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G.R. No. L-54598 April 15, 1988
JOSE B. LEDESMA, petitioner,
vs.
HON. COURT OF APPEALS, Spouses PACIFICO DELMO and SANCHA DELMO (as private respondents),respondents.
The Solicitor General for petitioner.
Luzel D. Demasu-ay for respondent.
GUTIERREZ, JR., J.:
This petition seeks to reverse the decision of the respondent Court of Appeals which afirmed the decision of the Court of Fir st
Instanceof Iloilo,adjudgingthepetitioner, who was then the Presidentof the West Visayas Collegeliablefor damages under Article
27 of the Civil Codeof the Philippines for failureto graduate a student with honors.
The facts are not disputed.
An organization named Student Leadership Club was formed by some students of the West Visayas College.They elected the late
Violets Delmo as the treasurer. In that capacity,Delmo extended loans fromthe funds of the club to some of the students of the
school."the petitioner claims thatthe said actof extending loans was againstschool rules and regulations.Thus,the petitioner, as
President of the School,sent a letter to Delmo informingher that she was being dropped from the membership of the club and that
she would not be a candidatefor any award or citation fromthe school.
Delmo asked for a reconsideration of the decision butthe petitioner denied it. Delmo, thus, appealed to the Office of the Director of
the Bureau of Public Schools.
The Director after due investigation,rendered a decison on April 13,1966 which provided:
Records of the preliminary investigation conducted by one of the legal officers of this Officedisclosed the
following:That Violeta Delmo was the treasurer of the Student Leadership Club,an exclusivestudent organization;
that pursuantto ArticleIX of the of the Constitution and By-Laws of the club, itpassed Resolution No. 2,
authorizingthe treasurer to disbursefunds of the Club to student for financial aid and other humanitarian
purposes;that in compliancewith said resolution and as treasurer of the Club,Violeta Delmo extended loans to
some officers and members of the Club upon proper application duly approved by the majority of the members of
the Executive Board; and that upon receivingthe report from Mr. Jesse Dagoon, adviser of the funds of the Club,
that Office conducted an investigation on the matter and havingbeen convinced of the guiltof Violets Delmo and
the other officers and members of the Club, that Office rendered the order or decision in question.In justifying

2. that Office's order or decision,itis contended that approval by that Office of the Constitution and By-Laws of the
Club is necessary for its effectivity and validity and sinceitwas never submitted to that Office, the Club had no
valid constitution and By-Laws and that as a consequence, Resolution No. 2 which was passed based on the
Constitution and By-Laws- is without any force and effect and the treasurer,Violeta Delmo, who extended loans to
some officers and members of the Club pursuantthereto are illegal (sic),hence, she and the other students
involved are deemed guilty of misappropriatingthefunds of the Club.On the other hand, Raclito Castaneda,
Nestor Golez and Violeta Delmo, President, Secretary and Treasurer of the Club,respectively, testified that the
Club had adopted its Constitution and By-Laws in a meeting held lastOctober 3, 1965,and that pursuantto Article
I of said Constitution and By-Laws, the majority of the members of the Executive Board passed Resolution No. 2,
which resolution became the basisfor the extension on of loans to some officers and members of the Club,that
the Club honestly believed that its Constitution and By-Laws has been approved by the superintendent because
the adviser of the Club, Mr. Jesse Dagoon, assured the President of the Club that he will causethe approval of the
Constitution and By-Laws by the Superintendent; the officers of the Club have been inducted to officeon October
9,1965 by the Superintendent and that the Club had been likewiseallowed to cosponsor the Education Week
Celebration.
After a careful study of the records, this Officesustainstheaction taken by the Superintendent in penalizingthe
adviser of the Club as well as the officers and members thereof by droppingthem from membership therein.
However, this Officeis convinced that Violets M. Delmo had acted in good faith,in her capacity as Club Treasurer,
in extending loans to the officers and members of the Student partnership Club.Resolution No. 2 authorizingthe
Club treasurer to dischargefinds to students in need of financial assistanceand other humanitarian purposes had
been approved by the Club adviser,Mr. Jesse Dagoon, with the notation that approval was given in his capacity as
adviser of the Club and extension of the Superintendent's personality.Asidefrom misleadingthe officers and
members of the Club,Mr. Dagoon, had unsatisfactorily explained why he failed to give the Constitution and By-
Laws of the Club to the Superintendent for approval despitehis assuranceto the Club president that he would do
so. With this findingof negligence on the partof the Club adviser,not to mention laxity in the performance of his
duties as such,this Officeconsiders as too severe and unwarranted that portion of the questioned order stating
that Violeta Delmo "shall notbe a candidatefor any award or citati on from this school or any organization in this
school."Violeta Delmo, itis noted, has been a consistentfull scholar of the school and shealonehas maintained
her scholarship.Thedecision in question would,therefore, set at naught all her sacrificea nd frustrateher dreams
of graduatingwith honors in this year's commencement exercises.
In view of all theforegoing, this Officebelieves and so holds and hereby directs that appellantVioleta.M. Delmo,
and for that matter all other Club members or officers involved in this case,be not deprived of any award,citation
or honor from the school,if they areotherwise entitled thereto. (Rollo,pp. 28-30)
On April 27,1966, the petitioner received by mail the decision of the Director and all the records of the case.On the same day,
petitioner received a telegram statingthe following:
"AIRMAIL RECORDS DELMO CASE MISSENT THAT OFFICE"
The Director asked for the return only of the records but the petitioner allegedly mistook the telegram as orderinghim to al so send
the decision back.On the same day, he returned by mail all therecords plus the decision of the Director to the Bureau of Public
Schools.
The next day, the petitioner received another telegram from the Director order him to furnish Delmo with a copy of the decision.
The petitioner, in turn, sent a night letter to the Director informingthe latter that he had sent the decision back and that he had not
retained a copy thereof..
On May 3, 1966,the day of the graduation,the petitioner received another telegram from the Director orderinghim not to deprive
Delmo of any honors due her. As it was impossibleby this time to includeDelmo's name in the program as one of the honor
students, the petitioner let her graduate as a plain studentinstead of being awarded the Latin honor of Magna Cum Laude.
To delay the matter further, the petitioner on May 5, 1966, wrote the Director for a reconsideration of the latters" decision because
he believed that Delmo should not be allowed to graduatewith honors. The Director denied the petitioner's request.
On July 12, 1966,the petitioner finally instructed the Registrar of the school to enter into the scholastic records of Delmo the honor,
"Magna Cum Laude."

3. On July 30, 1966,Delmo, then a minor, was joined by her parents in flagaction for damages againstthepetitioner. Duringthe
pendency of the action,however, Delmo passed away,and thus, an Amended and Supplemental Complaintwas filed by her parents
as her soleand only heirs.
The trial courtafter hearingrendered judgment againstthe petitioner and in favor of the spouses Delmo. The court said:
Let us go to specific badges of the defendants (now petitioners) bad faith.Per investigation of Violeta Delmo's
appeal to Director Vitaliano Bernardino of the Bureau of Public Schools(ExhibitLitwas the defendant who
inducted the officers of the Student Leadership Club on October 9, 1965. In fact the Club was allowed to cosponsor
the Education Week Celebration.(Exh. "L"). If the defendant he not approve of the constitution and by-laws of the
Club, why did he inductthe officers into office and allowthe Club to sponsor the Education Week Celebration"? It
was through his own actthat the students were misled to do as they did. Coupled with the defendants tacit
recognition of the Club was the assuranceof Mr. Jemm Dagoon, Club Adviser, who made the students believe that
he was actingas an extension of Mr. Ledesma's personality.(Exhibit"L").
Another badge of the defendan'ts want of good faith is the factthat, although, he kaew as early as April 27,1966
that per on of r Bernardino,Exhibit"L," he was directed to give honors to Miss Delmo, he kept Id information to .
He told the Court that he knew that the letter of Director Bernardino directed him not to deprive Miss Delmo the
honors due her, but she (sic) says thathe has not finished readingthe letter-decision,Exhibit"L," of Director
Bernardino 0, him to give honors to Miss Delmo.(Tsn, Feb. 5, 1974,testimony of Mr. Ledesma, pp. .33-35). It could
not be true that he has not finished readingthe letter-decision,Exh. "L," becausesaid letter consisted of only three
pages, and the portion which directed that Miss Delmo "be not deprived of any award,citation or honor from the
school,if otherwise entitled thereto is found at the lastparagraph of the same. How did he know the last
paragraph if he did not read the letter.
Defendants actuations regardingMissDelmo's camhad been one of bias and prejudice.When his action would
favor him, he was deliberate and aspectto the utter prejudiceand detriment of Miss Delmo. Thus, although, as
early as April 27,1966,he knew of the exoneration of Miss Delino by Director Bernardino,he withheld the
information from Miss Delmo. This is eloquently dramatized by Exh. "11" and Exh. "13" On April 29,1966,Director
Bernardino cabled himto furnish Violeta Delmo copy of the Decision,Exh. "L," but instead of informingMiss Delmo
about the decision,sincehesaid he mailed back the decision on April 28,1966,he sent a night letter on April
29,1966,to Director Bernardino,informingthe latter that he had returned the decision (Exh. "l3"), together with
the record. Why a night letter when the matter was of utmost urgency to the parties in the case,because
graduation day was only four days ahead? An examination of the telegrams sent by the defendant shows that he
had been sendingordinary telegram and not nightletters. (Exh. "5", Exhibit"7"). At least, if the defendant could
not furnish a copy of the decision,(Exh. "L"), to Miss Delmo, he should have told her about itor that Miss Delmo's
honors and citation in the commencement be announced or indicated.But Mr. Ledesma is one who cannot admit
a mistake. Very ungentlemanly this is home out by his own testimony despite his knowledge that his decision to
deprive Miss Delmo of honors due to her was overturned by Director Bernardino,he on his wrong belief.To quote
the defendant,1 believed that she did not deserve those honors(Tsn Feb. 5, 1974,p. 43,Empasized supplied).
Despite the telegram of Director Bernardino which the defendant received hours before the commencement
executory on May 3-4,1966,he did not obey Director Bernardino becausehe said in his testimony that he would
be embarrassment. Tan Feb 5,1974, P. 46). Evidently, he knew only his embarrassmentand not that of r
Bernardino whose order was being flagrantly and wantonly disregarded by bim And certainly,not the leastof Miss
Delmo's embarrassment. His acts speak eloquently of ho bad faith and unjustof mindwarped by his delicate
sensitivity for havingbeen challenged by Miss Delmo, a mere student.
xxx xxx xxx
Finally thedefendant's behaviour relativeto Miss s casesmacks of contemptuous arrogance,oppression and abuse
of power. Come to think of it. He refused to obey the directiveof Be o and instead,chose to feign ignoranceof it."
(Reward on Appeal, p. 72-76).
The trial courtawarded P20,000.00 to the estate of Violeta Delmo and P10,000.00 to her parents for moral damages; P5,000.00 for
nominal damages to Violeta's estate; exemplary damages of P10,000.00 and P2,000.00 attorney's fees.
On appeal,the Court of Appeals affirmed the decision.Hence, this petition.
The issues raised in this petition can be reduced to the solequestion of whether or not the respondent Court of Appeal s erred in
affirmingthe trial court's findingthatpetitioner is liablefor damages under Article27 of the New Civil Code.

