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Republic of the Philippines

SUPREME COURTManila

FIRST DIVISION

G.R. No. 115814 May 26, 1995

PEDRO P. PECSON,

petitioner,

versus

COURT OF APPEALS, SPOUSES JUAN NUGUID and ERLINDA NUGUID,

respondents.

X ------------------------------------------------------------------------------------------------------------------------- X

DECISION

DAVIDE, JR., J.:

This petition for review on certiorari seeks to set aside the decision 1 of the Court of Appeals in CA-G.R.SP No. 32679 affirming in part the order2 of the Regional Trial Court (RTC) of Quezon City, Branch101, in Civil Case No. Q-41470.

The factual and procedural antecedents of this case as gathered from the record are as follows:

Petitioner Pedro P. Pecson was the owner of a commercial lot located in Kamias Street, Quezon City, onwhich he built a four-door two-storey apartment building. For his failure to pay realty taxes amounting totwelve thousand pesos (P12,000.00), the lot was sold at public auction by the city Treasurer of QuezonCity to Mamerto Nepomuceno who in turn sold it on 12 October 1983 to the private respondents, thespouses Juan Nuguid and Erlinda Tan-Nuguid, for one hundred three thousand pesos (P103,000.00).

The petitioner challenged the validity of the auction sale in Civil Case No. Q-41470 before the RTC ofQuezon City. In its decision of 8 February 1989, the RTC dismissed the complaint, but as to the privaterespondents' claim that the sale included the apartment building, it held that the issue concerning it was"not a subject of the . . . litigation." In resolving the private respondents' motion to reconsider this issue,the trial court held that there was no legal basis for the contention that the apartment building wasincluded in the sale. 3

Both parties then appealed the decision to the Court of Appeals. The case was docketed as CA-G.R. CVNo. 2931. In its decision of 30 April 1992, 4 the Court of Appeals affirmed in toto the assailed decision. Italso agreed with the trial court that the apartment building was not included in the auction sale of thecommercial lot. Thus:

Indeed, examining the record we are fully convinced that it was only the landwithout

the apartment buildingwhich was sold at the auction sale, for plaintiff's failure to paythe taxes due thereon. Thus, in the Certificate of Sale of Delinquent Property ToPurchaser (Exh. K, p. 352, Record) the property subject of the auction sale at whichMamerto Nepomuceno was the purchaser is referred to as Lot No. 21-A, Block No. K-34,at Kamias, Barangay Piahan, with an area of 256.3 sq. m., with no mention whatsoever,of the building thereon. The same description of the subject property appears in the FinalNotice To Exercise The Right of Redemption (over subject property) dated September14, 1981 (Exh. L, p. 353, Record) and in the Final Bill of Sale over the same propertydated April 19, 1982 (Exh. P, p. 357, Record). Needless to say, as it was only the landwithout any building which Nepomuceno had acquired at the auction sale, it was also

only that land without any building which he could have legally sold to theNuguids. Verily, in the Deed of Absolute Sale of Registered Land executed by Mamerto


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Nepomuceno in favor of the Nuguids on October 25, 1983 (Exh. U, p. 366, Record) itclearly appears that the property subject of the sale for P103,000.00 was only the parcel

of land, Lot 21-A, Blk. K-34 containing an area of 256.3 sq. meters, without any mentionof any improvement, much less any building thereon. (emphases supplied)

The petition to review the said decision was subsequently denied by this Court. 5 Entry of judgment was

made on 23 June 1993. 6

On November 1993, the private respondents filed with the trial court a motion for delivery of possessionof the lot and the apartment building, citing article 546 of the Civil Code. 7 Acting thereon, the trial courtissued on 15 November 1993 the challenged order8 which reads as follows:

Submitted for resolution before this Court is an uncontroverted [sic] for the Delivery ofPossession filed by defendants Erlinda Tan, Juan Nuguid, et al. considering that despitepersonal service of the Order for plaintiff to file within five (5) days his opposition to saidmotion, he did not file any.

In support of defendant's motion, movant cites the law in point as Article 546 of the CivilCode . . .

Movant agrees to comply with the provisions of the law considering that plaintiff is abuilder in good faith and he has in fact, opted to pay the cost of the construction spent byplaintiff. From the complaint itself the plaintiff stated that the construction cost of theapartment is much more than the lot, which apartment he constructed at a cost ofP53,000.00 in 1965 (par. 8 complaint). This amount of P53,000.00 is what the movant issupposed to pay under the law before a writ of possession placing him in possession ofboth the lot and apartment would be issued.

However, the complaint alleges in paragraph 9 that three doors of the apartment are being

leased. This is further confirmed by the affidavit of the movant presented in support ofthe motion that said three doors are being leased at a rental of P7,000.00 a month each.The movant further alleges in his said affidavit that the present commercial value of thelot is P10,000.00 per square meter or P2,500,000.00 and the reasonable rental value ofsaid lot is no less than P21,000.00 per month.

The decision having become final as per Entry of Judgment dated June 23, 1993 and fromthis date on, being the uncontested owner of the property, the rents should be paid to himinstead of the plaintiff collecting them. From June 23, 1993, the rents collected byplaintiff amounting to more than P53,000.00 from tenants should be offset from the rentsdue to the lot which according to movant's affidavit is more than P21,000.00 a month.

WHEREFORE, finding merit in the Motion, the Court hereby grants the following prayerthat:

1. The movant shall reimburse plaintiff the construction cost ofP53,000.00.

2. The payment of P53,000.00 as reimbursement for the constructioncost, movant Juan Nuguid is hereby entitled to immediate issuance of awrit of possession over the Lot and improvements thereon.

3. The movant having been declared as the uncontested owner of the Lotin question as per Entry of Judgment of the Supreme Court dated June

23, 1993, the plaintiff should pay rent to the movant of no less thanP21,000.00 per month from said date as this is the very same amountpaid monthly by the tenants occupying the lot.

4. The amount of P53,000.00 due from the movant is hereby offsetagainst the amount of rents collected by the plaintiff from June 23, 1993,to September 23, 1993.

SO ORDERED.

The petitioner moved for the reconsideration of the order but it was not acted upon by the trial court.Instead, on 18 November 1993, it issued a writ of possession directing the deputy sheriff "to place said

movant Juan Nuguid in possession of subject property located at No. 79 Kamias Road, Quezon City, with


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all the improvements thereon and to eject therefrom all occupants therein, their agents, assignees, heirsand representatives." 9

The petitioner then filed with the Court of Appeals a special civil action forcertiorari and prohibitionassailing the order of 15 November 1993, which was docketed as CA-G.R. SP No. 32679. 10 In itsdecision of 7 June 1994, the Court of Appeals affirmed in part the order of the trial court citing Article

448 of the Civil Code. In disposing of the issues, it stated:

As earlier pointed out, private respondent opted to appropriate the improvementintroduced by petitioner on the subject lot, giving rise to the right of petitioner to bereimbursed of the cost of constructing said apartment building, in accordance with Article546 of the . . . Civil Code, and of the right to retain the improvements until he isreimbursed of the cost of the improvements, because, basically, the right to retain theimprovement while the corresponding indemnity is not paid implies the tenancy orpossession in fact of the land on which they are built . . . [2 TOLENTINO, CIVIL CODEOF THE PHILIPPINES (1992) p. 112]. With the facts extant and the settled principle asguides, we agree with petitioner that respondent judge erred in ordering that "the movanthaving been declared as the uncontested owner of the lot in question as per Entry of

Judgment of the Supreme Court dated June 23, 1993, the plaintiff should pay rent to themovant of no less than P21,000 per month from said date as this is the very same amountpaid monthly by the tenants occupying the lot.

We, however, agree with the finding of respondent judge that the amount of P53,000.00earlier admitted as the cost of constructing the apartment building can be offset from theamount of rents collected by petitioner from June 23, 1993 up to September 23, 1993which was fixed at P7,000.00 per month for each of the three doors. Our underlyingreason is that during the period of retention, petitioner as such possessor and receivingthe fruits from the property, is obliged to account for such fruits, so that the amountthereof may be deducted from the amount of indemnity to be paid to him by the owner ofthe land, in line with Mendoza vs. De Guzman, 52 Phil. 164 . . . .

The Court of Appeals then ruled as follows:

WHEREFORE, while it appears that private respondents have not yet indemnifiedpetitioner with the cost of the improvements, since Annex I shows that the Deputy Sheriffhas enforced the Writ of Possession and the premises have been turned over to thepossession of private respondents, the quest of petitioner that he be restored in possessionof the premises is rendered moot and academic, although it is but fair and just that privaterespondents pay petitioner the construction cost of P53,000.00; and that petitioner beordered to account for any and all fruits of the improvements received by him starting onJune 23, 1993, with the amount of P53,000.00 to be offset therefrom.

IT IS SO ORDERED. 11

Aggrieved by the Court of Appeals' decision, the petitioner filed the instant petition.

The parties agree that the petitioner was a builder in good faith of the apartment building on the theorythat he constructed it at the time when he was still the owner of the lot, and that the key issue in this caseis the application of Articles 448 and 456 of the Civil Code.

