Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
, plaintiff-appellants,
vs.
SOUTHERN MOTORS, INC., ET AL., defendants-appellees.
BENGZON, J.:
The case. Appellants seek to reverse the order of Hon. Pantaleon Pelayo, Judge of the
Iloilo court of first instance refusing to interfere with the alias writ of execution issued in
Civil Case No. 2942 pending in another sala of the same court.
The facts. In April 1953 Amador Tajanlangit and his wife Angeles, residents of Iloilo,
bought, from the Southern Motors Inc. of Iloilo two tractors and a thresher. In payment
for the same, they executed the promissory note Annex A whereby they undertook to
satisfy the total purchase price of P24,755.75 in several installments (with interest)
payable on stated dates from May 18, 1953 December 10, 1955. The note stipulated
that if default be made in the payment of interest or of any installment, then the total
principal sum still unpaid with interest shall at once become demandable etc. The
spouse failed to meet any installment. Wherefore, they were sued, in the above Civil
Case No. 2942, for the amount of the promissory note.1 The spouses defaulted, and
the court, after listening to the Southern Motors' evidence entered Judgment for it in
the total sum of P24,755.75 together with interest at 12 per cent, plus 10 per cent of
the total amount due as attorney's fees and costs of collection.
Carrying out the order of execution, the sheriff levied on the same machineries and
farm implements which had been bought by the spouses; and later sold them at public
auction to the highest bidder which turned out to be the Southern Motors itself for
the total sum of P10,000.
As its judgment called for much more, the Southern Motors subsequently asked and
obtained, an alias writ of execution; and pursuant thereto, the provincial sheriff levied
attachment on the Tajanlangits' rights and interests in certain real properties with a
view to another sale on execution.
To prevent such sale, the Tajanlangits instituted this action in the Iloilo court of first
instance for the purpose among others, of annulling the alias writ of execution and all
proceedings subsequent thereto. Their two main theories: (1) They had returned the
machineries and farm implements to the Southern Motors Inc., the latter accepted
them, and had thereby settled their accounts; for that reason, said spouses did not
contest the action in Civil Case No. 2942; and (2) as the Southern Motors Inc. had
repossessed the machines purchased on installment (and mortgaged) the buyers were
thereby relieved from further responsibility, in view of the Recto Law, now article 1484
of the New Civil Code.
For answer, the company denied the alleged "settlement and understanding" during
the pendency of civil case No. 2949. It also denied having repossessed the
machineries, the truth being that they were attached by the sheriff and then deposited
by the latter in its shop for safekeeping, before the sale at public auction.
The case was submitted for decision mostly upon a stipulation of facts. Additional
testimony was offered together with documentary evidence. Everything considered the
court entered judgment, saying in part;
The proceedings in Civil Case No. 2942 above referred to, were had in the
Court of First Instance (Branch 1) of the Province and of the City of Iloilo. While
this court (Branch IV) sympathizes with plaintiffs, it cannot grant, in this action,
the relief prayed for the complaint because courts of similar jurisdiction cannot
invalidate the judgments and orders of each other. Plaintiffs have not pursued
the proper remedy. This court is without authority and jurisdiction to declare null
and void the order directing the issuance of aliaswrit of execution because it
was made by another court of equal rank and category (see Cabiao and
Izquierdo vs. Del Rosario and Lim, 44 Phil., 82-186).
WHEREFORE, judgement is hereby rendered dismissing the complaint with
costs against plaintiffs costs against plaintiffs. Let the writ of preliminiary
injunction issued on August 26, 1954, be lifted.
The plaintiffs reasonably brought the matter to the Court of Appeals, but the latter
forwarded the expediente, being of the opinion that the appeal involved questions of
jurisdiction and/or law
Discussion. Appellants' brief elaborately explains in the nine errors assigned, their
original two theories although their "settlement" idea appears to be somewhat
modified.
"What is being sought in this present action" say appellants "is to prohibit and forbid
the appellee Sheriff of Iloilo from attaching and selling at public auction sale the real
properties of appellants because that is now forbidden by our law after the chattels that
have been purchased and duly mortgagee had already been repossessed by the same
vendor-mortgagee and later on sold at public auction sale and purchased by the same
at such meager sum of P10,000."
It is true that there was a chattel mortgage on the goods sold. But the Southern Motors
elected to sue on the note exclusively, i.e. to exact fulfillment of the obligation to pay. It
had a right to select among the three remedies established in Article 1484. In choosing
to sue on the note, it was not thereby limited to the proceeds of the sale, on execution,
of the mortgaged good.2
In Southern Motors Inc. vs. Magbanua, (100 Phil., 155) a similar situation arose in
connection with the purchase on installment of a Chevrolet truck by Magbanua. Upon
the latter's default, suit on the note was filed, and the truck levied on together with
other properties of the debtor. Contending that the seller was limited to the truck, the
debtor obtained a discharge of the other properties. This court said:
By praying that the defendant be ordered to pay the sum of P4,690 together
with the stipulated interest at 12% per annum from 17 March 1954 until fully
paid, plus 10 per cent of the total amount due as attorney's fees and cost of
collection, the plaintiff acted to exact the fulfillment of the obligation and not to
foreclosethe mortgage on the truck. . . .
As the plaintiff has chosen to exact the fulfillment of the defendant's obligation,
the former may enforce execution of the judgement rendered in its favor on the
personal and real properties of the latter not exempt from execution sufficient to
satisfy the judgment. That part of the judgement depriving the plaintiff of its
right to enforce judgment against the properties of the defendant except the
mortgaged truck and discharging the writ of attachment on his other properties
is erroneous. (Emphasis ours.)
Concerning their second theory, settlement or cancellation appellants allege that
the very implements sold "were duly returned" by them, and "were duly received and
accepted by the said vendor-mortgagee". Therefore they argue, "upon the return of the
same chattels and due acceptance of the same by the vendor-mortgagee, the
conditional sale is ipso facto cancelled, with the right of the vendor-mortgagee to
appropriate whatever downpayment and posterior monthly installments made by the
purchaser as it did happen in the present case at bar."
The trouble with the argument is that it assumes that acceptance of the goods by the
Southern Motors Co, with a view to "cancellation" of the sale. The company denies
such acceptance and cancellation, asserting the goods, were deposited in its shop
when the sheriff attached them in pursuance of the execution. Its assertion is backed
up by the sheriff, of whose credibility there is no reason to doubt. Anyway this
cancellation or settlement theory may not be heeded now, because it would
contravene the decision in Civil Case No. 2942 above-mentioned it would show the
Tajanlangits owned nothing to Southern Motors Inc. Such decision is binding upon
them, unless and until they manage to set it aside in a proper proceeding and this is
not it.
There are other points involved in the case, such as the authority of the judge of one
branch of a court of first instance to enjoin proceedings in another branch of the same
court. As stated, Judge Pelayo refused to interfere on that ground. Appellants insist
this was error on several counts. We deem it unnecessary to deal with this procedural
aspect, inasmuch as we find that, on the merits, plaintiffs are not entitled to the relief
demanded.
Judgment. The decision dismissing the complaint, is affirmed, with costs against
appellants. So ordered.
Hongkong. On July 10, 1976, plaintiffs bought plane tickets (Exhs. A & B) from
defendant Claudia Tagunicar who represented herself to be an agent of defendant
Tourist World Services, Inc. (TWSI). The destination[s] are Hongkong, Tokyo, San
Francisco, U.S.A., for the amount of P25,000.00 per computation of said defendant
Claudia Tagunicar (Exhs. C & C-1). The purpose of this trip is to go to Fairfield,
New Jersey, U.S.A. to buy to two (2) lines of infrared heating system processing
textured plastic article (Exh. K).
On said date, only the passage from Manila to Hongkong, then to Tokyo, were
confirmed. [PAA] Flight 002 from Tokyo to San Francisco was on "RQ" status,
meaning "on request". Per instruction of defendant Claudia Tagunicar, plaintiffs
returned after a few days for the confirmation of the Tokyo-San Francisco segment
of the trip. After calling up Canilao of TWSI, defendant Tagunicar told plaintiffs that
their flight is now confirmed all the way. Thereafter, she attached the confirmation
stickers on the plane tickets (Exhs. A & B).
A few days before the scheduled flight of plaintiffs, their son, Adrian Yu, called the
Pan Am office to verify the status of the flight. According to said Adrian Yu, a
personnel of defendant Pan Am told him over the phone that plaintiffs' booking[s]
are confirmed.
On July 23, 1978, plaintiffs left for Hongkong and stayed there for five (5) days.
They left Hongkong for Tokyo on July 28, 1978. Upon their arrival in Tokyo, they
called up Pan-Am office for reconfirmation of their flight to San Francisco. Said
office, however, informed them that their names are not in the manifest. Since
plaintiffs were supposed to leave on the 29th of July, 1978, and could not remain in
Japan for more than 72 hours, they were constrained to agree to accept airline
tickets for Taipei instead, per advise of JAL officials. This is the only option left to
them because Northwest Airlines was then on strike, hence, there was no chance
for the plaintiffs to obtain airline seats to the United States within 72 hours.
Plaintiffs paid for these tickets.
Upon reaching Taipei, there were no flight[s] available for plaintiffs, thus, they were
forced to return back to Manila on August 3, 1978, instead of proceeding to the
United States. [Japan] Air Lines (JAL) refunded the plaintiffs the difference of the
price for Tokyo-Taipei [and] Tokyo-San Francisco (Exhs. I & J) in the total amount
of P2,602.00.