4. We find no reason why the findings of the trial and appellatecourts should bereversed. It cannotbe disputed that Violeta Delmo
went through a painful ordeal which was broughtabout by the petitioner's neglect of duty and callousness.Thus,moral damages are
but proper. As we have affirmed in the caseof (Prudenciado v. AllianceTransportSystem, Inc.,148 SCRA 440, 448):
There is no argument that moral damages includephysical suffering,mental anguish,fright,serious anxiety,
besmirched reputation, wounded feelings,moral shock,social humiliation,and similarinjury.Though incapableof
pecuniary computation, moral damages may be recovered if they are the proximate resultof defendant's wrongly
act or omission."(People v. Baylon,129 SCRA 62 (1984).
The Solicitor-General tries to cover-up the petitioner's deliberate omission to informMiss Delmo by statingthat it was not the duty
of the petitioner to furnish her a copy of the Director's decision.Grantingthis to be true, itwas nevertheless the petitioner's duty to
enforce the said decision.He could havedone so consideringthathe received the decision on April 27, 1966 and even though he
sent it back with the records of the case, he undoubtedly read the whole of itwhich consisted of only three pages. Moreover, the
petitioner should havehad the decency to meet with Mr. Delmo, the girl's father,and inform the latter, at the very leastof the
decision.This,the petitioner likewisefailed to do, and not without the attendant bad faith which the appellatecourt correctly
pointed out in its decision,to wit:
Third, assumingthatdefendant could not furnish Miss Delmo of a copy of the decision,he could have used his
discretion and plain common sense by informingher about itor he could havedirected the inclusion of Miss
Delmo's honor in the printed commencement program or announced it duringthe commencement exercises.
Fourth, defendant despite receipt of the telegram of Director Benardino hours before the commencement
exercises on May 3-4, 1966, disobeyed his superior by refusingto give the honors due Miss Delmo with a lame
excuse that he would be embarrassed if he did so,to the prejudiceof and in complete disregard of Miss Delmo's
rights.
Fifth, defendant did not even extend the courtesy of meeting Mr. Pacifico Delmo,father of Miss Delmo, who tried
several times to see defendant in his officethus Mr. Delmo suffered extreme disappointment and humiliation.
xxx xxx xxx
Defendant, being a public officer should haveacted with circumspection and due regard to the rights of Miss
Delmo. Inasmuch as he exceeded the scopeof his authority by defiantly disobeyingthe lawful directive of his
superior,Director Bernardino,defendant is liablefor damages in his personal capacity... . (Rollo,pp- 57-58)
Based on the undisputed facts,exemplary damages arealso in order. In the same caseof Prudenciado v. Alliance Transport System,
Inc., supra., atp. 450,we ruled:
The rationalebehind exemplary or corrective damages is,as the name implies,to providean example or correction
for the public good (Lopez, et al.v. Pan American World Airways,16 SCRA 431).
However, we do not deem itappropriateto award the spouses Delmo damages in the amount of P10,000.00 in
their individual capacity,separately fromand in addition to what they are already entitled to as soleheirs of the
deceased Violeta Delmo. Thus, the decision is modified insofar as moral damages areawarded to the spouses in
their own behalf.
WHEREFORE, the petition is DISMISSED for lack of merit. The decision of the Court of Appeals is AFFIRMED with the slight
modification as stated in the preceding paragraph.This decision isimmediately executory.
SO ORDERED.
Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.

5. G.R. No. L-39999 May 31, 1984
ROY PADILLA, FILOMENO GALDONES, ISMAEL GONZALGO and JOSE FARLEY BEDENIA, petitioners,
vs.
COURT OF APPEALS, respondent.
Sisenando Villaluz, Sr. for petitioners.
The Solicitor General for respondent.
GUTIERREZ, JR., J.:
This is a petition for review on certiorari of a Court of Appeals' decision which reversed the trial court's judgment of conviction and
acquitted the petitioners of the crime of grave coercion on the ground of reasonabledoubt but inspiteof the acquittal order ed them
to pay jointly and severally theamount of P9,000.00 to the complainants asactual damages.
The petitioners were charged under the followinginformation:
The undersigned Fiscal accused ROYPADILLA, FILOMENO GALDONES, PEPITO BEDENIA, YOLLY RICO, DAVID
BERMUNDO, VILLANOAC, ROBERTO ROSALES, VILLANIA, ROMEO GARRIDO, JOSE ORTEGA, JR., RICARDO
CELESTINO, REALINGO alias"KAMLON", JOHN DOE aliasTATO, and FOURTEEN (14) RICARDO DOES of the crime of
GRAVE COERCION, committed as follows:
That on or about February 8, 1964 at around 9:00 o'clock in the morning, in the municipality of Jose Panganiban,
provinceof Camarines Norte, Philippines,and within the jurisdiction of this HonorableCourt,the above- named
accused,Roy Padilla,Filomeno Galdones,Pepito Bedenia, Yolly Rico,David Bermundo, Villanoac,Roberto Rosales,
Villania,Romeo Garrido,JoseOrtega, Jr., Ricardo Celestino,Realingo aliasKamlon,John Doe aliasTato,and
Fourteen Richard Does,by confederating and mutually helpingone another, and actingwithout any authority of
law,did then and there wilfully,unlawfully,and feloniously,by means of threats, force and violence prevent
Antonio Vergara and his family to closetheir stall located atthe Public Market, BuildingNo. 3, Jose Panganiban,
Camarines Norte, and by subsequently forcibly openingthe door of said stall and thereafter brutally demolishing
and destroying said stall and thefurnitures therein by axes and other massiveinstruments,and carryingaway the
goods, wares and merchandise,to the damage and prejudiceof the said Antonio Vergara and his family in the

6. amount of P30,000.00 in concept of actual or compensatory and moral damages, and further the sum of
P20,000.00 as exemplary damages.
That in committing the offense, the accused took advantage of their public positions:Roy Padilla,beingthe
incumbent municipal mayor,and the rest of the accused being policemen, except Ricardo Celestino who is a
civilian,all of JosePanganiban,Camarines Norte, and that itwas committed with evident premeditation.
The Court of FirstInstanceof Camarines Norte, Tenth Judicial Districtrendered a decision,the dispositiveportion of which states
that:
IN VIEW OF THE FOREGOING, the Court finds the accused Roy Padilla,Filomeno Galdonez,Ismael Gonzalgo and Jose Parley Bedenia
guilty beyond reasonabledoubtof the crimeof grave coercion,and hereby imposes upon them to suffer an imprisonment of FIVE (5)
months and One (1) day; to pay a fineof P500.00 each; to pay actual and compensatory damages in the amount of P10,000.00;
moral damages in the amount of P30,000.00; and another P10,000.00 for exemplary damages, jointly and severa lly,and all the
accessory penalties provided for by law; and to pay the proportionate costs of this proceedings.
The accused Federico Realingo alias'Kamlon',David Bermundo, Christopher Villanoac,Godofredo Villania,Romeo
Garrido,Roberto Rosales,Ricardo Celestino and JoseOrtega, are hereby ordered acquitted on grounds of
reasonabledoubt for their criminal participation in thecrime charged.
The petitioners appealed the judgment of conviction to the Court of Appeals. They contended that the trial cour t's findingof grave
coercion was not supported by the evidence. Accordingto the petitioners, the town mayor had the power to order the clearance of
market premises and the removal of the complainants' stall becausethe municipality had enacted municipal ordinances pursuantto
which the market stall was a nuisanceper se. The petitioners stated that the lower courterred in findingthat the demolition of the
complainants' stall was a violation of the very directive of the petitioner Mayor which gave the stall owners seventy two (72) hours
to vacatethe market premises. The petitioners questioned the imposition of prison terms of five months and one day and of
accessory penalties provided by law.They also challenged the order to pay fines of P500.00 each, P10,000.00 actual and
compensatory damages, P30,000.00 moral damages,P10,000.00 exemplary damages, and the costs of the suit.
The dispositiveportion of the decision of the respondent Court of Appeals states:
WHEREFORE, we hereby modify the judgment appealed from in the sense that the appellants areacquitted on
ground of reasonabledoubt. but they areordered to pay jointly and severally to complainants theamount of
P9,600.00,as actual damages.
The petitioners filed a motion for reconsideration contendingthat the acquittal of the defendants-appellants as to criminal liability
results in the extinction of their civil liability.The Court of Appeals denied the motion holdingthat:
xxx xxx xxx
... appellants' acquittal was based on reasonabledoubtwhether the crime of coercion was committed, not on facts
that no unlawful actwas committed; as their takingthe lawinto their hands,destructing(sic) complainants'
properties is unlawful,and,as evidence on record established thatcomplainants suffered actual damages,the
imposition of actual damages is correct.
Consequently, the petitioners filed this special civil action,contendingthat:
I
THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW OR GRAVELY ABUSED ITS DISCRETION IN IMPOSING
UPON PETITIONERS PAYMENT OF DAMAGES TO COMPLAINANTS AFTER ACQUITTING PETITIONERS OF THE CRIME
CHARGED FROM WHICH SAID LIABILITY AROSE.
II
THE COURT OF APPEALS ERRED IN HOLDING IN ITS RESOLUTION DATED DECEMBER 26, 1974 THAT SINCE
APPELLANTS' ACQUITTAL WAS BASED ON REASONABLE DOUBT, NOT ON FACTS THAT NO UNLAWFUL ACT WAS
COMMITTED, THE IMPOSITIONOF ACTUAL DAMAGES IS CORRECT.
III
THE COURT OF APPEALS COMMITTED A LEGAL INCONSISTENCY, IF NOT PLAIN JUDICIAL ERROR, IN HOLDING IN ITS
APPEALED RESOLUTION THAT PETITIONERS COMMITTED AN UNLAWFUL ACT, THAT IS TAKING THE LAW INTO
THEIR HANDS, DESTRUCTING (sic) 'COMPLAINANTS' PROPERTIES', AFTER HOLDING IN ITS MAIN DECISION OF
NOVEMBER 6,1974 THAT THE ACTS FOR WHICH THEY WERE CHARGED DID NOT CONSTITUTE GRAVE COERCION
AND THEY WERE NOT CHARGED OF ANY OTHER CRIME.
IV

