SECOND DIVISION

[G.R. No. 198643. August 19, 2015.]

MARSMAN & COMPANY and QUIRINO R. ILEDAN , petitioners,

vs. ARTEMIO M. LIGO, respondent.

DECISION

DEL CASTILLO, J : p

An employee who was wrongly accused of criminal acts, illegally

arrested and detained, presented to the media at a humiliating press
conference against his will, and prosecuted in an unfounded criminal suit is
entitled to damages for malicious prosecution.
This Petition for Review on Certiorari 1 seeks to set aside the April 29,
2011 Decision 2 of the Court of Appeals in CA-G.R. CV No. 87004, as well as
its September 16, 2011 Resolution 3 denying reconsideration thereof.
Factual Antecedents
Petitioner Marsman & Company, Inc. (Marsman) — now Metro Drug,
Inc. — is a domestic corporation engaged in the business of distributing
pharmaceutical products. Petitioner Quirino R. Iledan (Iledan) was Marsman's
Warehouse Manager during the time material to this case.
Respondent Artemio M. Ligo was then Marsman's Warehouse
Supervisor and was primarily responsible for the destruction of bad order
and expired drugs. 4 Bad order drugs are those that are retrieved from the
market for being unfit for human consumption, while expired drugs are
those which have reached their expiry date. 5
Sometime in February 1993, Iledan supposedly received a telephone
call from Isabelito Miguel (Miguel), informing him that some of Marsman's
bad order and expired drugs that were intended for destruction were not
actually destroyed but were sold at the back of the Sto. Niño Church in
Parañaque. Iledan relayed this information to Marsman President and Chief
Executive Officer Dr. Eligio Santos (Santos), who called a meeting with Iledan
and Marsman Assistant Vice-President for Human Resources Manolette
Pilapil (Pilapil). During the meeting, Santos instructed Pilapil to seek the
assistance of the National Bureau of Investigation (NBI) in the investigation
of the matter. Thus, Pilapil sent a letter-request dated March 15, 1993 to NBI
Director Epimaco Velasco (NBI Director Velasco). 6 CAIHTE

The NBI 7 conducted surveillance on several dates in coordination with

Iledan. On May 7, 1993, it arrested several individuals who were supposedly
caught in the act of distributing these medicines that should have been
destroyed. 8 However, respondent was not one of them.
The following day, or on May 8, 1993, Iledan asked respondent to
accompany him to the NBI office on the pretext of visiting one of the
suspects arrested, Francisco Mercado (Mercado), 9 one of respondent's
colleagues at work. They proceeded to the NBI headquarters in Manila,
where respondent was arrested and placed in a detention cell. 10 Thereafter,
respondent and other individuals were presented to the media during a live
conference as the suspects in the distribution and sale of bad order and
expired medicines. Their photographs were taken, and later published, by
news reporters of The Daily Inquirer, Philippine Star, Bulletin, Taliba, Balita,
and Tempo. 11
Respondent was detained at the NBI headquarters for at least 10 days,
after which he was provisionally released after posting bond. 12 He was
criminally charged with violation of Republic Act No. 3720 13 as amended by
Executive Order No. 175 14 (RA 3720) which prohibits the sale, dispensing or
delivery of expired or rejected pharmaceutical products. The criminal case
was docketed with the Metropolitan Trial Court of Taguig City, Branch 74 as
Criminal Case No. 9070. However, the court issued an Order 15 on October
12, 1994 acquitting respondent of the charge. The Order held in part:
From this evidence, the court finds that indeed the prosecution
has miserably failed to prove the principal elements of the crime
charged, that is there was no showing that the accused has [sic] sold
or was [sic] selling much less dispensing the expired medicines. While
it is true that the destructing [sic] or transferring [sic] the expired
drugs is prohibited as defined in Section 11 of Republic Act 3720, the
destruction or transfer referred to in the act is distributing or
transferring the drugs to any third person or persons. From the
testimony of witness NBI Agent Arnel Azul is [sic] that when they
arrested the accused, the accused were transferring the expired
drugs from one vehicle to another, to be exact from a 10 wheeler
truck to [a] white delivery van and this transfer is not the transfer
contemplated, defined and penalized under Section 11 of R.A. 3720.
It is also the observation that from the evidences [sic] adduced
by the prosecution that assuming arguendo that the transfer of the
expired drugs from one vehicle to another is a crime by itself, from
the evidence, it appears that the transfer was done and
consummated in Angono, Rizal and therefore not within the territorial
jurisdiction of this court and it is elementary in criminal prosecution
that criminal cases has [sic] to be filed and prosecuted in the place
[sic] it was committed except those continuing offenses, in the case
at bar nowhere from the prosecution's evidence shows [sic] that the
crime charged or any of its ingredient [sic] has been committed here
in [Taguig], Metro Manila, the territorial jurisdiction of this court. Of
course this is not impugned in the demurrer to evidence, this is but
the observation of this court from the evidence adduced by the
prosecution.
Viewed [from] the foregoing, the court finds that the
prosecution has failed to establish the elements of the crime charged
amounting to failure to prove the guilt of the accused beyond
reasonable doubt and accordingly therefore, the above-entitled case
is hereby dismissed with costs de officio.
 xxx xxx xxx
SO ORDERED. 16