In view of their failure to reach Fairfield, New Jersey, Radiant Heat Enterprises, Inc.
cancelled Yu Eng Cho's option to buy the two lines of infra-red heating system
(Exh. K). The agreement was for him to inspect the equipment and make final
arrangement[s] with the said company not later than August 7, 1978. From this
business transaction, plaintiff Yu Eng Cho expected to realize a profit of
P300,000.00 to P400,000.00.
[A] scrutiny of defendants' respective evidence reveals the following:
Plaintiffs, who were intending to go to the United States, were referred to defendant
Claudia Tagunicar, an independent travel solicitor, for the purchase of their plane
tickets. As such travel solicitor, she helps in the processing of travel papers like
passport, plane tickets, booking of passengers and some assistance at the airport.
She is known to defendants Pan-Am, TWSI/Julieta Canilao, because she has been
dealing with them in the past years. Defendant Tagunicar advised plaintiffs to take
Pan-Am because Northwest Airlines was then on strike and plaintiffs are passing
Hongkong, Tokyo, then San Francisco and Pan-Am has a flight from Tokyo to San
Francisco. After verifying from defendant TWSI, thru Julieta Canilao, she informed
plaintiffs that the fare would be P25,093.93 giving them a discount of P738.95
(Exhs. C, C-1). Plaintiffs, however, gave her a check in the amount of P25,000.00
only for the two round trip tickets. Out of this transaction, Tagunicar received a 7%
commission and 1% commission for defendant TWSI.
Defendant Claudia Tagunicar purchased the two round-trip Pan-Am tickets from
defendant Julieta Canilao with the following schedules:
Origin Destination Airline Date Time/Travel
Manila Hongkong CX900 7-23-78 1135/1325hrs
Hongkong Tokyo CS500 7-28-78 1615/2115hrs
Tokyo San Francisco PA002 7-29-78 1930/1640hrs
The use of another airline, like in this case it is Cathay Pacific out of Manila, is
allowed, although the tickets issued are Pan-Am tickets, as long as it is in
connection with a Pan-Am flight. When the two (2) tickets (Exhs. A & B) were
issued to plaintiffs, the letter "RQ" appears below the printed word "status" for the
flights from Tokyo to San Francisco which means "under request," (Exh. 3-A, 4-A
Pan-Am). Before the date of the scheduled departure, defendant Tagunicar
received several calls from the plaintiffs inquiring about the status of their bookings.
Tagunicar in turn called up TWSI/Canilao to verify; and if Canilao would answer
that the bookings are not yet confirmed, she would relate that to the plaintiffs.
Defendant Tagunicar claims that on July 13, 1978, a few days before the scheduled
flight, plaintiff Yu Eng Cho personally went to her office, pressing her about their
flight. She called up defendant Julieta Canilao, and the latter told her "o sige
Claudia, confirm na." She even noted this in her index card (Exh. L), that it was
Julieta who confirmed the booking (Exh. L-1). It was then that she allegedly
attached the confirmation stickers (Exhs. 2, 2-B TWSI) to the tickets. These
stickers came from TWSI.
Defendant Tagunicar alleges that it was only in the first week of August, 1978 that
she learned from Adrian Yu, son of plaintiffs, that the latter were not able to take
the flight from Tokyo to San Francisco, U.S.A. After a few days, said Adrian Yu
came over with a gentleman and a lady, who turned out to be a lawyer and his
secretary. Defendant Tagunicar claims that plaintiffs were asking for her help so
that they could file an action against Pan-Am. Because of plaintiffs' promise she
will not be involved, she agreed to sign the affidavit (Exh. M) prepared by the
lawyer.
Defendants TWSI/Canilao denied having confirmed the Tokyo-San Francisco
segment of plaintiffs' flight because flights then were really tight because of the ongoing strike at Northwest Airlines. Defendant Claudia Tagunicar is very much aware
that [said] particular segment was not confirmed, because on the very day of
plaintiffs' departure, Tagunicar called up TWSI from the airport; defendant Canilao
asked her why she attached stickers on the tickets when in fact that portion of the
flight was not yet confirmed. Neither TWSI nor Pan-Am confirmed the flight and
never authorized defendant Tagunicar to attach the confirmation stickers. In fact,
the confirmation stickers used by defendant Tagunicar are stickers exclusively for
use of Pan-Am only. Furthermore, if it is the travel agency that confirms the
booking, the IATA number of said agency should appear on the validation or
confirmation stickers. The IATA number that appears on the stickers attached to
plaintiffs' tickets (Exhs. A & B) is 2-82-0770 (Exhs. 1, 1-A TWSI), when in fact
TWSI's IATA number is 2-83-0770 (Exhs. 5, 5-A TWSI). 3
A complaint for damages was filed by petitioners against private respondents Pan
American World Airways, Inc. (Pan Am), Tourist World Services, Inc. (TWSI), Julieta
Canilao (Canilao), and Claudia Tagunicar (Tagunicar) for expenses allegedly incurred such
as costs of tickets and hotel accommodations when petitioners were compelled to stay in
Hongkong and then in Tokyo by reason of the non-confirmation of their booking with PanAm. In a Decision dated November 14, 1991, the Regional Trial Court of Manila, Branch 3,
held the defendants jointly and severally liable, except defendant Julieta Canilao, thus:
WHEREFORE, judgment is hereby rendered for the plaintiffs and ordering
defendants Pan American World Airways, Inc., Tourist World Services, Inc. and
Claudia Tagunicar, jointly and severally, to pay plaintiffs the sum of P200,000.00 as
actual damages, minus P2,602.00 already refunded to the plaintiffs; P200,000.00
as moral damages; P100,000.00 as exemplary damages; an amount equivalent to
20% of the award for and as attorney's fees, plus the sum of P30,000.00 as
litigation expenses.
Defendants' counterclaims are hereby dismissed for lack of merit.
In so ruling, respondent court found that Tagunicar is an independent travel solicitor and is
not a duly authorized agent or representative of either Pan Am or TWSI. It held that their
business transactions are not sufficient to consider Pan Am as the principal, and Tagunicar
and TWSI as its agent and sub-agent, respectively. It further held that Tagunicar was not
authorized to confirm the bookings of, nor issue validation stickers to, herein petitioners
and hence, Pan Am and TWSI cannot be held responsible for her actions. Finally, it deleted
the award for actual damages for lack of proof.
Hence this petition based on the following assignment of errors:
1. the Court of Appeals, in reversing the decision of the trial court, misapplied the
ruling in Nicos Industrial Corporation vs. Court of Appeals, et. al. [206 SCRA 127];
and
2. the findings of the Court of Appeals that petitioners' ticket reservations in
question were not confirmed and that there is no agency relationship among PANAM, TWSI and Tagunicar are contrary to the judicial admissions of PAN-AM, TWSI
and Tagunicar and likewise contrary to the findings of fact of the trial court.
SO ORDERED.
We affirm.
Only respondents Pan Am and Tagunicar appealed to the Court of Appeals. On 11 August
1995, the appellate court rendered judgment modifying the amount of damages awarded,
holding private respondent Tagunicar solely liable therefor, and absolving respondents Pan
Am and TWSI from any and all liability, thus:
PREMISES CONSIDERED, the decision of the Regional Trial Court is hereby SET
ASIDE and a new one entered declaring appellant Tagunicar solely liable for:
I. The first issue deserves scant consideration. Petitioners contend that contrary to the
ruling of the Court of Appeals, the decision of the trial court conforms to the standards of
an ideal decision set in Nicos Industrial Corporation, et. al. vs. Court of Appeals, et. al., 4 as
"that which, with welcome economy of words, arrives at the factual findings, reaches the
legal conclusions, renders its ruling and, having done so, ends." It is averred that the trial
court's decision contains a detailed statement of the relevant facts and evidence adduced
by the parties which thereafter became the bases for the court's conclusions.
A careful scrutiny of the decision rendered by the trial court will show that after narrating
the evidence of the parties, it proceeded to dispose of the case with a one-paragraph
generalization, to wit:
On the basis of the foregoing facts, the Court is constrained to conclude that
defendant Pan-Am is the principal, and defendants TWSI and Tagunicar, its
authorized agent and sub-agent, respectively. Consequently, defendants Pan-Am,
TWSI and Claudia Tagunicar should be held jointly and severally liable to plaintiffs
for damages. Defendant Julieta Canilao, who acted in her official capacity as Office
Manager of defendant TWSI should not be held personally liable. 5
The trial court's finding of facts is but a summary of the testimonies of the witnesses and
the documentary evidence presented by the parties. It did not distinctly and clearly set
forth, nor substantiate, the factual and legal bases for holding respondents TWSI, Pan Am
and Tagunicar jointly and severally liable. In Del Mundo vs. CA, et al. 6 where the trial court,
after summarizing the conflicting asseverations of the parties, disposed of the kernel issue
in just two (2) paragraphs, we held:
It is understandable that courts, with their heavy dockets and time constraints,
often find themselves with little to spare in the preparation of decisions to the
extent most desirable. We have thus pointed out that judges might learn to
synthesize and to simplify their pronouncements. Nevertheless, concisely written
such as they may be, decisions must still distinctly and clearly express, at least in
minimum essence, its factual and legal bases.
For failing to explain clearly and well the factual and legal bases of its award of moral
damages, we set it aside in said case. Once more, we stress that nothing less than Section
14 of Article VIII of the Constitution requires that "no decision shall be rendered by any
court without expressing therein clearly and distinctly the facts and the law on which it is
based." This is demanded by the due process clause of the Constitution. In the case at bar,
the decision of the trial court leaves much to be desired both in form and substance. Even
while said decision infringes the Constitution, we will not belabor this infirmity and rather
examine the sufficiency of the evidence submitted by the petitioners.