7. THE COURT OF APPEALS ERRED IN ORDERING THE PETITIONERS HEREIN, APPELLANTS IN CA-G.R. NO. 13456CR,
JOINTLY AND SEVERALLY, TO PAY COMPLAINANTS P9,600.00 IN SUPPOSED ACTUAL DAMAGES.
The issueposed in the instantproceeding is whether or not the respondent court committed a reversibleerror in requiringthe
petitioners to pay civil indemnity to the complainants after acquittingthem from the criminal charge.
Petitioners maintain the view that where the civil liability which is included in the criminal action isthatarisingfromand as a
consequence of the criminal act,and the defendant was acquitted in the criminal case,(no civil liability arisingfromthe c riminal
case),no civil liability arisingfromthe criminal chargecould beimposed upon him. They cite precedents to the effect that the
liability of the defendant for the return of the amount received by him may not be enforced in the criminal casebutmust be raised
in a separate civil action for the recovery of the said amount(People v. Pantig,97 Phil.748;followingthe doctrine laid down in
Manila Railroad Co.v. HonorableRodolfo Baltazar,49 O.G. 3874;Pueblo contra Abellera, 69 Phil.623;People v. Maniago 69 P hil.
496; People v. Miranda,5 SCRA 1067;Aldaba v. Elepafio 116 Phil.457).In the casebefore us, the petitioners were acquitted not
because they did not commit the acts stated in the charge againstthem. There is no disputeover the forcibleopening of the market
stall,its demolition with axes and other instruments, and the cartingaway of the merchandize. The petitioners were acquitted
because these acts were denominated coercion when they properly constituted some other offense such as threat or malicious
mischief.
The respondent Court of Appeals stated in its decision:
For a complaintto prosper under the foregoing provision,theviolence must be employed againstthe person, not
againstproperty as what happened in the caseat bar. ...
xxx xxx xxx
The next problem is:May the accused be convicted of an offense other than coercion?
From all appearances,they should havebeen prosecuted either for threats or malicious mischief.But the lawdoes
not allowus to render judgment of conviction for either of these offenses for the reason that they were not
indicted for, these offenses. The information under which they were prosecuted does not allegethe elements of
either threats or maliciousmischief.Although the information mentions that the actwas by means of threats', it
does not allege the particular threatmade. An accused person is entitled to be informed of the nature of the acts
imputed to him before he can be made to enter into trial upon a valid information.
We rulethat the crime of grave coercion has not been proved in accordancewith law.
Whileappellants areentitled to acquittal they nevertheless are liablefor the actual damages suffered by the
complainants by reason of the demolition of the stall and loss of someof their properties. The extinction of the
penal action does not carry with itthat of the civil,unlesstheextinction proceeds from a declaration in a final
judgment that the factfrom which the civil mightarisedid notexist. (Rule 111,Sec. 3 (c), Rev. Rules of Court;
Laperal v. Aliza,51 OG.R. 1311,People v. Velez, 44 OG. 1811).In the instantcase,the factfrom which the civil
might arise,namely, the demolition of the stall and loss of the properties contained therein; exists,and this is not
denied by the accused.And sincethere is no showingthat the complainants havereserved or waived their rightto
institutea separatecivil action,thecivil aspecttherein is deemed instituted with the criminal action.(Rule111,
Sec. 1, Rev. Rules of Court).
xxx xxx xxx
Section 1 of Rule 111 of the Rules of Court states the fundamental proposition thatwhen a criminal action isinstituted,the civil
action for recovery of civil liability arisingfromthe offense charged is impliedly instituted with it. There is no implied institution
when the offended party expressly waives the civil action or reserves his rightto instituteit separately.(Morte Sr. v. Alvizo,Jr., 101
SCRA 221).
The extinction of the civil action by reason of acquittal in the criminal caserefers exclusively to civil liability ex delic to founded on
Article100 of the Revised Penal Code. (Elcano v. Hill,77 SCRA 98; Virata v. Ochoa,81 SCRA 472).In other words,the civil liability
which is also extinguished upon acquittal of the accused is the civil liability arisingfromthe actas a crime.
As easily as 1942,the Supreme Court speakingthrough JusticeJorge Bocobo in Barredo v. Garcia, et at. 73 Phil.607 laid down the
rulethat the same punishableactor omission can createtwo kinds of civil liabilities againstthe accused and,where provided by law,
his employer. 'There is the civil liability arisingfromthe actas a crime and the liability arisingfromthe same act as a quasi-
delict. Either one of these two types of civil liability may be enforced againstthe accused,However, the offended party cannot
recover damages under both types of liability.For instance,in cases of criminal negligenceor crimes due to reckless imprudence,
Article2177 of the Civil Codeprovides:

8. Responsibility for faultor negligence under the preceding articleis entirely separateand distinctfromthe civil
liability arisingfromnegligence under the Penal Code. But the plaintiff cannotrecover damages twice for the same
act or omission of the defendant.
Section 3 (c) of Rule 111 specifically providesthat:
Sec. 3. Other civil actions arising from offenses. — In all cases notincluded in the preceding section the following
rules shall beobserved:
xxx xxx xxx
xxx xxx xxx
(c) Extinction of the penal action does not carry with itextinction of the civil,unlesstheextinction proceeds from a
declaration in a final judgment that the fact from which the civil mightarisedid not exist.In other cases,the
person entitled to the civil action may instituteitin the Jurisdiction and in themanner provided by lawagainstthe
person who may be liablefor restitution of the thing and reparation or indemnity for the damage suffered.
The judgment of acquittal extinguishesthe liability of the accused for damages only when it includes a declaration thatthe facts
from which the civil mightarisedid notexist.Thus, the civil liability is notextinguished by acquittal where the acquittal is based on
reasonabledoubt (PNB v. Catipon,98 Phil.286) as only preponderance of evidence is required in civil cases;where the court
expressly declares thatthe liability of the accused is not criminal butonly civil in nature(De Guzman v. Alvia,96 Phil.558; People v.
Pantig,supra) as,for instance,in the felonies of estafa, theft, and maliciousmischief committed by certain relatives who thereby
incur only civil liability (See Art. 332, Revised Penal Code); and, where the civil liability does not arisefrom or is not based upon the
criminal actof which the accused was acquitted (Castro v. Collector of Internal Revenue, 4 SCRA 1093; See Regalado, Remedial Law
Compendium, 1983 ed., p. 623). Article29 of the Civil Codealso provides that:
When the accused in a criminal prosecution isacquitted on the ground that his guilthas notbeen proved beyond
reasonabledoubt, a civil action for damages for the same act or omission may be instituted. Such action requires
only a preponderance of evidence. Upon motion of the defendant, the court may require the plaintiff to filea bond
to answer for damages in casethe complaintshould be found to be malicious.
If in a criminal casethe judgment of acquittal is based upon reasonabledoubt, the court shall so declare.In the
absence of any declaration to that effect, it may be inferred from the text of the decision whether or not the
acquittal is dueto that ground.
More recently, we held that the acquittal of the defendant in the criminal casewould not constitute an obstacleto the filingof a civil
casebased on the same acts which led to the criminal prosecution:
... The findingby the respondent court that he spent said sumfor and in the interest of the CapizAgricultural and
Fishery School and for his personal benefitis not a declaration thatthe fact upon which Civil CaseNo. V-3339 is
based does not exist.The civil action barred by such a declaration isthecivil liability arisingfromthe offense
charged, which is the one impliedly instituted with the criminal action.(Section 1,Rule III,Rules of Court.) Such a
declaration would not bar a civil action filed againstan accused who had been acquitted in the criminal caseif the
criminal action ispredicated on factual or legal considerations other than the commission of the offense charged.
A person may be acquitted of malversation where, as in the caseat bar,he could show that he did not
misappropriatethe public funds in his possession,buthe could be rendered liableto restore said funds or atleast
to make a proper accountingthereof if he shall spend the same for purposes which are not authorized nor
intended, and in a manner not permitted by applicablerules and regulations.(Republic v.Bello,120 SCRA 203)
There appear to be no sound reasons to requirea separatecivil action to still befiled consideringthatthe facts to be proved in the
civil casehavealready been established in the criminal proceedings where the accused was acquitted.Due process has been
accorded the accused.He was, in fact, exonerated of the criminal charged.The constitutional presumption of innocencecalled for
more vigilantefforts on the partof prosecutingattorneys and defense counsel,a keener a wareness by all witnesses of the serious
implications of perjury,and a more studied consideration by the judge of the entire records and of applicablestatutes and
precedents. To require a separatecivil action simply becausethe accused was acquitted would mean needless cloggingof court
dockets and unnecessary duplication of litigation with all its attendantloss of time, effort, and money on the part of all c oncerned.
The trial courtfound the followingfacts clearly established by the evidence adduced by both the prosecution and the defense:
xxx xxx xxx
(9) In the morning of February 8, 1964,then Chief Galdones,complyingwith the instructions contained in said
Memorandum No. 32 of the Mayor, and upon seeing that Antonio Vergara had not vacated the premises in
question, with the aid of his policemen,forced upon the store or stall and ordered the removal of the goods inside

9. the store of Vergara, at the same time takinginventory of the goods taken out, piled them outsidein front of the
store and had itcordoned with a rope, and after all the goods were taken out from the store, ordered the
demolition of said stall of Antonio Vergara.Since then up to the trial of this case,the whereabouts of the goods
taken out from the store nor the materials of the demolished stall havenotbeen made known.
The respondent Court of Appeals made a similar findingthat:
On the morning of February 8th, becausethe said Vergaras had notup to that time complied with the order to
vacate, the co-accused Chief of PoliceGaldones and some members of his policeforce,went to the market and,
usingax,crowbars and hammers, demolished the stall of the Vergaras who were not present or around,and after
havingfirstinventoried the goods and merchandisefound therein, they had them brought to the municipal
buildingfor safekeeping. Inspiteof noticeserved upon the Vergaras to take possession of the goods and
merchandisethus taken away, the latter refused to do so.
The loss and damage to the Vergaras as they evaluated them were:
Cost of stall construction P1,300.00
Value of furnitureand equipment
judgment destroyed 300.00
Value of goods and equipment taken 8,000.00
P9,600.00
It is not disputed that the accused demolished the grocery stall of the complainants Vergaras and carted away its
contents. The defense that they did so in order to abate what they considered a nuisanceper se is untenable, This
finds no support in lawand in fact. The couplehas been payingrentals for the premises to the government which
allowed them to leasethe stall.Itis,therefore, farfetched to say that the stall was a nuisanceper se which could
be summarily abated.
The petitioners, themselves, do not deny the fact that they caused the destruction of the complainant's marketstall and had its
contents carted away. They state:
On February 8, 1964, despite personal pleas on Vergaras by the Mayor to vacate the passageways of Market
BuildingNo. 3, the Vergaras were still in thepremises, so the petitioners Chief of Policeand members of the Police
Force of Jose Panganiban,pursuantto the Mayor' 6 directives, demolished the store of the Vergaras,made an
inventory of the goods found in said store,and brought these goods to the municipal buildingunder the custody of
the Municipal Treasurer,...
The only supposed obstacleis the provision of Article29 of the Civil Code,earlier cited,that "when the accused in a criminal
prosecution is acquitted on the ground that his guilthas not been proved beyond reasonabledoubt, a civil action for damages for
the same act or omission may be instituted." According to some scholars,this provision of substantivelawcallsfor a separatecivil
action and cannot be modified by a rule of remedial laweven in the interests of economy and simplicity and followingthedic tates of
logic and common sense.
As stated by retired Judge J. Cezar Sangco:
... if the Court finds the evidence sufficientto sustain thecivil action butinadequateto justify a conviction in the
criminal action,may itrender judgment acquittingthe accused on reasonabledoubt, but hold himcivilly liable
nonetheless? An affirmativeanswer to this question would be consistentwith the doctrinethat the two are
distinctand separateactions,and win (a) dispensewith the reinstitutingof the same civil action,or onebased on
quasi-delictor other independent civil action,and of presenting the same evidence: (b) save the injured party
unnecessary expenses in the prosecution of the civil action or enablehim to take advantageof the free services of
the fiscal;and (c) otherwise resolvethe unsettlingimplications of permittingthe reinstitution of a separate civil
action whether based on delict,or quasi-delict,or other independent civil actions.
... But for the court to be ableto adjudicatein the manner here suggested, Art. 29 of the Civil Codeshould be
amended because itclearly and expressly provides thatthe civil action based on the same actor omission may
only be instituted in a separateaction,and therefore, may not inferentially beresolved in the same criminal action.
To dismissthecivil action upon acquittal of the accused and disallowthe reinstitution of any other civil action,
would likewiserender, unjustifiably,the acquittal on reasonabledoubtwithout any significance,and would violate
the doctrine that the two actions aredistinctand separate.
In the lightof the foregoing exposition,itseems evident that there is much sophistry and no pragmatismin the
doctrine that itis inconsistentto award in the same proceedings damages againstthe accused after acquittinghim