The trial court and the Court of Appeals, as well as the parties, concerned themselves with the applicationof Articles 448 and 546 of the Civil Code. These articles read as follows:

Art. 448. The owner of the land on which anything has been built, sown or planted ingood faith, shall have the right to appropriate as his own the works, sowing or planting,after payment of the indemnity provided for in articles 546 and 548, or to oblige the onewho built or planted to pay the price of the land, and the one who sowed, the proper rent.However, the builder or planter cannot be obliged to buy the land if its value isconsiderably more than that of the building or trees. In such case, he shall pay reasonablerent, if the owner of the land does not choose to appropriate the building or trees afterproper indemnity. The parties shall agree upon the terms of the lease and in case ofdisagreement, the court shall fix the terms thereof. (361a)

xxx xxx xxx

Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessorin good faith may retain the thing until he has been reimbursed therefor.


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Useful expenses shall be refunded only to the possessor in good faith with the same rightof retention, the person who has defeated him in the possession having the option ofrefunding the amount of the expenses or of paying the increase in value which the thingmay have acquired by reason thereof. (453a)

By its clear language, Article 448 refers to a land whose ownership is claimed by two or more parties, one

of whom has built some works, or sown or planted something. The building, sowing or planting may havebeen made in good faith or in bad faith. The rule on good faith laid down in Article 526 of the Civil Codeshall be applied in determining whether a builder, sower or planter had acted in good faith. 12

Article 448 does not apply to a case where the owner of the land is the builder, sower, or planter who thenlater loses ownership of the land by sale or donation. This Court said so in Coleongco vs.Regalado: 13

Article 361 of the old Civil Code is not applicable in this case, for Regalado constructedthe house on his own land before he sold said land to Coleongco. Article 361 applies onlyin cases where a person constructs a building on the land of another in good or in badfaith, as the case may be. It does not apply to a case where a person constructs a buildingon his own land, for then there can be no question as to good or bad faith on the part ofthe builder.

Elsewise stated, where the true owner himself is the builder of works on his own land, the issue of goodfaith or bad faith is entirely irrelevant.

Thus in strict point of law, Article 448 is not apposite to the case at bar. Nevertheless, we believe that theprovision therein on indemnity may be applied by analogy considering that the primary intent of Article448 is to avoid a state of forced co-ownership and that the parties, including the two courts below, in themain agree that Articles 448 and 546 of the Civil Code are applicable and indemnity for theimprovements may be paid although they differ as to the basis of the indemnity.

Article 546 does not specifically state how the value of the useful improvements should be determined.The respondent court and the private respondents espouse the belief that the cost of construction of theapartment building in 1965, and not its current market value, is sufficient reimbursement for necessaryand useful improvements made by the petitioner. This position is, however, not in consonance withprevious rulings of this Court in similar cases. InJavier vs. Concepcion, Jr., 14 this Court pegged thevalue of the useful improvements consisting of various fruits, bamboos, a house and camarin made ofstrong material based on the market value of the said improvements. In Sarmiento vs.Agana,

15 despitethe finding that the useful improvement, a residential house, was built in 1967 at a cost of between eightthousand pesos (P8,000.00) to ten thousand pesos(P10,000.00), the landowner was ordered to reimbursethe builder in the amount of forty thousand pesos (P40,000.00), the value of the house at the time of thetrial. In the same way, the landowner was required to pay the "present value" of the house, a usefulimprovement, in the case ofDe Guzman vs.De la Fuente,

16 cited by the petitioner.

The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In thisregard, this Court had long ago stated inRivera vs.Roman Catholic Archbishop of Manila17 that the saidprovision was formulated in trying to adjust the rights of the owner and possessor in good faith of a pieceof land, to administer complete justice to both of them in such a way as neither one nor the other mayenrich himself of that which does not belong to him. Guided by this precept, it is therefore the currentmarket value of the improvements which should be made the basis of reimbursement. A contrary rulingwould unjustly enrich the private respondents who would otherwise be allowed to acquire a highly valuedincome-yielding four-unit apartment building for a measly amount. Consequently, the parties shouldtherefore be allowed to adduce evidence on the present market value of the apartment building uponwhich the trial court should base its finding as to the amount of reimbursement to be paid by thelandowner.

The trial court also erred in ordering the petitioner to pay monthly rentals equal to the aggregate rentalspaid by the lessees of the apartment building. Since the private respondents have opted to appropriate theapartment building, the petitioner is thus entitled to the possession and enjoyment of the apartmentbuilding, until he is paid the proper indemnity, as well as of the portion of the lot where the building hasbeen constructed. This is so because the right to retain the improvements while the correspondingindemnity is not paid implies the tenancy or possession in fact of the land on which it is built, planted orsown. 18 The petitioner not having been so paid, he was entitled to retain ownership of the building and,necessarily, the income therefrom.

It follows, too, that the Court of Appeals erred not only in upholding the trial court's determination of theindemnity, but also in ordering the petitioner to account for the rentals of the apartment building from 23

June 1993 to 23 September 1993.


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WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No. 32679 and the Order of 15November 1993 of the Regional Trial Court, Branch 101, Quezon City in Civil Case No. Q-41470 arehereby SET ASIDE.

The case is hereby remanded to the trial court for it to determine the current market value of theapartment building on the lot. For this purpose, the parties shall be allowed to adduce evidence on the

current market value of the apartment building. The value so determined shall be forthwith paid by theprivate respondents to the petitioner otherwise the petitioner shall be restored to the possession of theapartment building until payment of the required indemnity.

No costs.

SO ORDERED.

Padilla, Bellosillo and Kapunan, JJ., concur.

Quiason, J., is on leave.


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SUPREME COURTManila

FIRST DIVISION

G.R. No. 117009 October 11, 1995

SECURITY BANK & TRUST COMPANY and ROSITO C. MANHIT,

petitioners,

versus

COURT OF APPEALS and YSMAEL C. FERRER,

respondents.

X ------------------------------------------------------------------------------------------------------------------------- X

DECISION

PADILLA, J.:

In this petition for review under Rule 45 of the Rules of Court, petitioners seek a review and reversal of

the decision * of respondent Court of Appeals in CA-G.R. CV No. 40450, entitled "Ysmael C. Ferrer v.Security Bank and Trust Company, et. al." dated 31 August 1994, which affirmed the decision ** of theRegional Trial Court, Branch 63, Makati in Civil Case No. 42712, a complaint for breach of contract withdamages.

Private respondent Ysmael C. Ferrer was contracted by herein petitioners Security Bank and TrustCompany (SBTC) and Rosito C. Manhit to construct the building of SBTC in Davao City for the price ofP1,760,000.00. The contract dated 4 February 1980 provided that Ferrer would finish the construction intwo hundred (200) working days. Respondent Ferrer was able to complete the construction of the buildingon 15 August 1980 (within the contracted period) but he was compelled by a drastic increase in the costof construction materials to incur expenses of about P300,000.00 on top of the original cost. Theadditional expenses were made known to petitioner SBTC thru its Vice-President Fely Sebastian and

Supervising Architect Rudy de la Rama as early as March 1980. Respondent Ferrer made timely demandsfor payment of the increased cost. Said demands were supported by receipts, invoices, payrolls and otherdocuments proving the additional expenses.

In March 1981, SBTC thru Assistant Vice-President Susan Guanio and a representative of an architecturalfirm consulted by SBTC, verified Ferrer's claims for additional cost. A recommendation was then made tosettle Ferrer's claim but only for P200,000.00. SBTC, instead of paying the recommended additionalamount, denied ever authorizing payment of any amount beyond the original contract price. SBTClikewise denied any liability for the additional cost based on Article IX of the building contract whichstates:

If at any time prior to the completion of the work to be performed hereunder, increase inprices of construction materials and/or labor shall supervene through no fault on the partof the contractor whatsoever or any act of the government and its instrumentalities whichdirectly or indirectly affects the increase of the cost of the project, OWNER shallequitably make the appropriate adjustment on mutual agreement of both parties.

Ysmael C. Ferrer then filed a complaint for breach of contract with damages. The trial court ruled forFerrer and ordered defendants SBTC and Rosito C. Manhit to pay:

a) P259,417.23 for the increase in price of labor and materials plus 12% interestthereon per annumfrom 15 August 1980 until fully paid;

b) P24,000.00 as actual damages;


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c) P20,000.00 as moral damages;

d) P20,000.00 as exemplary damages;

e) attorney's fees equivalent to 25% of the principal amount due; and

f) costs of suit.

On appeal, the Court of Appeals affirmed the trial court decision.

In the present petition for review, petitioners assign the following errors to the appellate court:

. . . IN HOLDING THAT PLAINTIFF-APPELLEE HAS, BY PREPONDERANCE OFEVIDENCE SUFFICIENTLY PROVEN HIS CLAIM AGAINST THE DEFENDANTS-APPELLANTS.

. . . IN INTERPRETING AN OTHERWISE CLEAR AND UNAMBIGUOUS

PROVISION OF THE CONSTRUCTION CONTRACT.