Respondent was likewise charged with serious misconduct, breach of

trust, and commission of a crime against Marsman. After several hearings,
respondent was terminated from employment on the ground of "negligence
and breach of trust and confidence" as well as failure to perform the
"sensitive task of supervising the burning and destroying of expired,
obsolete, bad order drugs and medicines," 17 but not for commission of a
crime against Marsman.
In October 1995, respondent filed a Complaint 18 for damages against
petitioners Marsman and Iledan with the Regional Trial Court of Las Piñas,
docketed as Civil Case No. LP-95-022 and assigned to Branch 275.
Respondent alleged that petitioners maliciously conspired to frame him and
fabricate a criminal charge against him by making it appear that he
feloniously sold, dispensed or delivered expired or bad order medicines; that
he was illegally arrested by the NBI on May 8, 1993, humiliated in a press
conference, and unlawfully detained for 10 days; that photographs taken
during the press conference were published in major dailies, and he became
the object of embarrassing news reports on radio and television; that he was
falsely charged criminally with violation of RA 3720 (Criminal Case No. 9070)
and illegally dismissed from employment; that he was subsequently
acquitted in Criminal Case No. 9070; that as a result of the frame-up, he and
his family became the object of ridicule in the community, school and
workplace, which thus forced them to relocate in order to avoid further
shame and embarrassment; and that in a demand letter to petitioners, he
sought restitution, but was ignored. He thus prayed for indemnity in the
amount of P5 million as moral damages, P1 million as exemplary damages,
P50,000.00 as actual damages, 25% of the total amount as attorney's fees,
and costs of suit.
Respondent's complaint particularly noted that when Iledan assumed
his position as warehouse manager, he was arrogant and hostile toward the
employees and even manifested his desire to replace respondent and other
employees assigned at respondent's warehouse. 19
In their Answer with Counterclaim, 20 petitioners insisted that
respondent was involved in a scheme of selling expired and bad order drugs
which he was supposed to destroy; that respondent's modus operandi
became the subject of three preliminary surveillances conducted by the NBI,
which revealed that the scheduled destruction of medicines through burning
did not take place, and that respondent left the site without supervising the
complete destruction of the medicines, while his cohorts transferred the
medicines from the company truck to another vehicle; that on May 7, 1993,
respondent's cohorts were intercepted and arrested by the NBI; that boxes of
expired medicines scheduled for destruction were confiscated from them;
that the next day, May 8, 1993, respondent reported for work and submitted
a false Certificate of Destruction stating that all medicines scheduled for
destruction the day before were destroyed; that respondent was arrested
and charges were lodged against him and his cohorts; that an investigation
for serious misconduct, breach of trust and commission of felony was also
conducted by Marsman; that while photographs of respondent were taken at
the NBI and published, they could not be held responsible therefor; that the
dismissal of Criminal Case No. 9070 was grounded on lack of jurisdiction and
not based on the merits; and that they acted in good faith, pursuant to duty,
and in defense of Marsman's rights in reporting the suspected illegal
operation to the NBI. By way of counterclaim, petitioners prayed to be
awarded P10 million as moral damages; P1 million as exemplary damages;
and P250,000.00 as attorney's fees and litigation expenses. DETACa

Trial ensued. The evidence of the parties were summed up by the trial
court, as follows:
EVIDENCE FOR THE PLAINTIFF
xxx xxx xxx
ARTEMIO LIGO, . . . testified that he was employed by
defendant Marsman & Co., Inc. from February 5, 1970 to July 15,
1993. He was then the Warehouse Supervisor . . . receiving and
supervising stocks, burning and destroying condemned medicines. . .
..
xxx xxx xxx
. . . The last time plaintiff led the destruction was on May 7,
1993 at Angono, Rizal. Defendant Iledan requested a BIR
representative and a Duncan pharmacist by the name of Rolando
Rotoni and Susan Ferrer, respectively. . . . Loading of medicines
started at about 8:00 in the morning . . . . With him in the van were
Mr. Rotoni, Ms. Ferrer and Francisco Mercado, the company driver.
They left for Angono, Riza1 at around 9:30 and arrived at site at
around 12:00 noon. The medicines were unloaded which took them
more than 1 hour. During the unloading, Mr. Rotoni and Ms. Ferrer
saw the bottled medicines . . . . At around 2:00 in the afternoon, the
representatives wanted to leave because of heat, bad odor and flies
in the area . . . . Defendant Iledan instructed him to attend to the
representatives' needs.
. . . Around 6:30 in the morning of May 8, 1993, he reported to
defendant Iledan on the accomplished mission, to which [Iledan
remarked] "very good." Then Francisco's son arrived and informed
him about Francisco's arrest in the afternoon of May 7, 1993.
Surprised, he reported the matter immediately to defendant Iledan
who pretended not to know it and [said] that they will go to NBI
headquarters. They left at around 10:00 in the morning. Upon arrival,
he was suddenly arrested while defendant Iledan who was beside him
turned his back and left. Defendant Iledan did nothing when he was
arrested. He was brought to the detention cell and then [to] the 2nd
floor where he was forced to admit the accusation. . . . (A)t the 2nd
floor, he saw Francisco and companions. Director Epimaco Velasco
entered the room and called them [to] the table where expired
medicines were placed. Then news reporters of Balita, Tempo and
others went inside and took them [sic] pictures, during which
defendant Iledan was at his back, hiding. He had no occasion to talk
to defendant IIedan. Then they were brought back to the detention
cell . . . .
After 10 days, he was able to post a bond and was provisionally
released. [A criminal] charge was filed against him by the NBI at the
instance of defendant Iledan . . . . Hearings were conducted on the
case and after a period of less than 2 years, the case was dismissed .
...
Plaintiff had clean record in his 21 years of service at defendant
company and received [an] award, a plaque of loyalty and
appreciation letters . . . . Defendant Iledan would have caused the
filing of the fabricated case because he was angry with union
members as they were organizing a supervisors' union [in] which he
was active. He engaged the services of a lawyer to protect his rights
and interest at a fee of more than P50,000.0. n He was restless,
experienced sleepless nights, felt humiliated and was ashamed to his
friends, relatives and neighbors, co-teachers of his wife and
classmates of his children, being labeled "manloloko." He got sick
often and they were constrained to transfer their residence . . . to
avoid the hurling of bad remarks. . . . .
xxx xxx xxx
He left the site at Angono on May 7, 1993 when some items
were not yet burned[,] . . . as he was instructed by defendant IIedan
to attend to the needs of the representatives when they leave the
site. At [the] time he left, there were still bad order and expired
medicines to be burned. During the burning, present were Mr. Rotoni,
Ms. Ferrer, Francisco Mercado and brother and nephews, several
scavengers and a policeman of Angono whom Francisco paid to help
maintain peace and order. . . . (TSN, 12 September 1997).
xxx xxx xxx
FRANCISCO MERCADO testified that he knows defendant
company because he worked in that office from April 1, 1977 until
May 7, 1993 when he was apprehended by NBI agents for selling
condemned medicines. . . . [T]he last time [he was assigned to
destroy the bad order medicines] was on May 7, 1993. . . . The
representatives were from the BIR, DFA [sic] and pharmacist of the
companies that have the bad order medicines. Plaintiff called the
representatives. The destruction site on May 7, 1993 was at Angono,
Rizal (TSN, 22 May 1998). aDSIHc