II. Petitioners assert that Tagunicar is a sub-agent of TWSI while TWSI is a duly authorized
ticketing agent of Pan Am. Proceeding from this premise, they contend that TWSI and Pan
Am should be held liable as principals for the acts of Tagunicar. Petitioners stubbornly
insist that the existence of the agency relationship has been established by the judicial
admissions allegedly made by respondents herein, to wit: (1) the admission made by Pan
Am in its Answer that TWSI is its authorized ticket agent; (2) the affidavit executed by
Tagunicar where she admitted that she is a duly authorized agent of TWSI; and (3) the
admission made by Canilao that TWSI received commissions from ticket sales made by
Tagunicar.
We do not agree. By the contract of agency, a person binds himself to render some service
or to do something in representation or on behalf of another, with the consent or authority
of the latter. 7 The elements of agency are: (1) consent, express or implied, of the parties to
establish the relationship; (2) the object is the execution of a juridical act in relation to a
third person; (3) the agent acts as a representative and not for himself; (4) the agent acts
within the scope of his authority. 8 It is a settled rule that persons dealing with an assumed
agent are bound at their peril, if they would hold the principal liable, to ascertain not only
the fact of agency but also the nature and extent of authority, and in case either is
controverted, the burden of proof is upon them to establish it. 9
In the case at bar, petitioners rely on the affidavit of respondent Tagunicar where she
stated that she is an authorized agent of TWSI. This affidavit, however, has weak probative
value in light of respondent Tagunicar's testimony in court to the contrary. Affidavits, being
taken ex parte, are almost always incomplete and often inaccurate, sometimes from partial
suggestion, or for want of suggestion and inquiries. Their infirmity as a species of evidence
is a matter of judicial experience and are thus considered inferior to the testimony given in
court. 10Further, affidavits are not complete reproductions of what the declarant has in mind
because they are generally prepared by the administering officer and the affiant simply
signs them after the same have been read to her. 11Respondent Tagunicar testified that her
affidavit was prepared and typewritten by the secretary of petitioners' lawyer, Atty.
Acebedo, who both came with Adrian Yu, son of petitioners, when the latter went to see
her at her office. This was confirmed by Adrian Yu who testified that Atty. Acebedo brought
his notarial seal and notarized the affidavit of the same day. 12 The circumstances under
which said affidavit was prepared put in doubt petitioners' claim that it was executed
voluntarily by respondent Tagunicar. It appears that the affidavit was prepared and was
based on the answers which respondent Tagunicar gave to the questions propounded to
her by Atty. Acebedo. 13 They never told her that the affidavit would be used in a case to be
filed against her. 14 They even assured her that she would not be included as defendant if
she agreed to execute the affidavit. 15Respondent Tagunicar was prevailed upon by
petitioners' son and their lawyer to sign the affidavit despite her objection to the statement
therein that she was an agent of TWSI. They assured her that "it is immaterial" 16 and that "if
we file a suit against you we cannot get anything from you." 17 This purported admission of
respondent Tagunicar cannot be used by petitioners to prove their agency relationship. At
any rate, even if such affidavit is to be given any probative value, the existence of the
agency relationship cannot be established on its sole basis. The declarations of the agent
alone are generally insufficient to establish the fact or extent of his authority. 18 In addition,
as between the negative allegation of respondents Canilao and Tagunicar that neither is an
agent nor principal of the other, and the affirmative allegation of petitioners that an agency
relationship exists, it is the latter who have the burden of evidence to prove their
allegation, 19 failing in which, their claim must necessarily fail.
We stress that respondent Tagunicar categorically denied in open court that she is a duly
authorized agent of TWSI, and declared that she is an independent travel agent. 20 We
have consistently ruled that in case of conflict between statements in the affidavit and
testimonial declarations, the latter command greater weight. 21
for the flight to San Francisco, or even upon their arrival in Manila. The testimony of
petitioner Yu Eng Cho in this regard is of title value, viz:
Atty. Jalandoni: . . .
As further proofs of agency, petitioners call our attention to TWSI's Exhibits "7", "7-A", and
"8" which show that Tagunicar and TWSI received sales commissions from Pan Am.
Exhibit "7" 22 is the Ticket Sales Report submitted by TWSI to Pan Am reflecting the
commissions received by TWSI as an agent of Pan Am. Exhibit "7-A" 23 is a listing of the
routes taken by passengers who were audited to TWSI's sales report. Exhibit "8" 24 is a
receipt issued by TWSI covering the payment made by Tagunicar for the tickets she bought
from TWSI. These documents cannot justify the decision that Tagunicar was paid a
commission either by TWSI or Pan Am. On the contrary, Tagunicar testified that when she
pays TWSI, she already deducts in advance her commission and merely gives the net
amount to TWSI. 25 From all sides of the legal prism, the transaction is simply a contract of
sale wherein Tagunicar buys airline tickets from TWSI and then sells it at a premium to her
clients.
q Upon arrival at the Tokyo airport, what did you do if any in connection with your
schedule[d] trip?
III. Petitioners included respondent Pan Am in the complainant on the supposition that
since TWSI is its duly authorized agent, and respondent Tagunicar is an agent of TWSI,
then Pan Am should also be held responsible for the acts of respondent Tagunicar. Our
disquisitions above show that this contention lacks factual and legal bases. Indeed, there is
nothing in the records to show that respondent Tagunicar has been employed by Pan Am
as its agent, except the bare allegation of petitioners. The real motive of petitioners in
suing Pan Am appears in its Amended Complaint that "[d]efendants TWSI, Canilao and
Tagunicar may not be financially capable of paying plaintiffs the amounts herein sought to
be recovered, and in such event, defendant Pan Am, being their ultimate principal, is
primarily and/or subsidiary liable to pay the said amounts to plaintiffs." 26 This lends
credence to respondent Tagunicar's testimony that she was persuaded to execute an
affidavit implicating respondents because petitioners knew they would not be able to get
anything of value from her. In the past, we have warned that this Court will not tolerate an
abuse of judicial process by passengers in order to pry on international airlines for damage
awards, like "trophies in a safari." 27
This meritless suit against Pan Am becomes more glaring with petitioner' inaction after they
were bumped off in Tokyo. If petitioners were of the honest belief that Pan Am was
responsible for the misfortune which beset them, there is no evidence to show that they
lodged a protest with Pan Am's Tokyo office immediately after they were refused passage
a I went to the Hotel, Holiday Inn and from there I immediately called up Pan Am
office in Tokyo to reconfirm my flight, but they told me that our names were not
listed in the manifest, so next morning, very early in the morning I went to the
airport, Pan Am office in the airport to verify and they told me the same and we
were not allowed to leave.
q You were scheduled to be in Tokyo for how long Mr. Yu?
a We have to leave the next day 29th.
xxx
xxx
q As a consequence of the fact that you claimed that the Pan Am office in Tokyo
told you that your names were not in the manifest, what did you do, if any?
a I ask[ed] them if I can go anywhere in the State? They told me I can go to LA via
Japan Airlines and I accepted it.
q Do you have the tickets with you that they issued for Los Angels?
a It was taken by the Japanese Airlines instead they issue[d] me a ticket to Taipei.
xxx
xxx
xxx
q Were you able to take the trip to Los Angeles via Pan Am tickets that was issued
to you in lieu of the tickets to San Francisco?
a No, sir.
q Why not?
a The Japanese Airlines said that there were no more available seats.
q And as a consequence of that, what did you do, if any?
a I am so much scared and worried, so the Japanese Airlines advised us to go to
Taipei and I accepted it.
xxx
xxx
xxx
q Why did you accept the Japan Airlines offer for you to go to Taipei?
a Because there is no chance for us to go to the United States within 72 hours
because during that time Northwest Airlines [was] on strike so the seats are very
scarce. So they advised me better left (sic) before the 72 hours otherwise you will
have trouble with the Japanese immigration.
q As a consequence of that you were force[d] to take the trip to Taipei?
a Yes, sir. 28 (emphasis supplied)
It grinds against the grain of human experience that petitioners did not insist that they be
allowed to board, considering that it was then doubly difficult to get seats because of the
ongoing Northwest Airlines strike. It is also perplexing that petitioners readily accepted
whatever the Tokyo office had to offer as an alternative. Inexplicably too, no demand letter
was sent to respondents TWSI and Canilao. 29 Nor was a demand letter sent to respondent
Pan Am. To say the least, the motive of petitioners in suing Pan Am is suspect.
We hasten to add that it is not sufficient to prove that Pan Am did not allow petitioners to
board to justify petitioners' claim for damages. Mere refusal to accede to the passenger's
wishes does not necessarily translate into damages in the absence of bad faith. 30 The
settled rule is that the law presumes good faith such that any person who seeks to be
awarded damages due to acts of another has the burden of proving that the latter acted in
bad faith or with ill motive. 31 In the case at bar, we find the evidence presented by
petitioners insufficient to overcome the presumption of good faith. They have failed to show
In not a few cases, this Court did not hesitable to hold an airline liable for damages for
having acted in bad faith in refusing to accommodate a passenger who had a confirmed
ticket and whose name appeared in the passenger manifest. In Ortigas Jr. v. Lufthansa
German Airlines Inc., 32 we ruled that there was a valid and binding contract between the
airline and its passenger after finding that validating sticker on the passenger's ticket had
the letters "O.K." appearing in the "Res. Status" box which means "space confirmed" and
that the ticket is confirmed or validated. In Pan American World Airways Inc. v. IAC, et
al. 33 where a would-be-passenger had the necessary ticket, baggage claim and clearance
from immigration all clearly showing that she was a confirmed passenger and included in
the passenger manifest and yet was denied accommodation in said flight, we awarded
damages. InArmovit, et al. v. CA, et al., 34 we upheld the award of damages made against
an airline for gross negligence committed in the issuance of tickets with erroneous entries
as to the time of flight. In Alitalia Airways v. CA, et al.,35 we held that when airline issues a
ticket to a passenger confirmed on a particular flight, on a certain date, a contract of
carriage arises, and the passenger has every right to expect that he would fly on that flight
and on that date. If he does not, then the carrier opens itself to a suit for breach of contract
of carriage. And finally, an award of damages was held proper in the case of Zalamea, et
al. v. CA, et al., 36 where a confirmed passenger included in the manifest was denied
accommodation in such flight.