. . . IN DISREGARDING THE EXPRESS PROVISION OF THE CONSTRUCTIONCONTRACT, THE LOWER COURT VIOLATED DEFENDANTS-APPELLANTS'CONSTITUTIONAL GUARANTY OF NON IMPAIRMENT OF THE OBLIGATIONOF CONTRACT. 1

Petitioners argue that under the aforequoted Article IX of the building contract, any increase in the priceof labor and/or materials resulting in an increase in construction cost above the stipulated contract pricewill not automatically make petitioners liable to pay for such increased cost, as any payment above thestipulated contract price has been made subject to the condition that the "appropriate adjustment" will bemade "upon mutual agreement of both parties". It is contended that since there was no mutual agreement

between the parties, petitioners' obligation to pay amounts above the original contract price nevermaterialized.

Respondent Ysmael C. Ferrer, through counsel, on the other hand, opposed the arguments raised bypetitioners. It is of note however that the pleadings filed with this Court by counsel for Ferrer hardlyrefute the arguments raised by petitioners, as the contents of said pleadings are mostly quoted portions ofthe decision of the Court of Appeals, devoid of adequate discussion of the merits of respondent's case.The Court, to be sure, expects more diligence and legal know-how from lawyers than what has beenexhibited by counsel for respondent in the present case. Under these circumstances, the Court had toreview the entire records of this case to evaluate the merits of the issues raised by the contending parties.

Article 22 of the Civil Code which embodies the maxim,Nemo ex alterius incommodo debet

lecupletari (no man ought to be made rich out of another's injury) states:

Art. 22. 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 orlegal ground, shall return the same to him.

The above-quoted article is part of the chapter of the Civil Code on Human Relations, the provisions ofwhich were formulated as "basic principles to be observed for the rightful relationship between humanbeings and for the stability of the social order, . . . designed to indicate certain norms that spring from thefountain of good conscience, . . . guides for human conduct [that] should run as golden threads throughsociety to the end that law may approach its supreme ideal which is the sway and dominance of justice." 2

In the present case, petitioners' arguments to support absence of liability for the cost of constructionbeyond the original contract price are not persuasive.

Under the previously quoted Article IX of the construction contract, petitioners would make theappropriate adjustment to the contract price in case the cost of the project increases through no fault of thecontractor (private respondent). Private respondent informed petitioners of the drastic increase inconstruction cost as early as March 1980.

Petitioners in turn had the increased cost evaluated and audited. When private respondent demandedpayment of P259,417.23, petitioner bank's Vice-President Rosito C. Manhit and the bank's architecturalconsultant were directed by the bank to verify and compute private respondent's claims of increased cost.A recommendation was then made to settle private respondent's claim for P200,000.00. Despite thisrecommendation and several demands from private respondent, SBTC failed to make payment. It denied


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authorizing anyone to make a settlement of private respondent's claim and likewise denied any liability,contending that the absence of a mutual agreement made private respondent's demand premature andbaseless.

Petitioners' arguments are specious.

It is not denied that private respondent incurred additional expenses in constructing petitioner bank'sbuilding due to a drastic and unexpected increase in construction cost. In fact, petitioner bank admittedliability for increased cost when a recommendation was made to settle private respondent's claim forP200,000.00. Private respondent's claim for the increased amount was adequately proven during the trialby receipts, invoices and other supporting documents.

Under Article 1182 of the Civil Code, a conditional obligation shall be void if its fulfillment dependsupon the sole will of the debtor. In the present case, the mutual agreement, the absence of whichpetitioner bank relies upon to support its non-liability for the increased construction cost, is in effect acondition dependent on petitioner bank's sole will, since private respondent would naturally and logicallygive consent to such an agreement which would allow him recovery of the increased cost.

Further, it cannot be denied that petitioner bank derived benefits when private respondent completed theconstruction even at an increased cost.

Hence, to allow petitioner bank to acquire the constructed building at a price far below its actualconstruction cost would undoubtedly constitute unjust enrichment for the bank to the prejudice of privaterespondent. Such unjust enrichment, as previously discussed, is not allowed by law.

Finally, with respect to the award of attorney's fees to respondent, the Court has previously held that,"even with the presence of an agreement between the parties, the court may nevertheless reduce attorney'sfees though fixed in the contract when the amount thereof appears to be unconscionable orunreasonable." 3As previously noted, the diligence and legal know-how exhibited by counsel for private

respondent hardly justify an award of 25% of the principal amount due, which would be at leastP60,000.00. Besides, the issues in this case are far from complex and intricate. The award of attorney'sfees is thus reduced to P10,000.00.

WHEREFORE, with the above modification in respect of the amount of attorney's fees, the appealeddecision of the Court of Appeals in CA G.R. CV No. 40450 is AFFIRMED.

SO ORDERED.

Davide, Jr., Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur.


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SUPREME COURTManila

FIRST DIVISION

G.R. No. 98273 October 28, 1991

CLARITA V. CRUZ,

petitioner,

versus

NATIONAL LABOR RELATIONS COMMISSION (NLRC), PHILIPPINE OVERSEAS

EMPLOYMENT ADMINISTRATION (POEA), EMS MANPOWER & PLACEMENT SERVICE(PHIL.), ABDUL KARIM AL YAHYA, and TRAVELLERS INSURANCE,

respondents.

Public Attorney's Office for petitioner.

Manuel T. Collado for private respondent.

X ------------------------------------------------------------------------------------------------------------------------- X

DECISION

CRUZ, J.:p

Clarita V. Cruz** went abroad pursuant to an employment contract that she hoped would improve herfuture. Although a high school graduate, she agreed to work as a domestic helper in Kuwait inconsideration of an attractive salary and vacation leave benefits she could not expect to earn in thiscountry. But her foreign adventure proved to be a bitter disappointment. On March 18,1988, aftercompleting her two-year engagement, she was back home in the Philippines with her dead dreams and anangry grievance.

On March 23,1988, she filed a complaint against EMS Manpower and Placement Services (Phil.) and itsforeign principal, Abdul Karim Al Yahya, for underpayment of her salary and non-payment of hervacation leave. She also claimed that she was charged a placement fee of P7,000.00 instead of the legalmaximum of only P5,000.00. She alleged that her foreign employer treated her as a slave and required herto work 18 hours a day. She was beaten up and suffered facial deformity, head trauma and decreasedsensation in the right portion of her body. On top of all this, she was paid only $120 per month and hertotal salaries were given to her only three hours before her flight back to Manila. This was after the planeshe was supposed to take had left and she had to stay in the airport for 24 hours before her employerfinally heard her pleas and delivered her passport and ticket to her.

In its answer and position paper, the private respondent raised the principal defense of settlement asevidenced by the Affidavit of Desistance executed by the complainant on June 21, 1988. In thisdocument, she declared inter alia that

xxx xxx xxx

2. Thereafter going thoroughly over the facts of the case by reconciling our records, wecame to discover that it was only a plain case of misunderstanding on our part, and thatwe have already settled our differences;

3. That I am no longer interested in further continuance of the above case against EMS

Manpower & Placement Services either criminal, civil or administrative or whatevernature as I hereby desist now and hereafter;


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4. That I am executing this affidavit of desistance to attest to the truth of the foregoingfacts and circumstances and for the purpose of asking the dismissal of my said complaintagainst EMS Manpower & Placement Services.

On the basis of this affidavit, the Philippine Overseas Employment Administration (POEA) dismissed hercomplaint in a decision dated May 16, 1989. This was affirmed by the National Labor Relations

Commission (NLRC) in its resolution dated December 28, 1990, reconsideration of which was denied onFebruary 21, 1991.

The petition now before us faults the POEA and the NLRC with grave abuse of discretion for havingupheld the Affidavit of Desistance. Cruz rejects the settlement as having been obtained from her underduress and false pretenses and insists on her original claim for the balance of her salaries and vacation-leave pay at the agreed rate of P250.00 per month.

Her contention is that she was inveigled into signing the Affidavit of Desistance without the assistance ofcounsel. The "Attorney" Alvarado who assisted her was not really a lawyer but only a helper in theOverseas Workers Welfare Administration. Atty. Biolena, on the other hand, merely acknowledged thedocument. Moreover, when she signed the affidavit, she was under the impression when she was agreeingto settle only her claim for one month unpaid vacation leave, as the wording of the receipt she issued onthe same date showed, to wit:

June 21, 1988

Receipt

This is to certify that I received the amount of P2,400.00 from EMS Manpower &Placement Services in settlement of 1 month unpaid vacation leave.

(Sgd.) CLARITA V.

CRUZ

IN THE PRESENCE OF:

(Sgd.) O.G. ALVARADO

OWWA Legal Dept.

For its part, the private respondent argues that the petitioner is bound by her Affidavit of Desistance,which she freely and knowingly executed. After all, she was not an ignorant and illiterate person but ahigh school graduate who understood what she was signing. The due execution of the instrument mustalso be sustained on the basis of the presumptions of regularity of official functions and of good faith.

Significantly, neither the private respondent nor the Solicitor General refuted the petitioner's submissionthat the person who allegedly assisted her in the execution of the Affidavit of Desistance and explained toher its content and meaning was not a lawyer but a mere employee in the OWWA. His status was merelyassumed but not established by the respondents although it was directly questioned. The comments of thepublic and private respondents did not meet this challenge squarely.