. . . On December 18, 1992, he invited defendant Iledan . . . for

dinner [during which] Iledan said "kayong mga unionista, ida-down ko
kayong lahat sa warehouse." Defendant was mad with the unionista
and those in the warehouse. . . . On May 7, 1993, he was arrested by
the NBI agents who blocked his way near the dump site at Angono.
Around 8:00 in the morning, defendant Iledan called up their office
and instructed him and plaintiff to burn the medicines. In the office,
he saw the BIR representative and pharmacist of Duncan Co. They
loaded the medicines to be burned [inside] the 10-wheeler truck . . . .
The zebra van he was driving was not loaded with medicines. At [the]
site, he was instructed by plaintiff to unload the medicines to be
burned. Due to stingy bad odor and heat of the sun, plaintiff and the
representatives left the area at about 2:30 in the afternoon. He
stayed to conduct the burning as instructed by defendant Iledan
(TSN, 28 September 1998).
The bottled medicines were ordered separated and placed
[inside] the van as they cannot be burned as they will explode. These
were brought to Taguig, the contents thrown and the bottles given to
the helpers . . . . He was not able to reach the shop because the NBI
agents, 7 of them on board 3 vehicles blocked [his path] and arrested
him. Two agents were armed, asked him to alight from the vehicle
and poked a gun at him. He was handcuffed and was asked the key of
the van which he refused to give because it was his responsibility. . . .
. They left and while on their way, somebody called by radio,
introduced himself as defendant Iledan . . . .
. . . On December 27 or 28, 1992, . . . defendant Iledan said that
the union members will not stay long because he will file cases
against them and he will terminate [the] witness from the service. . . .
The arrest was masterminded by defendant Iledan . . . (TSN, 24
February 1999).
xxx xxx xxx
ROLANDO ROTONI testified that he was a Revenue Examiner of
the BIR . . . . Per referral by the Revenue District Officer, he
represented the BIR in the destruction of bad order and expired
medicines of defendant company on May 7, 1993. . . . . There was
also a representative from Duncan Pharmaceuticals, Susan. They left
the site at about 12:00 noon to 1:00 in the afternoon. Destruction
started after arriving at the place. He was present during the burning
of all the medicines. . . .
On cross-examination, he admitted that . . . [n]ot all the
medicines were destructed [sic] when they left the site, but [he]
made sure that substantially all the medicines were actually
destroyed. . . . . All the medicines were placed in 1 fire and were
burned, using gasoline. He was checking while the medicines were
being unloaded from the truck. No medicine was left, [the] truck was
empty. None of the medicines were returned to any of the vehicles
undestroyed. He was not sure that at the time he left the site, there
were medicines still not destroyed. . . . . He left without making sure
that all the medicines were actually destroyed because they were
already . . . on fire. He would not know the other procedure for
bottled medicines for destruction. The bottled medicines were not
crushed as they were placed in 1 fire together with the capsules and
tablets, then gasoline [was] poured on the single [pile] . . . and [set on
fire].
xxx xxx xxx
EVIDENCE FOR THE DEFENSE
Evidence for the defense consists of the testimonies of
defendant Quirino Iledan, Efren Cruz, Leonora Pacson, Atty. Ferdinand
Lavin and Exhibits "1" to "15," inclusive of submarkings.
QUIRINO ILEDAN testified that he was . . . the Warehouse
Operations Manager since March 1984, responsible for the operations
of the entire warehouse. . . . . He knew plaintiff being the warehouse
supervisor, responsible for the receipt of good stocks from
manufacturers and . . . the destruction of expired and bad order
medicines. . . . . Francisco Mercado assisted plaintiff in the
destruction. . . . . Stocks were to be destroyed, tablets should be
crushed, bottles should be crushed and liquids should be thrown out
of the bottles and the bottles should be crushed or perforated so that
[they become] valueless. They should be unfit for human
consumption as it is a requirement of the manufacturer to prevent its
reuse. The certificate of destruction should be signed by plaintiff,
representatives of the BIR, BFAD, Auditor and the manufacturer which
certifies that the products have been destroyed. It was plaintiff's
responsibility to make sure that the bad order medicines were
completely destroyed.
In February 1998, 21 he received a call from Isabelito Miguel
that expired and bad order medicines were being sold at the back of
Sto. Niño church. He immediately informed Mr. Santos by telephone
who called up the AVP, HRD to report the matter to the NBI. . . . . He
informed the agents of the dates when to conduct the surveillance
operations during the scheduled destruction. . . . . On May 8, 1993, he
received a call from plaintiff informing him that Francisco was
arrested by the NBI. . . . . He went to the NBI headquarters with
plaintiff to visit Francisco in the afternoon and looked for the arresting
officer. . . .
After he left the NBI headquarters, he was informed that
plaintiff was arrested. . . . . The NBI filed a criminal case against
plaintiff in which he had no participation. . . . . When plaintiff was
informed that Francisco was arrested by NBI agents, he already heard
but pretended not to know because he had the idea that plaintiff was
involved and he might flee. He denied the truth of plaintiff's
statement on June 4, 1997 that upon arrival at the NBI headquarters
with plaintiff, the latter was suddenly arrested. Instead, they were
told to execute [a] statement, after which he asked that he . . . be
allowed to leave. He knew of the pictures taken by the NBI . . . but he
did not know who took the pictures and who asked the photographers
to go to the premises. He denied the truth in the statement of plaintiff
taken on July 1, 1997 that the reason why defendant Iledan caused
the filing of complaint that led to his arrest was because defendant
Iledan was angry with union members knowing that plaintiff
organized and was an active union member. . . . . He also denied the
plaintiff's testimony on July 30, 1997 that he manifested hostility and
was angry with plaintiff and other employees especially at the
warehouse division . . . (TSN, 15 February 2001). ETHIDa

