Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 111744 September 8, 1995

LOURDES G. MARCOS, ALEJANDRO T. ANDRADA, BALTAZARA J. LOPEZ AND VILMA L. CRUZ, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION and INSULAR LIFE ASSURANCE CO., LTD., respondents.

REGALADO, J.:

This petition for certiorari seeks the nullification of the decision 1 of the National Labor Relations Commission (NLRC) promulgated on May 31, 1992 in NLRC NCR CA No. 004120-92, and its resolution dated August 27, 1993 denying petitioner's motion for reconsideration thereof. The said decision set aside on appeal, the decision of Labor Arbiter Alex Arcadio Lopez ordering private respondent to pay petitioners their service awards, anniversary bonus and prorated performance bonus in the amount of P144,579.00 and 10% attorney's fees in the amount of P14,457.90. 2

First, the undisputed facts.

Petitioners were regular employees of private respondent Insular Life Assurance Co:, Ltd., but they were dismissed on November 1, 1990 when their positions were declared redundant. A special redundancy benefit was paid to them, which included payment of accrued vacation leave and fifty percent (50%) of unused current sick leave, special redundancy benefit, equivalent to three (3) months salary for every year of service; and additional cash benefits, in lieu of other benefits provided by the company or required by law. 3

Before the termination of their services, petitioner Marcos had been in the employ of private respondent for more than twenty (20) years, from August 26, ]970; petitioner Andrada, more than twenty-five (25) years, from July 26, 1965; petitioner Lopez, exactly thirty (30) years, from October 31, 1960; and petitioner Cruz, more than twenty (20) years, from March 1, 1970. 4

Petitioners, particularly Baltazara J. Lopez, sent a letter dated October 23, 1990 to respondent company questioning the redundancy package, She claimed that they should receive their respective service awards and other prorated bonuses which they had earned at the time they were dismissed. In addition, Lopez argued that "the cash service awards have already been budgeted in a fund distinct and apart from redundancy fund. 5

Thereafter, private respondent required petitioners to execute a "Release and Quitclaim," 6 and petitioners complied but with a written protest reiterating their previous demand that they were nonetheless entitled to receive their service awards.

On March 21, 1991, petitioners inquired from the Legal Service of the Department of Labor and Employment 7whether respondent corporation could legally refuse the payment of their service awards as mandated in their Employee's Manual.

About three months later the labor department issued its opinion, with pertinent authorities, responding to petitioners' query as follows:

xxx xxx xxx

This Department believes that your query presents several issues. These shall be addressed point by point, thus:

First, the Department deems the service award to be part of the benefits of the employees of Insular Life. Company policies and practices are fertile sources of employee's rights. These must be applied uniformly as interpretation cannot vary from one employee to another. . . .

xxx xxx xxx

While it may be argued that the above-cited case applies only to retirement benefits, we find solace in the cases of Liberation Steamship Co., Inc. vs. CIR and National Development Company vs. Unlicensed Crew members of Three Dons vessels (23 SCRA 1105) where the Supreme Court held that a gratuity or bonus, by reason of its long and regular concession indicating company practice, may become regarded as part of regular compensation and thus demandable.

xxx xxx xxx

Second, the award is earned at the pertinent anniversary date. At this time, entitlement to the award becomes vested. The anniversary date is the only crucial determining factor. Since the award accrues on that date, it is of no moment that the entitled employee is separated from service (for whatever cause) before the awards are physically handed out.

xxx xxx xxx

Third, even if the award has not accrued — as when an employee is separated from service because of redundancy before the applicable 5th year anniversary, the material benefits of the award must be given, prorated, by Insular Life. This is especially true (in) redundancy, wherein he/she had no control.

xxx xxx xxx

Fourth, the fact that you were required to sign "Release and Quitclaim" does not affect your right to the material benefits of the service award. . . . 8

Meanwhile, in the same year, private respondent celebrated its 80th anniversary wherein the management approved the grant of an anniversary bonus equivalent to one (1) month salary only to permanent and probationary employees as of November 15, 1990. 9

On March 26, 1991, respondent company announced the grant of performance bonus to both rank and file employees and supervisory specialist grade and managerial staff equivalent to two (2) months salary

and 2.75 basic salary, respectively, as of December 30, 1990. The performance bonus, however, would be given only to permanent employees as of March 30, 1991. 10

Despite the aforequoted opinion of the Department of Labor and Employment, private respondent refused to pay petitioners service awards. This prompted the latter to file a consolidated complaint, which was assigned to NLRC Labor Arbiter Lopez, for payment of their service awards, including performance and anniversary bonuses.

In their complaint, petitioners contended that they are likewise entitled to the performance and anniversary bonuses because, at the time the performance bonus was announced to be given, they were only short of two (2) months service to be entitled to the full amount thereof as they had already served the company for ten (10) months prior to the declaration of the grant of said benefit. Also, they lacked only fifteen (15) days to be entitled to the full amount of the anniversary bonus when it was announced to be given to employees as of November 15, 1990.

In a decision dated October 8, 1992, the labor arbiter ordered respondent company to pay petitioners their service awards, anniversary bonuses and prorated performance bonuses, including ten percent (10%) thereof as attorney's fees.

Respondent company appealed to public respondent NLRC claiming grave abuse of discretion committed by the labor arbiter in holding it liable to pay said service award, performance and anniversary bonuses, and in not finding that petitioners were estopped from claiming the same as said benefits had already been given to them.

In setting aside the decision of the labor arbiter, respondent NLRC upheld the validity of the quitclaim document executed by petitioners. For this conclusion, it rationalized that "(c)ertainly, before complainants signed the quitclaim and release, they are aware of the nature of such document. In fact, they never assailed the genuineness and due execution of the same. Hence, we can safely say that they were not placed under duress or were compelled by means of force to sign the document." 11

Furthermore, the NLRC held that "(n)either was there any unwritten agreement between complainants and respondent upon separation, which entitled the former to other renumerations or benefits. On the contrary, they voluntarily accepted the redundancy benefit package, otherwise, they would not have been separated from employment." 12

Hence, this petition wherein it is postulated that the basic issue is whether or not respondent NLRC committed reversible error or grave abuse of discretion in affirming the validity of the "Release and Quitclaim" and, consequently, that petitioners are not entitled to payment of service awards and other bonuses. 13 The Solicitor General public respondent NLRC and private respondent company duly filed their respective comments. 14

In their petition, petitioners stress that they have actually devoted much, if not all, of their employable life with private respondent; that given their length of service, their loyalty to the latter is easily demonstrable; and that the same length of service had rendered slim, if not eliminated, their chances of getting employed somewhere else."15

On the other hand, respondent company reiterates its basic contention that the consideration for the settlement of petitioners' claim is credible and reasonable, more than satisfies the legal requirement therefor, and that petitioners, in executing the release and quitclaim, did so voluntarily and with full knowledge of the consequences thereof. 16

The petition being meritorious, we find for petitioners.

Under prevailing jurisprudence, the fact that an employee has signed a satisfaction receipt for his claims does not necessarily result in the waiver thereof. The law does not consider as valid any agreement whereby a worker agrees to receive less compensation than what he is entitled to recover. A deed of release or quitclaim cannot bar an employee from demanding benefits to which he is legally entitled. 17

We have heretofore explained that the reason why quitclaims commonly frowned upon as contrary to public policy, and why they are held to be ineffective to bar claims for the full measure of the workers' legal rights, is the fact that the employer and the employee obviously do not stand on the same footing. The employer drove the employee to the wall. The latter must have harsh necessities of life. He thus found himself in no position to resist money proffered. His, then, is a case of adherence, not of choice. One thing sure, however, is that petitioners did not relent on their claim. They pressed it. They are deemed not have waived any of their rights. Renuntiatio non praesumitur. 18

Along this line, we have more trenchantly declared that quitclaims and/or complete releases executed by the employees do not estop them from pursuing their claims arising from unfair labor practices of the employer. The basic reason for this is that such quitclaims and/or complete releases are against public policy and, therefore, null and void. The acceptance of termination does not divest a laborer of the right to prosecute his employer for unfair labor practice acts. 19 While there maybe possible exceptions to this holding, we do not perceive any in the case at bar.

Furthermore, in the instant case, it is an undisputed fact that when petitioners signed the instrument of release and quitclaim, they made a written manifestation reserving their right to demand the payment of their service awards. 20 The element of total voluntariness in executing that instrument is negated by the fact that they expressly stated therein their claim for the service awards, a manifestation equivalent to a protest and a disavowal of any waiver thereof.

As earlier stated, petitioners even sought the opinion of the Department of Labor and Employment to determine where and how they stood in the controversy. This act only shows their adamant desire to obtain their service awards and to underscore their disagreement with the "Release and Quitclaim" they were virtually forced to sign in order to receive their separation pay.

We have pointed out in Veloso, et al., vs. Department of Labor and Employment, et al., 21 that:

While rights may be waived, the same must not be contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law.