It is no less noteworthy that the receipt the petitioner issued on the same day was only for "P2,400.00 . . .in settlement of 1 month unpaid vacation." This clearly shows that she was not waiving the rest of herdemands in exchange for that measly amount (which did not even really represent the commutable valueof the 1 month vacation leave at the rate of $250.00). In fact, the total claim of the petitioner is forP88,840.00, itemized as follows:

a) P84,240.00, representing the salary differentials of $130 for 24 months (US $3,120.00x P27.00).

b) P2,600.00, representing the balance of her vacation leave pay.

c) P2,000.00, representing her excess placement fee.

InPrincipe v. Philippine-Singapore Transport Service, Inc., 1this Court held:

Even assuming for the sake of argument that the quitclaim had foreclosed petitioner's

right over the death benefits of her husband, the fact that the consideration given inexchange thereof was very much less than the amount petitioner is claiming renders the


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quitclaim null and void for being contrary to public policy. The State must be firm inaffording protection to labor. The quitclaim wherein the consideration is scandalouslylow and inequitable cannot be an obstacle to petitioner's pursuing her legitimate claim.Equity dictates that the compromise agreement should be voided in this instance.(Emphasis supplied.)

The following guidelines were likewise set inPeriquet v. NLRC: 2

Not all waivers and quitclaims are invalid as against public policy. If the agreement wasvoluntarily entered into and represents a reasonable settlement, it is binding on the partiesand may not later be disowned simply because of a change of mind.It is only where thereis clear proof that the waiver was wangled from an unsuspecting or gullible person, orthe terms of settlement are unconscionable on its face, that the law will step in to annul

the questionable transaction. (Emphasis supplied.)

The Court is convinced that the petitioner was not fully aware of the import and consequences of theAffidavit of Desistance when she executed it, allegedly with the assistance of counsel. Except for thedisputable presumptions invoked by the private respondent, such assistance has not been establishedagainst the petitioner's allegation that the "Attorney" Alvarado who supposedly counseled her was noteven a lawyer. Indeed, even assuming that such assistance had been duly given, there is still the questionof the intrinsic validity of the quitclaim in view of the gross disparity between the amount of thesettlement and the petitioner's original claim. It is difficult to believe that the petitioner would agree towaive her total claim of P88,840.00 for the unseemly settlement of only P2,400.00. And even if she did,the waiver would still be null and void as violative of public policy.

It remains to state that, contrary to the contention of the private respondent in the proceedings below thatit has no privity of contract with the petitioner, we have held in a long line of cases that the local recruiteris solidarily liable with the foreign principal for all damages sustained by the overseas worker inconnection with his contract of employment. Such liability is provided for in Section 1, Rule II, Book II,of the POEA Rules and Regulations, which we have consistently sustained.

This decision demonstrates once again the tenderness of the Court toward the worker subjected to thelawless exploitation and impositions of his employer. The protection of our overseas workers is especiallynecessary because of the inconveniences and even risks they have to undergo in their quest for a betterlife in a foreign land away from their loved ones and their own government.

The domestic helper is particularly susceptible to abuse because she usually works only by herself in aprivate household unlike other workers employed in an open business concern who are able to share anddiscuss their problems and bear or solve them together. The domestic helper is denied that comfort. Shehas no companions in her misery. She usually broods alone. There is no one to turn to for help. That iswhy we must carefully listen to her when she is finally able to complain against those who would rob herof her just rewards and even of her dignity as a human being.

WHEREFORE, the resolutions of the NLRC dated December 28, 1990, and February 21, 1991, are SETASIDE, and the Affidavit of Desistance is DECLARED null and void. POEA Case No. 88-03-255 isREMANDED to the POEA for further proceedings and expeditious resolution.

SO ORDERED.

Narvasa, Grio-Aquino and Medialdea, JJ., concur.


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SUPREME COURTManila

FIRST DIVISION

G.R. No. L-22554 August 29, 1975

DELFIN LIM and JIKIL TAHA,

plaintiffs-appellants,

versus

FRANCISCO PONCE DE LEON AND ORLANDO MADDELA,

defendants-appellees.

Ricardo L. Manalilig for plaintiffs-appellants.

Iigo R. Pea for defendants-appellees.

X ------------------------------------------------------------------------------------------------------------------------- X

DECISION

MARTIN, J.:

Appeal on a question of law from the decision of the Court of First Instance of Palawan in Civil Case No.416, entitled "Delfin Lim and Jikil Taha vs. Francisco Ponce de Leon and Orlando Maddela", dismissingthe complaint of the plaintiffs and ordering them to pay each of the defendants jointly and severally thesum of P500.00 by way of actual damages; P500.00 by way of attorney's fees; and P1,000.00 by way ofexemplary damages.

On April 29, 1961, plaintiff-appellant Jikil Taha sold to a certain Alberto Timbangcaya of Brooke's Point,Palawan a motor launch named M/L "SAN RAFAEL". A year later or on April 9, 1962 AlbertoTimbangcaya filed a complaint with the Office of the Provincial Fiscal of Palawan alleging that after thesale Jikil Taha forcibly took away the motor launch from him.

On May 14, 1962, after conducting a preliminary investigation, Fiscal Francisco Ponce de Leon in hiscapacity as Acting Provincial Fiscal of Palawan, filed with the Court of First Instance of Palawan thecorresponding information for Robbery the Force and Intimidation upon Persons against Jikil Taha. Thecase was docketed as Criminal Case No. 2719.

On June 15, 1962, Fiscal Francisco Ponce de Leon, upon being informed that the motor launch was inBalabac, Palawan, wrote the Provincial Commander of Palawan requesting him to direct the detachment

commander-in Balabac to impound and take custody of the motor launch.1

On June 26, 1962, Fiscal Ponce de Leon reiterated his request to the Provincial Commander to impoundthe motor launch, explaining that its subsequent sale to a third party, plaintiff-appellant Delfin Lim,cannot prevent the court from taking custody of the same. 2So, on July 6, 1962 upon order of theProvincial Commander, defendant-appellee Orlando Maddela, Detachment Commander of Balabac,Palawan, seized the motor launch "SAN RAFAEL" from plaintiff-appellant Delfin Lim and impounded it.

On July 15, 1962 plaintiff-appellant Delfin Lim pleaded with Orlando Maddela to return the motor launchbut the latter refused. Likewise, on September 20, 1962, Jikil Taha through his counsel maderepresentations with Fiscal Ponce de Leon to return the seized property to plaintiff-appellant Delfin Limbut Fiscal Ponce de Leon refused, on the ground that the same was the subject of a criminal offense.


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All efforts to recover the motor launch going to naught, plaintiffs-appellants Delfin Lim and Jikil Taha,on November 19, 1962, filed with the Court of First Instance of Palawan a complaint for damages againstdefendants-appellees Fiscal Francisco Ponce de Leon and Orlando Maddela, alleging that on July 6, 1962Orlando Maddela entered the premises of Delfin Lim without a search warrant and then and there tookaway the hull of the motor launch without his consent; that he effected the seizure upon order of FiscalPonce de Leon who knew fully well that his office was not vested with authority to order the seizure of a

private property; that said motor launch was purchased by Delfin Lim from Jikil Taha in consideration ofThree Thousand Pesos (P3,000.00), Two Thousand Pesos (P2,000.00) of which has been given to JikilTaha as advance payment; that as a consequence of the unlawful seizure of the motor launch, its sale didnot materialize; and that since July 6, 1962, the said motor launch had been moored at the Balabac Bay,Palawan and because of exposure to the elements it had become worthless and beyond repair. For thealleged violation of their constitutional rights, plaintiffs-appellants prayed that defendants-appellees beordered to pay jointly and severally each of them the sum of P5,750.00 representing actual, moral andexemplary damages and attorney's fees.

In their answer, defendants-appellees denied the material allegations of the complaint and as affirmativedefenses alleged that the motor launch in question which was sold by Jikil Taha to Alberto Timbangcayaon April 29, 1961 was sometime in April 1962, forcibly taken with violence upon persons and with intent

to gain by Jikil Taha from Alfredo Timbangcaya without the latter's knowledge and consent, thus givingrise to the filing of a criminal charge of robbery against Jikil Taha; that Fiscal Ponce de Leon, in hiscapacity as Acting Provincial Fiscal of Palawan ordered Orlando Maddela to seize and impound themotor launch "SAN RAFAEL", for being the corpus delicti of the robbery; and that Orlando Maddelamerely obeyed the orders of his superior officer to impound said launch. By way of counterclaim,defendants-appellees alleged that because of the malicious and groundless filing of the complaint byplaintiffs-appellants, they were constrained to engage the services of lawyers, each of them payingP500.00 as attorney's fees; and that they suffered moral damages in the amount of P5,000.00 each andactual damages in the amount of P500.00 each. They also prayed that each of them awarded exemplarydamages in the amount of P1,000.00.

On September 13, 1965, the trial court rendered its decision, upholding the validity of the seizure of the

motor launch on the ground that "the authority to impound evidences or exhibits orcorpus delicti in acase pending investigation is inherent in the Provincial Fiscal who controls the prosecution and whointroduces those exhibits in the court." Accordingly, the trial court dismissed the complaint of plaintiffs-appellants and ordered them to pay jointly and severally each of the defendants-appellees the amount ofP500.00 by way of actual damages another amount of P500.00 for attorney's fees and P1,000.00 asexemplary damages.