On the other hand, the respondent airline in Sarreal, Sr. v. Japan Airlines Co., Ltd., 37 was
held not liable for damages where the passenger was not allowed to board the plane
because his ticket had not been confirmed. We ruled that "[t]he stub that the lady
employee put on the petitioner's ticket showed among other coded items, under the
column "status" the letters "RQ" which was understood to mean "Request." Clearly, this
does not mean a confirmation but only a request. JAL Traffic Supervisor explained that it
would have been different if what was written in the stub were the letter "ok" in which case
the petitioner would have been assured of a seat on said flight. But in this case, the
petitioner was more of a wait-listed passenger than a regularly booked passenger."
In the case at bar, petitioners' ticket were on "RQ" status. They were not confirmed
passengers and their names were not listed in the passenger manifest. In other words, this
is not a case where Pan Am bound itself to transport petitioners and thereafter reneged on
its obligation. Hence, respondent airline cannot be held liable for damages.
SO ORDERED.
IV. We hold that respondent Court of Appeals correctly rules that the tickets were never
confirmed for good reasons: (1) The persistent calls made by respondent Tagunicar to
Canilao, and those made by petitioners at the Manila, Hongkong and Tokyo offices in Pan
Am, are eloquent indications that petitioners knew that their tickets have not been
confirmed. For, as correctly observed by Pan Am, why would one continually try to have
one's ticket confirmed if it had already been confirmed? (2) The validation stickers which
respondent Tagunicar attached to petitioners' tickets were those intended for the exclusive
use of airline companies. She had no authority to use them. Hence, said validation
stickers, wherein the word "OK" appears in the status box, are not valid and binding. (3)
The names of petitioners do not appear in the passengers manifest. (4) Respondent
Tagunicar's "Exhibit 1" 38 shows that the status of the San Francisco-New York segment
was "Ok", meaning it was confirmed, but that the status of the Tokyo-San Francisco
segment was still "on request". (5) Respondent Canilao testified that on the day that
petitioners were to depart for Hongkong, respondent Tagunicar called her from the airport
asking for confirmation of the Tokyo-San Francisco flight, and that when she told
respondent Tagunicar that she should not have allowed petitioners to leave because their
tickets have not been confirmed, respondent Tagunicar merely said "Bahala na." 39 This
was never controverted nor refuted by respondent Tagunicar. (6) To prove that it really did
not confirm the bookings of petitioners, respondent Canilao pointed out that the validation
stickers which respondent Tagunicar attached to the tickets of petitioners had IATA No. 282-0770 stamped on it, whereas the IATA number of TWSI is 28-30770. 40
Undoubtedly, respondent Tagunicar should be liable for having acted in bad faith in
misrepresenting to petitioners that their tickets have been confirmed. Her culpability,
however, was properly mitigated. Petitioner Yu Eng Cho testified that he repeatedly tried to
follow up on the confirmation of their tickets with Pan Am because he doubted the
confirmation made by respondent Tagunicar. 41 This is clear proof that petitioners knew that
they might be bumped off at Tokyo when they decided to proceed with the trip. Aware of
this risk, petitioners exerted efforts to confirm their tickets in Manila, then in Hongkong, and
finally in Tokyo. Resultantly, we find the modification as to the amount of damages awarded
just and equitable under the circumstances.
WHEREFORE, the decision appealed from is hereby AFFIRMED. Cost against
petitioners.
1wphi1.nt
PAREDES, J.:
The case was submitted on agreed statement of facts.
On June 6, 1957, plaintiff-appellee Southern Motors, Inc. sold to defendantappellant Angel Moscoso one Chevrolet truck, on installment basis, for P6,445.00.
Upon making a down payment, the defendant executed a promissory note for the
sum of P4,915.00, representing the unpaid balance of the purchase price (Annex
A, complaint), to secure the payment of which, a chattel mortgage was constituted
on the truck in favor of the plaintiff (Annex B). Of said account of P4,915.00, the
defendant had paid a total of P550.00, of which P110.00 was applied to the interest
up to August 15, 1957, and P400.00 to the principal, thus leaving an unpaid
balance of P4,475.00. The defendant failed to pay 3 installments on the balance of
the purchase price.
On November 4, 1957, the plaintiff filed a complaint against the defendant, to
recover the unpaid balance of the promissory note. Upon plaintiff's petition,
embodied in the complaint, a writ of attachment was issued by the lower court on
the properties Of the defendant. Pursuant thereto, the said Chevrolet truck, and a
house and lot belonging to defendant, were attached by the Sheriff of San Jose,
Antique, where defendant was residing on November 25, 1957, and said truck was
brought to the plaintiff's compound in Iloilo City, for safe keeping.
After attachment and before the trial of the case on the merits, acting upon the
plaintiff's motion dated December 23, 1957, for the immediate sale of the
mortgaged truck, the Provincial Sheriff of Iloilo on January 2, 1958, sold the truck
at public auction in which plaintiff itself was the only bidder for P1,000.00. The case
had not been set for hearing, then.
The trial court on March 27, 1958, condemned the defendant to pay the plaintiff the
amount of P4,475.00 with interest at the rate of 12% per annum from August 16,
1957, until fully paid, plus 10% thereof as attorneys fees and costs against which
defendant interposed the present appeal, contending that the trial court erred
(1) In not finding that the attachment caused to be levied on the truck and
its immediate sale at public auction, was tantamount to the foreclosure of
the chattel mortgage on said truck; and
(2) In rendering judgment in favor of the plaintiff-appellee.
Both parties agreed that the case is governed by Article 1484 of the new Civil
Case, which provides:
ART. 1484. In a contract of sale of personal property the price of which is
payable in installments, the vendor may exercise any of the following
remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay; .
(2) Cancel the sale, should the vendee's failure to pay cover two or more
installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more
installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to the
contrary shall be void.
While the appellee claims that in filing the complaint, demanding payment of the
unpaid balance of the purchase price, it has availed of the first remedy provided in
said article i.e. to exact fulfillment of the obligation (specific performance); the
appellant, on the other hand, contends that appellee had availed itself of the third
remedy viz, the foreclosure of the chattel mortgage on the truck.
The appellant argues that considering history of the law, the circumstances leading
to its enactment, the evil that the law was intended to correct and the remedy
afforded (Art. 1454-A of the old Civil Code; Act No. 4122; Bachrach Motor Co. vs.
Reyes, 62 Phil. 461, 466-469); that the appellee did not content itself by waiting for
the judgment on the complaint and then executed the judgment which might be
rendered in its favor, against the properties of the appellant; that the appellee
obtained a preliminary attachment on the subject of the chattel mortgage itself and
caused said truck to be sold at public auction petition, in which he was bidder for
P1,000.00; the result of which, was similar to what would have happened, had it
foreclosed the mortgage pursuant to the provisions of Sec. 14 of Act No. 1508
(Chattel Mortgage Law) the said appellee had availed itself of the third remedy
aforequoted. In other words, appellant submits that the matter should be looked at,
not by the allegations in the complaint, but by the very effect and result of the
procedural steps taken and that appellee tried to camouflage its acts by filing a
complaint purportedly to exact the fulfillment of an obligation petition, in an attempt
to circumvent the provisions of Article 1484 of the new Civil Code. Appellant
concludes that under his theory, a deficiency judgment would be without legal
basis.
We do not share the views of the appellant on this matter. Manifestly, the appellee
had chosen the first remedy. The complaint is an ordinary civil action for recovery
of the remaining unpaid balance due on the promissory note. The plaintiff had not
adopted the procedure or methods outlined by Sec. 14 of the Chattel Mortgage
Law but those prescribed for ordinary civil actions, under the Rules of Court. Had
appellee elected the foreclosure, it would not have instituted this case in court; it
would not have caused the chattel to be attached under Rule 59, and had it sold at
public auction, in the manner prescribed by Rule 39. That the herein appellee did
not intend to foreclose the mortgage truck, is further evinced by the fact that it had
also attached the house and lot of the appellant at San Jose, Antique. In the case
of Southern Motors, Inc. vs. Magbanua, G.R. No. L-8578, Oct. 29, 1956, we held:
By praying that the defendant be ordered to pay it the sum of P4,690.00
together with the stipulated interest of 12% per annum from 17 March 1954
until fully paid, plus 10% of the total amount due as attorney's fees and cost
of collection, the plaintiff elected to exact the fulfillment of the obligation,
and not to foreclose the mortgage on the truck. Otherwise, it would not have
gone to court to collect the amount as prayed for in the complaint. Had it
elected to foreclose the mortgage on the truck, all the plaintiff had to do was
to cause the truck to be sold at public auction pursuant to section 14 of the
Chattel Mortgage Law. The fact that aside from the mortgaged truck,
another Chevrolet truck and two parcels of land belonging to the defendant
were attached, shows that the plaintiff did not intend to foreclose the
mortgage.