Article 6 of the Civil Code renders a quitclaim agreement void ab initio where the quitclaim obligates the workers concerned to forego their benefits while at the same time exempting the employer from any liability that it may choose to reject. This runs counter to Art. 22 of the Civil Code which provides that no one shall be unjustly enriched at the expense of another.

We agree with the further observations of the Solicitor General who, in recommending the setting aside of the decision of respondent NLRC, called attention to the fact that "contrary to private respondent's contention, the "additional" redundancy package does not and could not have covered the payment of the service awards, performance and anniversary bonuses since the private respondent company has initially maintained the

position that petitioners are not legally entitled to the same. . . . Surprisingly, in a sudden turnabout, private respondent now claims . . . that the subject awards and bonuses are integrated in the redundancy package. It is evident, therefore, that private respondent has not truly consolidated the payment of the subject awards and bonuses in the redundancy package paid to the petitioners. 22

We are likewise in accord with the findings of the labor arbiter that petitioners are indeed entitled to receive service awards and other benefits, thus:

Since each of the complainants have rendered services to respondent in multiple(s) of five years prior to their separation from employment, respondent should be paid their service awards for 1990.

We are not impressed with the contention of the respondent that service award is a bonus and therefore is an act of gratuity which the complainants have no right to demand. Service awards are governed by respondent's employee's manual and (are) therefore contractual in nature.

On the matter of anniversary and performance bonuses, it is not disputed that it is respondent's practice to give an anniversary bonus every five years from its incorporation; that pursuant to this practice, respondent declared an anniversary bonus for its 80th Anniversary in 1990; that per terms of this declaration, only the employees of respondent as of 15 November 1990 will be given the bonus; and that complainants were separated from respondent only 25 days before :the respondent's anniversary. On the other hand, it is also (not) disputed that respondent regularly gives performance bonuses; that for its commendable performance in 1990, respondent declared a performance bonus; that per terms of this declaration, only permanent employees of respondent as of March 30, 1991 will be given this bonus; and that complainants were employees of respondents for the first 10 months of 1990.

We cannot see any cogent reason why an anniversary bonus which respondent gives only once in every five years were given to all employees of respondent as of 15 November 1990 (pro rata even to probationary employees; Annex 9) and not to complainants who have rendered service to respondent for most of the five year cycle. This is also true in the case of performance bonus which were given to permanent employees of respondent as of 30 March 1991 and not to employees who have been connected with respondent for most of 1990 but were separated prior to 30 March 1991.

We believe that the prerogative of the employer to determine who among its employee shall be entitled to receive bonuses which are, as a matter of practice, given periodically cannot be exercised arbitrarily. 23 (Emphasis and corrections in parentheses supplied.)

The grant of service awards in favor of petitioners is more importantly underscored in the precedent case ofInsular Life Assurance Co., Ltd., et al. vs. NLRC, et al., 24 where this Court ruled that "as to the service award differentials claimed by some respondent union members, the company policy shall likewise prevail, the same being based on the employment contracts or collective bargaining agreements between the parties. As the petitioners had explained, pursuant to their policies on the matter, the service award differential is given at the end of the year to an employee who has completed years of service divisible by 5.

A bonus is not a gift or gratuity, but is paid for some services or consideration and is in addition to what would ordinarily be given. 25 The term "bonus" as used in employment contracts, also conveys an idea of something which is gratuitous, or which may be claimed to be gratuitous, over and above the prescribed wage which the employer agrees to pay.

While there is a conflict of opinion as to the validity of an agreement to pay additional sums for the performance of that which the promisee is already under obligation to perform, so as to give the latter the right to enforce such promise after performance, the authorities hold that if one enters into a contract of employment under an agreement that he shall be paid a certain salary by the week or some other stated period and, in addition, a bonus, in case he serves for a specified length of time, there is no reason for refusing to enforce the promise to pay the bonus, if the employee has served during the stipulated time, on the ground that it was a promise of a mere gratuity.

This is true if the contract contemplates a continuance of the employment for a definite term, and the promise of the bonus is made at the time the contract is entered into. If no time is fixed for the duration of the contract of employment, but the employee enters upon or continues in service under an offer of a bonus if he remains therein for a certain time, his service, in case he remains for the required time, constitutes an acceptance of the offer of the employer to pay the bonus and, after that acceptance, the offer cannot be withdrawn, but can be enforced by the employee. 26

The weight of authority in American jurisprudence, with which we are persuaded to agree, is that after the acceptance of a promise by an employer to pay the bonus, the same cannot be withdrawn, but may be enforced by the employee. 27 However, in the case at bar, equity demands that the performance and anniversary bonuses should be prorated to the number of months that petitioners actually served respondent company in the year 1990. This observation should be taken into account in the computation of the amounts to be awarded to petitioners.

WHEREFORE, the assailed decision and resolution of respondent National Labor Relations Commission are hereby SET ASIDE and the decision of Labor Arbiter Alex Arcadio Lopez is REINSTATED.

SO ORDERED.

FIRST DIVISION

PEPSI-COLA PRODUCTSPHILIPPINES, INCORPORATED, and PEPSICO, INCORPORATED,Petitioners,

 

- versus - PEPE B. PAGDANGANAN, and PEPITO A. LUMAJAN,Respondents.

G. R. No. 167866 Present: PANGANIBAN, C.J.,YNARES-SANTIAGO,AUSTRIA-MARTINEZ,CALLEJO, SR.,CHICO-NAZARIO, JJ. Promulgated: October 12, 2006

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x D E C I S I O N

CHICO-NAZARIO, J.:

The Case

For review under Rule 45 of the Rules of Court, as amended, is the 13 February

2004 Decision[1] and 26 June 2005 Resolution[2] of the Court of Appeals in CA-G.R. CV No. 68290,

reversing and setting aside the 3 August 2000 [3] Decision and 23 August 2000[4] Order of the Regional

Trial Court of Pasig City, Branch 163,[5] in Civil Case No. 62726.

The Facts

This case stemmed from a Complaint[6] filed by herein respondents Pepe B. Pagdanganan

(Pagdanganan) and Pepito A. Lumahan (Lumahan) against herein petitioners Pepsi-Cola Products

Philippines, Incorporated (PCPPI) and PEPSICO, Incorporated (PEPSICO) on 22 December 1992, before

the Regional Trial Court (RTC) of Pasig City, Branch 163, for Sum of Money and Damages.

The facts are beyond dispute. As culled from the records of the case, they are as follows:

Petitioners PCPPI and PEPSICO launched a Department of Trade and Industry (DTI) approved and

supervised under-the-crown promotional campaign entitled Number Fever sometime in 1992. With said

marketing strategy, it undertook to give away cash prizes to holders of specially marked crowns and

resealable caps of PEPSI-COLA softdrink products, i.e., Pepsi, 7-Up, Mirinda and Mountain Dew. Specially

marked crowns and resealable caps were said to contain a) a three-digit number, b) a seven-digit alpha-

numeric security code, and c) the amount of the cash prize in any of the following

denominations P1,000.00; P10,000.00; P50,000.00;P100,000.00; and P1,000,000.00.

Petitioners PCPPI and PEPSICO engaged the services of D.G. Consultores, a Mexican consultancy

firm with experience in handling similar promotion in other countries, to randomly pre-select 60 winning

three-digit numbers with their matching security codes out of 1000 three-digit numbers seeded in the

market, as well as the corresponding artworks appearing on a winning crown and/or resealable cap.

The mechanics of the Number Fever promo was simple From Monday to Friday, starting 17

February 1992 to 8 May 1992, petitioners PCPPI and PEPSICO will announce, on national and local

broadcast and print media, a randomly pre-selected [7] winning three-digit number. All holders of

specially marked crowns bearing the winning three-digit number will win the corresponding amount

printed on said crowns and/or resealable caps.

On account of the success of the promotional campaign, petitioners PCPPI and PEPSICO

extended or stretched out the duration of the Number Fever for another five weeks or until 12 June

1992.

For the extended period, petitioners PCPPI and PEPSICO again sought the services of D.G.

Consultores to pre-select 25 winning three-digit numbers with their matching security codes as well as

the corresponding artworks to appear on a winning crown and/or resealable cap.

On 25 May 1992, petitioners PCPPI and PEPSICO announced the notorious three-digit

combination 349 as the winning number for the next day, 26 May 1992. On the same night of the

announcement, however, petitioners PCPPI and PEPSICO learned of reports that numerous people were

trying to redeem 349 bearing crowns and/or resealable caps with incorrect security codes L-2560-FQ

and L-3560-FQ. Upon verification from the list of the 25 pre-selected [8] winning three-digit numbers,

petitioners PCPPI and PEPSICO and the DTI learned that the three-digit combination 349 was indeed the

winning combination for 26 May 1992 but the security codes L-2560-FQ and L-3560-FQ do not

correspond to that assigned to the winning number 349.

Subsequently, petitioners PCPPI and PEPSICO issued a statement stating in part that:

DEAR VALUED CUSTOMERS

x x x x Some 349 crowns have winning security codes as per the list held in a bank vault

by the Department of Trade and Industry and will be redeemed at full value like all other authenticated winning crowns.