He recalled that he has gone to Francisco's residence in

December 1992, but denied . . . having stated "kayong mga
unionista, ida-down ko kayong lahat sa warehouse." As a matter of
procedure, plaintiff was authorized to leave the destruction site
before the bad order medicines were destroyed, to have lunch with
the representatives. After which, plaintiff must go back to the
destruction site to witness the complete destruction. In that case,
plaintiff no longer returned which was not the correct procedure. . . .
xxx xxx xxx
 EFREN CRUZ testified that he . . . was then the Employee
Relations Manager . . . and was aware of [plaintiff's] termination due
to violation of company policies and procedures, on the basis of NBI
surveillance reports[,] . . . particularly in the conduct of destruction of
expired and bad order drugs.
. . . The surveillance reports furnished by the NBI to the
company served as basis for the investigation they conducted. . . .
xxx xxx xxx
On redirect examination, he confirmed that he did not know if
the surveillance reports were accurate or not. The basis of plaintiff's
termination was his breach of trust and confidence and negligence in
the performance of his duty based on such report and information
gathered during the investigation that they conducted . . . (TSN, 24
April 2003).
xxx xxx xxx
ATTY. FERDINAND LAVIN testified that he . . . was employed as
Chief, Anti-Organized Crime Division of the NBI. . . . . He knew
defendant company because they investigated its complaint (Exh.
"1") requesting for investigative assistance. . . . . Then [a] series of
case conferences and surveillance operations were conducted. . . . .
22

Ruling of the Regional Trial Court

On February 28, 2005, the trial court issued its Decision 23 in Civil Case
No. LP-95-022, decreeing thus:
PREMISES CONSIDERED, judgment is rendered in favor of the
plaintiff and against the defendants who hereby are found to have
maliciously prosecuted the plaintiff and they are directed to pay the
plaintiff, jointly and severally, the following amounts, to wit:
1. Â Three Million (P3,000,000.00) Pesos by way of moral
damages;
2. Â Five Hundred Thousand (P500,000.00) Pesos by way of
exemplary damages;
3. Â 25% of the total amount awarded to plaintiff as
attorney's fees and pay the cost of the suit.
SO ORDERED. 24

The trial court held that all the elements of malicious prosecution have
been proved, namely, that (1) the prosecution did occur and the defendant
was himself the prosecutor, and the criminal action terminated in an
acquittal; (2) in bringing the action, the prosecutor acted without probable
cause; and (3) the prosecutor was actuated or impelled by legal malice, i.e .,
by improper or sinister motive. 25 It declared that petitioners knowingly and
deliberately caused the investigation and prosecution of respondent through
a false and unfounded letter-complaint coursed through the NBI that was
based on the supposed tip of Miguel who was not even called to testify in
court. Acting without probable cause and with full knowledge that
respondent and his colleagues were proceeding in accordance with accepted
company practices regarding the destruction of the bad order and expired
medicines and subsequent disposition of the medicine bottles — which, after
emptying and destroying their contents, were cleaned and then awarded to
the helpers as their compensation or sold, petitioners nonetheless caused
the unlawful arrest of respondent and his colleagues while the latter were on
their way to dispose of the bottled medicines (in accordance with said
company-accepted procedure) on May 7, 1993 — on the false supposition or
pretext that they were carrying out their modus operandi of selling and
distributing the company's bad medicines. The trial court added that all the
surveillance operations previously conducted by the NBI proved nothing
other than that the employees were transporting the medicines to places
where they would be destroyed and disposed of pursuant to accepted
practices.
The trial court added that respondent and his colleagues were
subjected to a humiliating press conference, and petitioners failed to assist
them or shield them from embarrassment despite the fact that Iledan was
then present at the press briefing; that he was detained for 10 days together
with 40 other hardened criminal-inmates who threatened him every now and
then and made him their servant for the whole duration of his detention, in a
cell where they were packed like sardines; that he was then falsely charged
in Criminal Case No. 9070 and subsequently acquitted for lack of evidence;
and that he was terminated from employment.
The trial court concluded that for petitioners' malicious acts resulting in
his unwarranted arrest, detention, prosecution, public humiliation, and
suffering, respondent was entitled to indemnity.
Ruling of the Court of Appeals
Petitioners interposed an appeal with the CA contending essentially
that not all the elements of malicious prosecution were present; that there
was probable cause in filing the complaint and in requesting NBI assistance;
that based on the surveillance reports, respondent committed anomalies
which thus warranted a finding of probable cause; that the trial court erred
in awarding damages to respondent; and that it was erroneous for the trial
court to dismiss their counterclaim. cSEDTC

On April 29, 2011, the CA issued the assailed Decision, finding that
there was indeed malicious prosecution of respondent; that the trial court
was correct in declaring that Iledan knew from the start that the accusation
against respondent was false and baseless; that the NBI surveillance
operations merely revealed an irregularity in the manner of destruction of
Marsman's expired and bad order medicines, and that no destruction took
place on the dates when these surveillance operations were conducted —
not that respondent was guilty of selling, dispensing or delivering expired or
rejected pharmaceutical products; that Iledan knew and approved of the
practice of reselling the empty medicine bottles rather than destroying
them, which practice he should have disclosed to Marsman; and that
Marsman should have conducted its own internal investigation of the case,
instead of immediately seeking NBI assistance and subjecting respondent to
a humiliating experience and unnecessary media exposure. The CA likewise
sustained the trial court's award of moral and exemplary damages, noting
that respondent's detention, media exposure, and unwarranted prosecution
in an unfounded suit caused him and his family great damage, mental
anguish, and serious anxiety. Thus, the appellate court decreed:
WHEREFORE, PREMISES CONSIDERED, the court a quo's
decision dated 28 February 2005 is hereby AFFIRMED IN TOTO .
SO ORDERED. 26

