Independent civil action for fraud

Many lawyers instinctively assume that once a criminal case is filed, the civil consequences automatically travel with it. In many situations, that assumption is correct. But not always. In a recent ruling, the Supreme Court reminded litigants that certain civil actions may proceed independently of the criminal prosecution. One of these is the independent civil action for fraud under Article 33 of the Civil Code.

The case of Angelito O. Hao v. Jennifer Lagahid illustrates how Philippine law recognizes that a single wrongful act may give rise to different kinds of civil liability. One is civil liability arising from the crime itself, generally deemed instituted with the criminal action under Rule 111 of the Rules of Court. The other is independent civil liability arising from the Civil Code.

The controversy began after the death of Samson Hao, the registered owner of several properties. A woman claiming to be his lawful spouse executed an affidavit of self-adjudication asserting ownership of the properties together with her alleged son. She later filed affidavits of loss claiming that the owner’s duplicate certificates of title could no longer be located. Acting on these representations, the trial court ordered the issuance of new owner’s duplicate titles.

The problem was simple: the titles were never lost.

They were in the possession of Samson’s brother and business partner.

When the brother later discovered that new titles had been issued, he filed a petition for relief from judgment. The court eventually declared the earlier order void after finding that the certificates of title had not been lost at all.

Believing that the order had been obtained through false representations, the brother filed criminal complaints for perjury and also instituted a separate civil action for damages based on the alleged fraud.

The trial court ruled in his favor and awarded damages. The Court of Appeals reversed, holding that the civil action was barred because the damages should have been raised earlier or were already deemed included in the criminal cases.

The Supreme Court disagreed.

The Court emphasized that Article 33 of the Civil Code allows an independent civil action for damages in cases of defamation, fraud and physical injuries. Such actions are entirely separate and distinct from the criminal case. They may proceed independently and require only proof by a preponderance of evidence.

While the civil liability arising from perjury was deemed included in the criminal proceedings, the damages claimed by the petitioner were anchored on something broader: the respondent’s alleged fraudulent scheme to misrepresent herself as the lawful spouse of the deceased and to obtain new titles through false statements.

That conduct, the Court explained, may constitute fraud in its ordinary sense — any act calculated to deceive and obtain an unfair advantage over another.

Equally significant was the Court’s rejection of the argument that the claim for damages should have been raised as a compulsory counterclaim in the earlier petition for replacement of lost titles. That proceeding was summary and non-adversarial. There was no defendant against whom a counterclaim could be asserted, and the petitioner was not even a party to the petition.

Simply put, the law cannot require a person to assert a counterclaim in a case where he had no opportunity to participate.

In the end, the Supreme Court reinstated the trial court’s ruling awarding damages.

The decision offers a practical lesson. Not all civil liability is absorbed by the criminal case. Where the Civil Code recognizes an independent cause of action — such as fraud under Article 33 — the injured party may pursue that remedy separately.

For more of Dean Nilo Divina’s legal tidbits, please visit www.divinalaw.com. For comments and questions, please send an email to cad@divinalaw.com.