Some other 349 crowns which have security codes L-2560-FQ and L-3560-FQ are

not winning crowns. However, as an act of goodwill to our customers, we will redeem the non-

winning 349 crowns for P500.00 each until June 12, 1992 at all Pepsi plants & warehouses.

x x x x

Sincerely,

ROD SALAZARPresident

PEPSI-COLA PRODUCTS PHILS., INC.

Despite the foregoing announcement, on 9 July 1992, respondent Pagdanganan demanded

from petitioners PCPPI and PEPSICO and the DTI the payment of the corresponding cash prize of each of

his 349 bearing crown, specifically, four 7-Up [9] crowns and two Mirinda[10] crowns, each displaying the

cash prize ofP1,000,000.00 in addition to one 7-Up[11] crown showing the cash prize

of P100,000.00. Notably, all seven crowns bore the security code L-2560-FQ.

For his part, respondent Lumahan similarly insisted that petitioners PCPPI and PEPSICO pay him

the cash value of his two winning crowns, that is, two 7-Up crowns with one exhibiting the cash value

of P1,000,000.00 and the other the amount of P100,000.00.

Petitioners PCPPI and PEPSICO refused to take heed of the aforementioned demands.

Affronted by the seeming injustice, respondents Pagdanganan and Lumahan filed a collective

complaint[12] for Sum   of   Money and Damages before the RTC of Pasig City, Branch 163, against

petitioners PCPPI and PEPSICO.

After trial on the merits, the RTC rendered its decision on 3 August 2000, the dispositive part of

which states that:

WHEREFORE, for failure of the plaintiffs to establish a cause of action against

defendants, the instant case is hereby DISMISSED. The defendants are hereby ordered to pay plaintiffs Pagdanganan and Lumahan

the amounts of P3,500.00 and P1,000.00, respectively. Without costs. SO ORDERED.

In dismissing the complaint, the RTC ratiocinated that:

The preponderance of evidence now on record does not appear to support the

assertion of the plaintiffs that number 349 with security code number L-2560-FQ won the Pepsicos sales promotion game for May 26, 1992. While it is true that number 349 was used both as a winning and non-winning number, still the winning 349 must tally with the corresponding security code contained in the master list of winning crowns.

x x x x x x x [a]mong the 349s enumerated in the list of winning crowns (citation

omitted) as winning numbers were 349 V-2421-JC; 349 A-7963-IS; 349 B-4860-IG; 349 C-3984-RP; 349 D-5863-CO; 349 E-3800-EL; 349 U-3501-MN (sic) and 349 U-3246-NP. Nowhere to be found were nos. 349 L-2560-FQ and L-3560-FQ. This means that it was not possible for both defendants to have won during the entire extended period of the sales promotion of Pepsi Cola because the number did not appear in the master list. It was made clear in the advertisements and posters put up by defendants that to win, the 3-digit number must be matched with the proper security code. The Department of Trade and Industry had been duly informed of the mechanics of the Pepsi Cola sales promotion for the protection of the interest of the public.

Anent the award of P3,500.00 and P1,000.00 to respondents Pagdanganan and Lumahan,

respectively, the RTC justified such grant, by stating to wit:

x x x since the defendants have voluntarily announced their desire to pay

holders of caps or crowns of their products bearing non-winning number 349 as a sign of goodwill, the Court feels that this privilege should also be extended to the plaintiffs despite the institution of the instant case.

Their Partial Motion for Reconsideration[13] having been denied in an Order[14] dated 23

August 2000, respondents Pagdanganan and Lumahan appealed their case to the Court of

Appeals.

In a Decision[15] promulgated on 13 February 2004, the Court of Appeals reversed and set aside

the decision of the RTC, the fallo of which reads:

WHEREFORE, the appeal is hereby GRANTED. The decision of the Regional Trial

Court of Pasig, Branch 163, in Civil Case No. 62726 is REVERSED. Defendants-appellants are hereby ORDERED to pay plaintiffs-appellants Pepe Pagdanganan the sum of P5 million and Pepito Lumahan the sum of P1.2 million.

In a Resolution dated 26 April 2005, the Court of Appeals denied petitioners PCPPI and

PEPSICOs Motion for Reconsideration.

The Issues

Hence, this petition for review on certiorari under Rule 45 of the Rules of Court, as amended,

predicated on the following issues:[16]

I.

WHETHER OR NOT PETITIONERS ARE ESTOPPED FROM RAISING STARE DECISIS;

II.

WHETHER OR NOT RODRIGO, MENDOZA, PATAN AND DE MESA ARE BINDING ALTHOUGH RESPONDENTS WERE NOT PARTIES THEREIN;

III.

WHETHER OR NOT THE RESPONDENTS RAISE ANY ISSUE THAT HAS NOT BEEN PREVIOUSLY RESOLVED IN RODRIGO, MENDOZA, PATAN OR DE MESA;

IV.

WHETHER OR NOT THE SENATE AND DTI TASK FORCE REPORTS ARE EVEN RELEVANT, OR CONTROLLING; and

V.

WHETHER OR NOT RESPONDENTS MAY SEEK AFFIRMATIVE RELIEF WITHOUT HAVING APPEALED.

In essence, the present petition raises as fundamental issue for resolution by the Court the

question of whether or not the instant case is already barred by our rulings in the cases of Rodrigo,[17] Mendoza,[18] Patan   [19]    and, the most recent, De Mesa. [20]

 

The Courts Ruling

In ordering petitioners PCPPI and PEPSICO to pay respondents Pagdanganan and Lumahan the

amounts of P5,000,000.00 and P1,200,000.00, the appellate court articulated that:

x x x [w]e fully agree with the contention of plaintiffs-appellants that such deviation or additional requirement, that is the winning crown must have a corresponding winning security code, imposed by PEPSI was a deviation from the rules approved by DTI.

x x x x x x x [i]t appeared that the matching winning security with code is not an

express requirement in order to win. Taken together with printed promo mechanics, this means that one is a winner as long as he has in his possession the crown with the winning number. The matching winning security code is not required.

With the promo mechanics as the guide, it is undisputable that plaintiffs-

appellants are very well entitled to the cash prizes indicated on their crowns. To deny their claim despite their compliance with the unequivocal requirements of the promotion is contrary to the principle of good faith.

x x x x It is highly inequitable for PEPSI to impose an additional requirement in order to

win as a way to evade the unusually large number of 349 winner-claimants. x x x.

Petitioners PCPPI and PEPSICO fault the appellate court for disregarding this Courts

pronouncements in four other Pepsi/349 cases i.e., Mendoza, Rodrigo,Patan and De Mesa that the 349

bearing crowns and/or resealable caps with security codes L-2560-FQ and L-3560-FQ, like those held by

respondents Pagdanganan and Lumahan, are non-winning crowns under the terms of the Number Fever

promo. They reckon that, by virtue of the principle of stare  decisis, the aforementioned cases have

already settled the issue of whether or not petitioners PCPPI and PEPSICO are liable to holders of non-

winning 349 bearing crowns and/or resealable caps. Simply put, the principle of stare decisis should

have been determinative of the outcome of the case at bar. Rodrigo, Mendoza, Patan and De

Mesa cases having ruled on the very same issues raised in the case at bar, they constitute binding

judicial precedents on how Pepsi/"349" litigations must be disposed of.

On the other hand, respondents Pagdanganan and Lumahan justify the non-application of the

principle of stare decisis by stating that it is required that the legal rights and relations of the parties,

and the facts, and the applicable laws, the issue and evidence are exactly the same, (sic) as those

decided in the cases of Rodrigo,Mendoza and later the de Mesa x x x.[21] They contend, however, that a

comparison of the subject cases show that they are not the same nor identical x x x as evident in the

different questions of law, the findings of facts and evidence and issues involved in said cases x x x. [22] In

fact, respondents Pagdanganan and Lumahan particularly argue that the basis of their action is Breach of 

Contract while that of the Rodrigo and Mendoza cases involved complaints for Specific Performance.

The petition is meritorious.

There is no question that the cases of Mendoza, Rodrigo, Patan and De Mesa, including the case

at bar, arose from the same set of facts concerning the Number Fever promo debacle of petitioners

PCPPI and PEPSICO. Mendoza, Rodrigo, Patan, De Mesa, Pagdanganan and Lumahan are among those

holding supposedly winning 349 Pepsi/7-Up/Mirinda/Mountain Dew soft drink crowns and/or resealable

caps. Said crowns and/or resealable caps were not honored or allowed to be cashed in by petitioners

PCPPI and PEPSICO for failing to contain the correct security code assigned to such winning combination.

As a result, the rejected crown and/or resealable cap holders filed separate complaints for specific

performance/ sum of money/ breach of contract, with damages, all against petitioners PCPPI and

PEPSICO.

A survey of said cases is imperative in order to determine whether or not the principle of stare

decisis will, indeed, bar the relitigation of the instant case.