10. on reasonabledoubt. Such doctrinemust recognize the distinctand separatecharacter of the two actions,the
nature of an acquittal on reasonabledoubt,the vexatious and oppressiveeffects of a reservation or institution of a
separatecivil action,and thatthe injured party is entitled to damages not becausethe act or omission is
punishablebutbecausehe was damaged or injured thereby (Sangco, PhilippineLaw on Torts and Damages, pp.
288-289).
We see no need to amend Article29 of the Civil Codein order to allowa court to grant damages despite a judgment of acquittal
based on reasonabledoubt. What Article29 clearly and expressly provides isa remedy for the plaintiff in casethe defendant has
been acquitted in a criminal prosecution on the ground that his guilthas not been proved beyond reasonabledoubt. It merely
emphasizes that a civil action for damages is not precluded by an acquittal for the same criminal actor omission.The Civil Code
provision does not state that the remedy can be availed of only in a separatecivil action.Aseparatecivil casemay be filed but there
is no statement that such separatefilingis theonly and exclusivepermissiblemode of recovering damages.
There is nothing contrary to the Civil Codeprovision in the rendition of a judgment of acquittal and a judgment awardingdamages in
the same criminal action.The two can stand sideby side.A judgment of acquittal operates to extinguish the criminal liability.Itdoes
not, however, extinguish the civil liability unless thereis clear showingthatthe act from which civil liability mightarisedid notexist.
A different conclusion would beattributingto the Civil Codea trivial requirement, a provision which imposes an uncalled fo r burden
before one who has already been the victimof a condemnable, yet non-criminal,actmay be accorded the justicewhich he seeks.
We further note the rationalebehind Art. 29 of the Civil Codein arrivingatthe intent of the legislator thatthey could not possibly
have intended to make it more difficultfor the aggrieved party to recover justcompensation by makinga separatecivil action
mandatory and exclusive:
The old rule that the acquittal of the accused in a criminal casealso releases himfromcivil liability is oneof the
most serious flaws in the Philippinelegal system. Ithas given riseto numberless instances of miscarriageof justice,
where the acquittal was dueto a reasonabledoubtin the mind of the court as to the guiltof the accused.The
reasoningfollowed is thatinasmuch as the civil responsibility is derived fromthe the criminal offense,when the
latter is not proved, civil liability cannotbe demanded.
This is one of those cases where confused thinkingleads to unfortunate and deplorableconsequences.Such
reasoningfailsto drawa clear lineof demarcation between criminal liability and civil responsibility,and to
determine the logical resultof the distinction.Thetwo liabilities areseparateand distinctfromeach other. One
affects the social order and the other, privaterights. One is for the punishment or correction of the offender while
the other is for reparation of damages suffered by the aggrieved party... it is justand proper that, for the purposes
of the imprisonment of or fineupon the accused,the offense should be proved beyond reasonabledoubt. But for
the purpose of indemnifyingthe complainingparty,why should the offense also beproved beyond reasonable
doubt? Is not the invasion or violation of every privateright to be proved only by preponderance of evidence? Is
the right of the aggrieved person any less privatebecausethe wrongful actis also punishableby the criminal law?
(Code Commission,pp. 45-46).
A separatecivil action may bewarranted where additional facts haveto be established or more evidence must be adduced or where
the criminal casehas been fully terminated and a separatecomplaintwould be justas efficaciousor even more expedient than a
timely remand to the trial courtwhere the criminal action was decided for further hearings on the civil aspects of the case.The
offended party may, of course,choose to filea separateaction.These do not existin this case.Consideringmoreover the delays
suffered by the casein the trial,appellate,and review stages,it would be unjustto the complainants in thiscaseto require atthis
time a separate civil action to be filed.
With this in mind, we therefore hold that the respondent Court of Appeals did not err in awardingdamages despite a judgment of
acquittal.
WHEREFORE, we hereby AFFIRM the decision of the respondent Court of Appeals and dismiss thepetition for lack of merit.
SO ORDERED.
Fernando, C.J., Teehankee, Makasiar, Guerrero, Abad Santos, Melencio- Herrera, Plana,Escolin, Relova and De la Fuente, JJ., concur.
Aquino, J., concur in the result.
De Castro, J., took no part.
Concepcion, Jr. J., is on leave.

11. G.R. No. 102007 September 2,1994
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ROGELIO BAYOTAS y CORDOVA, accused-appellant.
The Solicitor General for plaintiff-appellee.
Public Attorney's Office for accused-appellant.
ROMERO, J.:
In Criminal CaseNo. C-3217 filed before Branch 16, RTC Roxas City,Rogelio Bayotas y Cordova was charged with Rape and eventually
convicted thereof on June 19, 1991 in a decision penned by Judge Manuel E. Autajay. Pending appeal of his conviction,Bayotas died
on February 4, 1992 at
the National Bilibid Hospital dueto cardio respiratory arrestsecondary to hepatic encephalopathy secondary to hipato carcin oma
gastric malingering.Consequently,the Supreme Court in its Resolution of May 20,1992 dismissed the criminal aspectof the appeal.
However, it required the Solicitor General to fileits comment with regard to Bayotas' civil liability arisingfromhis commi ssion of the
offense charged.
In his comment, the Solicitor General expressed his view that the death of accused-appellantdid notextinguish his civil liability as a
resultof his commission of the offense charged. The Solicitor General,relyingon the caseofPeople v. Sendaydiego 1 insists thatthe
appeal should still beresolved for the purposeof reviewing his conviction by the lower courton which the civil liability i sbased.
Counsel for the accused-appellant,on the other hand, opposed the view of the Solicitor General arguingthatthe death of the
accused whilejudgment of conviction is pendingappeal extinguishes both his criminal and civil penalties.In supportof his position,
said counsel invoked the rulingof the Court of Appeals in People v. Castillo and Ocfemia 2 which held that the civil obligation in a
criminal casetakes rootin the criminal liability and,therefore, civil liability is extinguished if accused should diebefore final
judgment is rendered.
We arethus confronted with a singleissue:Does death of the accused pendingappeal of his conviction extinguish hiscivil liability?
In the aforementioned caseof People v. Castillo, this issuewas settled in the affirmative.This same issueposed therein was phrased
thus: Does the death of Alfredo Castillo affectboth his criminal responsibility and his civil liability as a consequenceof the alleged
crime?

12. It resolved this issuethru the followingdisquisition:
Article89 of the Revised Penal Code is the controllingstatute.It reads, in part:
Art. 89. How criminal liability is totally extinguished. — Criminal liability is totally extinguished:
1. By the death of the convict, as to the personal penalties;and as to the pecuniary penalties
liability therefor is extinguished only when the death of the offender occurs before final
judgment;
With reference to Castillo'scriminal liability,there is no question. The lawis plain.Statutory construction is
unnecessary.Said liability is extinguished.
The civil liability,however, poses a problem. Such liability is extinguished only when the death of the offender
occurs before final judgment. Saddled upon us is the task of ascertainingthe legal importof the term "final
judgment." Is itfinal judgment as contradistinguished froman interlocutory order? Or, is ita judgment which is
final and executory?
We go to the genesis of the law.The legal precept contained in Article89 of the Revised Penal Code heretofore
transcribed is lifted from Article132 of the Spanish El Codigo Penal de 1870 which, in part, recites:
La responsabilidad penal seextingue.
1. Por la muerte del reo en cuanto a las penas personales siempre,y respecto a las pecuniarias,
solo cuando a su fallecimiento no hubiere recaido sentencia firme.
xxx xxx xxx
The code of 1870 . . . itwill be observed employs the term "sentencia firme." Whatis "sentencia firme" under the
old statute?
XXVIII Enciclopedia Juridica Española,p.473, furnishes the ready answer: It says:
SENTENCIA FIRME. La sentencia que adquierela fuerza de las definitivaspor no haberse utilizado
por las partes litigantes recurso alguno contra elladentro de los terminos y plazos legales
concedidos al efecto.
"Sentencia firme" really should beunderstood as one which is definite. Because, it is only when judgment is such
that, as Medina y Maranon puts it,the crimeis confirmed — "en condena determinada;" or, in the words of
Groizard,the guiltof the accused becomes — "una verdad legal."Prior thereto, should the accused die, according
to Viada,"no hay legalmente, en tal caso,ni reo, ni delito, ni responsabilidad criminal deninguna clase."And, as
Judge Kapunan well explained,when a defendant dies before judgment becomes executory, "there cannot be any
determination by final judgment whether or not the felony upon which the civil action mightariseexists,"for the
simplereason that "there is no party defendant." (I Kapunan,Revised Penal Code, Annotated, p. 421.Senator
Francisco holdsthesame view. Francisco,Revised Penal Code, Book One, 2nd ed., pp. 859-860)
The legal import of the term "final judgment" is similarly reflected in the Revised Penal Code. Articles 72 and 78 of
that legal body mention the term "final judgment" in the sense that it is already enforceable.This also bringsto
mind Section 7, Rule 116 of the Rules of Court which states that a judgment in a criminal casebecomes final "after
the lapseof the period for perfecting an appeal or when the sentence has been partially or totally satisfied or
served, or the defendant has expressly waived in writinghis rightto appeal."
By fair intendment, the legal precepts and opinions herecollected funnel down to one positiveconclusion:The
term final judgment employed in the Revised Penal Code means judgment beyond recall.Really,as longas a
judgment has not become executory, it cannotbe truthfully said thatdefendant is definitely guilty of the felony
charged againsthim.
Not that the meaning thus given to final judgment is without reason.For where, as in this case,the rightto
institutea separatecivil action isnotreserved, the decision to be rendered must, of necessity, cover "both the
criminal and thecivil aspects of the case." People vs. Yusico (November 9, 1942),2 O.G., No. 100, p. 964. See
also:People vs. Moll, 68 Phil.,626, 634; Francisco, Criminal Procedure,1958 ed., Vol. I,pp. 234,236. Correctly,
Judge Kapunan observed that as "the civil action isbased solely on the felony committed and of which the
offender might be found guilty, the death of the offender extinguishes the civil liability."I Ka punan,Revised Penal
Code, Annotated, supra.
Here is the situation obtainingin the present case:Castillo's criminal liability is out.His civil liability is soughtto be
enforced by reason of that criminal liability.But then, if we dismiss,as wemust, the criminal action and letthe civil
aspectremain, we will be faced with the anomalous situation whereby we will becalled upon to clamp civil liability