Petitioners moved for reconsideration, but in its September 16, 2011

Resolution, the CA stood its ground. Hence, the instant Petition.
Issues
Petitioners raise the following issues:
I. Â THREE OUT OF THE FOUR ELEMENTS OF MALICIOUS
PROSECUTION WERE NOT ESTABLISHED;
II. Â THERE IS NO BASIS TO AWARD DAMAGES, ATTORNEY'S FEES
AND COSTS; AND
III. Â THE AWARD OF P3,500,000.00 IN MORAL AND EXEMPLARY
DAMAGES AND P875,000.00 IN ATTORNEY'S FEES IS EXCESSIVE
AND UNJUST. 27
Petitioners' Arguments
In their Petition and Reply, 28 petitioners seek a reversal of the assailed
CA dispositions and the consequent dismissal of respondent's complaint in
Civil Case No. LP-95-022. They argue that three of the four elements
required for a malicious prosecution suit to prosper are lacking, namely: 1)
that the defendant in the malicious prosecution case is himself the
prosecutor in the criminal, civil or other legal proceeding or case, or that he
instigated its commencement; 2) that in bringing the action, the defendant
acted without probable cause; and 3) that the defendant was impelled by
legal malice — an improper or sinister motive. In connection with the first
requisite, petitioners contend that they did not act as prosecutors, nor did
they commence the criminal case against respondent; that it was the NBI
that investigated and caused the filing of Criminal Case No. 9070, and their
role was limited to requesting the NBI's assistance in investigating the
respondent's alleged pilferage of bad medicines; that they did not seek NBI
assistance to prosecute respondent, but merely to investigate him; and that
it was the NBI alone which determined what crime respondent should be
charged with.
Relative to the second element, petitioners insist that they acted with
probable cause in seeking the investigation of respondent and his
colleagues, based on the tip provided by Miguel that bad medicines were
being sold in Parañaque; that probable cause was established through the
surveillance operations of the NBI and the State Prosecutor's
recommendation to file Criminal Case No. 9070; that acquittal does not
disprove the existence of probable cause, 29 and so it was erroneous for the
CA to declare that respondent's acquittal implies lack of probable cause, as
his acquittal was based on failure to prove guilt beyond reasonable doubt —
not lack of probable cause.
On the third element, or the issue of legal malice, petitioners argue
that since there was probable cause to charge respondent, then this is
tantamount to absence of malice; stated otherwise, the absence of probable
cause and malice must concur in an action for malicious prosecution. 30
Moreover, good faith is presumed in the absence of clear and convincing
evidence of malice.
Petitioners add that they should not be penalized for exercising their
right to litigate or for requesting NBI assistance in investigating respondent
and his colleagues; that the mere act of submitting a case to the authorities
for prosecution does not make them liable for malicious prosecution, since
the law does not mean to impose a penalty on the right to litigate; 31 and
that they acted as a sensible and prudent citizen would upon being told by
the informant Miguel of the purported sale of bad medicines in Parañaque.
Finally, on the issue of indemnity, petitioners submit that since all the
elements of malicious prosecution were not proved, there is no ground to
hold them liable for damages, attorney's fees and costs; that the award is
excessive; and that respondent's case should suffer the same fate as that
instituted by Mercado, 32 which was dismissed for lack of merit — and which
dismissal was affirmed with finality by the CA in CA-G.R. CV No. 88732. SDAaTC