In 2001, in the case of Mendoza v. Pepsi-Cola Products Phils., Inc. and Pepsico, Inc.,[23] the RTC

dismissed the complaint for specific performance and damages against herein petitioners PCPPI and

PEPSICO. On appeal[24] with the Court of Appeals, the latter dismissed the appeal for lack of merit and

affirmed the dismissal of the complaint. It rationalized that:

The mechanics for the Number Fever promo, both in the original period and for the extension period, was duly approved by the DTI. Television, radio and print advertisements for the promo passed through and were by the DTI. Posters explaining the promo mechanics were posted all over the country and warning ads in newspapers highlighted the importance of the security code. Plaintiff-appellant admitted to have read and understood the mechanics of the promo. His different interpretation of the security codes function should not mean that PEPSI was grossly negligent. The mechanics were clear. A winning number had its own unique, matching security code

which must be authenticated by PEPSI against its official list. The importance of a matching security code had been adequately emphasized in the Warning Ads (citation omitted) and in the new campaign posters (citation omitted) during the extension period both of which were duly approved by DTI. x x x x The function of the security code is not limited to the determination of whether or not a crown is tampered with or fake. It also serves to authenticate the winning number combination whether it had the correct alpha-numeric security code uniquely assigned to each crown as appearing in PEPSIs official list. The campaign posters for the promo period February 17, 1992 to May 10, 1992 as well as for the extension period from May 11, 1992 to June 12, 1992 uniformly enumerated three (3) essential elements of a participating winning crown, to wit: (1) 3-digit winning number; (2) prize denomination; and (3) 7-digit alpha-numeric security code. x x x The promo mechanics stressed that the 3-digit winning number combination must have an authenticated security code, which security code was unique to every crown. Thus, plaintiff-appellants 349 crown must also be measured against the essential elements of a winning participating crown pursuant to the promos mechanics. x x x x Thus, PEPSIs obligation to redeem plaintiff-appellants 349 crown did not arise as his crown did not bear the correct security code, a condition precedent to winning the proffered prize.

A Petition for Review on Certiorari was then filed with this Court. In a Resolution dated 24 July 2002, we

denied Mendozas petition for review for failing to show that the Court of Appeals committed reversible

error.[25]

Similarly, in 2002, in Rodrigo v. Pepsi Cola Products (Phils.), Inc. and Pepsico, Inc., the RTC therein

dismissed the complaint for Specific Performance and Damages filed against herein petitioners PCPPI

and PEPSICO. The Court of Appeals then affirmed the dismissal of the complaint, stating that:

To resolve the pivotal issue of whether the appellants are the real winners of

the promo, the various advertisements must be read together to give effect to all. From the start of the promotion, Pepsi had highlighted the security code as a major component of each and every crown. In subsequent posters, the companies clarified its role as a measure against tampering or faking crowns. (sic), and emphasized the important role of the security code in identifying and verifying the real winning crown. In its Warning Cheaters posters, the third paragraph succinctly provides that:

Thus if a supposed winning crown is presented to us where the

security code does not match the real security code of the winning number as verified with our master list (known only to authorized

personnel of Pepsi and DTI), then we know that the Crown is either fake or tampered with. (Citation omitted.)

Also (sic) the companies published that:

Every crown/cap with a winning number and Authenticated security wins the amount printed on the crown/cap. (Citation omitted.)

Given said advertisements, the impression an ordinary consumer gets is that the

security code distinguishes the real or genuine from the fake winning crown, especially considering the conditions surrounding their issuance i.e., that as early as March 1992, various complaints of tampered crowns had reached the DTI. This construction is bolstered by the subsequent release of the NUMBER FEVER MORE CHANCES TO WIN posters during the extension period wherein the security code is defined as a measure against tampering or faking of crowns (citation omitted) and in the subsequent advertisements which warned the consuming public that the appellee companies would not honor under any circumstances any fake or tampered crown. (Citation omitted.)

The inescapable conclusion is that the crowns held by the appellants are not

winning crowns. x x x .

Undaunted, Rodrigo went to this Court via a Petition for  Review on Certiorari but we subsequently

denied his petition, in a Resolution dated 1 October 2001, for failure to show that a reversible error was

committed by the Court of Appeals, hence the aforequoted disquisition was affirmed.

Promulgated in 2003, in Pepsi Cola Products (Phils.) vs. Patan, Jr., the RTC therein dismissed two

consolidated complaints for specific performance and damages against herein petitioners PCPPI and

PEPSICO for lack of cause of action. The Court of Appeals substantially affirmed the findings of the trial

court that therein respondents did not win in the petitioners Number Fever promotional campaign as

their crowns were not the winning crowns. The appellate court, however, awarded therein respondents

P500 each in the interest of justice. When the case came to the Court by means of a Petition for Review 

on Certiorari, the finding that the correct security code is an indispensable requirement to be entitled to

the cash prize is concerned, was affirmed. The award of P500 though was deleted as it was our stance

that the offer of P500 for every non-winning 349 crown had long expired on 12 June 1992.

And, in the 2005 case of De Mesa v. Pepsi Cola Products Phils., Inc., the RTC dismissed the case

under the principle of stare decisis. It elucidated that the instant case, as well as the 2001 Mendoza case,

not only are the legal rights and relations of the parties substantially the same as those passed upon in

the 2002 Rodrigocase, but the facts, the applicable laws, the causes of action, the issues, and the

testimonial and documentary evidence are identical such that a ruling in one case, under the principle

of stare decisis, is a bar to any attempt to relitigate the same issue. Subsequently, De Mesa et al., filed

a Petition   for   Review   on   Certiorari before us challenging the application of the principle of stare 

decisis to said case. In a Decision promulgated 19 August 2005, we denied their recourse to this court

and affirmed the dismissal of the complaint. We held that:

In the instant case, the legal rights and relations of the parties, the facts, the

applicable laws, the causes of action, the issues, and the evidence are exactly the same as those in the decided cases of Mendoza and Rodrigo, supra. Hence, nothing is left to be argued. The issue has been settled and this Courts final decision in the said cases must be respected. This Courts hands are now tied by the finality of the said judgments. We have no recourse but to deny the instant petition.

The principle of stare decisis et non quieta movere (to adhere to precedents and not to unsettle

things which are established) is well entrenched in Article 8 of the Civil Code, to wit: [26]

ART. 8. Judicial decisions applying or interpreting the laws or the Constitution

shall form a part of the legal system of the Philippines.

With the above provision of law, in tandem with the foregoing judicial pronouncements, it is

quite evident that the appellate court committed reversible error in failing to take heed of our final,

and executory decisions those decisions considered to have attained the status of judicial precedents in

so far as the Pepsi/349 cases are concerned. For it is the better practice that when a court has laid down

a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all

future cases where the facts are substantially the same.[27] In the case at bar, therefore, we have no

alternative but to uphold the ruling that the   correct   security   code   is   an   essential,   nay,   critical, 

requirement   in   order   to   become   entitled   to   the   amount   printed   on   a   349   bearing   crown   and/or 

resealable cap.

Likewise, the same principle of judicial precedent will prevent respondents Pagdanganan and

Lumahan from receiving the amounts of P3,500.00 and P1,000.00, respectively, as goodwill

compensation. As we have stated on the case of Patan:

Neither is the award of P500 to respondent Patan, Jr. in the interest of justice

and equity warranted. Respondent Patan, jr. had consistently refused the petitioners offer of P500 for his non-winning 349 crown. Unlike the other holders of the non-winning 349 crowns, x x x who availed themselves of the goodwill money offered by the petitioner, respondent Patan, Jr. rejected the same.

x x x x

In this case, the petitioners offer of P500 for every non-winning 349 crown had long expired on June 12, 1992. The petitioner cannot now be compelled to pay respondent Patan, Jr. P500 as a goodwill gesture, since he had already rejected the same.

The doctrine of stare decisis embodies the legal maxim that a principle or rule of law which has

been established by the decision of a court of controlling jurisdiction will be followed in other cases

involving a similar situation. It is founded on the necessity for securing certainty and stability in the law

and does not require identity of or privity of parties. [28] This is unmistakable from the wordings of Article

8 of the Civil Code. It is even said that such decisions assume the same authority as the statute itself

and, until authoritatively abandoned, necessarily become, to the extent that they are applicable, the

criteria which must control the actuations not only of those called upon to decide thereby but also of

those in duty bound to enforce obedience thereto. [29] Abandonment thereof must be based only on

strong and compelling reasons, otherwise, the becoming virtue of predictability which is expected from

this Court would be immeasurably affected and the publics confidence in the stability of the solemn

pronouncements diminished.

To reiterate, there is naught that is left to be brought to court. Those things which have been so

often adjudged ought to rest in peace.[30]

WHEREFORE, premises considered, the instant petition is GRANTED. The assailed 13 February

2004 Decision and 26 April 2005 Resolution both of the Court of Appeals in CA-G.R. CV No. 68290, are

hereby REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Pasig City, Branch 163, in

Civil Case No. 62726 dismissing the complaint for Sum of Money and Damages is REINSTATED. Further,

respondents Pepe B. Pagdanganan and Pepito A. Lumahan, are not entitled to the award of P3,500.00

and P1,000.00, respectively, as goodwill compensation.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 80116 June 30, 1989

IMELDA MANALAYSAY PILAPIL, petitioner, vs.HON. CORONA IBAY-SOMERA, in her capacity as Presiding Judge of the Regional Trial Court of Manila, Branch XXVI; HON. LUIS C. VICTOR, in his capacity as the City Fiscal of Manila; and ERICH EKKEHARD GEILING, respondents.