As the plaintiff has chosen to exact the fulfillment of the defendant's
obligation, the former may enforce execution of the judgment rendered in its
favor on the personal and real property of the latter not exempt from
execution sufficient to satisfy the judgment. That part of the judgment
against the properties of the defendant except the mortgaged truck and
discharging the writ of attachment on his other properties is erroneous.
We perceive nothing unlawful or irregular in appellee's act of attaching the
mortgaged truck itself. Since herein appellee has chosen to exact the fulfillment of
the appellant's obligation, it may enforce execution of the judgment that may be
favorably rendered hereon, on all personal and real properties of the latter not
exempt from execution sufficient to satisfy such judgment. It should be noted that a
house and lot at San Jose, Antique were also attached. No one can successfully
contest that the attachment was merely an incident to an ordinary civil action.
(Sections 1 & 11, Rule 59; Sec. 16, Rule 39). The mortgage creditor may recover
judgment on the mortgage debt and cause an execution on the mortgaged
property and may cause an attachment to be issued and levied on such property,
upon beginning his civil action (Tizon vs. Valdez, 48 Phil. 910-911).
IN VIEW HEREOF, the judgment appealed from hereby is affirmed, with costs
against the defendant-appellant.
CONCEPCION, C.J.:p
ART. 1479. A promise to buy and sell a determinate thing for a price
certain is reciprocally demandable.
Appeal from a decision of the Court of First Instance of Nueva Ecija to the Court of
Appeals, which certified the case to Us, upon the ground that it involves a question
purely of law.
The record shows that, on April 3, 1961, plaintiff Nicolas Sanchez and defendant
Severina Rigos executed an instrument entitled "Option to Purchase," whereby
Mrs. Rigos "agreed, promised and committed ... to sell" to Sanchez the sum of
P1,510.00, a parcel of land situated in the barrios of Abar and Sibot, municipality of
San Jose, province of Nueva Ecija, and more particularly described in Transfer
Certificate of Title No. NT-12528 of said province, within two (2) years from said
date with the understanding that said option shall be deemed "terminated and
elapsed," if "Sanchez shall fail to exercise his right to buy the property" within the
stipulated period. Inasmuch as several tenders of payment of the sum of Pl,510.00,
made by Sanchez within said period, were rejected by Mrs. Rigos, on March 12,
1963, the former deposited said amount with the Court of First Instance of Nueva
Ecija and commenced against the latter the present action, for specific
performance and damages.
In his complaint, plaintiff alleges that, by virtue of the option under consideration,
"defendant agreed and committed to sell" and "the plaintiff agreed and committed
to buy" the land described in the option, copy of which was annexed to said
pleading as Annex A thereof and is quoted on the margin. 1 Hence, plaintiff maintains
that the promise contained in the contract is "reciprocally demandable," pursuant to the first
paragraph of said Article 1479. Although defendant had really "agreed, promised and
committed" herself to sell the land to the plaintiff, it is not true that the latter had, in turn,
"agreed and committed himself " to buy said property. Said Annex A does not bear out plaintiff's
allegation to this effect. What is more, since Annex A has been made "an integral part" of his
complaint, the provisions of said instrument form part "and parcel" 2 of said pleading.
The option did not impose upon plaintiff the obligation to purchase defendant's
property. Annex A is not a "contract to buy and sell." It merely granted plaintiff an
"option" to buy. And both parties so understood it, as indicated by the caption,
"Option to Purchase," given by them to said instrument. Under the provisions
thereof, the defendant "agreed, promised and committed" herself to sell the land
therein described to the plaintiff for P1,510.00, but there is nothing in the contract
to indicate that her aforementioned agreement, promise and undertaking is
supported by a consideration "distinct from the price" stipulated for the sale of the
land.
Relying upon Article 1354 of our Civil Code, the lower court presumed the
existence of said consideration, and this would seem to be the main factor that
influenced its decision in plaintiff's favor. It should be noted, however, that:
(1) Article 1354 applies to contracts in general, whereas the second paragraph of
Article 1479 refers to "sales" in particular, and, more specifically, to "an accepted
unilateral promise to buy or to sell." In other words, Article 1479 is controlling in the
case at bar.
(2) In order that said unilateral promise may be "binding upon the promisor, Article
1479 requires the concurrence of a condition, namely, that the promise be
"supported by a consideration distinct from the price." Accordingly, the promisee
can not compel the promisor to comply with the promise, unless the former
establishes the existence of said distinct consideration. In other words,
the promisee has the burden of proving such consideration. Plaintiff herein has not
even alleged the existence thereof in his complaint.
(3) Upon the other hand, defendant explicitly averred in her answer, and pleaded
as a special defense, the absence of said consideration for her promise to sell and,
by joining in the petition for a judgment on the pleadings, plaintiff has impliedly
admitted the truth of said averment in defendant's answer. Indeed as early as
March 14, 1908, it had been held, in Bauermann v. Casas, 3 that:
One who prays for judgment on the pleadings without offering proof
as to the truth of his own allegations, and without giving the opposing
party an opportunity to introduce evidence, must be understood
to admit the truth of all the material and relevant allegations of the
opposing party, and to rest his motion for judgment on those
allegations taken together with such of his own as are admitted in
Squarely in point is Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific
Co., 6 from which We quote:
The main contention of appellant is that the option granted to
appellee to sell to it barge No. 10 for the sum of P30,000 under the
terms stated above has no legal effect because it is not supported by
any consideration and in support thereof it invokes article 1479 of the
new Civil Code. The article provides:
"ART. 1479. A promise to buy and sell a determinate
thing for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or sell a
determinate thing for a price certain is binding upon
the promisor if the promise is supported by a
consideration distinct from the price."
On the other hand, Appellee contends that, even granting that the
"offer of option" is not supported by any consideration, that option
became binding on appellant when the appellee gave notice to it of
its acceptance, and that having accepted it within the period of
option, the offer can no longer be withdrawn and in any event such
withdrawal is ineffective. In support this contention, appellee invokes
article 1324 of the Civil Code which provides:
"ART. 1324. When the offerer has allowed the offeree
a certain period to accept, the offer may be withdrawn
any time before acceptance by communicating such
Upon mature deliberation, the Court is of the considered opinion that it should, as it
hereby reiterates the doctrine laid down in the Atkins, Kroll & Co. case, and that,
insofar as inconsistent therewith, the view adhered to in theSouthwestern Sugar &
Molasses Co. case should be deemed abandoned or modified.
WHEREFORE, the decision appealed from is hereby affirmed, with costs against
defendant-appellant Severina Rigos. It is so ordered.
Reyes, J.B.L., Makalintal, Zaldivar, Teehankee, Barredo and Makasiar, JJ., concur.
Castro, J., took no part.
public auction sale, the franchise of plaintiffs to operate five units of taxicab service
was sold for P8,000 to the highest bidder, herein defendant corporation, which
subsequently sold and conveyed the same to herein defendant Jose D. Sebastian,
who then filed with the Public Service Commission an application for approval of
said sale in his favor.
On February 21, 1966, plaintiffs filed an action for annulment of contract before the
Court of First Instance of Rizal, Branch I, with Filipinas Investment and Finance
Corporation, Jose D. Sebastian and Sheriff Jose San Agustin, as party-defendants.
By agreement of the parties, the case was submitted for decision in the lower court
on the basis of the documentary evidence adduced by the parties during the pretrial conference. Thereafter, the lower court rendered judgment as follows:
IN VIEW OF THE ABOVE CONSIDERATIONS, this Court declares
the chattel mortgage, Exhibit "C", to be null and void in so far as the
taxicab franchise and the used Chevrolet car of plaintiffs are
concerned, and the sale at public auction conducted by the City
Sheriff of Manila concerning said taxicab franchise, to be of no legal
effect. The certificate of sale issued by the City Sheriff of Manila in
favor of Filipinas Investment and Finance Corporation concerning
plaintiffs' taxicab franchise for P8,000 is accordingly cancelled and
set aside, and the assignment thereof made by Filipinas Investment
in favor of defendant Jose Sebastian is declared void and of no legal
effect. (Record on Appeal, p. 128).
1wph1.t
From the foregoing judgment, defendants appealed to the Court of Appeals which,
as earlier stated, certified the appeal to this Court, appellants imputing to the lower
court five alleged errors, as follows:
I
THE LOWER COURT ERRED IN DECLARING THE CHATTEL
MORTGAGE, EXHIBIT "C", NULL AND VOID.
II
V
THE LOWER COURT (sic) IN NOT DECIDING THE CASE IN
FAVOR OF THE DEFENDANTS. Appellants' Brief, pp. 9 & 10)
From the aforequoted assignment of errors, the decisive issue for consideration is
the validity of the chattel mortgage in so far as the franchise and the subsequent
sale thereof are concerned.
The resolution of said issue is unquestionably governed by the provisions of Article
1484 of the Civil Code which states:
Art. 1484. In a contract of sale of personal property the price of
which is payable in installments, the vendor may exercise y of the
following remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or
more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more
installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void.
Under the above-quoted article of the Civil Code, the vendor of personal property
the purchase price of which is payable in installments, has the right, should the
vendee default in the payment of two or more of the agreed installments, to exact
fulfillment by the purchaser of the obligation, or to cancel the sale, or to foreclose
the mortgage on the purchased personal property, if one was
constituted. 1 Whichever right the vendor elects, he cannot avail of the other, these remedies
being alternative, not cumulative. 2 Furthermore, if the vendor avails himself of the right to
foreclose his mortgage, the law prohibits him from further bringing an action against the vendee
for the purpose of recovering whatever balance of the debt secured not satisfied by the
foreclosure sale. 3 The precise purpose of the law is to prevent mortgagees from seizing the
mortgaged property, buying it at foreclosure sale for a low price and then bringing suit against
the mortgagor for a deficiency judgment, otherwise, the mortgagor-buyer would find himself
without the property and still owing practically the full amount of his original indebtedness. 4
In the instant case, defendant corporation elected to foreclose its mortgage upon
default by the plaintiffs in the payment of the agreed installments. Having chosen to
foreclose the chattel mortgage, and bought the purchased vehicles at the public
auction as the highest bidder, it submitted itself to the consequences of the law as
specifically mentioned, by which it is deemed to have renounced any and all rights
which it might otherwise have under the promissory note and the chattel mortgage
as well as the payment of the unpaid balance.