Hence, this appeal.

Two vital issues call for resolution by this Court. First, whether or not defendant-appellee Fiscal Ponce deLeon had the power to order the seizure of the motor launch in question without a warrant of search andseizure even if the same was admittedly the corpus delicti of the crime. Second, whether or not

defendants-appellees are civilly liable to plaintiffs-appellants for damages allegedly suffered by themgranting that the seizure of the motor launch was unlawful.

The gravamen of plaintiffs-appellants' argument is that the taking of the motor launch on July 6, 1962 byOrlando Maddela upon the order of Fiscal Ponce de Loon was in violation of the constitutional guaranteeagainst unreasonable searches and seizures since it was done without a warrant.

The pertinent provision of the Constitution then in force reads:

3) The right of the people to be secure in their persons, houses, papers and effects againstunreasonable searches and seizures shall not be violated, and no warrants shall issue but

upon probable cause, to be determined by the judge after examination under oath oraffirmation of the complainant and the witnesses he may produce, and particularlydescribing the place to be searched, and the persons or things to be seized. 3

A cursory reading of the above provision easily brings into focus the unreasonableness of the seizure ofthe aforementioned motor launch. A search and seizure to be reasonable, must be effected by means of avalid search warrant. And for a search warrant to be valid: (1) it must be issued upon probable cause; (2)the probable cause must be determined by the judge himself and not by the applicant or any other person;(3) in the determination of probable cause, the judge must examine, under oath or affirmation, thecomplainant and such witnesses as the latter may produce; and (4) the warrant issued must particularlydescribe the place to be searched and persons or things to be seized. 4Thus in a long line of decisions, thisCourt has declared invalid search warrants which were issued in utter disregard of the constitutional

injunction.

5


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Defendants-appellees admitted that when Orlando Maddela entered the premises of Delfin Lim andimpounded the motor launch he was not armed with a search warrant; that he effected the seizure of themotor launch in the absence of and without the consent of Delfin Lim. There can be no question thatwithout the proper search warrant, no public official has the right to enter the premises of another withouthis consent for the purpose of search and seizure. 6And since in the present case defendants-appelleesseized the motor launch without a warrant, they have violated the constitutional right of plaintiffs-

appellants against unreasonable search and seizure.

Defendants-appellees however would want to justify the seizure of the motor launch even without awarrant because of Fiscal Ponce de Leon's alleged inherent power to order the seizure of a personalproperty which is thecorpus delicti of a crime, he being a quasijudicial officer who has the control of theprosecution and the presentation of the evidence in the criminal case. They argue that inasmuch as themotor launch in question was allegedly stolen by Jikil Taha from Timbangcaya, Fiscal Ponce de Leoncould order its seizure even without a search warrant. We cannot agree. Under the old Constitution 7thepower to issue a search warrant is vested in a judge or magistrate and in no other officer and no searchand seizure can be made without a proper warrant. At the time the act complained of was committed,there was no law or rule that recognized the authority of Provincial Fiscals to issue a search warrant. Inhis vain attempt to justify the seizure of the motor launch in question without a warrant Fiscal Ponce de

Leon invoked the provisions of Republic Act No. 732, which amended Sections 1674 and 1687 of theRevised Administrative Code. But there is nothing in said law which confers upon the provincial fiscal;the authority to issue warrants, much less to order without warrant the seizure of a personal property evenif it is the corpus delicti of a crime. True, Republic Act No. 732 has broadened the power of provincialfiscals to conduct preliminary investigations, but said law did not divest the judge or magistrate of itspower to determine, before issuing the corresponding warrant, whether or not probable cause existstherefor. 8

Moreover, under Sections 2 and 3 of Rule 122 of the Rules of Court 9 which complement theconstitutional provision earlier cited, two principles are made clear, namely: (1) that in the seizure of astolen property search warrant is still necessary; and (2) that in issuing a search warrant the judge alonedetermines whether or not there is a probable cause. The fact that a thing is a corpus delicti of a crime

does not justify its seizure without a warrant. As held in U.S. v. de losReyes andEsguerra,

10citingMcClurg v. Brenton:

11

The mere fact that a man is an officer, whether of high or low degree, gives him no moreright than is possessed by the ordinary private citizen to break in upon the privacy of ahome and subject its occupant to the indignity of a search for the evidence of crime,without a legal warrant procured for that purpose.No amount of incriminating evidencewhatever its source, will supply the place of such warrant. At the closed door of the homebe it palace or hovel even bloodhounds must wait till the law, by authoritative process,bids it open. (Emphasis supplied.)

Defendant-appellee Fiscal Ponce de Leon would also invoke lack of time to procure a search warrant as

an excuse for the seizure of the motor launch without one. He claimed that the motor launch had to beseized immediately in order to preserve it and to prevent its removal out of the locality, since Balabac,Palawan, where the motor launch was at the time, could only be reached after three to four days' travel byboat. 12The claim cannot be sustained. The records show that on June 15, 1962 13Fiscal Ponce de Leonmade the first request to the Provincial Commander for the impounding of the motor launch; and on June26, 1962 14another request was made. The seizure was not effected until July 6, 1962. In short, FiscalPonce de Leon had all the time to procure a search warrant had he wanted to and which he could havetaken in less than a day, but he did not. Besides, there is no basis for the apprehension that the motorlaunch might be moved out of Balabac because even prior to its seizure the motor launch was alreadywithout its engine. 15In sum, the fact that there was no time to secure a search warrant would not legallyjustify a search without one. 16

As to whether or not they are entitled to damages, plaintiffs-appellants anchor their claim for damages onArticles 32 and 2219 of the New Civil Code which provide in part as follows:

ART. 32. Any public officer or employee, or any private individual, who directly orindirectly obstructs, defeats, violates or in any manner impedes or impairs any of thefollowing rights and liberties of another person shall be liable to the latter for damages.

xxx xxx xxx

(9) The rights to be secure in one's person, house, papers, and effects againstunreasonable searches and seizures.

xxx xxx xxx


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The indemnity shall include moral damages. Exemplary damages may also beadjudicated.

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

xxx xxx xxx

(6) Illegal search;

xxx xxx xxx

(1) Acts and action referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.

Pursuant to the foregoing provisions, a person whose constitutional rights have been violated or impairedis entitled to actual and moral damages from the public officer or employee responsible therefor. Inaddition, exemplary damages may also be awarded. In the instant case, plaintiff-appellant Delfin Limclaimed that he purchased the motor launch from Jikil Taha in consideration of P3,000.00, having given

P2,000.00 as advanced payment; that since or seizure on July 6, 1962 the motor launch had been mooredat Balabac Bay and because of exposure to the elements it has become worthless at the time of the filingof the present action; that because of the illegality of the seizure of the motor launch, he suffered moraldamages in the sum of P1,000.00; and that because of the violation of their constitutional rights they wereconstrained to engage the services of a lawyer whom they have paid P1,500.00 for attorney's fees. Wefind these claims of Delfin Lim amply supported by the evidence and therefore should be awarded thesum of P3,000.00 as actual damages; P1,000.00 as moral damages and P750.00 for attorney's fees.However, with respect co plaintiff Jikil Taha, he is not entitled to recover any damage which he allegedhe had suffered from the unlawful seizure of the motor launch inasmuch as he had already transferred theownership and possession of the motor launch to Delfin Lim at the time it was seized and therefore, hehas no legal standing to question the validity of the seizure. Well settled is the rule that the legality of aseizure can be contested only by the party whose rights have been impaired thereby, and that the objection

to an unlawful search and seizure is purely personal and cannot be availed of by thirdparties. 17Consequently, one who is not the owner, lessee, or lawful occupant of the premise searchedcannot raise the question of validity of the search and seizure. 18Jikil Taha is not without recourse though.He can still collect from his co-plaintiff, Delfin Lim the unpaid balance of P1,000.00.

Defendant-appellee Fiscal Ponce de Leon wanted to wash his hands of the incident by claiming that "hewas in good faith, without malice and without the slightest intention of inflicting injury to plaintiff-appellant, Jikil Taha" 19when he ordered the seizure of the motor launch. We are not prepared to sustainhis defense of good faith. To be liable under Article 32 of the New Civil Code it is enough that there wasa violation of the constitutional rights of the plaintiffs and it is not required that defendants should haveacted with malice or bad faith. Dr. Jorge Bocobo, Chairman of the Code Commission, gave the followingreasons during the public hearings of the Joint Senate and House Committees, why good faith on the part

of the public officer or employee is immaterial. Thus:

DEAN BOCOBO. Article 32, regarding individual rights; Attorney Cirilo Paredesproposes that Article 32 be so amended as to make a public official liable for violation ofanother person's constitutional rights only if the public official acted maliciously or inbad faith. The Code Commission opposes this suggestion for these reasons:

The very nature of Article 32 is that the wrong may be civil or criminal. It is notnecessary therefore that there should be malice or bad faith. To make such a requisitewould defeat the main purpose of Article 32 which is the effective protection ofindividual rights. Public officials in the past have abused their powers on the pretext ofjustifiable motives or good faith in the performance of their duties. Precisely, the object

of the Article is to put an end to official abuse by the plea of good faith. In the UnitedStates this remedy is in he nature of a tort.