REGALADO, J.:

An ill-starred marriage of a Filipina and a foreigner which ended in a foreign absolute divorce, only to be followed by a criminal infidelity suit of the latter against the former, provides Us the opportunity to lay down a decisional rule on what hitherto appears to be an unresolved jurisdictional question.

On September 7, 1979, petitioner Imelda Manalaysay Pilapil, a Filipino citizen, and private respondent Erich Ekkehard Geiling, a German national, were married before the Registrar of Births, Marriages and Deaths at Friedensweiler in the Federal Republic of Germany. The marriage started auspiciously enough, and the couple lived together for some time in Malate, Manila where their only child, Isabella Pilapil Geiling, was born on April 20, 1980. 1

Thereafter, marital discord set in, with mutual recriminations between the spouses, followed by a separation de facto between them.

After about three and a half years of marriage, such connubial disharmony eventuated in private respondent initiating a divorce proceeding against petitioner in Germany before the Schoneberg Local Court in January, 1983. He claimed that there was failure of their marriage and that they had been living apart since April, 1982. 2

Petitioner, on the other hand, filed an action for legal separation, support and separation of property before the Regional Trial Court of Manila, Branch XXXII, on January 23, 1983 where the same is still pending as Civil Case No. 83-15866. 3

On January 15, 1986, Division 20 of the Schoneberg Local Court, Federal Republic of Germany, promulgated a decree of divorce on the ground of failure of marriage of the spouses. The custody of the child was granted to petitioner. The records show that under German law said court was locally and internationally competent for the divorce proceeding and that the dissolution of said marriage was legally founded on and authorized by the applicable law of that foreign jurisdiction. 4

On June 27, 1986, or more than five months after the issuance of the divorce decree, private respondent filed two complaints for adultery before the City Fiscal of Manila alleging that, while still married to said respondent, petitioner "had an affair with a certain William Chia as early as 1982 and with yet another man named Jesus Chua sometime in 1983". Assistant Fiscal Jacinto A. de los Reyes, Jr., after the corresponding investigation, recommended the dismissal of the cases on the ground of insufficiency of evidence. 5 However, upon review, the respondent city fiscal approved a resolution, dated January 8,

1986, directing the filing of two complaints for adultery against the petitioner. 6 The complaints were accordingly filed and were eventually raffled to two branches of the Regional Trial Court of Manila. The case entitled "People of the Philippines vs. Imelda Pilapil and William Chia", docketed as Criminal Case No. 87-52435, was assigned to Branch XXVI presided by the respondent judge; while the other case, "People of the Philippines vs. Imelda Pilapil and James Chua", docketed as Criminal Case No. 87-52434 went to the sala of Judge Leonardo Cruz, Branch XXV, of the same court. 7

On March 14, 1987, petitioner filed a petition with the Secretary of Justice asking that the aforesaid resolution of respondent fiscal be set aside and the cases against her be dismissed. 8 A similar petition was filed by James Chua, her co-accused in Criminal Case No. 87-52434. The Secretary of Justice, through the Chief State Prosecutor, gave due course to both petitions and directed the respondent city fiscal to inform the Department of Justice "if the accused have already been arraigned and if not yet arraigned, to move to defer further proceedings" and to elevate the entire records of both cases to his office for review. 9

Petitioner thereafter filed a motion in both criminal cases to defer her arraignment and to suspend further proceedings thereon. 10 As a consequence, Judge Leonardo Cruz suspended proceedings in Criminal Case No. 87-52434. On the other hand, respondent judge merely reset the date of the arraignment in Criminal Case No. 87-52435 to April 6, 1987. Before such scheduled date, petitioner moved for the cancellation of the arraignment and for the suspension of proceedings in said Criminal Case No. 87-52435 until after the resolution of the petition for review then pending before the Secretary of Justice. 11 A motion to quash was also filed in the same case on the ground of lack of jurisdiction, 12 which motion was denied by the respondent judge in an order dated September 8, 1987. The same order also directed the arraignment of both accused therein, that is, petitioner and William Chia. The latter entered a plea of not guilty while the petitioner refused to be arraigned. Such refusal of the petitioner being considered by respondent judge as direct contempt, she and her counsel were fined and the former was ordered detained until she submitted herself for arraignment. 13 Later, private respondent entered a plea of not guilty. 14

On October 27, 1987, petitioner filed this special civil action for certiorari and prohibition, with a prayer for a temporary restraining order, seeking the annulment of the order of the lower court denying her motion to quash. The petition is anchored on the main ground that the court is without jurisdiction "to try and decide the charge of adultery, which is a private offense that cannot be prosecuted de officio (sic), since the purported complainant, a foreigner, does not qualify as an offended spouse having obtained a final divorce decree under his national law prior to his filing the criminal complaint." 15

On October 21, 1987, this Court issued a temporary restraining order enjoining the respondents from implementing the aforesaid order of September 8, 1987 and from further proceeding with Criminal Case No. 87-52435. Subsequently, on March 23, 1988 Secretary of Justice Sedfrey A. Ordoñez acted on the aforesaid petitions for review and, upholding petitioner's ratiocinations, issued a resolution directing the respondent city fiscal to move for the dismissal of the complaints against the petitioner. 16

We find this petition meritorious. The writs prayed for shall accordingly issue.

Under Article 344 of the Revised Penal Code, 17 the crime of adultery, as well as four other crimes against chastity, cannot be prosecuted except upon a sworn written complaint filed by the offended spouse. It has long since been established, with unwavering consistency, that compliance with this rule is a jurisdictional, and not merely a formal, requirement. 18 While in point of strict law the jurisdiction of the court over the offense is vested in it by the Judiciary Law, the requirement for a sworn written

complaint is just as jurisdictional a mandate since it is that complaint which starts the prosecutory proceeding 19 and without which the court cannot exercise its jurisdiction to try the case.

Now, the law specifically provides that in prosecutions for adultery and concubinage the person who can legally file the complaint should be the offended spouse, and nobody else. Unlike the offenses of seduction, abduction, rape and acts of lasciviousness, no provision is made for the prosecution of the crimes of adultery and concubinage by the parents, grandparents or guardian of the offended party. The so-called exclusive and successive rule in the prosecution of the first four offenses above mentioned do not apply to adultery and concubinage. It is significant that while the State, as parens patriae, was added and vested by the 1985 Rules of Criminal Procedure with the power to initiate the criminal action for a deceased or incapacitated victim in the aforesaid offenses of seduction, abduction, rape and acts of lasciviousness, in default of her parents, grandparents or guardian, such amendment did not include the crimes of adultery and concubinage. In other words, only the offended spouse, and no other, is authorized by law to initiate the action therefor.

Corollary to such exclusive grant of power to the offended spouse to institute the action, it necessarily follows that such initiator must have the status, capacity or legal representation to do so at the time of the filing of the criminal action. This is a familiar and express rule in civil actions; in fact, lack of legal capacity to sue, as a ground for a motion to dismiss in civil cases, is determined as of the filing of the complaint or petition.

The absence of an equivalent explicit rule in the prosecution of criminal cases does not mean that the same requirement and rationale would not apply. Understandably, it may not have been found necessary since criminal actions are generally and fundamentally commenced by the State, through the People of the Philippines, the offended party being merely the complaining witness therein. However, in the so-called "private crimes" or those which cannot be prosecuted de oficio, and the present prosecution for adultery is of such genre, the offended spouse assumes a more predominant role since the right to commence the action, or to refrain therefrom, is a matter exclusively within his power and option.

This policy was adopted out of consideration for the aggrieved party who might prefer to suffer the outrage in silence rather than go through the scandal of a public trial. 20 Hence, as cogently argued by petitioner, Article 344 of the Revised Penal Code thus presupposes that the marital relationship is still subsisting at the time of the institution of the criminal action for, adultery. This is a logical consequence since the raison d'etre of said provision of law would be absent where the supposed offended party had ceased to be the spouse of the alleged offender at the time of the filing of the criminal case. 21

In these cases, therefore, it is indispensable that the status and capacity of the complainant to commence the action be definitely established and, as already demonstrated, such status or capacity must indubitably exist as of the time he initiates the action. It would be absurd if his capacity to bring the action would be determined by his status before or subsequent to the commencement thereof, where such capacity or status existed prior to but ceased before, or was acquired subsequent to but did not exist at the time of, the institution of the case. We would thereby have the anomalous spectacle of a party bringing suit at the very time when he is without the legal capacity to do so.

To repeat, there does not appear to be any local precedential jurisprudence on the specific issue as to when precisely the status of a complainant as an offended spouse must exist where a criminal prosecution can be commenced only by one who in law can be categorized as possessed of such status. Stated differently and with reference to the present case, the inquiry ;would be whether it is necessary in the commencement of a criminal action for adultery that the marital bonds between the complainant

and the accused be unsevered and existing at the time of the institution of the action by the former against the latter.