Consequently, the lower court rightly declared the nullity of the chattel mortgage in
question in so far as the taxicab franchise and the used Chevrolet car of plaintiffs
are concerned, under the authority of the ruling in the case of Levy Hermanos, Inc.
vs. Pacific Commercial Co., et al., 71 Phil. 587, the facts of which are similar to
those in the case at bar. There, we have the same situation wherein the vendees
offered as security for the payment of the purchase price not only the motor
vehicles which were bought on installment, but also a residential lot and a house of
strong materials. This Court sustained the pronouncement made by the lower court
on the nullity of the mortgage in so far as it included the house and lot of the
vendees, holding that under the law, should the vendor choose to foreclose the
mortgage, he has to content himself with the proceeds of the sale at the public
auction of the chattels which were sold on installment and mortgaged to him and
having chosen the remedy of foreclosure, he cannot nor should he be allowed to
insist on the sale of the house and lot of the vendees, for to do so would be
equivalent to obtaining a writ of execution against them concerning other
properties which are separate and distinct from those which were sold on
installment. This would indeed be contrary to public policy and the very spirit and
purpose of the law, limiting the vendor's right to foreclose the chattel mortgage only
on the thing sold.
In the case of Cruz v. Filipinos Investment & Finance Corporation, 23 SCRA 791,
this Court ruled that the vendor of personal property sold on the installment basis is
precluded, after foreclosing the chattel mortgage on the thing sold from having a
recourse against the additional security put up by a third party to guarantee the
purchaser's performance of his obligation on the theory that to sustain the same
would overlook the fact that if the guarantor should be compelled to pay the
balance of the purchase price, said guarantor will in turn be entitled to recover what
he has paid from the debtor-vendee, and ultimately it will be the latter who will be
made to bear the payment of the of the balance of the price, despite the earlier
foreclosure of the chattel mortgage given by him, thereby indirectly subverting the
protection given the latter. Consequently, the additional mortgage was ordered
cancelled. Said ruling was reiterated in the case of Pascual v. Universal Motors
Corporation, 61 SCRA 121. If the vendor under such circumstance is prohibited
from having a recourse against the additional security for reasons therein stated,
there is no ground why such vendor should not likewise be precluded from further
extrajudicially foreclosing the additional security put up by the vendees
themselves, as in the instant case, it being tantamount to a further action 5 that
would violate Article 1484 of the Civil Code, for then is actually no between an additional
security put up by the vendee himself and such security put up by a third party insofar as how
the burden would ultimately fall on the vendee himself is concerned.
Reliance on the ruling in Southern Motors, inc. v. Moscoso, 2 SCRA 168, that in
sales on installments, where the action instituted is for and the mortgaged property
is subsequently attached and sold, the sales thereof does not amount to a
foreclosure of the mortgage, hence, the seller creditor is entitled to a deficiency
judgment, does not for the stand of the appellants for that case is entirely different
from the case at bar. In that case, the vendor has availed of the first remedy
provided by Article 1484 of the Civil Code, i.e., to exact fulfillment of the obligation
whereas in the present case, the remedy availed of was foreclosure of the chattel
mortgage.
The foregoing disposition renders superfluous a determination of the other issue
raised by the parties as to the validity of the auction sale, in so far as the franchise
of plaintiffs is concerned, which sale had been admittedly held without any notice to
the plaintiffs.
IN VIEW HEREOF, the judgment appealed from is hereby affirmed, with costs
against the appellants.
SO ORDERED.
ART. 2. In compensation for the expenses of advertisement which, for the benefit of
both contracting parties, Mr. Parsons may find himself obliged to make, Mr.
Quiroga assumes the obligation to offer and give the preference to Mr. Parsons in
case anyone should apply for the exclusive agency for any island not comprised
with the Visayan group.
ART. 3. Mr. Parsons may sell, or establish branches of his agency for the sale of
"Quiroga" beds in all the towns of the Archipelago where there are no exclusive
agents, and shall immediately report such action to Mr. Quiroga for his approval.
ART. 4. This contract is made for an unlimited period, and may be terminated by
either of the contracting parties on a previous notice of ninety days to the other
party.
Of the three causes of action alleged by the plaintiff in his complaint, only two of them
constitute the subject matter of this appeal and both substantially amount to the averment
that the defendant violated the following obligations: not to sell the beds at higher prices
than those of the invoices; to have an open establishment in Iloilo; itself to conduct the
agency; to keep the beds on public exhibition, and to pay for the advertisement expenses
for the same; and to order the beds by the dozen and in no other manner. As may be seen,
with the exception of the obligation on the part of the defendant to order the beds by the
dozen and in no other manner, none of the obligations imputed to the defendant in the two
causes of action are expressly set forth in the contract. But the plaintiff alleged that the
defendant was his agent for the sale of his beds in Iloilo, and that said obligations are
implied in a contract of commercial agency. The whole question, therefore, reduced itself to
a determination as to whether the defendant, by reason of the contract hereinbefore
transcribed, was a purchaser or an agent of the plaintiff for the sale of his beds.
In order to classify a contract, due regard must be given to its essential clauses. In the
contract in question, what was essential, as constituting its cause and subject matter, is
that the plaintiff was to furnish the defendant with the beds which the latter might order, at
the price stipulated, and that the defendant was to pay the price in the manner stipulated.
The price agreed upon was the one determined by the plaintiff for the sale of these beds in
Manila, with a discount of from 20 to 25 per cent, according to their class. Payment was to
be made at the end of sixty days, or before, at the plaintiff's request, or in cash, if the
defendant so preferred, and in these last two cases an additional discount was to be
allowed for prompt payment. These are precisely the essential features of a contract of
purchase and sale. There was the obligation on the part of the plaintiff to supply the beds,
and, on the part of the defendant, to pay their price. These features exclude the legal
conception of an agency or order to sell whereby the mandatory or agent received the
thing to sell it, and does not pay its price, but delivers to the principal the price he obtains
from the sale of the thing to a third person, and if he does not succeed in selling it, he
returns it. By virtue of the contract between the plaintiff and the defendant, the latter, on
receiving the beds, was necessarily obliged to pay their price within the term fixed, without
any other consideration and regardless as to whether he had or had not sold the beds.
It would be enough to hold, as we do, that the contract by and between the defendant and
the plaintiff is one of purchase and sale, in order to show that it was not one made on the
basis of a commission on sales, as the plaintiff claims it was, for these contracts are
incompatible with each other. But, besides, examining the clauses of this contract, none of
them is found that substantially supports the plaintiff's contention. Not a single one of these
clauses necessarily conveys the idea of an agency. The words commission on sales used
in clause (A) of article 1 mean nothing else, as stated in the contract itself, than a mere
discount on the invoice price. The word agency, also used in articles 2 and 3, only
expresses that the defendant was the only one that could sell the plaintiff's beds in the
Visayan Islands. With regard to the remaining clauses, the least that can be said is that
they are not incompatible with the contract of purchase and sale.
The plaintiff calls attention to the testimony of Ernesto Vidal, a former vice-president of the
defendant corporation and who established and managed the latter's business in Iloilo. It
appears that this witness, prior to the time of his testimony, had serious trouble with the
defendant, had maintained a civil suit against it, and had even accused one of its partners,
Guillermo Parsons, of falsification. He testified that it was he who drafted the contract
Exhibit A, and, when questioned as to what was his purpose in contracting with the plaintiff,
replied that it was to be an agent for his beds and to collect a commission on sales.
However, according to the defendant's evidence, it was Mariano Lopez Santos, a director
of the corporation, who prepared Exhibit A. But, even supposing that Ernesto Vidal has
stated the truth, his statement as to what was his idea in contracting with the plaintiff is of
no importance, inasmuch as the agreements contained in Exhibit A which he claims to
have drafted, constitute, as we have said, a contract of purchase and sale, and not one of
commercial agency. This only means that Ernesto Vidal was mistaken in his classification
of the contract. But it must be understood that a contract is what the law defines it to be,
and not what it is called by the contracting parties.
The plaintiff also endeavored to prove that the defendant had returned beds that it could
not sell; that, without previous notice, it forwarded to the defendant the beds that it wanted;
and that the defendant received its commission for the beds sold by the plaintiff directly to
persons in Iloilo. But all this, at the most only shows that, on the part of both of them, there
was mutual tolerance in the performance of the contract in disregard of its terms; and it
gives no right to have the contract considered, not as the parties stipulated it, but as they
performed it. Only the acts of the contracting parties, subsequent to, and in connection
with, the execution of the contract, must be considered for the purpose of interpreting the
contract, when such interpretation is necessary, but not when, as in the instant case, its
essential agreements are clearly set forth and plainly show that the contract belongs to a
certain kind and not to another. Furthermore, the return made was of certain brass beds,
and was not effected in exchange for the price paid for them, but was for other beds of
another kind; and for the letter Exhibit L-1, requested the plaintiff's prior consent with
respect to said beds, which shows that it was not considered that the defendant had a
right, by virtue of the contract, to make this return. As regards the shipment of beds without
previous notice, it is insinuated in the record that these brass beds were precisely the ones
so shipped, and that, for this very reason, the plaintiff agreed to their return. And with
respect to the so-called commissions, we have said that they merely constituted a discount
on the invoice price, and the reason for applying this benefit to the beds sold directly by the
plaintiff to persons in Iloilo was because, as the defendant obligated itself in the contract to
incur the expenses of advertisement of the plaintiff's beds, such sales were to be
considered as a result of that advertisement.
