G.R. No. 48135 . June 22, 1942.
FELIX MONTENEGRO, plaintiff-appellant, vs. ENRIQUE MEDINA, defendant-appellee.

FACTS

On July 14, 1939, defendant Enrique Medina filed a civil case (No. 1614) against plaintiff Felix Montenegro and another for recovery of money for professional services. In paragraph 24 of the complaint in that case, Medina inserted allegations stating that Montenegro frequently evaded paying his just obligations, did not pay his debts religiously despite his solvency, and that many of his creditors, lawyers, employees, contractors, and even relatives could not collect from him except through legal action, leaving them disgusted. Montenegro alleged these words were highly malicious, defamatory, and libelous per se, inserted not because they were material, relevant, or pertinent to the cause of action, but with the sole purpose of mortifying him, attacking his honesty, integrity, and reputation, and exposing him to public hatred and ridicule. Montenegro, a businessman whose enterprises depended on public confidence, claimed he suffered damages. Subsequently, upon Montenegro’s motion, the court in case No. 1614 ordered paragraph 24 stricken out as impertinent and unnecessary. Montenegro then filed this separate action for damages. Medina demurred to the complaint, arguing (1) the facts did not constitute a cause of action because the statements were absolutely privileged as part of a judicial proceeding, and (2) another action existed between the parties (since the order to strike in case No. 1614 was not yet final). The trial court sustained the demurrer and dismissed the complaint, holding Montenegro did not yet have a cause of action because the order striking out the paragraph was not final.

ISSUE

Whether the trial court erred in dismissing the complaint on demurrer, specifically: (1) in holding the action was premature because the order striking the libelous allegations in the prior case was not final; and (2) in not deciding the substantive issue of whether the alleged defamatory matter, published in a judicial pleading, was absolutely privileged and therefore not actionable.

RULING

Yes, the trial court erred. The order is reversed and the case remanded for further proceedings.
1. On Prematurity: The trial court erred in holding the action was premature. An action for libel accrues from the date of publication and must be instituted within two years. The plaintiff’s motion to strike the libelous allegation in the prior case and his independent action for damages are not mutually exclusive; they may be filed simultaneously and independently. The court’s order to strike in the prior case is not a prerequisite for filing a libel action.
2. On Privilege and Sufficiency of the Complaint: The demurrer hypothetically admits the allegations of the complaint. The complaint expressly alleges that the defamatory words in paragraph 24 were inserted “sin ser materiales, relevantes y pertinentes” (without being material, relevant, and pertinent) to the cause of action in the prior case and were published with the sole purpose of mortifying the plaintiff and attacking his reputation. Under the doctrine established in Santiago vs. Calvo, statements published in the course of judicial proceedings are exempt from liability in libel only if they are pertinent or relevant to the case. Since the demurrer admits the allegation of impertinence and irrelevance, it must be assumed for purposes of the demurrer that the statements were not privileged. The imputations constitute a grave reflection on Montenegro’s moral character and reputation as a businessman and are libelous per se. The complaint therefore states facts sufficient to constitute a cause of action for actual damages.
3. On the Second Ground of Demurrer: The contention that the claim for damages should have been presented as a counterclaim in the prior civil case No. 1614 is without merit. The claim for damages did not exist at the commencement of that case and did not arise out of the transaction involved therein; thus, it was not obligatory to set it up as a counterclaim under Section 97 of Act No. 190 .
The Court found it unnecessary to decide at this stage whether Section 11 of Act No. 277 (allowing recovery for injury to feelings and punitive damages) remained in force despite the Revised Penal Code’s repealing clause, as the complaint sufficiently alleged a cause of action for actual damages.