American jurisprudence, on cases involving statutes in that jurisdiction which are in pari materia with ours, yields the rule that after a divorce has been decreed, the innocent spouse no longer has the right to institute proceedings against the offenders where the statute provides that the innocent spouse shall have the exclusive right to institute a prosecution for adultery. Where, however, proceedings have been properly commenced, a divorce subsequently granted can have no legal effect on the prosecution of the criminal proceedings to a conclusion. 22

In the cited Loftus case, the Supreme Court of Iowa held that —

'No prosecution for adultery can be commenced except on the complaint of the husband or wife.' Section 4932, Code. Though Loftus was husband of defendant when the offense is said to have been committed, he had ceased to be such when the prosecution was begun; and appellant insists that his status was not such as to entitle him to make the complaint. We have repeatedly said that the offense is against the unoffending spouse, as well as the state, in explaining the reason for this provision in the statute; and we are of the opinion that the unoffending spouse must be such when the prosecution is commenced. (Emphasis supplied.)

We see no reason why the same doctrinal rule should not apply in this case and in our jurisdiction, considering our statutory law and jural policy on the matter. We are convinced that in cases of such nature, the status of the complainant vis-a-vis the accused must be determined as of the time the complaint was filed. Thus, the person who initiates the adultery case must be an offended spouse, and by this is meant that he is still married to the accused spouse, at the time of the filing of the complaint.

In the present case, the fact that private respondent obtained a valid divorce in his country, the Federal Republic of Germany, is admitted. Said divorce and its legal effects may be recognized in the Philippines insofar as private respondent is concerned 23 in view of the nationality principle in our civil law on the matter of status of persons.

Thus, in the recent case of Van Dorn vs. Romillo, Jr., et al., 24 after a divorce was granted by a United States court between Alice Van Dornja Filipina, and her American husband, the latter filed a civil case in a trial court here alleging that her business concern was conjugal property and praying that she be ordered to render an accounting and that the plaintiff be granted the right to manage the business. Rejecting his pretensions, this Court perspicuously demonstrated the error of such stance, thus:

There can be no question as to the validity of that Nevada divorce in any of the States of the United States. The decree is binding on private respondent as an American citizen. For instance, private respondent cannot sue petitioner, as her husband, in any State of the Union. ...

It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, only Philippine nationals are covered by the policy against absolute divorces the same being considered contrary to our concept of public policy and morality. However, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. ...

Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioner's husband entitled to exercise control over conjugal assets. ... 25

Under the same considerations and rationale, private respondent, being no longer the husband of petitioner, had no legal standing to commence the adultery case under the imposture that he was the offended spouse at the time he filed suit.

The allegation of private respondent that he could not have brought this case before the decree of divorce for lack of knowledge, even if true, is of no legal significance or consequence in this case. When said respondent initiated the divorce proceeding, he obviously knew that there would no longer be a family nor marriage vows to protect once a dissolution of the marriage is decreed. Neither would there be a danger of introducing spurious heirs into the family, which is said to be one of the reasons for the particular formulation of our law on adultery, 26 since there would thenceforth be no spousal relationship to speak of. The severance of the marital bond had the effect of dissociating the former spouses from each other, hence the actuations of one would not affect or cast obloquy on the other.

The aforecited case of United States vs. Mata cannot be successfully relied upon by private respondent. In applying Article 433 of the old Penal Code, substantially the same as Article 333 of the Revised Penal Code, which punished adultery "although the marriage be afterwards declared void", the Court merely stated that "the lawmakers intended to declare adulterous the infidelity of a married woman to her marital vows, even though it should be made to appear that she is entitled to have her marriage contract declared null and void, until and unless she actually secures a formal judicial declaration to that effect". Definitely, it cannot be logically inferred therefrom that the complaint can still be filed after the declaration of nullity because such declaration that the marriage is void ab initio is equivalent to stating that it never existed. There being no marriage from the beginning, any complaint for adultery filed after said declaration of nullity would no longer have a leg to stand on. Moreover, what was consequently contemplated and within the purview of the decision in said case is the situation where the criminal action for adultery was filed before the termination of the marriage by a judicial declaration of its nullity ab initio. The same rule and requisite would necessarily apply where the termination of the marriage was effected, as in this case, by a valid foreign divorce.

Private respondent's invocation of Donio-Teves, et al. vs. Vamenta, hereinbefore cited, 27 must suffer the same fate of inapplicability. A cursory reading of said case reveals that the offended spouse therein had duly and seasonably filed a complaint for adultery, although an issue was raised as to its sufficiency but which was resolved in favor of the complainant. Said case did not involve a factual situation akin to the one at bar or any issue determinative of the controversy herein.

WHEREFORE, the questioned order denying petitioner's motion to quash is SET ASIDE and another one enteredDISMISSING the complaint in Criminal Case No. 87-52435 for lack of jurisdiction. The temporary restraining order issued in this case on October 21, 1987 is hereby made permanent.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 161877 March 23, 2006

ARIEL C. SANTOS, Petitioner, vs.PEOPLE OF THE PHILIPPINES and the SANDIGANBAYAN, Respondents.

D E C I S I O N

GARCIA, J.:

In this petition for review on certiorari, petitioner Ariel C. Santos assails and seeks the reversal of the July 31, 2003 decision1 of the Sandiganbayan (Third Division) in Criminal Case No. 21770, as reiterated in its January 28, 2004 resolution,2 denying petitioner's motion for reconsideration.

The facts:

In an Information3 filed with the Sandiganbayan, thereat docketed as Criminal Case No. 21770 and raffled to its Third Division, herein petitioner Ariel Santos y Cadiente, then the Labor Arbiter of the National Labor Relations Commission (NLRC), Regional Arbitration Branch No. III, San Fernando, Pampanga, was charged with violation of Section 3(e) of Republic Act (R.A.) No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act, allegedly committed as follows:

That on March 11, 1993 and June 15, 1993 respectively, in San Fernando, Pampanga, …, the above-named accused, …, being then the Labor Arbiter of the [NLRC], Regional Arbitration Branch No. III, San Fernando, Pampanga, while in the performance of his quasi-judicial functions, taking advantage of his position and committing the offense in relation to his office, did then and there willfully, unlawfully, criminally and through evident bad faith and manifest partiality towards Abraham Mose, complainant in NLRC-RAB Case No. RO3-198-79 captioned Abraham Mose vs. Plaza Hotel/Apartments, cause undue injury to Conrado L. Tiu, the owner of the Plaza Hotel/Apartments, in the following manner: accused despite the pendency of the motion for reconsideration of his Order dated October 21, 1992 directing the issuance of a writ of execution and the opposition to the motion for execution as well as the motion to quash writ of execution, issued first a writ of execution dated March 11, 1993 followed by an alias writ of execution dated June 15, 1993, without acting on the said motions and opposition anymore, and as a consequence thereof, undue injury was caused to Conrado L. Tiu while giving unwarranted benefit and advantage to Abraham Mose.

CONTRARY TO LAW. [Words in bracket added.]

Arraigned on April 22, 1996,4 petitioner, as accused below, entered a plea of "Not Guilty."

In the ensuing pre-trial conference, petitioner made the following admissions of fact duly embodied in the court’s second pre-trial order5 dated April 13, 1999:

1. That at the time material to the case as alleged in the information, accused Ariel Santos was the Labor Arbiter of the NLRC-Branch III, San Fernando, Pampanga;

2. That the accused issued an Order dated October 21, 1992, directing the issuance of Writ of Execution against Conrado L. Tiu in NLRC-RAB Case No. RO3-198-79 ….;

3. That Conrado L. Tiu …, addressed to the accused, a motion for reconsideration … of said Order directing the issuance of Writ of Execution;

4. That likewise, Conrado L. Tiu filed an opposition to Abraham Mose's motion for issuance of Writ of Execution in the above-entitled case;

5. That without resolving the Motion for Reconsideration …, and despite the pendency of the same accused issued a Writ of Execution dated March 11, 1993, as well as an Alias Writ of Execution dated June 15, 1993 in said case.

During trial, the prosecution adduced in evidence the testimony of its sole witness in the person of private complainant Conrado L. Tiu, owner of Plaza Hotel/Apartments, and the documents he identified and marked in the course of the proceedings.

For its part, the defense, following the denial of its Demurrer to Evidence,6 called to the witness box petitioner himself and one Norma G. Reyes.

As summarized in the decision under review, the parties’ respective versions of the relevant incidents follow:

Facts as established by the prosecution

On July 10, 1981, a Decision was rendered by Labor Arbiter Andres Palumbarit of the Ministry of Labor and Employment of Region 3, Arbitration Branch in RO3-AB Case No. 198-79 entitled Abraham M. Mose vs. Plaza Hotel/Apartments, owned by Conrado L. Tiu. In said Decision, Conrado L. Tiu was ordered to pay his former employee, Abraham Mose, backwages and other benefits from the time he was illegally dismissed up to the time of his reinstatement, without however indicating any particular amount.