Mr. Chairman, this article is firmly one of the fundamental articles introduced in the NewCivil Code to implement democracy. There is no real democracy if a public official isabusing, and we made the article so strong and so comprehensive that it concludes anabuse of individual rights even if done in good faith, that official is liable. As a matter offact, we know that there are very few public officials who openly and definitely abuse theindividual rights of the citizens. In most cases, the abuse is justified on a plea of desire toenforce the law to comply with one's duty. And so, if we should limit the scope of thisarticle, that would practically nullify the object of the article. Precisely, the openingobject of the article is to put an end to abuses which are justified by a plea of good faith,

which is in most cases the plea of officials abusing individual rights.20


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But defendant-appellee Orlando Maddela cannot be held accountable because he impounded the motorlaunch upon the order of his superior officer. While a subordinate officer may be held liable for executingunlawful orders of his superior officer, there are certain circumstances which would warrant Maddela'sexculpation from liability. The records show that after Fiscal Ponce de Leon made his first request to theProvincial Commander on June 15, 1962 Maddela was reluctant to impound the motor launch despiterepeated orders from his superior officer. 21It was only after he was furnished a copy of the reply of

Fiscal Ponce de Leon, dated June 26, 1962, to the letter of the Provincial Commander, justifying thenecessity of the seizure of the motor launch on the ground that the subsequent sale of the launch to DelfinLim could not prevent the court from taking custody of the same, 22that he impounded the motor launchon July 6, 1962. With said letter coming from the legal officer of the province, Maddela was led tobelieve that there was a legal basis and authority to impound the launch. Then came the order of hissuperior officer to explain for the delay in the seizure of the motor launch. 23Faced with a possibledisciplinary action from his Commander, Maddela was left with no alternative but to seize the vessel. Inthe light of the above circumstances. We are not disposed to hold Maddela answerable for damages.

IN VIEW OF THE FOREGOING, the decision appealed from is hereby reversed and another one entereddeclaring the seizure illegal and ordering defendant-appellee Fiscal Francisco Ponce de Leon to pay toplaintiff-appellant Delfin Lim the sum of P3,000.00 as actual damages, plus P1,000.00 moral damages,

and, in addition, P750.00 for attorney's fees. With costs against defendant-appellee Fiscal Ponce de Leon.

SO ORDERED.

Castro (Chairman), Teehankee, Makasiar and Esguerra, JJ., concur.

Muoz Palma, J, is on leave.


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SUPREME COURTManila

SECOND DIVISION

G.R. No. 86720 September 2, 1994

MHP GARMENTS, INC., and LARRY C. DE GUZMAN,

petitioners,

versus

THE HONORABLE COURT OF APPEALS, AGNES VILLA CRUZ, MIRASOL LUGATIMAN,

and GERTRUDES GONZALES,

respondents.

Benjamin M. Dacanay for petitioners.

Emmanuel O. Tansingco for private respondents.

X ------------------------------------------------------------------------------------------------------------------------- X

DECISION

PUNO, J.:

The constitutional protection of our people against unreasonable search and seizure is not merely apleasing platitude. It vouchsafes our right to privacy and dignity against undesirable intrusions committedby any public officer or private individual. An infringement of this right justifies an award for damages.

On February 22, 1983, petitioner MHP Garments, Inc., was awarded by the Boy Scouts of thePhilippines, the exclusive franchise to sell and distribute official Boy Scouts uniforms, supplies, badges,and insignias. In their Memorandum Agreement, petitioner corporation was given the authority to"undertake or cause to be undertaken the prosecution in court of all illegal sources of scout uniforms andother scouting supplies." 1

Sometime in October 1983, petitioner corporation received information that private respondents AgnesVilla Cruz, Mirasol Lugatiman, and Gertrudes Gonzales were selling Boy Scouts items and paraphernaliawithout any authority. Petitioner de Guzman, an employee of petitioner corporation, was tasked toundertake the necessary surveillance and to make a report to the Philippine Constabulary (PC).

On October 25, 1983, at about 10:30 A.M., petitioner de Guzman, Captain Renato M. Peafiel, and two(2) other constabulary men of the Reaction Force Battalion, Sikatuna Village, Diliman, Quezon City wentto the stores of respondents at the Marikina Public Market. Without any warrant, they seized the boy andgirl scouts pants, dresses, and suits on display at respondents' stalls. The seizure caused a commotion and

embarrassed private respondents. Receipts were issued for the seized items. The items were then turnedover by Captain Peafiel to petitioner corporation for safekeeping.

A criminal complaint for unfair competition was then filed against private respondents. 2During itspendency, petitioner de Guzman exacted from private respondent Lugatiman the sum of THREETHOUSAND ONE HUNDRED PESOS (P3,100.00) in order to be dropped from the complaint. OnDecember 6, 1983, after a preliminary investigation, the Provincial Fiscal of Rizal dismissed thecomplaint against all the private respondents. On February 6, 1984, he also ordered the return of theseized items. The seized items were not immediately returned despite demands. 3Private respondents hadto go personally to petitioners' place of business to recover their goods. Even then, not all the seized itemswere returned. The other items returned were of inferior quality.

Private respondents then filed Civil Case No. 51144 against the petitioners for sums of money anddamages. 4In its Decision dated January 9, 1987, the trial court ruled for the private respondents, thus:


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WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendants,ordering the latter jointly and severally:

1. To return the amount of P3,100.00 to plaintiff Mirasol Lugatiman with interest at 12%per annum from January 12, 1984, the date of the last receipt issued, until fully paid;

2. To pay plaintiff Agnes Villa Cruz the sum of P2,000.00 for the 26 pieces of girl scoutitems not returned;

3. To pay plaintiffs the amount of P50,000.00 for and as moral damages and P15,000.00for and as exemplary damages; and

4. P5,000.00 for and as attorney's fees and litigation expenses.

Costs against the defendants.

SO ORDERED.

The decision was appealed to the respondent court. On January 18, 1989, its Fifth Division, 5affirmed theDecision with modification, thus:

WHEREFORE, the decision appealed from is AFFIRMED with MODIFICATION; and,as modified, the dispositive portion thereof now reads as follows:

Judgment is hereby rendered in favor of plaintiffs (private respondents) and againstdefendants (petitioners), ordering the latter jointly and severally;

1. To return the amount of P3,100.00 to plaintiff (respondent) Mirasol Lugatiman andcancel her application for distributor's license;

2. To pay plaintiff (respondent) Agnes Villa Cruz the sum of P2,000.00 for theunreturned 26 pieces of girl scouts items with interest at 12% per annum from June 4,1984 (date the complaint was filed) until it is fully paid;

3. To pay plaintiffs (respondents) the amount of P10,000.00 each, or a total ofP30,000.00, for and as moral damages; and P5,000.00 each, or a total of P15,000.00, forand as exemplary damages; and

4. To pay plaintiffs (respondents) P5,000.00 for and as attorney's fees and litigationexpenses.

Costs of the case a quo and the instant appeal are assessed jointly and severally againstdefendants-appellants (petitioners) MHP Garments, Inc. and Larry de Guzman.

SO ORDERED.

In this petition forcertiorari, petitioners contend:

FIRST ASSIGNMENT OF ERROR

THE COURT OF APPEALS ERRED IN IMPUTING LIABILITY FOR DAMAGES TOTHE PETITIONERS WHO DID NOT EFFECT THE SEIZURE OF THE SUBJECT

MERCHANDISE.

SECOND ASSIGNMENT OF ERROR

THE COURT OF APPEALS ERRED WHEN IT MADE A FINDING THAT THEMANNER WITH WHICH THE CONFISCATION OF PRIVATE RESPONDENTSWAS TORTIOUS BUT PENALIZED INSTEAD THE PETITIONERS WHO DID NOTCOMMIT THE ACT OF CONFISCATION.

THIRD ASSIGNMENT OF ERROR

THE COURT OF APPEALS ERRED WHEN IT FOUND FOR THE PRIVATE

RESPONDENTS AND AGAINST THE PETITIONERS.


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We affirm.

Article III, section 2, of the Constitution protects our people from unreasonable search and seizure. Itprovides:

The right of the people to be secure in their persons, houses, papers, and effects againstunreasonable searches and seizures of whatever nature for any purpose shall beinviolable, and no search warrant or warrant of arrest shall issue except upon probablecause to be determined personally by the judge after examination under oath oraffirmation of the complainant and the witnesses he may produce, and particularlydescribing the place to be searched and the persons or things to be seized.

This provision protects not only those who appear to be innocent but also those who appear to be guiltybut are nevertheless to be presumed innocent until the contrary is proved. 6In the case at bench, theseizure was made without any warrant. Under the Rules of Court, 7a warrantless search can only beundertaken under the following circumstance:

Sec. 12. Search incident to a lawful arrest. - A person lawfully arrested may be searchedfor dangerous weapons or anything which may be used as proof of the commission of anoffense, without a search warrant.

