in the BIOTECH;
and that the FEMF, which funded the project, was liable to the PHILAB for the purchase
price of the laboratory furniture. UP specifically denied obliging itself to pay for the
laboratory furniture supplied by PHILAB.
• The trial court rendered judgment dismissing the complaint without prejudice to PHILAB’s
recourse against the FEMF.

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 • PHILAB appealed to the Court of Appeals (CA). The CA reversed and set aside the
decision of the RTC
o Held that there was never a contract between FEMF and PHILAB.
o Consequently, PHILAB could not be bound by the MOA between the FEMF and
UP since it was never a party thereto.
o Although UP did not bind itself to pay for the laboratory furniture; nevertheless, it
is liable to PHILAB under the maxim: "No one should unjustly enrich himself at
the expense of another."

ISSUE:
Whether or PHILAB is not entitled to its claim against UP.

RULING:
No.

Respondent failed to prove that the petitioner ever obliged itself to pay for the laboratory furniture
supplied by it. Hence, the respondent is not entitled to its claim against the petitioner.

There is no dispute that the respondent is not privy to the MOA executed by the petitioner and
FEMF; hence, it is not bound by the said agreement. We agree with the petitioner that, based on
the records, an implied-in-fact contract of sale was entered into between the respondent and FEMF.
A contract implied in fact is one implied from facts and circumstances showing a mutual intention
to contract. It arises where the intention of the parties is not expressed, but an agreement in fact
creating an obligation. It is a contract, the existence and terms of which are manifested by conduct
and not by direct or explicit words between parties but is to be deduced from conduct of the parties,
language used, or things done by them, or other pertinent circumstances attending the transaction.

Contracts take effect only between the parties and their assigns. A contract cannot be binding upon
and cannot be enforced against one who is not a party to it, even if he is aware of such contract
and has acted with knowledge thereof. Likewise admitted by the parties, is the fact that there was
no written contract executed by the petitioner, the respondent and FEMF relating to the fabrication
and delivery of office and laboratory furniture to the BIOTECH. Even the CA failed to specifically
declare that the petitioner and the respondent entered into a contract of sale over the said laboratory
furniture.

In this case, the respondent was aware, from the time Padolina contacted it for the fabrication and
supply of the laboratory furniture until the go-signal was given to it to fabricate and deliver the
furniture to BIOTECH as beneficiary, that the FEMF was to pay for the same. Indeed, Padolina
asked the respondent to prepare the draft of the contract to be received by the FEMF prior to the
execution of the parties (the respondent and FEMF), but somehow, the respondent failed to prepare

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The respondent knew that the petitioner was merely the donee- beneficiary of the laboratory
furniture and not the buyer; nor was it liable for the payment of the purchase price thereof. From
the inception, the FEMF paid for the bills and statement of accounts of the respondent, for which
the latter unconditionally issued receipts to and under the name of the FEMF. Also, the respondent,
in its Letter dated March 26, 1986, informed the petitioner and sought its assistance for the
collection of the amount due from the FEMF. The respondent even wrote former President Aquino
seeking her assistance for the payment of the amount due, in which the respondent admitted it tried
to collect from her predecessor.

Admittedly, the respondent sent to the petitioner its bills and statements of accounts for the
payments of the laboratory furniture it delivered to the petitioner which the petitioner, through
Padolina, transmitted to the FEMF for its payment. However, the FEMF failed to pay the last
statement of account of the respondent because of the onset of the EDSA upheaval. It was only
when the respondent lost all hope of collecting its claim from the government and/or the PCGG
did it file the complaint against the petitioner for the collection of the payment of its last delivery
of laboratory furniture.

The Court reject the ruling of the CA holding the petitioner liable for the claim of the respondent
based on the maxim that no one should enrich itself at the expense of another. Unjust enrichment
claims do not lie simply because one party benefits from the efforts or obligations of others, but
instead it must be shown that a party was unjustly enriched in the sense that the term unjustly could
mean illegally or unlawfully. Moreover, to substantiate a claim for unjust enrichment, the claimant
must unequivocally prove that another party knowingly received something of value to which he
was not entitled and that the state of affairs are such that it would be unjust for the person to keep
the benefit. Unjust enrichment is a term used to depict result or effect of failure to make
remuneration of or for property or benefits received under circumstances that give rise to legal or
equitable obligation to account for them; to be entitled to remuneration, one must confer benefit
by mistake, fraud, coercion, or request.

Article 22 of the New Civil Code reads:

“Every person who, through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall
return the same to him.”

In order that accion in rem verso may prosper, the essential elements must be present: (1) that the
defendant has been enriched, (2) that the plaintiff has suffered a loss, (3) that the enrichment of
the defendant is without just or legal ground, and (4) that the plaintiff has no other action based on
contract, quasi-contract, crime or quasi-delict. An accion in rem verso is considered merely an
auxiliary action, available only when there is no other remedy on contract, quasi-contract, crime,
and quasi-delict.

Jagolino (3LM2)
The essential requisites for the application of Article 22 of the New Civil Code do not obtain in
this case. The respondent had a remedy against the FEMF via an action based on an implied-in-
fact contract with the FEMF for the payment of its claim. The petitioner legally acquired the
laboratory furniture under the MOA with FEMF; hence, it is entitled to keep the laboratory
furniture.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Decision of the
Court of Appeals is REVERSED AND SET ASIDE. The Decision of the Regional Trial Court,
Makati City, Branch 150, is REINSTATED. No costs.

Jagolino (3LM2)
G.R. No. 145391 August 26, 2002

AVELINO CASUPANAN and ROBERTO CAPITULO, petitioners, vs.

MARIO LLAVORE LAROYA, respondent.