13. in a casewhere the sourcethereof — criminal liability — does not exist. And, as was well stated in Bautista, et
al. vs. Estrella, et al., CA-G.R.
No. 19226-R, September 1, 1958, "no party can be found and held criminally liablein a civil suit,"which solely
would remain if we are to divorceitfrom the criminal proceeding."
This rulingof the Court of Appeals in the Castillo case3 was adopted by the Supreme Court in the cases ofPeopleof the Philippines
v. Bonifacio Alison, et al., 4 People of the Philippines v. Jaime Jose, et al. 5 and People of the Philippines v. Satorre 6 by dismissingthe
appeal in view of the death of the accused pending appeal of said cases.
As held by then Supreme Court JusticeFernando in the Alison case:
The death of accused-appellantBonifacio Alison havingbeen established,and consideringthatthere is as yet no
final judgment in view of the pendency of the appeal, the criminal and civil liability of the said accused-appellant
Alison was extinguished by his death (Art. 89,Revised Penal Code; Reyes' Criminal Law,1971 Rev. Ed., p. 717, citing
People v. Castillo and Ofemia C.A., 56 O.G. 4045);consequently, the caseagainsthimshould bedismissed.
On the other hand, this Court in the subsequent cases of Buenaventura Belamala v. Marcelino Polinar 7 andLamberto Torrijos v. The
Honorable Court of Appeals 8 ruled differently. In the former, the issuedecided by this court was:Whether the civil liability of one
accused of physical injuries who died before final judgment is extinguished by his demiseto the extent of barringany claim therefore
againsthis estate.It was the contention of the administrator-appellanttherein that the death of the accused prior to final judgment
extinguished all criminal and civil liabilities resultingfromthe offense, in view of Article89, paragraph 1 of the Revised Penal Code.
However, this court ruled therein:
We see no merit in the plea that the civil liability has been extinguished, in view of the provisionsof the Civil Code
of the Philippines of 1950 (Rep. Act No. 386) that became operative eighteen years after the revised Penal Code.
As pointed out by the Court below, Article33 of the Civil Codeestablishes a civil action for damages on accountof
physical injuries,entirely separate and distinct from the criminal action.
Art. 33. In cases of defamation, fraud,and physical injuries,a civil action for damages,entirely
separateand distinctfromthe criminal action,may be brought by the injured party. Such civil
action shall proceed independently of the criminal prosecution,and shall requireonly a
preponderance of evidence.
Assumingthat for lack of express reservation,Belamala's civil action for damages was to be considered instituted
together with the criminal action still,sinceboth proceedings were terminated without final adjudication,the civil
action of the offended party under Article 33 may yet be enforced separately.
In Torrijos, the Supreme Court held that:
xxx xxx xxx
It should be stressed that the extinction of civil liability follows theextinction of the criminal liability under Article
89, only when the civil liability arises fromthe criminal actas its only basis. Stated differently, where the civil
liability does not existindependently of the criminal responsibility,the extinction of the latter by death, ipso
facto extinguishes the former, provided, of course, that death supervenes before final judgment. The said principle
does not apply in instantcasewherein the civil liability springs neither solely nor originally fromthe crime itself but
from a civil contractof purchaseand sale.(Emphasis ours)
xxx xxx xxx
In the above case,the court was convinced that the civil liability of the accused who was charged with estafa could likewise
trace its genesis to Articles 19,20 and 21 of the Civil Codesincesaid accused had swindled thefirstand second vendees of
the property subjectmatter of the contract of sale. Ittherefore concluded: "Consequently, whilethe death of the accused
herein extinguished his criminal liability includingfine,his civil liability based on the laws of human relations remains."
Thus itallowed the appeal to proceed with respect to the civil liability of the accused,notwithstandingthe extinction of his criminal
liability dueto his death pending appeal of his conviction.
To further justify its decision to allowthecivil liability to survive,the court relied on the following ratiocination:SinceSection 21,
Rule 3 of the Rules of Court 9 requires the dismissal of all money claims againstthe defendant whose death occurred prior to the
final judgment of the Court of FirstInstance(CFI),then it can be inferred that actions for recovery of money may continue to be
heard on appeal,when the death of the defendant supervenes after the CFI had rendered its judgment. In such case, explained this
tribunal,"the name of the offended party shall beincluded in the titleof the caseas plaintiff-appelleeand the legal representative
or the heirs of the deceased-accused should be substituted as defendants-appellants."

14. It is,thus, evident that as jurisprudenceevolved from Castillo to Torrijos,the ruleestablished was thatthe survival of the civil liability
depends on whether the same can be predicated on sources of obligations other than delict.Stated differently, the claimfor civil
liability is also extinguished together with the criminal action if itwere solely based thereon, i.e., civil liability ex delicto.
However, the Supreme Court in People v. Sendaydiego, et al. 10 departed from this long-established principleof law.In this case,
accused Sendaydiego was charged with and convicted by the lower court of malversation thru falsification of public documents.
Sendaydiego's death supervened duringthe pendency of the appeal of his conviction.
This court in an unprecedented move resolved to dismissSendaydiego's appeal butonly to the extent of his criminal liability.His civil
liability was allowed to survivealthough itwas clear that such claimthereon was exclusively dependent on the criminal action
already extinguished.The legal importof such decision was for the court to continue exercisingappellatejurisdiction over the entire
appeal,passingupon the correctness of Sendaydiego's conviction despitedismissal of the criminal action,for the purpose of
determining if he is civilly liable.In doingso, this Court issued a Resolution of July 8, 1977 statingthus:
The claimof complainantProvinceof Pangasinan for the civil liability survived Sendaydiego becausehis death
occurred after final judgmentwas rendered by the Court of FirstInstanceof Pangasinan,which convicted himof
three complex crimes of malversation through falsification and ordered him to indemnify the Provincein the total
sum of P61,048.23 (should be P57,048.23).
The civil action for the civil liability is deemed impliedly instituted with the criminal action in theabsence of
express waiver or its reservation in a separate action (Sec. 1, Rule 111 of the Rules of Court). The civil action for the
civil liability isseparateand distinctfromthe criminal action (Peopleand Manuel vs. Coloma,105 Phil.1287;Roa
vs. De la Cruz, 107 Phil.8).
When the action is for the recovery of money and the defendant dies before final judgment in the Court of First
Instance,it shall bedismissed to be prosecuted in the manner especially provided in Rule87 of the Rules of Court
(Sec. 21, Rule 3 of the Rules of Court).
The implication isthat,if the defendant dies after a money judgment had been rendered againsthimby the Court
of FirstInstance,the action survives him.Itmay be continued on appeal (Torrijos vs.Courtof Appeals,L-40336,
October 24, 1975; 67 SCRA 394).
The accountablepublic officer may still becivilly liablefor the funds improperly disbursed although hehas no
criminal liability (U.S. vs. Elvina,24 Phil.230;PhilippineNational Bank vs.Tugab, 66 Phil.583).
In view of the foregoing, notwithstandingthe dismissal of the appeal of the deceased Sendaydiego insofar as his
criminal liability is concerned,the Court Resolved to continueexercisingappellatejurisdiction over his possiblecivil
liability for the money claims of the Provinceof Pangasinan arisingfromthe alleged criminal acts complained of,as
if no criminal casehad been instituted againsthim,thus making applicable,in determininghis civil liability,Article
30 of the Civil Code. . . and, for that purpose, his counsel is directed to i nformthis Court within ten (10) days of the
names and addresses of the decedent's heirs or whether or not his estate is under administration and has a duly
appointed judicial administrator.Said heirs or administrator will besubstituted for the deceased insofar as thecivil
action for the civil liability is concerned (Secs.16 and 17, Rule 3, Rules of Court).
Succeeding cases 11 raisingthe identical issuehavemaintained adherence to our rulingin Sendaydiego; in other words,they were a
reaffirmanceof our abandonment of the settled rulethat a civil liability solely anchored on the criminal (civil liability ex delicto) is
extinguished upon dismissal of the entire appeal due to the demise of the accused.
But was itjudicious to haveabandoned this old ruling? A re-examination of our decision in Sendaydiego impels us to revert to the
old ruling.
To restate our resolution of July 8, 1977 in Sendaydiego: The resolution of the civil action impliedly instituted in the criminal action
can proceed irrespectiveof the latter's extinction due to death of the accused pendingappeal of his conviction,pursuantto Article
30 of the Civil Codeand Section 21, Rule 3 of the Revised Rules of Court.
Article30 of the Civil Codeprovides:
When a separatecivil action isbroughtto demand civil liability arisingfroma criminal offense,and no criminal
proceedings are instituted duringthe pendency of the civil case,a preponderance of evidence shall likewisebe
sufficientto prove the act complained of.
Clearly,the text of Article30 could not possibly lend supportto the rulingin Sendaydiego. Nowhere in its text is there a grant of
authority to continue exercisingappellatejurisdiction over the accused's civil liability ex delictowhen his death supervenes during
appeal.What Article30 recognizes is an alternativeand separatecivil action which may be brought to demand civil liability arising
from a criminal offenseindependently of any criminal action.In the event that no criminal proceedings areinstituted during the

15. pendency of said civil case,the quantum of evidence needed to prove the criminal actwill haveto be that which is compatibl ewith
civil liability and thatis,preponderance of evidence and not proof of guiltbeyond reasonabledoubt. Citingor invokingArticle30 to
justify the survival of the civil action despiteextinction of the criminal would in effect merely beg the question of whether civil
liability ex delicto survives upon extinction of the criminal action dueto death of the accused duringappeal of his conviction.This is
because whether asserted in
the criminal action or in a separatecivil action,civil liability ex delicto is extinguished by the death of the accused whilehis conviction
is on appeal.Article89 of the Revised Penal Code is clear on this matter:
Art. 89. How criminal liability is totally extinguished. — Criminal liability is totally extinguished:
1. By the death of the convict, as to the personal penalties;and as to pecuniary penalties,liability therefor is
extinguished only when the death of the offender occurs before final judgment;
xxx xxx xxx
However, the rulingin Sendaydiego deviated from the expressed intent of Article89. It allowed claims for civil liability ex delicto to
surviveby ipso facto treating the civil action impliedly instituted with the criminal,as onefiled under Article30, as though no
criminal proceedings had been filed but merely a separatecivil action.This had the effect of converting such claims fromone which
is dependent on the outcome of the criminal action to an entirely new and separateone, the prosecution of which does not even
necessitatethe filingof criminal proceedings. 12Onewould be hard put to pinpointthe statutory authority for such a transformation.
It is to be borne in mind that in recovering civil liability ex delicto, the samehas perforce to be determined in the criminal action,
rooted as itis in the court's pronouncement of the guiltor innocence of the accused.This is but to render fealty to the intendment
of Article100 of the Revised Penal Code which provides that "every person criminally liablefor a felony is also civilly liable."In such
cases,extinction of the criminal action dueto death of the accused pending appeal inevitably signifies theconcomitantexti nction of
the civil liability.Mors Omnia Solvi. Death dissolves all things.
In sum, in pursuingrecovery of civil liability arisingfromcrime, the final determination of the criminal liability is a condition
precedent to the prosecution of the civil action,such thatwhen the criminal action isextinguished by the demise of accused-
appellantpendingappeal thereof, said civil action cannotsurvive.The claimfor civil liability springs outof and is dependent upon
facts which,if true, would constitute a crime. Such civil liability is an inevitableconsequenceof the criminal liability and is to be
declared and enforced in the criminal proceeding.This is to be distinguished fromthat which is contemplated under Article 3 0 of the
Civil Codewhich refers to the institution of a separate civil action thatdoes not draw its lifefrom a criminal proceeding.The
Sendaydiego resolution of July 8, 1977,however, failed to take note of this fundamental distinction when itallowed the survival of
the civil action for the recovery of civil liability ex delicto by treating the same as a separatecivil action referred to under Article30.
Surely, itwill take more than justa summary judicial pronouncement to authorize the conversion of said civil action to an
independent one such as that contemplated under Article 30.
Ironically however, the main decision in Sendaydiego did not apply Article30, the resolution of July 8, 1977 notwithstanding.Thus, it
was held in the main decision:
Sendaydiego's appeal will beresolved only for the purposeof showing his criminal liability which is thebasis of the
civil liability for which his estatewould be liable. 13
In other words, the Court, in resolvingthe issueof his civil liability,concomitantly madea determination on whether Senda ydiego,
on the basis of evidenced adduced, was indeed guilty beyond reasonabledoubt of committing the offense charged. Thus, it upheld
Sendaydiego's conviction and pronounced the same as the source of his civil liability.Consequently, although Article30 was not
applied in the final determination of Sendaydiego's civil liability,there was a reopening of the criminal action already extinguished
which served as basis for Sendaydiego's civil liability.Wereiterate: Upon death of the accused pendingappeal of his conviction,the
criminal action isextinguished inasmuch as there is no longer a defendant to stand as the accused;the civil action instituted therein
for recovery of civil liability ex delicto is ipso facto extinguished,grounded as itis on the criminal.
Section 21, Rule 3 of the Rules of Court was also invoked to serve as another basis for the Sendaydiegoresolution of July 8, 1977.In
citingSec. 21, Rule 3 of the Rules of Court, the Court made the inference that civil actionsof the type involved
in Sendaydiego consistof money claims,the recovery of which may be continued on appeal if defendant dies pending appeal of his
conviction by holdinghis estate liabletherefor. Hence, the Court's conclusion:
"When the action is for the recovery of money" "and the defendant dies before final judgment in the court of First
Instance,it shall bedismissed to be prosecuted in the manner especially provided"in Rule87 of the Rules of Court
(Sec. 21, Rule 3 of the Rules of Court).
The implication isthat,if the defendant dies after a money judgment had been rendered againsthimby the Court
of FirstInstance,the action survives him.Itmay be continued on appeal.