We hold that the evidence did not justify the warrantless search and seizure of private respondents' goods.Petitioner corporation received information that private respondents were illegally selling Boy Scoutsitems and paraphernalia in October 1983. The specific date and time are not established in the evidenceadduced by the parties. Petitioner de Guzman then made a surveillance of the stores of privaterespondents. They reported to the Philippine Constabulary and on October 25, 1983, the raid was made onthe stores of private respondents and the supposed illicit goods were seized. The progression of timebetween the receipt of the information and the raid of the stores of private respondents shows there wassufficient time for petitioners and the PC raiding party to apply for a judicial warrant. Despite thesufficiency of time, they did not apply for a warrant and seized the goods of private respondents. In doingso, they took the risk of a suit for damages in case the seizure would be proved to violate the right ofprivate respondents against unreasonable search and seizure. In the case at bench, the search and seizurewere clearly illegal. There was no probable cause for the seizure. Probable cause for a search has beendefined as "such facts and circumstances which would lead a reasonably discreet and prudent man tobelieve that an offense has been committed and that the objects sought in connection with the offense arein the place sought to be searched." 8These facts and circumstances were not in any way shown by thepetitioners to justify their warrantless search and seizure. Indeed, after a preliminary investigation, theProvincial Fiscal of Rizal dismissed their complaint for unfair competition and later ordered the return ofthe seized goods.

Petitioners would deflect their liability with the argument that it was the Philippine Constabulary thatconducted the raid and their participation was only to report the alleged illegal activity of privaterespondents.

While undoubtedly, the members of the PC raiding team should have been included in the complaint forviolation of the private respondents' constitutional rights, still, the omission will not exculpate petitioners.

In the case ofLim vs. Ponce de Leon, 9we ruled for the recovery of damages for violation ofconstitutional rights and liberties from public officer or private individual, thus:

Art. 32. Any public officer oremployee, or any private individual, who directly orindirectly obstructs, defeats, violates or in any manner impedes or impairs any of thefollowing rights and liberties of another person shall be liable to the latter for damages.

xxx xxx xxx

(9) The rights to be secure in one's person, house, papers, and effects againstunreasonable searches and seizures.

xxx xxx xxx

The indemnity shall include moral damages. Exemplary damages may also be adjudged.

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

xxx xxx xxx


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(6) Illegal search;

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

Pursuant to the foregoing provisions, a person whose constitutional rights have beenviolated or impaired is entitled to actual and moral damages from the public officeroremployee responsible therefor. In addition, exemplary damages may also be awarded.

xxx xxx xxx

The very nature of Article 32 is that the wrong may be civil or criminal. It is notnecessary therefore that there should be malice or bad faith. To make such a requisitewould defeat the main purpose of Article 32 which is the effective protection ofindividual rights. Public officials in the past have abused their powers on the pretext ofjustifiable motives or good faith in the performance of their duties. Precisely, the objectof the Article is to put an end to official abuse by plea of the good faith. In the UnitedStates this remedy is in the nature of a tort. (emphasis supplied)

In the subsequent case ofAberca vs. Ver, 10the CourtEn Banc explained the liability of persons indirectlyresponsible, viz:

[T]he decisive factor in this case, in our view, is the language of Article 32. The lawspeaks of an officer oremployee or person "directly or indirectly"responsible for theviolation of the constitutional rights and liberties of another. Thus, it is not the actor alone(i.e., the one directly responsible) who must answer for damages under Article 32; theperson indirectly responsible has also to answer for the damages or injury caused to theaggrieved party.

xxx xxx xxx

While it would certainly be too naive to expect that violators of human rights wouldeasily be deterred by the prospect of facing damages suits, it should nonetheless be madeclear in no uncertain terms that Article 32 of the Civil Code makes the persons who aredirectly, as well as indirectly, responsible for the transgression joint tortfeasors.

xxx xxx xxx

[N]either can it be said that only those shown to have participated "directly" should beheld liable. Article 32 of the Civil Code encompasses within the ambit of its provisionsthose directly, as well as indirectly, responsible for its violations. (emphasis supplied)

Applying the aforecited provisions and leading cases, the respondent court correctly granted damages toprivate respondents. Petitioners were indirectly involved in transgressing the right of private respondentsagainst unreasonable search and seizure. Firstly, they instigated the raid pursuant to their covenant in theMemorandum Agreement to undertake the prosecution in court of all illegal sources of scoutingsupplies. 11As correctly observed by respondent court:

Indeed, the acts committed by the PC soldiers of unlawfully seizing appellees'(respondents') merchandise and of filing the criminal complaint for unfair competitionagainst appellees (respondents) were for the protection and benefit of appellant(petitioner) corporation. Such being the case, it is, thus, reasonably fair to infer fromthose acts that it was upon appellant (petitioner) corporation's instance that the PC

soldiers conducted the raid and effected the illegal seizure. These circumstances should

answer the trial court's query

posed in its decision now under consideration

as towhy the PC soldiers immediately turned over the seized merchandise to appellant(petitioner) corporation. 12

The raid was conducted with the active participation of their employee. Larry de Guzman did not lift afinger to stop the seizure of the boy and girl scouts items. By standing by and apparently assentingthereto, he was liable to the same extent as the officers themselves. 13So with the petitioner corporationwhich even received for safekeeping the goods unreasonably seized by the PC raiding team and deGuzman, and refused to surrender them for quite a time despite the dismissal of its complaint for unfaircompetition.

Secondly, Letter of Instruction No. 1299 was precisely crafted on March 9, 1983 to safeguard not only the

privilege of franchise holder of scouting items but also the citizen's constitutional rights, to wit:


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TITLE: APPREHENSION OF UNAUTHORIZEDMANUFACTURERS AND DISTRIBUTORS OF SCOUTPARAPHERNALIA AND IMPOUNDING OF SAIDPARAPHERNALIA.

ABSTRACT:

Directs all law enforcement agencies of the Republic of the Philippines, to apprehendimmediately unauthorized manufacturers and distributors of Scout paraphernalia, upon

proper application by the Boy Scouts of the Philippines and/or Girl Scouts of the

Philippines for warrant of arrest and/or search warrant with a judge, or such otherresponsible officer as may be authorized by law; and to impound the said paraphernalia tobe used as evidence in court or other appropriate administrative body. Ordersthe immediate and strict compliance with the Instructions. 14

Under the above provision and as aforediscussed, petitioners miserably failed to report the unlawfulpeddling of scouting goods to the Boy Scouts of the Philippines for the proper application of a warrant.Private respondents' rights are immutable and cannot be sacrificed to transient needs. 15Petitioners did nothave the unbridled license to cause the seizure of respondents' goods without any warrant.

And thirdly, if petitioners did not have a hand in the raid, they should have filed a third-party complaintagainst the raiding team for contribution or any other relief, 16in respect of respondents' claim forRecovery of Sum of Money with Damages. Again, they did not.

We have consistently ruled that moral damages are not awarded to penalize the defendant but tocompensate the plaintiff for the injuries he may have suffered. 17Conformably with our ruling inLim vs.

Ponce de Leon, op. cit., moral damages can be awarded in the case at bench. There can be no doubt thatpetitioners must have suffered sleepless nights, serious anxiety, and wounded feelings due the tortiousraid caused by petitioners. Private respondents' avowals of embarrassment and humiliation during theseizure of their merchandise were supported by their testimonies. Respondent Cruz declared:

I felt very nervous. I was crying to loss (sic) my goods and capital because I am doingbusiness with borrowed money only, there was commotion created by the raiding teamand they even stepped on some of the pants and dresses on display for sale. All passersbystopped to watch and stared at me with accusing expressions. I was trembling and terriblyashamed, sir. 18

Respondent Lugatiman testified:

I felt very nervous. I was crying and I was very much ashamed because many peoplehave been watching the PC soldiers hauling my items, and many/I (sic) heard say "nakaw

pala ang mga iyan" for which I am claiming P25,000.00 for damages.19

While respondent Gonzalez stated thus:

I do not like the way the raid was conducted by the team sir because it looked like thatwhat I have been selling were stolen items that they should be confiscated by uniformedsoldiers. Many people were around and the more the confiscation was made in ascandalous manner; every clothes, T-shirts, pants and dresses even those not wrappeddropped to the ground. I was terribly shamed in the presence of market goers thatmorning.20

Needles to state, the wantonness of the wrongful seizure justifies the award of exemplary damages. 21It

will also serve as a stern reminder to all and sundry that the constitutional protection against unreasonablesearch and seizure is a virile reality and not a mere burst of rhetoric. The all encompassing protectionextends against intrusions directly done both by government and indirectly by private entities.

IN VIEW WHEREOF, the appealed decision is AFFIRMED WITH MODIFICATION. We impose a SIXPERCENT (6%) interest from January 9, 1987 on the TWO THOUSAND PESOS (P2,000.00) for theunreturned twenty-six (26) pieces of girl scouts items and a TWELVE PERCENT (12%) interest, in lieuof SIX PERCENT (6%), on the said amount upon finality of this Decision until the paymentthereof. 22Costs against petitioners.

SO ORDERED.