In respect to the defendant's obligation to order by the dozen, the only one expressly
imposed by the contract, the effect of its breach would only entitle the plaintiff to disregard
the orders which the defendant might place under other conditions; but if the plaintiff
consents to fill them, he waives his right and cannot complain for having acted thus at his
own free will.
For the foregoing reasons, we are of opinion that the contract by and between the plaintiff
and the defendant was one of purchase and sale, and that the obligations the breach of
which is alleged as a cause of action are not imposed upon the defendant, either by
agreement or by law.
The judgment appealed from is affirmed, with costs against the appellant. So ordered.
10. During the time or period while respondent is the legal counsel of
the aforecited corporation, there occurred certain fraudulent
manipulations, anomalous management and prejudicial operations
by certain officers of said corporation, namely: Edward J. Porter,
President/General Manager; Norma Y. Porter, Secretary; and
Zenaida T. Manaloto, Director, who caused great damage and
prejudice which will be related hereunder;
ERLINDA L. PONCE, petitioner,
vs.
VALENTINO L. LEGASPI and THE HON. COURT OF APPEALS, respondents.
First Specification:
That respondent Valentino Legaspi has committed gross misconduct
in office as a practicing lawyer and member of the Philippine Bar,
because, as legal counsel, he violated his duty to and the trust of his
client, L'NOR Marine Services, Inc., whom he is professionally duty
bound to represent with entire devotion faithfully as such attorney,
and whose paramount interest he should protect in all good faith with
absolute fidelity, but that, in truth and in fact, he did not do so.
Second Specification:
That respondent Valentino Legaspi, while acting as legal counsel of
L'NOR under continuing monthly retainer, has acted at the same
time as lawyer of Edward J. Porter, et. als., who have committed
anomalous acts, prejudicial manipulations and grave frauds against
In his comment, Atty. Legaspi denied the allegations in paragraphs 10, 21, 22, 23,
24, 28, 29 and 30. He qualifiedly admitted the allegations in paragraphs 14 and 15,
stating that Yrasport was not organized to compete directly with L'NOR. He
averred that L'NOR could not cope up with the business and Yrasport was formed
for the purpose of complementing L'NOR's business. He added that there is
nothing in the law nor contract which prohibits a stockholder from competing with
the business of the corporation.
Atty. Legaspi admitted the allegations in paragraphs 26 and 27 that he appeared
for Edward Porter in the estafa case filet against the latter, reasoning that his
appearances were direct orders of management and that it was not improper for
counsel to represent both the corporate officers when they are being sued at the
same time.
As to the allegations in paragraphs 16 and 17, Atty. Legaspi declared that he has
no sufficient knowledge to form a belief as to the truth or falsity of the statements
contained therein.
On January 23, 1978, the Court issued a resolution dismissing the disbarment
complaint against Legaspi. The resolution is quoted hereunder:
Administrative Case No. 1819 (Erlinda L. Ponce v. Valentino L.
Legaspi). Considering the complaint for disbarment against Atty.
Valentino L. Legaspi as well as said respondent's comment thereon,
the Court Resolved to DISMISS the complaint for lack of merit.
(Records, Administrative Case No. 1819 p. 91)
The petitioner filed a motion for reconsideration which was denied by the Court on
March 31, 1978.
On February 10, 1978, Atty. Legaspi filed before the Court of First Instance (now
Regional Trial Court of Cebu) a complaint for damages against the petitioner.
The petitioner filed a motion to dismiss which was denied by the trial court.
On July 18, 1983, the lower court rendered judgment the dispositive portion of
which reads as follows:
WHEREFORE, this court being satisfied that the material allegations
of the complaint have been proved and remained uncontradicted
with the testimonial and documentary evidence introduced and
admitted by the court, judgment is hereby rendered in favor of the
plaintiff and against the defendant Erlinda L. Ponce ordering the
defendant to pay Valentino L. Legaspi, plaintiff herein, the amount of
P1,000.00 as actual damages, P50,000.00 as moral damages and
P25,000.00 as exemplary damages and to pay the costs. (Rollo, p.
115)
The petitioner appealed to the Court of Appeals. On May 26, 1987, the Court of
Appeals affirmed the lower court's judgment. In affirming the appealed decision,
the Court of Appeals reasoned:
Defendant-appellant contends that plaintiff-appellee's action for
damages is purely retaliatory in character and stems from an alleged
feeling of wounded pride or amor proprio; that granting without
admitting that the appellee has suffered certain adverse effects in his
reputation because of the disbarment case, it does not constitute
malicious prosecution as would otherwise perhaps render the
appellant liable for damages; that the facts on record indubitably
show that the appellant was merely exercising her right of access to
courts for redress of legitimate grievances when she filed the
disbarment case believing then as she still does, that appellee
committed a breach of his professional duties as a lawyer. In
refutation, appellee alleges that appellant belittles this action for
damages as "purely retaliatory in character and stems from an
alleged feeling of wounded pride or amor proprio"; that by such
statement, appellant has unmasked herself as to how little regard
she has for the feelings of others and how she clings to the law if
only to secure her purpose; that what is being sought by appellee is
compensation for appellee's malice, falsehoods and deceit in trying
to destroy the professional standing of a humble practitioner just
because he did better than the other.
While free access to the courts is guaranteed under Section 9,
Article IV of the 1973 Constitution (now Section 11, Article III of the
1986 Constitution), it does not give unbridled license to file any case,
whatever the motives are. Whoever files a case shall be responsible
for the consequences thereof whenever his act of filing infringes
upon the rights of others. In the same way that although freedom of
speech is guaranteed, one cannot claim to be protected under such
freedom when he is being held liable for the libel he commits.
the corporation and corporate officers at the same time they are being sued."
(Records, Administrative Case No. 1819, p. 64)
It is of no moment now that Porter was acquitted of the estafa charge. Apparently,
at that time, petitioner Ponce saw a conflict of interest situation. To her mind, the
act of the respondent in appearing as counsel for Porter, who had allegedly
swindled L'NOR, the interest of which he was duty bound to protect by virtue of the
retainer contract, constituted grave misconduct and gross malpractice.
Atty. Legaspi did not deny that he aided the Porters in facilitating the incorporation
of YRASPORT and that he himself was its corporate secretary. He emphasized,
though, that due to L'NOR'S limited capitalization, YRASPORT was organized to
complement L'NOR'S business and not to compete with the latter's undertakings.
Since the petitioner, however, was of the honest perception that YRASPORT was
actually organized to appropriate for itself some of L'NOR's business, then we find
that she had probable cause to file the disbarment suit.
We take exception to the respondent's comment that, assuming the petitioner's
accusation to be true, "there is nothing in Philippine law which considers as
unethical the formation of competitive corporations and neither can it be
considered with evident bad faith and absolute lack of fidelity." (Records,
Administrative Case No. 1819, p. 69)
The circumstances of the case do not depict a simple case of formation of
competitive corporations. What the petitioner objects to is the fact that both the
respondent lawyer and Porter are fiduciaries of L'NOr and are at the same time
fiduciaries of YRASPORT, both of which are engaged in the same line of business.
True, at that time, the Corporation Law did not prohibit a director or any other
person occupying a fiduciary position in the corporate hierarchy from engaging in a
venture which competed with that of the corporation. But as a lawyer, Atty. Legaspi
should have known that while some acts may appear to be permitted through
sheer lack of statutory prohibition, these acts are nevertheless circumscribed upon
ethical and moral considerations. And had Atty. Legaspi turned to American
The Court finds it unnecessary to discuss all the other charges imputed to the
respondent lawyer in the disbarment complaint. From the foregoing discussion, we
have sufficient basis to declare that the petitioner had probable cause in filing the
administrative case against Atty. Legaspi. Facts and circumstances existed which
excited belief in Mrs. Ponce's mind that the respondent indeed committed unethical
acts which warranted the imposition of administrative sanctions. Whether or not the
petitioner's perception of these facts and circumstances is actually correct is
irrelevant to our inquiry, the only issue being whether or not the petitioner had
probable cause in filing the complaint.
The above discussion should not be construed as a re-opening of the disbarment
proceeding against Atty. Legaspi. References to the complaint for disbarment and
the respondent's comment thereto are made only for the purpose of determining
the existence of probable cause.
Since we adjudge that petitioner Ponce was moved by probable cause, we need
not anymore ascertain whether or not the petitioner acted with malice in filing the
complaint. The existence of probable cause alone, regardless of considerations of
malice, is sufficient to defeat the charge of malicious prosecution.
The respondent court treated Atty. Legaspi's complaint as one for damages arising
from libel and applied the test of bona fides, citing the case of Deles v. Aragona (27
SCRA 633 [1969]). This is incorrect.
In the first place, allegations and averments in pleadings are absolutely privileged
as long as they are relevant or pertinent to the issues (See Montenegro v. Medina,
73 Phil. 602 [1942]). The test of good faith applies only to a qualified privileged
communication. Had the respondent court studied the Deles case more closely, it
would have traced the "bona fides" test to the case of U.S. v. Bustos, (37 Phil. 731
[1918]). In the latter case, the Court was referring to a qualified privileged
communication when it formulated the "bona fides" test.