16. Sadly,relianceon this provision of lawis misplaced.From the standpointof procedural law,this coursetaken inSendaydiego cannot
be sanctioned.As correctly observed by JusticeRegalado:
xxx xxx xxx
I do not, however, agree with the justification advanced in both Torrijos and Sendaydiego which,relyingon the
provisionsof Section 21, Rule 3 of the Rules of Court, drew the strained implication therefrom that where the civil
liability instituted together with the criminal liabilities had already passed beyond the judgment of the then Court
of FirstInstance(now the Regional Trial Court),the Court of Appeals can continue to exercise appellatejurisdiction
thereover despite the extinguishment of the component criminal liability of the deceased. This pronouncement,
which has been followed in the Court's judgments subsequent and consonantto Torrijos and Sendaydiego, should
be set asideand abandoned as being clearly erroneous and unjustifiable.
Said Section 21 of Rule 3 is a ruleof civil procedurein ordinary civil actions.There is neither authority nor
justification for its application in criminal procedureto civil actions instituted together with and as partof criminal
actions.Nor is there any authority in lawfor the summary conversion from the latter category of an ordinary civil
action upon the death of the offender. . . .
Moreover, the civil action impliedly instituted in a criminal proceedingfor recovery of civil liability ex delicto can hardly be
categorized as an ordinary money claimsuch as thatreferred to in Sec. 21, Rule 3 enforceable before the estate of the decea sed
accused.
Ordinary money claims referred to in Section 21, Rule3 must be viewed in lightof the provisions of Section 5, Rule 86 invol ving
claims againstthe estate, which in Sendaydiego was held liablefor Sendaydiego's civil liability."Whatare contemplated in Section 21
of Rule 3, in relation to Section 5 of Rule 86, 14 arecontractual money claims whilethe claims involved in civil liability ex delicto may
includeeven the restitution of personal or real property." 15Section 5, Rule 86 provides an exclusive enumeration of what claims may
be filed againsttheestate. These are: funeral expenses, expenses for the lastillness,judgments for money and claimarisingfrom
contracts,expressed or implied.It is clear thatmoney claims arisingfromdelictdo not form partof this exclusiveenumeration.
Hence, there could be no legal basis in (1) treatinga civil action ex delicto as an ordinary contractual money claimreferred to in
Section 21, Rule 3 of the Rules of Court and (2) allowingitto surviveby filinga claimtherefor before the estate of the deceased
accused.Rather, itshould be extinguished upon extinction of the criminal action engendered by the death of the accused pend ing
finality of his conviction.
Accordingly,we rule: if the privateoffended party, upon extinction of the civil liability ex delicto desires to recover damages from
the same act or omission complained of, he must subjectto Section 1, Rule 111 16 (1985 Rules on Criminal Procedureas amended)
filea separate civil action,this timepredicated not on the felony previously charged but on other sources of obligation.Thesource
of obligation upon which the separatecivil action ispremised determines againstwhom the same shall beenforced.
If the sameact or omission complained of also arises fromquasi-delict or may, by provision of law,resultin an injury to person or
property (real or personal),the separatecivil action mustbe filed againstthe executor or administrator 17 of the estate of the
accused pursuantto Sec. 1, Rule 87 of the Rules of Court:
Sec. 1. Actions which may and which may not be brought against executor or administrator. — No action upon a
claimfor the recovery of money or debt or interest thereon shall becommenced againstthe executor or
administrator;butactions to recover real or personal property, or an interest therein, from the estate, or to
enforce a lien thereon, and actions to recover damages for an injury to person or property, real or personal, may be
commenced againsthim.
This is in consonancewith our rulingin Belamala 18 where we held that, in recoveringdamages for injury to persons thru an
independent civil action based on Article33 of the Civil Code, the same must be filed againstthe executor or administrator of the
estate of deceased accused and not againstthe estate under Sec. 5, Rule 86 because this ruleexplicitly limitstheclaimto those for
funeral expenses, expenses for the lastsickness of the decedent, judgment for money and claims arisingfromcontract,expres s or
implied.Contractual money claims,westressed,refers only to purely personal obligations other than those which have their source
in delictor tort.
Conversely, if the same actor omission complained of also arises fromcontract,the separate civil action mustbe filed againstthe
estate of the accused,pursuantto Sec. 5, Rule 86 of the Rules of Court.
From this lengthy disquisition,we summarizeour rulingherein:
1. Death of the accused pending appeal of his conviction extinguishes hiscriminal liability as well as thecivil liability based solely
thereon. As opined by JusticeRegalado,in this regard, "the death of the accused prior to final judgment terminates his criminal

17. liability and only the civil liability directly arisingfromand based solely on the offense committed, i.e., civil liability ex delicto in senso
strictiore."
2. Corollarily,the claimfor civil liability survives notwithstandingthedeath of accused,if the same may also be predicated on a
sourceof obligation other than delict. 19 Article1157 of the Civil Codeenumerates these other sources of obligation fromwhich the
civil liability may ariseas a resultof the sameact or omission:
a) Law 20
b) Contracts
c) Quasi-contracts
d) . . .
e) Quasi-delicts
3. Where the civil liability survives,as explained in Number 2 above, an action for recovery therefor may be pursued but only by way
of filinga separatecivil action and subjectto Section 1, Rule 111 of the 1985 Rules on Criminal Procedureas amended. This separate
civil action may be enforced either againstthe executor/administrator or the estate of the accused,depending on the sourceof
obligation upon which the same is based as explained above.
4. Finally,theprivate offended party need not fear a forfeiture of his rightto filethis separa tecivil action by prescription,in cases
where during the prosecution of the criminal action and prior to its extinction,the private-offended party instituted together
therewith the civil action.In such case,the statute of limitationson the civil liability is deemed interrupted duringthe pendency of
the criminal case,conformably with provisionsof Article115521 of the Civil Code, that should thereby avoid any apprehension on a
possibleprivation of rightby prescription.22
Applyingthis set of rules to the caseatbench, we hold that the death of appellantBayotas extinguished his criminal liability and the
civil liability based solely on the actcomplained of, i.e., rape. Consequently, the appeal is hereby dismissed withoutqualification.
WHEREFORE, the appeal of the late Rogelio Bayotas is DISMISSED with costs de oficio.
SO ORDERED.
Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Bellosillo, Melo, Quiason, Puno,Vitug, Kapunan and Mendoza,
JJ., concur.
Cruz, J., is on leave.
12 JusticeBarredo in his concurringopinion observed that:
. . . this provision contemplates prosecution of the civil liability arisingfroma criminal offensewithout the need of
any criminal proceedingto prove the commission of the crime as such,that is without havingto prove the criminal
liability of the defendant so longas his actcausingdamageor prejudiceto the offended party is proven by
preponderance of evidence.
13 Supra, p. 134.
14 Sec. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. — All claimsfor money
againstthe decedent, arisingfromcontract,express or implied,whether the same be due, not due, or contingent,
all claims for funeral expenses and expenses for the lastsicknessof the decedent, and judgment for money against
the decedent, must be filed within the time limited in the notice; otherwise they arebarred forever, except that
they may be set forth as counterclaims in any action thatthe executor or administrator may bringagainstthe
claimants.Wherean executor or administrator commences an action,or prosecutes an action already commenced
by the deceased in his lifetime, the debtor may set forth by answer the claims hehas againstthedecedent, instead
of presenting them independently to the court as herein provided,and mutual claims may be set off againsteach
other in such action;and if final judgmentis rendered in favor of the defendant, the amount so determined shall
be considered the true balanceagainstthe estate, as though the claimhad been presented directly before the
court in the administration proceedings.Claims notyet due, or contingent, may be approved attheir present
value.
15 As explained by J. Regalado in the deliberation of this case.
16 Sec. 1. Institute of criminal and civil actions. — When a criminal action isinstituted,the civil action for the
recovery of civil liability is impliedly instituted with the criminal action,unless theoffended party waives the civil
action,reserves his rightto instituteit separately, or institutes the civil action prior to the criminal action.
Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under Article32, 33,
34 and 2176 of the Civil Codeof the Philippines arisingfromthe same actor omis sion of the accused.