Respondent's Arguments
On the other hand, respondent — seeking affirmation of the assailed
CA pronouncements — maintains in his Comment and Addendum 33 thereto
that the Petition is a rehash of petitioners' arguments in the CA; that Iledan's
malice and hostile attitude toward his subordinates are the reasons for filing
the criminal case against him; that instead of aiding his subordinates when
they were arrested on May 7 and 8, 1993, Iledan instigated a humiliating
press conference where photographs and footage of respondent and his
companions were taken and published in the newspapers and aired on
television; that Mercado's civil case is different from his, in that he and
Mercado are not similarly situated — a fact which the trial court itself
realized in disposing of Civil Case No. LP-96-0040; and that overall, the CA's
pronouncements are correct and must be upheld.
Our Ruling
The Court denies the Petition.
I n Magbanua v. Junsay, 34 malicious prosecution was defined and
characterized as follows:
In this jurisdiction, the term 'malicious prosecution' has been
defined as 'an action for damages brought by one against whom a
criminal prosecution, civil suit, or other legal proceeding has been
instituted maliciously and without probable cause, after the
termination of such prosecution, suit, or other proceeding in favor of
the defendant therein.' While generally associated with unfounded
criminal actions, the term has been expanded to include unfounded
civil suits instituted just to vex and humiliate the defendant despite
 the absence of a cause of action or probable cause.
This Court, in Drilon v. Court of Appeals , elucidated, viz.:
The term malicious prosecution has been defined in
various ways. In American jurisdiction, it is defined as:
'One begun in malice without probable cause to
believe the charges can be sustained (Eustace v. Dechter,
28 Cal. App. 2d. 706, 83 P. 2d. 525). Instituted with
intention of injuring defendant and without probable
cause, and which terminates in favor of the person
prosecuted. For this injury an action on the case lies,
called the action of malicious prosecution (Hicks v.
Brantley , 29 S.E. 459, 102 Ga. 264; Eggett v. Allen , 96
N.W. 803, 119 Wis. 625).'
In Philippine jurisdiction, it has been defined as:
'An action for damages brought by one against
whom a criminal prosecution, civil suit, or other legal
proceeding has been instituted maliciously and without
probable cause, after the termination of such prosecution,
suit, or other proceeding in favor of the defendant
therein. The gist of the action is the putting of legal
process in force, regularly, for the mere purpose of
vexation or injury (Cabasaan v. Anota , 14169-R,
November 19, 1956).'
The statutory basis for a civil action for damages for
malicious prosecution are found in the provisions of the
New Civil Code on Human Relations and on damages
particularly Articles 19, 20, 21, 26, 29, 32, 33, 35, 2217
and 2219 (8). To constitute malicious prosecution,
however, there must be proof that the prosecution was
prompted by a sinister design to vex and humiliate a
person, and that it was initiated deliberately by the
defendant knowing that his charges were false and
groundless. Concededly, the mere act of submitting a
case to the authorities for prosecution does not make one
liable for malicious prosecution.
This Court has drawn the four elements that must be shown to
concur to recover damages for malicious prosecution. Therefore, for a
malicious prosecution suit to prosper, the plaintiff must prove the
following: (1) the prosecution did occur, and the defendant was
himself the prosecutor or that he instigated its commencement; (2)
the criminal action finally ended with an acquittal; (3) in bringing the
action, the prosecutor acted without probable cause; and (4) the
prosecution was impelled by legal malice — an improper or a sinister
motive. The gravamen of malicious prosecution is not the filing of a
complaint based on the wrong provision of law, but the deliberate
initiation of an action with the knowledge that the charges were false
and groundless. 35
The CA is correct in declaring that all the elements of malicious
prosecution exist in this case. First of all, there is no question that the
investigation of respondent for alleged participation in a purported syndicate
that sells Marsman's bad medicines was prompted by a supposed telephone
call tip from Miguel, which resulted in Pilapil's March 15, 1993 request to
then NBI Director Velasco for an investigation of the matter. Secondly,
respondent was acquitted in the resulting criminal case — Criminal Case No.
9070 — for lack of evidence and lack of jurisdiction, through an October 12,
1994 Order of the Taguig City Metropolitan Trial Court, Branch 74. There is
no doubt that Marsman instigated the investigation and prosecution of
respondent and his colleagues. Petitioners cannot claim that they merely
sought to investigate — and not prosecute — respondent; certainly,
prosecution follows as a necessary consequence if the NBI believes that a
crime has been committed, and petitioners cannot prevent the filing of
charges, even if they wanted to. As correctly observed by the appellate
court, if indeed petitioners simply sought to investigate and not prosecute
respondent, they should have first conducted their own internal investigation
of the matter instead of immediately referring the case to the NBI; the option
to prosecute may be exercised later. In fact, this should have been the case;
nothing prevented them from fielding confidential personnel to pose as
buyers of these bad medicines they believe were being sold in Parañaque.
Their so-called informant Miguel — if he actually existed — could have
produced more than a simple telephone report. acEHCD