Pursuant to the above Labor Decision, NLRC Corporate Auditing Examiner Maria Lourdes L. Flores issued a Report of Examiner rendering the computation of Abraham Mose’s backwages and benefits for a period of three (3) years from July 1979 …for a total amount of P16,360.50. ….

On September 2, 1981, the Plaza Hotel/Apartments … filed a Memorandum of Appeal with the MOLE Region 3, … seeking for the reversal/reconsideration of the above stated Labor Decision. This appeal was, however, dismissed per … Resolution dated August 4, 1982. Plaza Hotel/Apartments raised their appeal to the Honorable Supreme Court which was docketed as G.R. No. 77105.

While the appeal was still pending before the … Court, another Report of Examiner … was rendered by … Examiner Philip A. Manansala increasing the award from P16,360.50 to P63,537.76 which now covered backwages and benefits from July 1979 to May 1987.

This sudden increase of judgment award prompted Plaza Hotel/ Apartments to file an objection to the Report of Examiner Philip Manansala, citing among others: a) Supreme Court rulings that the maximum backwages to be paid should only cover three (3) years from dismissal; ….

On March 15, 1989, the Supreme Court denied the appeal filed by Plaza Hotel/Apartments and with finality on August 3, 1989.

On March 13, 1990, the NLRC Region 3 through … Norma G. Reyes, made a recomputation of the judgment award in favor of Abraham Mose in accordance with the Supreme Court ruling covering a period of only three (3) years from the date of dismissal. This recomputed award amounted to P19,908.46 ….

After the above incidents, [the] accused took over the above Labor Case RO3-AB-Case No. 198-79, …. On October 21, 1992, [he] …issued an Order of even date, which increased the judgment award … from P19,908.46 to a skyrocketing P178,462.56 adopting and citing therein as basis a Report of Fiscal Examiner dated September 24, 1991, which was not even furnished to Plaza Hotel/Restaurants, Conrado L. Tiu or his counsel. This computation was contrary to the prevailing jurisprudence in Lepanto Consolidated Mining Co. vs. Encarnacion, where the monetary awards for illegally dismissed employees should only cover a three (3) year-period from the time of dismissal. The October 21, 1992 Order of [the] accused included the order for the issuance of Writ of Execution.

Plaza Hotel/Apartments filed a Motion for Reconsideration dated November 5, 1992 seeking the reconsideration of the above Order of accused …. Cited as grounds for reconsideration, inter alia, are: a) the order assailed … [is] contrary to the prevailing jurisprudence laid … in Lepanto Consolidated Mining …; b) Conrado L. Tiu … cannot possibly reinstate Abraham Mose to his former position as waiter in the Plaza Hotel because it has already closed business as early as January 21, 1987 ….

During the pendency of the Plaza Hotel’s Motion for Reconsideration, Abraham Mose through counsel filed an Ex-Parte Motion for Execution of the Order dated October 21, 1992. This was opposed by Plaza Hotel/Apartments ….

Without however acting on the Plaza Hotel/Apartments’ Motion for Reconsideration dated November 5, 1992 and the Opposition to Motion for Execution dated February 6, 1993, [the] accused issued a Writ of Execution dated March 11, 1993 to implement his Order of October 21, 1992 to collect the amount of P178,462.56 …. Reacting to this action of [the] accused …, Plaza Hotel/Apartments filed on May 25, 1993 a Motion to Quash Writ of Execution and to Resolve Motion for Reconsideration. [The] accused however ignored all the abovesaid Motions and pleadings filed by Plaza Hotel/Apartments.

Conrado L. Tiu, … was then compelled to file a Petition for Injunction before the Department of Labor and Employment with a prayer for [a] Temporary Restraining Order [TRO].

The NLRC in its Resolution of June 9, 1993 issued the … (TRO) enjoining the accused from enforcing his Writ of Execution dated March 11, 1993. In order to implement the TRO, the NLRC imposed as a condition the posting by Conrado L. Tiu of a cash or surety bond equivalent to the judgment award of P178,462.56 [which Tiu complied] as shown by his payment of premium amounting to P11,885.50.

Despite the [TRO], [the] accused issued an "Alias Writ of Execution" dated June 15, 1993 reiterating the enforcement of his previous Writ of Execution. However, this was not enforced due to the [TRO] presented by Conrado L. Tiu to the NLRC Sheriffs ….

On February 8, 1994, the NLRC, … issued a decision … to limit the computation of judgment award in favor of Abraham Mose to only three (3) years from July 4, 1979 to July 4, 1982 without qualification or deduction according to the prevailing jurisprudence laid down by the Supreme Court.7 (Words in bracket added).

Facts as established by the defense

Accused Ariel Santos admitted that he had issued a Writ of Execution on the Decision dated July 10, 1981 of the Labor Arbiter Andres Palumbarit …. The award, however, was increased from P19,908.46 to P178,462.56 …. The said writ of execution was issued on March 11, 1993. A Motion for Reconsideration dated February 6, 1993 was subsequently filed by the Plaza Hotel/Apartments on the Order dated October 21, 1992, but [the] accused deemed not to resolve the same because he felt there is no necessity to resolve it, since the decision of Labor Arbiter Palumbarit has become final and executory, hence, ministerial for his part to implement and enforce the same.

On February 28, 1994, a Decision of the NLRC was issued … stating that the backwages should be limited only to three (3) years in consonance with the ruling in the Lepanto Mining Company case. He further testified that, he did not know anymore nor aware what happened to the case since, as of August, 1993, he was assigned at the NLRC–NCR, and much as he wanted to rectify the error, he can no longer do so ….

Prior to the issuance of the above–said decision, a [TRO]was issued by the DOLE–NLRC for the enjoinment of the implementation of the writ of execution dated March 11, 1993, however, [the] accused issued an alias writ of execution. The Sheriff assigned did not implement the said writs.

Norma Reyes initially made a computation for the back wages of Abraham Mose in the amount P19,908.46 …. However, she made a recomputation … based on the Order of [the accused] … dated October 21, 1992 and increased the P19,908.46 back wages to P178,462.56 …. She was not informed by [the] accused that it is physically impossible for Mose to be reinstated ….8 (Words in bracket added)

In the same decision, the Sandiganbayan (Third Division) adjudged petitioner guilty as charged and, accordingly, sentenced him, thus:

WHEREFORE, the Court finds accused ARIEL SANTOS y CADIENTE GUILTY beyond reasonable doubt of violation of Section 3 (e) of Republic Act No. 3019, otherwise known as "The Anti-Graft and Corrupt Practices Act", and sentences said accused to EIGHT (8) YEARS and ONE (1) DAY, as minimum, to TEN (10) YEARS, as maximum, and perpetual disqualification from holding public office.

Ariel Santos is also ordered to pay Plaza Hotel/Apartments, through Conrado L. Tiu, the following sums as his civil liability:

1. P68,000 for the attorney's fees paid by Conrado L. Tiu because of filing of this case; and

2. P11,800 for the supersedeas bond paid by Conrado L. Tiu in connection with the restraining order issued by the DOLE-NLRC.

SO ORDERED.9

His motion for reconsideration having been denied by the same court in its equally assailed Resolution of January 28, 2004,10 petitioner is now with this Court via the present recourse imputing on the respondent court the following errors:

I. IN HOLDING THAT PETITIONER WAS GUILTY OF MANIFEST PARTIALITY IN ISSUING THE WRITS OF EXECUTION SUBJECT OF THE INFORMATION.

ll. IN HOLDING THAT THE PRIVATE COMPLAINANT SUFFERED UNDUE INJURY SINCE, AS SHOWN ABOVE, THE JUDGMENT FOR WHICH HE WAS HELD LIABLE TO PAY BACKWAGES, WHETHER FOR THAT LIMITED PERIOD OF THREE (3) YEARS OR CONTINUING BACKWAGES UNTIL ACTUAL REINSTATEMENT HAS NEVER BEEN SATISFIED.

The petition is not impressed with merit.

Section 3(e) of R.A. No. 3019, as amended, under which petitioner was indicted and convicted, reads:

SEC. 3. Corrupt practices of public officers. - In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:

xxx xxx xxx

(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official, administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence. This provision shall apply to officers and employees of offices or government corporations charged with the grant of licenses or permits or other concessions.

In Jacinto vs. Sandiganbayan,11 the Court en banc enumerated the essential elements of the crime punishable under the aforequoted statutory provision, to wit:

1. The accused must be a public officer discharging administrative, judicial or official functions;

2. He must have acted with manifest partiality, evident bad faith or inexcusable negligence; and

3. That his action caused any undue injury to any party, including the government, or giving any private party unwarranted benefits, advantage or preference in the discharge of his functions.

