G.R. No. 82808 ; July 11, 1991
Dennis L. Lao, petitioner, vs. Hon. Court of Appeals, Judge Florentino Flor, Regional Trial Court, Branch 89 of Morong, Rizal, Benjamin L. Espiritu, Manuel Querubin and Chan Tong, respondents.

FACTS

Petitioner Dennis Lao was an employee of New St. Joseph Lumber & Hardware Supply, owned by respondent Chan Tong. In 1981, the company filed a collection suit and later a criminal complaint for estafa against a customer, respondent Benjamin Espiritu, for unpaid purchases. Lao, as the transacting salesman, executed an affidavit upon his employer’s directive to support the estafa charge. The criminal case was eventually dismissed, with the court finding the liability to be merely civil.
Espiritu subsequently filed a complaint for damages arising from malicious prosecution against both St. Joseph Lumber and Lao. During pre-trial, Lao and the company, through their shared counsel Atty. Manuel Querubin, were declared in default for repeated non-appearance. Evidence was presented ex parte, resulting in a trial court decision holding Lao and the company jointly and severally liable for moral damages and attorney’s fees. Lao’s motions for reconsideration and new trial were denied.

ISSUE

Whether the petitioner, a mere employee who acted as a witness in a criminal complaint filed by his employer, can be held solidarily liable for damages in a subsequent suit for malicious prosecution.

RULING

The Supreme Court ruled in favor of the petitioner, absolving him from liability. The legal logic is anchored on the essential elements of a malicious prosecution action and the principles of agency. For malicious prosecution to prosper, the defendant must be the prosecutor who acted without probable cause and with legal malice. Here, Lao was not the prosecutor; he was merely a witness. The complainant was his employer, Chan Tong. The investigating fiscal had found probable cause for the estafa charge, and Lao executed the affidavit in his capacity as an employee with personal knowledge of the transaction, not out of personal malice. As an agent of the company, he is not personally liable to third parties for acts done within the scope of his agency under Article 1897 of the Civil Code.
Furthermore, the Court found that Lao was effectively deprived of his day in court due to the gross negligence of the counsel hired by his employer, who failed to inform him of hearings and to protect his separate interests, focusing solely on the company’s defense. Consequently, the default judgment against him was a nullity. The execution against his personal property could not be permitted.