FACTS:
• Two vehicles, one driven by respondent Mario Llavore Laroya and the other owned by
petitioner Roberto Capitulo and driven by petitioner Avelino Casupanan, figured in an
accident. As a result, two cases were filed with the Municipal Circuit Trial Court (MCTC)
of Capas, Tarlac.
• Laroya filed a criminal case against Casupanan for reckless imprudence resulting in
damage to property, docketed as Criminal Case No. 002-99.
• Casupanan and Capitulo filed a civil case against Laroya for quasi-delict, docketed as Civil
Case No. 2089.
• When the civil case was filed, the criminal case was then at its preliminary investigation
stage. Laroya, defendant in the civil case, filed a motion to dismiss the civil case on the
ground of forum-shopping considering the pendency of the criminal case.
• The MCTC granted the motion in the Order of March 26, 1999 and dismissed the civil
case.
• On Motion for Reconsideration, Casupanan and Capitulo insisted that the civil case is a
separate civil action which can proceed independently of the criminal case. The MCTC
denied the motion for reconsideration.
• Casupanan and Capitulo filed a petition for certiorari under Rule 65 before the Regional
Trial Court of Capas, Tarlac, Branch 66,3 assailing the MCTC’s Order of dismissal.
• The RTC rendered judgment on December 28, 1999 dismissing the petition for certiorari
for lack of merit.
o RTC ruled that the order of dismissal issued by the MCTC is a final order which
disposes of the case and therefore the proper remedy should have been an appeal.
o RTC further held that a special civil action for certiorari is not a substitute for a lost
appeal.
o Finally, the RTC declared that even on the premise that the MCTC erred in
dismissing the civil case, such error is a pure error of judgment and not an abuse of
discretion.
• Casupanan and Capitulo filed a Motion for Reconsideration but the Capas RTC denied the
same in the Resolution of August 24, 2000.
• They contend that an action on quasi-delict is different from an action resulting from the
crime of reckless imprudence, and an accused in a criminal case can be an aggrieved party
in a civil case arising from the same incident. They maintain that under Articles 31 and
2176 of the Civil Code, the civil case can proceed independently of the criminal action.

Jagolino (3LM2)
 • Casupanan and Capitulo contend that the petition raises the legal question of whether there
is forum- shopping since they filed only one action - the independent civil action for quasi-
delict against Laroya.

ISSUE:
1. Whether or not an accused in a pending criminal case for reckless imprudence can validly
file, simultaneously and independently, a separate civil action for quasi-delict against the
private complainant in the criminal case.
2. Whether or not there is forum shopping.

RULING:
Yes.

Section 3, Rule 111 of the 2000 Rules provides as follows:

"SEC 3. When civil action may proceed independently. - In the cases provided in Articles 32, 33,
34 and 2176 of the Civil Code of the Philippines, the independent civil action may be brought by
the offended party. It shall proceed independently of the criminal action and shall require only a
preponderance of evidence. In no case, however, may the offended party recover damages twice
for the same act or omission charged in the criminal action."

Section 3 of the present Rule 111, like its counterpart in the amended 1985 Rules, expressly allows
the "offended party" to bring an independent civil action under Articles 32, 33, 34 and 2176 of the
Civil Code. There is no question that the offended party in the criminal action can file an
independent civil action for quasi-delict against the accused. Section 3 of the present Rule 111
expressly states that the "offended party" may bring such an action but the "offended party" may
not recover damages twice for the same act or omission charged in the criminal action. Clearly,
Section 3 of Rule 111 refers to the offended party in the criminal action, not to the accused.

Thus, the offended party can file two separate suits for the same act or omission. The first a
criminal case where the civil action to recover civil liability ex-delicto is deemed instituted, and
the other a civil case for quasi-delict - without violating the rule on non-forum shopping. The two
cases can proceed simultaneously and independently of each other. The commencement or
prosecution of the criminal action will not suspend the civil action for quasi-delict. The only
limitation is that the offended party cannot recover damages twice for the same act or omission of
the defendant. In most cases, the offended party will have no reason to file a second civil action
since he cannot recover damages twice for the same act or omission of the accused. In some
instances, the accused may be insolvent, necessitating the filing of another case against his
employer or guardians.

Jagolino (3LM2)
Similarly, the accused can file a civil action for quasi-delict for the same act or omission he is
accused of in the criminal case. This is expressly allowed in paragraph 6, Section 1 of the present
Rule 111 which states that the counterclaim of the accused "may be litigated in a separate civil
action." This is only fair for two reasons. First, the accused is prohibited from setting up any
counterclaim in the civil aspect that is deemed instituted in the criminal case. The accused is
therefore forced to litigate separately his counterclaim against the offended party. If the accused
does not file a separate civil action for quasi-delict, the prescriptive period may set in since the
period continues to run until the civil action for quasi-delict is filed.

Second, the accused, who is presumed innocent, has a right to invoke Article 2177 of the Civil
Code, in the same way that the offended party can avail of this remedy which is independent of
the criminal action. To disallow the accused from filing a separate civil action for quasi-delict,
while refusing to recognize his counterclaim in the criminal case, is to deny him due process of
law, access to the courts, and equal protection of the law.

Thus, the civil action based on quasi-delict filed separately by Casupanan and Capitulo is proper.
The order of dismissal by the MCTC of Civil Case No. 2089 on the ground of forum-shopping is
erroneous. The law itself, in Article 31 of the Code, expressly provides that the independent civil
action "may proceed independently of the criminal proceedings and regardless of the result of the
latter."

WHEREFORE, the petition for review on certiorari is hereby GRANTED. The Resolutions dated
December 28, 1999 and August 24, 2000 in Special Civil Action No. 17-C (99) are ANNULLED
and Civil Case No. 2089 is REINSTATED.

Jagolino (3LM2)