Narvasa, Padilla, Regalado, and Mendoza, JJ., concur.


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SUPREME COURTManila

EN BANC

G.R. No. L-13505 February 4, 1919

GEO. W. DAYWALT,

plaintiff-appellant,

versus

LA CORPORACION DE LOS PADRES AGUSTINOS RECOLETOS, ET AL.,

defendants-appellees.

C. C. Cohn and Thos. D. Aitken for appellant.

Crossfield & O'Brien for appellee.

X ------------------------------------------------------------------------------------------------------------------------- X

DECISION

STREET, J.:

In the year 1902, Teodorica Endencia, an unmarried woman, resident in the Province of Mindoro,executed a contract whereby she obligated herself to convey to Geo. W. Daywalt, a tract of land situatedin the barrio of Mangarin, municipality of Bulalacao, now San Jose, in said province. It was agreed that adeed should be executed as soon as the title to the land should be perfected by proceedings in the Court ofLand Registration and a Torrens certificate should be produced therefore in the name of TeodoricaEndencia. A decree recognizing the right of Teodorica as owner was entered in said court in August 1906,but the Torrens certificate was not issued until later. The parties, however, met immediately upon theentering of this decree and made a new contract with a view to carrying their original agreement intoeffect. This new contract was executed in the form of a deed of conveyance and bears date of August 16,1906. The stipulated price was fixed at P4,000, and the area of the land enclosed in the boundariesdefined in the contract was stated to be 452 hectares and a fraction.

The second contract was not immediately carried into effect for the reason that the Torrens certificate wasnot yet obtainable and in fact said certificate was not issued until the period of performance contemplatedin the contract had expired. Accordingly, upon October 3, 1908, the parties entered into still anotheragreement, superseding the old, by which Teodorica Endencia agreed upon receiving the Torrens title tothe land in question, to deliver the same to the Hongkong and Shanghai Bank in Manila, to be forwardedto the Crocker National Bank in San Francisco, where it was to be delivered to the plaintiff upon paymentof a balance of P3,100.

The Torrens certificate was in time issued to Teodorica Endencia, but in the course of the proceedingsrelative to the registration of the land, it was found by official survey that the area of the tract inclosed inthe boundaries stated in the contract was about 1.248 hectares of 452 hectares as stated in the contract. Inview of this development Teodorica Endencia became reluctant to transfer the whole tract to the

purchaser, asserting that she never intended to sell so large an amount of land and that she had beenmisinformed as to its area.

This attitude of hers led to litigation in which Daywalt finally succeeded, upon appeal to the SupremeCourt, in obtaining a decree for specific performance; and Teodorica Endencia was ordered to convey theentire tract of land to Daywalt pursuant to the contract of October 3, 1908, which contract was declared tobe in full force and effect. This decree appears to have become finally effective in the early part of theyear 1914.1

The defendant, La Corporacion de los Padres Recoletos, is a religious corporation, with its domicile in thecity of Manila. Said corporation was formerly the owner of a large tract of land, known as the San JoseEstate, on the island of Mindoro, which was sold to the Government of the Philippine Islands in the year1909. The same corporation was at this time also the owner of another estate on the same island


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immediately adjacent to the land which Teodorica Endencia had sold to Geo. W. Daywalt; and for manyyears the Recoletos Fathers had maintained large herds of cattle on the farms referred to. Theirrepresentative, charged with management of these farms, was father Isidoro Sanz, himself a members ofthe order. Father Sanz had long been well acquainted with Teodorica Endencia and exerted over her aninfluence and ascendency due to his religious character as well as to the personal friendship which existedbetween them. Teodorica appears to be a woman of little personal force, easily subject to influence, and

upon all the important matters of business was accustomed to seek, and was given, the advice of fatherSanz and other members of his order with whom she came in contact.

Father Sanz was fully aware of the existence of the contract of 1902 by which Teodorica Endencia agreedto sell her land to the plaintiff as well as of the later important developments connected with the history ofthat contract and the contract substituted successively for it; and in particular Father Sanz, as well as othermembers of the defendant corporation, knew of the existence of the contract of October 3, 1908, which,as we have already seen finally fixed the rights of the parties to the property in question. When theTorrens certificate was finally issued in 1909 in favor of Teodorica Endencia, she delivered it forsafekeeping to the defendant corporation, and it was then taken to Manila where it remained in thecustody and under the control of P. Juan Labarga the procurador and chief official of the defendantcorporation, until the deliver thereof to the plaintiff was made compulsory by reason of the decree of the

Supreme Court in 1914.

When the defendant corporation sold the San Jose Estate, it was necessary to bring the cattle off of thatproperty; and, in the first half of 1909, some 2,368 head were removed to the estate of the corporationimmediately adjacent to the property which the plaintiff had purchased from Teodorica Endencia. AsTeodorica still retained possession of said property Father Sanz entered into an arrangement with herwhereby large numbers of cattle belonging to the defendant corporation were pastured upon said landduring a period extending from June 1, 1909, to May 1, 1914.

Under the first cause stated in the complaint in the present action the plaintiff seeks to recover from thedefendant corporation the sum of P24,000, as damages for the use and occupation of the land in questionby reason of the pasturing of cattle thereon during the period stated. The trial court came to the conclusion

that the defendant corporation was liable for damages by reason of the use and occupation of the premisesin the manner stated; and fixed the amount to be recovered at P2,497. The plaintiff appealed and hasassigned error to this part of the judgment of the court below, insisting that damages should have beenawarded in a much larger sum and at least to the full extent of P24,000, the amount claimed in thecomplaint.

As the defendant did not appeal, the property of allowing damages for the use and occupation of the landto the extent o P2,497, the amount awarded, is not now in question an the only thing here to beconsidered, in connection with this branch of the case, is whether the damages allowed under this headshould be increased. The trial court rightly ignored the fact that the defendant corporation had paidTeodorica Endencia of ruse and occupation of the same land during the period in question at the rate ofP425 per annum, inasmuch as the final decree of this court in the action for specific performance is

conclusive against her right, and as the defendant corporation had notice of the rights of the plaintiffunder this contract of purchase, it can not be permitted that the corporation should escape liability in thisaction by proving payment of rent to a person other than the true owner.

With reference to the rate of which compensation should be estimated the trial court came to thefollowing conclusion:

As to the rate of the compensation, the plaintiff contends that the defendant corporationmaintained at leas one thousand head of cattle on the land and that the pasturage was of the valueof forty centavos per head monthly, or P4,800 annually, for the whole tract. The court can notaccept this view. It is rather improbable that 1,248 hectares of wild Mindoro land would furnishsufficient pasturage for one thousand head of cattle during the entire year, and, considering thelocality, the rate of forty centavos per head monthly seems too high. The evidence shows thatafter having recovered possession of the land the plaintiff rented it to the defendant corporationfor fifty centavos per hectares annually, the tenant to pay the taxes on the land, and this appears tobe a reasonable rent. There is no reason to suppose that the land was worth more for grazingpurposes during the period from 1909 to 1913, than it was at the later period. Upon this basis theplaintiff is entitled to damages in the sum of p2,497, and is under no obligation to reimburse thedefendants for the land taxes paid by either of them during the period the land was occupied bythe defendant corporation. It may be mentioned in this connection that the Lontok tract adjoiningthe land in question and containing over three thousand hectares appears to have been leased foronly P1,000 a year, plus the taxes.

From this it will be seen that the trial court estimated the rental value of the land for grazing purposes at50 centavos per hectare per annum, and roughly adopted the period of four years as the time for which


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compensation at that rate should be made. As the court had already found that the defendant was liable forthese damages from June, 1, 1909, to May 1, 1914, or a period of four years and eleven months, thereseems some ground for the contention made in the appellant's first assignment of error that the court'scomputation was erroneous, even accepting the rule upon which the damages were assessed, as it ismanifest that at the rate of 50 centavos per hectare per annum, the damages for four years and elevenmonths would be P3,090.

Notwithstanding this circumstance, we are of the opinion that the damages assessed are sufficient tocompensate the plaintiff for the use and occupation of the land during the whole time it was used. There isevidence in the record strongly tending to show that the wrongful use of the land by the defendant was notcontinuous throughout the year but was confined mostly to the reason when the forage obtainable on theland of the defendant corporation was not sufficient to maintain its cattle, for which reason it becamenecessary to allow them to go over to pasture on the land in question; and it is not clear that the whole ofthe land was used for pasturage at any time. Considerations of this character probably led the trial court toadopt four years as roughly being the period during which compensation should be allowed. But whetherthis was advertently done or not, we see no sufficient reason, in the uncertainty of the record withreference to the number of the cattle grazed and the period when the land was used, for substituting ourguess for the estimate made by the trial court.

In the second cause of action stated in the complaint the plaintiff seeks to recover from the defendantcorporation the sum of P500,000, as damages, on the ground that said corporation, for its own selfishpurposes, unlawfully induced Teodorica Endencia to refrain from the performance of her contract for thesale of the land in question and to withhold delivery to the plaintiff of the Torrens title, and further,maliciously and without reasonable cause, maintained her in her defense to the action of specificperformance which was finally decided in favor of the plaintiff in this court. The cause of acti

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