G.R. No. 205855 - People vs. Ambatang

Plaintiff: Smith, Bell & Co., Ltd., a domestic corporation incorporated on April 21, 1909, with its principal office and substantial commercial operations in the City of Manila.
Defendant: David E. Ellis, claimed to be a British subject domiciled in Hongkong, with a temporary residence in Manila.
Historical note: The plaintiff is the successor of Smith, Bell & Company, a longstanding partnership with over fifty years of reputation in commercial transactions in the Philippine Islands.

The defendant executed and swore to an affidavit on May 4, 1925, which became an integral part of the complaint (attached as Exhibit A).
The affidavit was filed in a pending civil action in the Court of First Instance of Manila involving a dispute between the plaintiff and The Malabon Sugar Company and its associates.
Within the affidavit, the defendant opined that Smith, Bell & Co., Ltd. had committed serious contractual breaches, exhibited gross mismanagement, and engaged in irregularities.

The affidavit alleges that despite any legal questions regarding the contract under which the plaintiff managed affairs of the defendant corporation, it had engaged in misconduct and mismanagement.
It is claimed that the affidavit was made with malice and in bad faith, intended to injure the plaintiff by charging it with mismanagement particularly in relation to The Malabon Sugar Company.

The affidavit (Exhibit A) was attached to the plaintiff’s complaint in the civil action pending under civil cause No. 27889, where the plaintiff was a party, and The Malabon Sugar Company amongst others were opposites.
Included in the affidavit is the statement that the affiant (the defendant in this instance) acted as a stockholder and representative, holding authority from a majority of the shareholders of The Malabon Sugar Company resident in Hongkong.

The affiant was sent from Hongkong to Manila to investigate the disputes between the plaintiff and the directors of The Malabon Sugar Company.
Upon arrival in Manila on April 16, 1925, he engaged in extensive investigations, which included personal meetings, interviews with employees, and consultations with officers of Smith, Bell & Co., Ltd.
His report, which formed a part of the affidavit, expressed the conclusion that the plaintiff had breached its contract and was guilty of mismanagement; however, this report was his opinion based on his investigations.

The plaintiff claimed damages amounting to P100,000 along with punitive and exemplary damages, contending that the defamatory statements damaged its good reputation and business interests.

The defendant argued that the affidavit's contents, being filed within a judicial proceeding, were privileged and not actionable as libel.
It was contended that the affidavit was materially relevant and pertinent to the matters in dispute in the pending civil action (No. 27889), thus enjoying the judicial privilege under the Libel Law and related doctrines.

The demurrer raised by the defendant was sustained by the lower court.
The plaintiff declined to further plead, resulting in judgment in favor of the defendant.

Whether the affidavit, containing allegations of contractual breaches and mismanagement, constitutes a statement that is actionable under libel law or if it is protected by judicial privilege.
Whether the allegations within the affidavit, being made and filed during a pending judicial action, are sufficiently pertinent and relevant to the issues of the said civil cause (No. 27889) so as to invoke the protective privilege.
Whether the opinion expressed by the affiant in the affidavit, despite potentially being erroneous, falls outside the scope of defamatory statements given its procedural context and its function as a report in a dispute.