On the question of probable cause, 36 it must be said that against the

respondent, no probable cause existed to warrant his prosecution for
violation of the provisions of RA 3720. There is no legal ground to suppose
that respondent was involved in a syndicate which sold Marsman's bad
medicines in Parañaque; the supposed tipster Miguel was not presented in
court to identify the alleged perpetrators of the illegal act — hence, the basis
for the accusation is lacking. Although informants are usually not presented
in court because of the need to hide their identity and maintain their
valuable service to the police, 37 this rule cannot apply in Miguel's case
because he was not a confidential informant; his identity was precisely
divulged. Likewise, there is no evidence to prove that respondent was
involved in or committed any act violative of RA 3720. He was not even part
of the group that was arrested by the NBI on May 7, 1993; he was arrested
and detained — illegally, in fact — only the next day. His participation in any
manner or degree has not been shown. Quite the contrary, the evidence
indicates that on May 7, 1993, respondent was with the BIR representative
Rotoni and Duncan Pharmaceuticals employee Ferrer the whole time. Rotoni
testified as well that on that day, all the bad medicines were placed in a
single pile, poured with gasoline, and burned, and nothing was left in the 10-
wheeler truck and van that brought the bad medicines to the destruction
site; this he made sure before he left — only that he, Ferrer and respondent
left without making sure that all the bad medicines in the pile were
completely destroyed. Nonetheless, if anything was recovered from the
burning pile after Rotoni and respondent left, respondent did not actually
participate in the recovery as he had to take Rotoni and Ferrer home.
Moreover, if it is true that the NBI recovered bad medicines from
respondent's colleagues on May 7, 1953 when they were arrested, this does
not appear to constitute a violation of RA 3720: according to Mercado, the
bottled bad medicines could not be burned in the pile because they would
explode — which is true as a matter of experience — and thus, they had to
be brought to a location in Taguig where their contents would be emptied,
destroyed and the bottles recovered and given to the helpers as
compensation, in accordance with accepted practice sanctioned by the
petitioners. However, before they could get to the said location, they were
intercepted and arrested by the NBI. Also, prior surveillance operations
conducted by the NBI in March 1993 do not even indicate that respondent
and his colleagues were involved in a syndicate relative to the sale of bad
medicines; the testimony of NBI agent Lavin yields nothing other than that
they conducted surveillance and tailing operations; he does not even know
the identities of the individuals they were tailing at the time. The
photographs taken during the operations do not show that respondent was
there, or that he was performing illegal acts or omissions. Petitioners' very
own witness, Marsman Employee Manager Efren Cruz, admitted that he
doubted the accuracy of the surveillance operations. 38
In short, while Marsman officials confined themselves to their secure
and relaxed offices, they simply relied on Iledan's claim that he received a
tip from a so-called informant and did not even lift a finger to verify the truth
of allegations that their bad medicines were being peddled in Parañaque. On
the strength of a questionable and unreliable third party tip — by telephone
at that, petitioners set into motion an investigative and prosecutorial process
that resulted in a bungled, crackpot operation and the inevitable acquittal of
the respondent. If petitioners and the NBI were prudent and clever enough,
they would have taken the surveillance operations all the way to the point
where the bad medicines were being actually sold to the public, before any
arrests were made; instead, their half-baked and poorly planned operation
yielded nothing to build a case on. As expected, Criminal Case No. 9070
could only be dismissed.
The fact that the plaintiff in a malicious prosecution case is acquitted of
the criminal charge precisely places the prior finding of probable cause in
issue, which must be determined in the malicious prosecution case. If the
plaintiff was acquitted for reasons other than lack of probable cause, then
certainly the malicious prosecution case cannot prosper. Thus, petitioners
are correct in arguing that acquittal does not disprove the existence of
probable cause. However, they are mistaken in concluding that respondent's
acquittal was based on failure to prove guilt beyond reasonable doubt and
not lack of probable cause. As a matter of fact, respondent's acquittal was
due to lack of evidence, which presupposes lack of probable cause.
The Court is inclined to believe respondent and Mercado's statements
that there is a standing company practice not to include bottled medicines in
the burning process and that, instead, these are emptied of their contents
and the bottles given to helpers as compensation or sold to the junk shops.
Firstly, if these bottled medicines are burned, they would in all likelihood
explode and potentially harm respondent and his colleagues; in short, it is
not — from a practical point of view — acceptable procedure to burn them.
Secondly, notwithstanding petitioners' claim that such procedure is not
sanctioned, they have not offered any proof of strict protocol regarding
disposal of bottled medicines other than to say that these medicine bottles
should be crushed — which procedure, again, is unsafe and potentially
harmful to respondents, his colleagues, and the public in general, since it is
apparent that petitioners have not provided respondent and his colleagues
the appropriate equipment and venue for crushing the bottles safely and
efficiently. Quite the opposite, it appears that petitioners have adopted an
irresponsible, unsafe, unhygienic, dangerous, unconscientious and lax
procedure relative to the disposal of Marsman's bad medicines; their
overwhelming attitude appears to be that it does not matter where or how
the bad medicines are disposed, so long as they are gotten rid of. Indeed,
the lack of safeguards and the multiple loopholes relative to the procedure
of disposal, as well as the indifference and unconcerned attitude adopted by
petitioners, are simply astounding. There is an absolute lack of strict
protocol and procedure in the disposal of bad medicines. There is no
controlled environment for the complete destruction of these potentially
harmful chemicals: they are simply brought to a vacant lot or open space —
where scavengers gather and ogle, hoping to salvage something from the
pile of hazardous substances — or private residential or commercial lot,
there to be burned without regard for the health and safety of bystanders
and residents. The bad medicines are burned openly and the fumes allowed
to escape freely, contaminating the environment, wreaking havoc and
causing unimaginable damage and deadly disease; worse, the resultant
chemical reactions caused by burning — which have permanent effects on
the soil, groundwater, and all animal life in general — are of no conceal to
petitioners. The destruction is carried out and witnessed by lowly employees
of Marsman — bereft of proper accountability and training — and whose
attention is distracted as they must simultaneously attend to the personal
needs of the BIR and pharmaceutical company representatives, feed them
and then drive them home. 39 The warehouse head Iledan, all the while,
simply sits idly in his comfortable office, there to conveniently await the
return of his supervisor. It is as if Marsman actually encourages the pilferage
of bad medicines. If any such pilferage occurs, Marsman and its officials
should be prosecuted together with the perpetrators; indeed, Marsman
should be held responsible for downright negligence in failing to carry out
strict procedure for the disposal of its bad medicines, which promotes
permanent environmental damage and the introduction of these harmful
products to the public at large. If there is anyone who should be prosecuted
criminally for flagrant violations of RA 3720 and environmental laws, it
should be the petitioners.
On the issue of legal malice, the Court notes respondent's complaint
which specifically alleged that when Iledan assumed his position as
warehouse manager, he was arrogant and hostile toward the employees and
even manifested his desire to replace respondent and other employees of
the respondent's warehouse. Respondent testified particularly that Iledan
did not relish his attempt in 1992 at establishing a supervisors' union, and
that Iledan was angry at union members. Mercado corroborated this,
testifying that in December 1992, he invited Iledan and his family to their
house for dinner, where Iledan became intoxicated and said "Kayong mga
unionista, ida-down ko kayong lahat sa warehouse;" that Iledan was "mad
with the unionista and those in the warehouse;" that union members like him
will not stay long because Iledan will file cases against them; that Iledan will
terminate him from the service; that Iledan was not able to say anything
more as his wife — Malou, whom he knew — persuaded him to leave
because what he was doing was wrong; and that he reported the incident to
the union president, which prompted the union to send a letter to Iledan. For
his part, Iledan affirmed that he and his family attended the December 1992
dinner at Mercado's home, but simply denied that he was intoxicated and
made the remark about targeting union members. He did not present his
wife to testify in his favor; nor did he refute the letter sent to him by the
union pertaining to the December 1992 incident. HSAcaE