As may be noted, what contextually is punishable is the act of causing any undue injury to any party, or the giving to any private party of unwarranted benefits, advantage or preference in the discharge of the public officer’s functions. In Uy vs. Sandiganbayan,12 and again in Santiago vs. Garchitorena,13 the Court has made it abundantly clear that the use of the disjunctive word "or" connotes that either act of (a) "causing any undue injury to any party, including the Government"; and (b) "giving any private party any unwarranted benefits, advantage or preference," qualifies as a violation of Section 3(e) of R.A. No. 3019, as amended. This is not to say, however, that each mode constitutes a distinct offense but that an accused may be proceeded against under either or both modes.

Anent the first error, petitioner submits that the Sandiganbayan overlooked the fact that, when he issued, on June 15, 1993, the Alias Writ of Execution, reiterating the enforcement of the previous Writ of Execution dated March 11, 1993, he had no knowledge of the issuance on June 9, 1993 by the NLRC of a temporary restraining order (TRO). Prescinding therefrom, petitioner would now insist that, having been apprised of the TRO only on June 29, 1993, the day the NLRC's Central Docket Section released the same, he could not be criminally liable for acting with manifest partiality in issuing the alias writ of execution on June 15, 1993.

The Court is not persuaded.

Petitioner’s posture of not having known at some material point in time the issuance of the TRO in question strikes the Court as mere afterthought. If it were really true that he had no knowledge of the TRO issuance before he issued the June 15, 1993 alias writ of execution, he should have at least stated so in his defense before the court below or marked, as evidence, the TRO evidencing that it was released from the NLRC's docket section only on June 29, 1993. The materiality and significant weight of this defense could not have eluded petitioner, himself a lawyer, and his counsel, if indeed he had no knowledge that a TRO had already been issued. Not lost on the Court is the fact that petitioner did not even raise said issue in his Demurrer to Evidence before the respondent court, as well as in his motion for reconsideration of its decision. The settled rule is that no question will be entertained on appeal unless it had been raised in the court below. Points of law, theories, issues and arguments not adequately brought to the attention of the lower court need not be, and ordinarily will not be, considered by a reviewing court as they cannot be raised for the first time on appeal. Springing surprises on the opposing party is offensive to the sporting idea of fair play, justice and due process; hence the proscription against raising a new issue for the first time on appeal.14

In any case, the Court agrees with the findings and disquisitions of the Sandiganbayan that petitioner exhibited manifest partiality towards Abraham Mose in issuing the two Writs of Execution:

As a Labor Arbiter, and a lawyer at that, it is incumbent upon him to exercise prudence and probity in the exercise of his functions. He knew that there was a pending Motion for Reconsideration filed by Plaza Hotel/Apartments contesting his order dated October 21, 1992 ordering, in haste, the issuance of the writ of execution and regarding the hulking increase of the amount of backwages to be paid to Abraham Mose from P19,908.46 toP178,462.56, and despite the pendency of the said Motion, he issued the corresponding writ of execution. His reason that there is no longer a necessity to resolve the motion for reconsideration because the Decision of Labor Arbiter Palumbarit has become final and executory is untenable and a very negligible statement. The issue raised in the motion for reconsideration is not the Decision of Labor Arbiter Palumbarit, but accused's Order dated October 21, 1992, and thus, incumbent upon him to resolve first the pending motion for reconsideration before pursuing with the implementation of the said Order and instead of issuing the writ of execution. Furthermore, accused again issued an alias writ of execution, this time, despite issuance of a temporary restraining order by the DOLE-NLRC. By these acts of accused Ariel Santos, it is clearly evident that he had exercised manifest partiality or bias on Abraham Mose in impetuously issuing the two writs of execution, thus, causing damage and injury, which are not merely negligible to Plaza Hotel/Apartments.15

Petitioner also maintains that Plaza Hotel did not suffer damage or injury consequent to his having issued the two writs of execution, arguing that neither was ever enforced. Pressing the point, he also states that what Plaza Hotel paid by way of attorney's fees and premium for the supersedeas bond it posted to enjoin the enforcement of the alias writ of execution is not the damage or injury contemplated under Section 3(e) of R.A. No. 3019.

The contention is untenable.

The term "undue injury" in the context of Section 3 (e) of the Anti-Graft and Corrupt Practices Act punishing the act of "causing undue injury to any party," has a meaning akin to that civil law concept of "actual damage." The Court said so in Llorente vs. Sandiganbayan,16 thus:

In jurisprudence, "undue injury" is consistently interpreted as "actual damage." Undue has been defined as "more than necessary, not proper, [or] illegal;" and injury as "any wrong or damage done to another, either in his person, rights, reputation or property [; that is, the] invasion of any legally protected interest of another." Actual damage, in the context of these definitions, is akin to that in civil law.

In turn, actual or compensatory damages is defined by Article 2199 of the Civil Code as follows:

"Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages."

Fundamental in the law on damages is that one injured by a breach of a contract, or by a wrongful or negligent act or omission shall have a fair and just compensation commensurate to the loss sustained as a consequence of the defendant’s act. Actual pecuniary compensation is awarded as a general rule, …. Actual damages are primarily intended to simply make good or replace the loss caused by the wrong.

Petitioner admitted issuing the two writs of execution without first resolving Plaza Hotel's motion for reconsideration of his October 21, 1992 Order. He argued, however, that it was his ministerial duty to issue the writs aforementioned, the finality of the decision sought to be enforced, i.e., the decision of Labor Arbiter Palumbarit, having set in upon the dismissal, with finality, by this Court of Plaza Hotel’s petition for certiorari in G.R. No. 77105 assailing said decision.

Petitioner is obviously trying to mislead. As may be recalled, petitioner took over Labor Case RO3-AB Case No. 198-79 after this Court, in G.R. No. 77105, dismissed with finality Plaza Hotel/Apartments’ appeal from the decision of Labor Arbiter Andres Palumbarit which, to stress, decreed payment to Mose of backwages from the date of his illegal dismissal to his reinstatement, without, however, indicating a specific amount. In the span between the issuance of the Palumbarit decision and this Court’s final dismissal action aforementioned, two NLRC auditing examiners came out with (2) different computations of the judgment award. Thereafter, but before accused issued, on October 21, 1992, an order fixing the judgment award at P178,462.56 and directing the issuance of the covering writ of execution, examiner Norma Reyes, following jurisprudence, made a recomputation and came up with the figure P19,908.46 to cover the threshold three years backwages.

The increase of the award for Mose from P19,908.46 to P178,462.56 appeared contrary to prevailing jurisprudence that such award should cover only a 3-year period from the time of the employee's dismissal.17 The perceived illegality of the said Order of October 21, 1992 is what impelled Plaza Hotel to move for a reconsideration, raising inter alia the following issues for petitioner to consider in assessing the former's liability: (a) the ruling in Lepanto Consolidated Mining vs. Encarnacion18 on the amount recoverable in illegal dismissal cases is still the prevailing doctrine; (b) as early as July 1990, the employer already expressed willingness to pay Mose the sum of P19,908.46; and (c) Plaza Hotel was not furnished of the new computation assessing it the amount of P178,462.56.

From the foregoing narration of events, it is fairly clear that Plaza Hotel’s motion for reconsideration immediately referred to above was directed against petitioner’s order of October 21, 1992 directing the

issuance of a writ of execution for the amount stated therein. Be this as it may, petitioner’s pose respecting his ministerial duty to order the execution of a final and executory decision of Andres Palumbarit is as simplistic as it is misleading.

As it were, petitioner failed to resolve said motion for reconsideration and instead issued on March 11, 1993 a writ of execution. Worse still, he proceeded to issue an alias writ of execution despite the issuance by the NLRC Proper of a TRO enjoining the implementation of the underlying writ. Under the circumstances, Plaza Hotel was within its right to secure the services of counsel - for a fee of P68,500.00 - and, to apply for injunctive relief and then pay P11,800.00 for the supersedeas bond to stay the implementation of the writ of execution in question. In net effect, Plaza Hotel incurred damages rendered necessary by the illegal or improper acts of petitioner.

All told, the Court rules and so holds, as did the respondent Sandiganbayan, that the elements of the offense charged had been duly established beyond reasonable doubt. Petitioner, being a labor arbiter of the NLRC, discharges quasi-judicial functions. His act of issuing the two writs of execution without first resolving the pending motion for reconsideration of his October 21, 1992 Order, and despite the existence of a TRO was clearly tainted with or attended by evident partiality causing undue injury to private complainant Conrado L. Tiu.

The penalty for violation of Section 3(e) of R.A. No. 3019 is imprisonment for not less than six years and one month nor more than fifteen years, perpetual disqualification from public office, and other accessory penalties. Under the Indeterminate Sentence Law, if the offense is punished by special law, as here, the court shall impose on the accused an indeterminate penalty the maximum term of which shall not exceed the maximum fixed by said law and the minimum shall not be less than the minimum prescribed by the same. Hence, the respondent court correctly imposed on petitioner an indeterminate prison term of eight (8) years and one (1) day, as minimum, to ten (10) years, as maximum, with perpetual disqualification from public office.

WHEREFORE, finding no reversible error on the decision under review, the same is hereby AFFIRMED in toto and this petition is DENIED for lack of merit.

Costs against petitioner.

SO ORDERED.