18. A waiver of any of the civil actions extinguishes theothers. The institution of,or the reservation of the rightto file,
any of said civil actionsseparately waives theothers.
The reservation of the right to institute the separatecivil actionsshall bemade before the prosecution starts to
present its evidence and under circumstances affordingthe offended party a reasonableopportunity to make such
reservation.
In no casemay the offended party recover damages twice for the same actor omission of the accused.
When the offended party seeks to enforce civil liability againstthe accused by way of moral,nominal,temperate
or exemplary damages,the filingfees for such civil action as provided in these Rules shall constitutea firstl ien on
the judgment except in an award for actual damages.
In cases wherein the amount of damages, other than actual,is alleged in the complaintor information,the
correspondingfilingfees shall bepaid by the offended party upon the filingthereof in court for trial.
17 JusticeRegalado cited the Court's rulingin Belamala that sincethe damages sought, as a resultof the felony
committed amounts to injury to person or property, real or personal,the civil liability to be recovered must be
claimed againsttheexecutor/administrator and not againstthe estate.
18 Ibid.
19 JusticeVitug who holds a similar viewstated: "The civil liability may still bepursued in a separatecivil action but
it must be predicated on a sourceof obligation other than delict, except when by statutory provision an
independent civil action isauthorized such as,to exemplify, in the instanceenumerated in Article 33 of the Civil
Code." JusticeRegalado stressed that:
Conversely, such civil liability is notextinguished and survives the deceased offender where it also arises
simultaneously fromor exists as a consequence or by reason of a contract, as in Torrijos; or from law,as stated
in Torrijos and in the concurringopinion in Sendaydiego,such as in reference to the Civil Code; or from a quasi-
contract; or is authorized by law to be pursued in an independent civil action,as in Belamala.Indeed, without
these exceptions, itwould be unfair and inequitableto deprive the victimof his property or recovery of damages
therefor, as would have been the fate of the second vendee in Torrijos or the provincial government
in Sendaydiego."
G.R. No. 74886 December 8, 1992
PRUDENTIAL BANK, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, PHILIPPINE RAYON MILLS, INC. and ANACLETO R. CHI, respondents.
DAVIDE, JR., J.:
Petitioner seeks to review and set asidethe decision 1 of public respondent; Intermediate Appellate Court (now Court of Appeals),
dated 10 March 1986, in AC-G.R. No. 66733 which affirmed in toto the 15 June 1978 decision of Branch 9 (Quezon City) of the then
Court of FirstInstance(now Regional Trial Court) of Rizal in Civil CaseNo. Q-19312.The latter involved an action instituted by the
petitioner for the recovery of a sum of money representing the amount paid by itto the Nissho Company Ltd. of Japan for textile
machinery imported by the defendant, now privaterespondent, PhilippineRayon Mills,Inc.(hereinafter PhilippineRayon),
represented by co-defendant Anacleto R. Chi.
The facts which gave riseto the instant controversy are summarized by the public respondent as follows:
On August 8, 1962,defendant-appellantPhilippineRayon Mills,Inc.entered into a contractwith Nissho Co., Ltd. of
Japan for the importation of textile machineries under a five-year deferred payment plan (ExhibitB, Plaintiff's
Folder of Exhibits,p 2). To effect payment for said machineries,the defendant-appellantapplied for a commercial
letter of credit with the Prudential Bank and Trust Company in favor of Nissho.By virtue of said appli cation,the
Prudential Bank opened Letter of Credit No. DPP-63762 for $128,548.78 (ExhibitA, Ibid., p. 1). Againstthis letter of
credit, drafts were drawn and issued by Nissho (Exhibits X,X-1 to X-11, Ibid., pp. 65, 66 to 76), which were all paid
by the Prudential Bank through its correspondentin Japan, the Bank of Tokyo, Ltd. As indicated on their faces, two
of these drafts (ExhibitX and X-1, Ibid., pp. 65-66) were accepted by the defendant-appellantthrough its president,
Anacleto R. Chi,whilethe others were not (Exhibits X-2 to X-11, Ibid., pp. 66 to 76).
Upon the arrival of the machineries,the Prudential Bank indorsed the shippingdocuments to the defendant-
appellantwhich accepted delivery of the same. To enable the defendant-appellantto take delivery of the

19. machineries,itexecuted, by prior arrangement with the Prudential Bank,a trust receipt which was signed by
Anacleto R. Chi in his capacity as President(sic) of defendant-appellantcompany (ExhibitC, Ibid., p. 13).
At the back of the trust receipt is a printed form to be accomplished by two sureties who, by the very terms and
conditions thereof, were to be jointly and severally liableto the Prudential Bank should the defendant-appellant
fail to pay the total amount or any portion of the drafts issued by Nissho and paid for by Prudential Bank. The
defendant-appellantwas ableto take delivery of the textile machineries and installed the same at its factory siteat
69 Obudan Street, Quezon City.
Sometime in 1967, the defendant-appellantceased business operation (sic). On December 29, 1969,defendant-
appellant's factory was leased by Yupangco Cotton Mills for an annual rental of P200,000.00 (ExhibitI, Ibid., p. 22).
The leasewas renewed on January 3, 1973 (ExhibitJ, Ibid., p. 26). On January 5, 1974,all the textile machineries in
the defendant-appellant's factory were sold to AIC Development Corporation for P300,000.00 (ExhibitK, Ibid., p.
29).
The obligation of the defendant-appellantarisingfromthe letter of creditand the trustreceipt remained unpaid
and unliquidated.Repeated formal demands (Exhibits U, V, and W, Ibid.,pp. 62,63, 64) for the payment of the said
trust receipt yielded no result Hence, the present action for the collection of the principal amountof P956,384.95
was filed on October 3, 1974 againstthedefendant-appellant and Anacleto R. Chi.In their respective answers,the
defendants interposed identical special defenses, viz., the complaintstates no causeof action; if there is,the same
has prescribed;and the plaintiff is guilty of laches. 2
On 15 June 1978, the trial courtrendered its decision thedispositiveportion of which reads:
WHEREFORE, judgment is hereby rendered sentencing the defendant PhilippineRayon Mills,Inc.to pay plaintiff
the sum of P153,645.22,the amounts due under Exhibits "X" & "X-1", with interest at 6% per annum beginning
September 15, 1974 until fully paid.
Insofar as the amounts involved in drafts Exhs. "X" (sic) to "X-11", inclusive,the same not havingbeen accepted by
defendant PhilippineRayon Mills,Inc.,plaintiff'scauseof action thereon has not accrued, hence, the instantcaseis
premature.
Insofar as defendant Anacleto R. Chi is concerned, the caseis dismissed.Plaintiff is ordered to pay defendant
Anacleto R. Chi the sum of P20,000.00 as attorney's fees.
With costs againstdefendant PhilippineRayon Mills,Inc.
SO ORDERED. 3
Petitioner appealed the decision to the then Intermediate Appellate Court. In urgingthe said courtto reverse or modify the decision,
petitioner alleged in its Brief that the trial courterred in (a) disregardingits rightto reimbursement from the privaterespondents for
the entire unpaid balanceof the imported machines,the total amount of which was paid to the Nissho Company Ltd., thereby
violatingthe principleof the third party payor's rightto reimbursement provided for in the second paragraph of Article 1236 of the
Civil Codeand under the ruleagainstunjustenrichment; (b) refusingto hold Anacleto R. Chi,as the responsibleofficer of defendant
corporation,liableunder Section 13 of P.D No 115 for the entire unpaid balanceof the imported machines covered by the bank 's
trust receipt (Exhibit"C"); (c) findingthat the solidary guaranty clausesigned by Anacleto R. Chi is not a guaranty at all ;(d)
controverting the judicial admissionsof Anacleto R. Chi that he is at leasta simpleguarantor of the said trustreceiptobl igation;(e)
contravening, based on the assumption thatChi is a simpleguarantor,Articles 2059,2060 and 2062 of the Civil Cod eand the related
evidence and jurisprudencewhich providethat such liability had already attached;(f) contravening the judicial admissionso f
PhilippineRayon with respect to its liability to pay the petitioner the amounts involved in the drafts (Exhibi ts "X", "X-l"to "X-11'');
and (g) interpreting "sight" drafts as requiringacceptanceby PhilippineRayon before the latter could be held liablethereon. 4
In its decision,public respondentsustained the trial courtin all respects.As to the firstand l astassigned errors,itruled that the
provision on unjustenrichment, Article2142 of the Civil Code,applies only if there is no express contractbetween the parties and
there is a clear showingthat the payment is justified.In the instantcase,the rel ationship existingbetween the petitioner and
PhilippineRayon is governed by specific contracts,namely the application for letters of credit,the promissory note, the dr afts and
the trust receipt. With respect to the lastten (10) drafts (Exhibits "X-2"to "X-11") which had not been presented to and were not
accepted by PhilippineRayon,petitioner was not justified in unilaterally payingthe amounts stated therein. The public respondent
did not agree with the petitioner's claimthatthe drafts were sight drafts which did not require presentment for acceptanceto
PhilippineRayon becauseparagraph 8 of the trust receipt presupposes prior acceptanceof the drafts.Sincethe ten (10) drafts were
not presented and accepted, no valid demand for payment can be made.

20. Public respondentalso disagreed with the petitioner's contention that privaterespondent Chi is solidarily liablewith Phili ppine
Rayon pursuantto Section 13 of P.D. No. 115 and based on his signatureon the solidary guaranty clauseatthe dorsal s ideof the
trust receipt. As to the firstcontention, the public respondent ruled that the civil liability provided for in said Section 13 attaches
only after conviction.As to the second, it expressed misgivingsas to whether Chi's signatureon the trust receipt made the latter
automatically liablethereon because the so-called solidary guaranty clauseatthe dorsal portion of the trust receipt is to be signed
not by one (1) person alone,but by two (2) persons;the lastsentence of the same is incomplete and unsigned by witnesses; and itis
not acknowledged before a notary public.Besides,even grantingthat it was executed and acknowledged before a notary public, Chi
cannot be held liabletherefor because the records fail to show that petitioner had either exhausted the properties of Philippine
Rayon or had resorted to all legal remedies as required in Article2058 of the Civil Code. As provided for under Articles 205 2 and
2054 of the Civil Code, the obligation of a guarantor is merely accessory and subsidiary,respectively.Chi's liability would therefore
ariseonly when the principal debtor fails to comply with his obligation. 5
Its motion to reconsider the decision havingbeen denied by the public respondentin its Resolution of 11 June 1986, 6 petitioner filed
the instantpetition on 31 July 1986 submittingthe followinglegal issues:
I. WHETHER OR NOT THE RESPONDENT APPELLATE COURT GRIEVOUSLY ERRED IN DENYING PETITIONER'S CLAIM
FOR FULL REIMBURSEMENT AGAINST THE PRIVATE RESPONDENTS FOR THE PAYMENT PETITIONER MADE TO
NISSHO CO. LTD. FOR THE BENEFIT OF PRIVATE RESPONDENT UNDER ART. 1283 OF THE NEW CIVIL CODE OF THE
PHILIPPINES AND UNDER THE GENERAL PRINCIPLE AGAINST UNJUST ENRICHMENT;
II.WHETHER OR NOT RESPONDENT CHI IS SOLIDARILY LIABLE UNDER THE TRUST RECEIPT (EXH. C);
III.WHETHER OR NOT ON THE BASIS OF THE JUDICIAL ADMISSIONS OF RESPONDENT CHI HE IS LIABLE THEREON
AND TO WHAT EXTENT;
IV. WHETHER OR NOT RESPONDENT CHI IS MERELY A SIMPLE GUARANTOR; AND IF SO; HAS HIS LIABILITY AS SUCH
ALREADY ATTACHED;
V. WHETHER OR NOT AS THE SIGNATORY AND RESPONSIBLE OFFICER OF RESPONDENT PHIL. RAYON RESPONDENT
CHI IS PERSONALLY LIABLE PURSUANT TO THE PROVISION OF SECTION 13, P.D. 115;
VI. WHETHER OR NOT RESPONDENT PHIL. RAYON IS LIABLE TO THE PETITIONER UNDER THE TRUST RECEIPT (EXH.
C);
VII. WHETHER OR NOT ON THE BASIS OF THE JUDICIAL ADMISSIONS RESPONDENT PHIL. RAYON IS LIABLE TO THE
PETITIONER UNDER THE DRAFTS (EXHS. X, X-1 TO X-11) AND TO WHAT EXTENT;
VIII.WHETHER OR NOT SIGHT DRAFTS REQUIRE PRIOR ACCEPTANCE FROM RESPONDENT PHIL. RAYON BEFORE
THE LATTER BECOMES LIABLE TO PETITIONER. 7
In the Resolution of 12 March 1990, 8 this Court gave due course to the petition after the filingof the Comment thereto by private
respondent Anacleto Chi and of the Reply to the latter by the petitioner; both parties were also required to submit their respective
memoranda which they subsequently complied with.
As We see it, the issues may be reduced as follows:
1. Whether presentment for acceptanceof the drafts was indispensableto make Philippine
Rayon liablethereon;
2. Whether PhilippineRayon is liableon the basis of the trust receipt;
3. Whether private respondent Chi is jointly and severally liablewith PhilippineRayon for the
obligation soughtto be enforced and if not, whether he may be considered a guarantor; in the
latter situation,whether the caseshould havebeen dismissed on the ground of lack of causeof
action as there was no prior exhaustion of PhilippineRayon's properties.
Both the trial courtand the public respondentruled that PhilippineRayon could be held liablefor the two (2) drafts,Exhibits "X" and
"X-1", becauseonly these appear to have been accepted by the latter after due presentment. The liability for the remainingten (10)
drafts (Exhibits "X-2"to "X-11" inclusive) did not arisebecausethe same were not presented for acceptance. In short,both courts
concluded that acceptance of the drafts by PhilippineRayon was indispensableto make the latter liablethereon. We areunabl eto
agree with this proposition.The transaction in thecaseat bar stemmed from PhilippineRayon's application for a commercial letter
of credit with the petitioner in the amount of $128,548.78 to cover the former's contractto purchaseand import loomand tex tile
machinery from Nissho Company,Ltd. of Japan under a five-year deferred payment plan.Petitioner approved the application.As
correctly ruled by the trial courtin its Order of 6 March 1975: 9
. . . By virtue of said Application and Agreement for Commercial Letter of Credit, plaintiff bank 10 was under
obligation to pay through its correspondent bank in Japan the drafts that Nisso (sic) Company, Ltd., periodically