As against Iledan's denial, respondent's declarations and Mercado's

testimony deserve weight. Iledan was prompted by hatred, malice and bad
faith in deliberately initiating a baseless action against respondent, Mercado
and their colleagues, with the solitary purpose of humiliating and harassing
them and ultimately causing their removal from Marsman. It must be
recalled that Iledan was the recipient of the supposed telephone tip from
Miguel, whose identity and existence is exceedingly questionable since he
was not presented in court. Relying blindly on Iledan's supposed information,
Marsman immediately sought NBI assistance without the benefit of tackling
the matter internally in order to make sure that the tip was reliable in the
first place. When respondent was illegally arrested in the presence of Iledan,
no protest was heard from petitioners as a measure of concern for one of
their long-serving employees. They allowed respondent and his colleagues to
be humiliated and shamed before a press conference, where their
photographs were taken and published indiscriminately in several
newspapers as members of a supposed syndicate which sold Marsman's bad
medicines — even before their guilt or innocence could be preliminarily or
finally determined. Respondent was then illegally detained in an NBI
detention cell for at least 10 days, where he experienced untold suffering. All
these culminated in a false criminal charge and respondent's dismissal from
Marsman.
On the issue of indemnity, we hold that since respondent has shown
that all the elements of a malicious prosecution case are present, and that
petitioners acted with evident bad faith, malice, and in gross disregard of
respondent's rights, a grant of damages is only proper. Suffice it to state that
the Court is in total agreement with the CA when it held that:
As regards the award of moral and exemplary damages as well
as attorney's fees, We affirm the court a quo's findings that
defendants-appellants are liable for damages for the malicious
prosecution of appellee . . .
xxx xxx xxx
The award of moral damages is proper when the following
circumstances concur: (1) there is an injury, whether physical, mental
or psychological, clearly sustained by the claimant; (2) there is a
 culpable act or omission factually established; (3) the wrongful act or
omission of the defendant is the proximate cause of the injury
sustained by the claimant; and (4) the award of damages is
predicated on any of the cases stated in Article 2219.
Exemplary damages are awarded in addition to moral damages
if the basis for the latter was established. It must be shown that the
party acted in a wanton, oppressive or malevolent manner for the
award of exemplary damages to be proper.
The discretion of the court to award attorney's fees under
Article 2208 of the Civil Code demands factual, legal, and equitable
justification, without which the award is a conclusion without a
premise, its basis being improperly left to speculation and conjecture.
In all events, the court must state the reason for the award of
attorney's fees.
As discussed by the court a quo and We agree, plaintiff-
appellee's detention, presentation to the media and prosecution in an
unfounded suit caused him and his family great damage, mental
anguish, and serious anxiety which entitles him to the damages
awarded. Also, the court a quo opined that defendants-appellants had
several chances in rectifying [sic] their error particularly when the
criminal case was dismissed but the latter failed to do so. Thus,
plaintiff-appellee was constrained to go to court. 40
WHEREFORE, the Petition is DENIED. The assailed April 29, 2011
Decision and September 16, 2011 Resolution of the Court of Appeals in CA-
G.R. CV No. 87004 are AFFIRMED IN TOTO .
Let a copy of this Decision be furnished to the Department of
Environment and Natural Resources for the conduct of investigation on
Marsman's practice of disposing its bad order and expired medicines through
unsanitary and unsafe means in violation of Republic Act No. 6969 41 and
other applicable environmental and safety laws, and the filing of proper
criminal, civil, and other charges if warranted.
SO ORDERED.
Carpio, Brion, Peralta * and Leonen, JJ., concur.
Â
Footnotes

* Per Raffle dated July 20, 2015.

1. Rollo , pp. 10-42.

2. Id. at 44-59; penned by Associate Justice Rodil V. Zalameda and concurred in by

Associate Justices Amelita G. Tolentino and Normandie B. Pizarro.

3. Id. at 61-62.

4. Id. at 13.

5. Id.
6. Id. at 14-15.

7. Id. at 84-85.

8. Id. at 15.

9. Id. at 85-86.

10. Id. at 65, 86.

11. Id. at 65, 69.

12. Id. at 65.

13. An Act to Ensure the Safety and Purity of Foods, Drugs, and Cosmetics being
Made Available to the Public by Creating the Food and Drug Administration
which shall Administer and Enforce the Laws Pertaining thereto. June 22,
1963.

14. Further Amending Republic Act No. 3720, Entitled "An Act to Ensure the Safety
and Purity of Foods, Drugs, and Cosmetics being Made Available to the Public
by Creating the Food and Drug Administration which shall Administer and
Enforce the Laws Pertaining thereto," as Amended, and for other Purposes.
May 22, 1987.

15. Rollo , pp. 129-133; penned by Judge Virgilio D. Quijano.

16. Id. at 132-133.

17. Id. at 170.

18. Id. at 136-142.

19. Id. at 137.

20. Id. at 143-153.

21. Should be 1993.

22. Rollo , pp. 64-78.

23. Id. at 63-89; penned by Judge Bonifacio Sanz Maceda.

24. Id. at 89.

25. Citing Lucas v. Royo, 398 Phil. 400, 408 (2000).

26. Rollo , p. 59.

27. Id. at 19.

28. Id. at 581-587.

29. Citing Villanueva v. United Coconut Planters Bank, 384 Phil. 130, 143 (2000).

30. Citing Diaz v. Davao Light and Power Company, Inc., 549 Phil. 271, 293 (2007).
31. Citing Magbanua v. Junsay , 544 Phil. 349 (2007); Diaz v. Davao Light and
Power Company, Inc., id.

32. Civil Case No. LP-96-0040, Regional Trial Court of Las Piñas City, Branch 255.

33. Rollo , pp. 562-578.

34. Supra note 31.

35. Id. at 364-365.

36. "Probable cause, for purposes of filing a criminal information, are such facts as
are sufficient to engender a well-founded belief that a crime has been
committed and that the accused is probably guilty thereof. It is the existence
of such facts and circumstances as would excite the belief in a reasonable
mind, acting on the facts within the knowledge of the prosecutor, that the
person charged was guilty of the crime for which he is to be prosecuted. A
finding of probable cause needs only to rest on evidence showing that, more
likely than not, a crime has been committed and that it was committed by
the accused." Philippine National Bank v. Tria , G.R. No. 193250, April 25,
2012, 671 SCRA 440, 452.

37. People v. Blanco , G.R. No. 193661, August 14, 2013, 703 SCRA 597, 605.

38. Rollo , p. 77; TSN, April 24, 2003.

39. Iledan testified that as a matter of procedure, respondent was authorized to

leave the destruction site even before the bad order medicines were
destroyed, in order to have lunch with the representatives.

40. Rollo , pp. 57-58.

41. TOXIC SUBSTANCES AND HAZARDOUS AND NUCLEAR WASTES CONTROL ACT
OF 1990. October 26, 1990.

n Note from the Publisher: Copied verbatim from the official document.