21. drew againstsaid letter of credit from 1963 to 1968,pursuantto plaintiff'scontractwith the defendant Philippine
Rayon Mills,Inc.In turn,defendant PhilippineRayon Mills,Inc.,was obligated to pay plaintiff bank the amounts of
the drafts drawn by Nisso (sic) Company, Ltd. againstsaid plaintiff bank together with any accruingcommercial
charges,interest, etc. pursuantto the terms and conditions stipulated in the Application and Agreement of
Commercial Letter of CreditAnnex "A".
A letter of creditis defined as an engagement by a bank or other person made at the request of a customer that the issuer will honor
drafts or other demands for payment upon compliancewith the conditions specified in the credit. 11 Through a letter of credit, the
bank merely substitutes its own promise to pay for one of its customers who in return promises to pay the bank the amount of funds
mentioned in the letter of creditplus creditor commitment fees mutually agreed upon. 12 In the instantcasethen, the drawee was
necessarily theherein petitioner. It was to the latter that the drafts were presented for payment. In fact, there was no need for
acceptanceas the issued drafts aresightdrafts.Presentment for acceptance is necessary only in the cases expressly provided for in
Section 143 of the Negotiable Instruments Law (NIL). 13 The said section reads:
Sec. 143.When presentment for acceptance must be made. — Presentment for acceptancemust be made:
(a) Where the bill is payableafter sight,or in any other case,where
presentment for acceptance is necessary in order to fix the maturity of the
instrument; or
(b) Where the bill expressly stipulates thatitshall bepresented for acceptance;
or
(c) Where the bill isdrawn payableelsewherethan at the residence or placeof
business of the drawee.
In no other caseis presentment for acceptancenecessary in order to render any party to the bill liable.
Obviously then, sight drafts do not require presentment for acceptance.
The acceptance of a bill is thesignification by the drawee of his assentto the order of the drawer; 14 this may be done in writingby
the drawee in the bill itself,or in a separateinstrument. 15
The parties herein agree, and the trial courtexplicitly ruled,thatthe subject,drafts are sightdrafts.Said the latter:
. . . In the instantcasethe drafts being at sight,they aresupposed to be payableupon acceptance unless plaintiff
bank has given the PhilippineRayon Mills Inc.timewithin which to pay the same. The firsttwo drafts (Annexes C &
D, Exh. X & X-1) were duly accepted as indicated on their face (sic), and upon such acceptance should have been
paid forthwith. These two drafts were not paid and although PhilippineRayon Mills
ought to have paid the same, the fact remains that until now they are still unpaid. 16
Corollarily,they are, pursuantto Section 7 of the NIL, payableon demand. Secti on 7 provides:
Sec. 7. When payable on demand. — An instrument is payableon demand —
(a) When so it is expressed to be payableon demand, or at sight, or on
presentation; or
(b) In which no time for payment in expressed.
Where an instrument is issued,accepted, or indorsed when overdue, itis,as regards the person so issuing,
accepting,or indorsingit,payableon demand. (emphasis supplied)
Paragraph 8 of the Trust Receipt which reads:"My/our liability for payment at maturity of any accepted draft,bill of
exchange or indebtedness shall notbe extinguished or modified" 17 does not, contrary to the holdingof the public
respondent, contemplate prior acceptanceby PhilippineRayon,but by the petitioner. Acceptance, however, was not even
necessary in the firstplacebecausethe drafts which were eventually issued were sightdrafts And even if these were not
sightdrafts,thereby necessitatingacceptance,itwould be the petitioner — and not PhilippineRayon — which had to
accept the same for the latter was not the drawee. Presentment for acceptanceis defined an the production of a bill of
exchange to a drawee for acceptance. 18 The trial courtand the public respondent, therefore, erred in rulingthat
presentment for acceptance was an indispensablerequisitefor PhilippineRayon's liability on the drafts to attach.Contrary
to both courts' pronouncements, PhilippineRayon immediately became liablethereon upon petitioner's payment thereof.
Such is the essence of the letter of creditissued by the petitioner. A different conclusion would violatethe principleupon
which commercial letters of creditare founded because in such a case,both the beneficiary and the issuer,Nissho Company
Ltd. and the petitioner, respectively, would be placed at the mercy of Phili ppineRayon even if the latter had already
received the imported machinery and the petitioner had fully paid for it. The typical settingand purpose of a letter of credit
are described in Hibernia Bank and Trust Co. vs. J. Aron & Co., Inc., 19 thus:

22. Commercial letters of credit have come into general use in international sales transactionswhere much time
necessarily elapses between the saleand the receipt by a purchaser of the merchandise,duringwhich interval
great pricechanges may occur.Buyers and sellers strugglefor the advantage of position.The seller is desirousof
being paid as surely and as soon as possible,realizingthatthe vendee at a distantpoint has itin his power to reject
on trivial grounds merchandiseon arrival,and causeconsiderablehardship to the shipper.Letters of credit meet
this condition by affordingcelerity and certainty of payment. Their purpose is to insureto a seller payment of a
definite amount upon presentation of documents. The bank deals only with documents. It has nothingto do with
the quality of the merchandise. Disputes as to the merchandiseshipped may ariseand be litigated later between
vendor and vendee, but they may not impede acceptance of drafts and payment by the issuingbank when the
proper documents arepresented.
The trial courtand the public respondent likewiseerred in disregardingthetrust receipt and in not holdingthat Philippine Rayon
was liablethereon. In People vs. Yu Chai Ho, 20 this Court explains thenature of a trust receipt by quoting In re Dunlap Carpet
Co., 21 thus:
By this arrangement a banker advances money to an intendingimporter, and thereby lends the aid of capital,of
credit, or of business facilities and agencies abroad,to the enterprise of foreign commerce. Much of this trade
could hardly be carried on by any other means, and therefore itis of the firstimportancethat the fundamental
factor in the transaction,the banker's advanceof money and credit, should receive the amplestprotection.
Accordingly,in order to secure that the banker shall berepaid atthe critical point — that is,when the imported
goods finally reach the hands of the intended vendee — the banker takes the full titleto the goods atthe very
beginning; he takes it as soon as the goods are bought and settled for by his payments or acceptances in the
foreign country, and he continues to hold that title as his indispensablesecurity until the goods are sold in the
United States and the vendee is called upon to pay for them. This security is notan ordinary pledge by the
importer to the banker, for the importer has never owned the goods, and moreover he is not ableto deliver the
possession;butthe security is the complete title vested originally in thebankers,and this characteristicof the
transaction has again and again been recognized and protected by the courts. Of course,the title is atbottom a
security title, as ithas sometimes been called,and the banker is always under the obligation to reconvey; but only
after his advances havebeen fully repaid and after the importer has fulfilled the other terms of the contract.
As further stated in National Bank vs. Viuda e Hijos de Angel Jose, 22 trust receipts:
. . . [I]n a certain manner, . . . partakeof the nature of a conditional saleas provided by the Chattel Mortgage Law,
that is,the importer becomes absoluteowner of the imported merchandiseas soon an he has paid its price.The
ownership of the merchandisecontinues to be vested in the owner thereof or in the person who has advanced
payment, until he has been paid in full,or if the merchandisehas already been sold,the proceeds of the sale
should be turned over to himby the importer or by his representativeor successor in interest.
Under P.D. No. 115,otherwise known an the Trust Receipts Law, which took effect on 29 January 1973,a trust receipt transaction is
defined as "any transaction by and between a person referred to in this Decree as the entruster, and another person referred to in
this Decree as the entrustee, whereby the entruster, who owns or holds absolutetitleor security interests' over certain specified
goods, documents or instruments, releases the same to the possession of the entrustee upon the latter's execution and deliver y to
the entruster of a signed document called the "trust receipt" wherein the entrustee binds himself to hold the designated goods,
documents or instruments in trust for the entruster and to sell or otherwise disposeof the goods, documents or instruments with
the obligation to turn over to the entruster the proceeds thereof to the extent of the amount owing to the entruster or as appears in
the trust receipt or the goods, instruments themselves if they are unsold or not otherwise disposed of,in accordancewith the terms
and conditions specified in the trusts receipt, or for other purposes substantially equivalentto any one of the following:. . ."
It is alleged in the complaintthat privaterespondents "not only have presumably put said machinery to good use and have pro fited
by its operation and/or disposition butvery recent information that(sic) reached plaintiff bank thatdefendants already sold the
machinery covered by the trust receipt to Yupangco Cotton Mills,"and that "as trustees of the property covered by the trust receipt,
. . . and therefore actingin fiduciary (sic) capacity,defendants have willfully violated their duty to account for the whereabouts of
the machinery covered by the trust receipt or for the proceeds of any lease,saleor other disposition of the same that they may have
made, notwithstandingdemands therefor; defendants have fraudulently misapplied or converted to their own use any money
realized from the lease, sale,and other disposition of said machinery." 23 Whilethere is no specific prayer for the delivery to the
petitioner by PhilippineRayon of the proceeds of the saleof the machinery covered by the trustreceipt, such relief is covered by the
general prayer for "such further and other relief as may be justand equitableon the premises." 24 And although itis true that the