Moreover, the test to break through the protective barrier of an absolutely
privileged communication is not "bona fides" but relevance. In the present case,
Atty. Legaspi's complaint nowhere alleged that the statements made by the
petitioner were irrelevant. Thus, we find that the petitioner's complaint for
disbarment is still covered by the privilege and may not be the basis of a damage
suit arising from libel.
We disagree with the findings of the two lower courts that it was the petitioner who
distributed copies of the complaint for disbarment to Atty. Legaspi's clients. It
should be noted that Atty. Legaspi did not even present these alleged clients in
court to testify to the source of these copies. Considering that a complaint for
disbarment becomes of public record once it is filed with the Court, then the
petitioner may not be pinpointed as the sole and indisputable source of the copies
received by the respondent's clients.
Atty. Legaspi may have suffered injury as a consequence of the disbarment
proceedings. But the adverse result of an action does not per se make the action
wrongful and subject the actor to make payment of damages for the law could not
have meant to impose a penalty on the right to litigate (Saba v. Court of Appeals,
189 SCRA 50 [1990], citing Rubio v. Court of Appeals, 141 SCRA 488 [1986]; see
also Salao v. Salao, 70 SCRA 65 [1976] and Ramos v. Ramos, 61 SCRA 284
[1974], citing Barreto v. Arevalo, 99 Phil. 771 [1956]). One who exercises his rights
does no injury. (Saba v. Court of Appeals, supra, citing Auyong Hian v. Court of Tax
Appeals, 59 SCRA 110 [1974]). If damage results from a person's exercising his
legal rights, it is damnum absque injuria. [Id.]
WHEREFORE, the petition is hereby GRANTED. The decision of the respondent
Court of Appeals is SET ASIDE and REVERSED.
SO ORDERED.
PARAS, J.:
In these petition and supplemental petition for Certiorari, Prohibition and
mandamus with Preliminary Injunction, petitioner Philippine Virginia Tobacco
Administration seeks to annul and set aside the following Orders of respondent
Judge of the Court of First Instance of Rizal, Branch IV (Quezon City) in Civil Case
No. Q-10351 and prays that the Writ of Preliminary Injunction (that may be) issued
by this Court enjoining enforcement of the aforesaid Orders be made permanent.
(Petition, Rollo, pp. 1-9)
They are:
The Order of July 17, 1967:
AS PRAYED FOR, the Prudential Bank & Trust Company is hereby
directed to release and deliver to the herein plaintiff, Timoteo A.
Sevilla, the amount of P800,000.00 in its custody representing the
marginal deposit of the Letters of Credit which said bank has issued
in favor of the defendant, upon filing by the plaintiff of a bond in the
Nationwide Agro-Industrial Development Corp. and the Consolidated AgroProducers Inc. were awarded in a public bidding the right to import Virginia leaf
tobacco for blending purposes and exportation by them of PVTA and farmer's lowgrade tobacco at a rate of one (1) kilo of imported tobacco for every nine (9) kilos
of leaf tobacco actually exported. Subsequently, the other two entities assigned
their rights to PVTA and respondent remained the only private entity accorded the
privilege.
The contract entered into between the petitioner and respondent Sevilla was for
the importation of 85 million kilos of Virginia leaf tobacco and a counterpart
exportation of 2.53 million kilos of PVTA and 5.1 million kilos of farmer's and/or
PVTA at P3.00 a kilo. (Annex "A," p. 55 and Annex "B," Rollo, p. 59) In accordance
with their contract respondent Sevilla purchased from petitioner and actually
exported 2,101.470 kilos of tobacco, paying the PVTA the sum of P2,482,938.50
and leaving a balance of P3,713,908.91. Before respondent Sevilla could import
the counterpart blending Virginia tobacco, amounting to 525,560 kilos, Republic Act
No. 4155 was passed and took effect on June 20, 1 964, authorizing the PVTA to
grant import privileges at the ratio of 4 to 1 instead of 9 to 1 and to dispose of all its
tobacco stock at the best price available.
Thus, on September 14, 1965 subject contract which was already amended on
December 14, 1963 because of the prevailing export or world market price under
which respondent will be exporting at a loss, (Complaint, Rollo, p. 3) was further
amended to grant respondent the privileges under aforesaid law, subject to the
following conditions: (1) that on the 2,101.470 kilos already purchased, and
exported, the purchase price of about P3.00 a kilo was maintained; (2) that the
unpaid balance of P3,713,908.91 was to be liquidated by paying PVTA the sum of
P4.00 for every kilo of imported Virginia blending tobacco and; (3) that respondent
Sevilla would open an irrevocable letter of credit No. 6232 with the Prudential Bank
and Trust Co. in favor of the PVTA to secure the payment of said balance,
drawable upon the release from the Bureau of Customs of the imported Virginia
blending tobacco.
While respondent was trying to negotiate the reduction of the procurement cost of
the 2,101.479 kilos of PVTA tobacco already exported which attempt was denied
by petitioner and also by the Office of the President, petitioner prepared two drafts
to be drawn against said letter of credit for amounts which have already become
due and demandable. Respondent then filed a complaint for damages with
preliminary injunction against the petitioner in the amount of P5,000,000.00.
Petitioner filed an answer with counterclaim, admitting the execution of the
contract. It alleged however that respondent, violated the terms thereof by causing
the issuance of the preliminary injunction to prevent the former from drawing from
the letter of credit for amounts due and payable and thus caused petitioner
additional damage of 6% per annum.
A writ of preliminary injunction was issued by respondent judge enjoining petitioner
from drawing against the letter of credit. On motion of respondent, Sevilla, the
lower court dismissed the complaint on April 19, 1967 without prejudice and lifted
the writ of preliminary injunction but petitioner's motion for reconsideration was
granted on June 5,1967 and the Order of April 19,1967 was set aside. On July 1,
1967 Sevilla filed an urgent motion for reconsideration of the Order of June 5, 1967
praying that the Order of dismissal be reinstated. But pending the resolution of
respondent's motion and without notice to the petitioner, respondent judge issued
the assailed Order of July 17, 1967 directing the Prudential Bank & Trust Co. to
make the questioned release of funds from the Letter of Credit. Before petitioner
could file a motion for reconsideration of said order, respondent Sevilla was able to
secure the releaseof P300,000.00 and the rest of the amount. Hence this petition,
followed by the supplemental petition when respondent filed with the lower court an
urgent ex-parte petition for the issuance of preliminary mandatory and preventive
injunction which was granted in the resolution of respondent Judge on November
3, 1967, above quoted. On March 16, 1968, respondent Judge denied petitioner's
motion for reconsideration. (Supp. Petition, Rollo, pp. 128- 130)
Pursuant to the resolution of July 21, 1967, the Supreme Court required
respondent to file an answer to the petition within 10 days from notice thereof and
upon petitioner's posting a bond of fifty thousand pesos (P50,000.00), a writ of
preliminary mandatory injunction was issued enjoining respondent Judge from
enforcing and implementing his Order of July 17,1967 and private respondents
Sevilla and Prudential Bank and Trust Co. from complying with and implementing
said order. The writ further provides that in the event that the said order had
already been complied with and implemented, said respondents are ordered to
return and make available the amounts that might have been released and taken
delivery of by respondent Sevilla. (Rollo, pp. 16-17)
In its answer, respondent bank explained that when it received the Order of the
Supreme Court to stop the release of P800,000.00 it had already released the
same in obedience to ailieged earlier Order of the lower Court which was reiterated
with ailieged admonition in a subsequent Order. (Annex "C," Rollo, pp. 37-38) A
Manifestation to that effect has already been filed c,irrency respondent bank (Rollo,
pp. 19-20) which was noted c,irrency this Court in the resolution of August 1, 1967,
a copy of which was sent to the Secretary of Justice. (Rollo, p. 30)
Before respondent Sevilla could file his answer, petitioner filed a motion to declare
him and respondent bank in contempt of court for having failed to comply with the
resolution to this court of July 21, 1967 to the effect that the assailed order has
already been implemented but respondents failed to return and make available the
amounts that had been released and taken delivery of by respondent Sevilla.
(Rollo, pp. 100-102)
In his answer to the petition, respondent Sevilla claims that petitioner demanded
from him a much higher price for Grades D and E tobacco than from the other
awardees; that petitioner violated its contract by granting indiscriminately to
numerous buyers the right to export and import tobacco while his agreement is
being implemented, thereby depriving respondent of his exclusive right to import
the Virginia leaf tobacco for blending purposes and that respondent Judge did not
abuse his discretion in ordering the release of the amount of P800,000.00 from the
Letter of Credit, upon his posting a bond for the same amount. He argued further
that the granting of said preliminary injunction is within the sound discretion of the
court with or without notice to the adverse party when the facts and the law are
clear as in the instant case. He insists that petitioner caretaker.2 claim from him a
price higher than the other awardees and that petitioner has no more right to the
sum in controversy as the latter has already been overpaid when computed not at
the price of tobacco provided in the contract which is inequitable and therefore null
and void but at the price fixed for the other awardees. (Answer of Sevilla, Rollo, pp.
105-111)
In its Answer to the Motion for Contempt, respondent bank reiterates its allegations
in the Manifestation and Answer which it filed in this case. (Rollo, pp. 113-114)
In his answer, (Rollo, pp. 118-119) to petitioner's motion to declare him in
contempt, respondent Sevilla explains that when he received a copy of the Order
of this Court, he had already disbursed the whole amount withdrawn, to settle his
huge obligations. Later he filed a supplemental answer in compliance with the
resolution of this Court of September 15, 1967 requiring him to state in detail the
amounts allegedly disbursed c,irrency him out of the withdrawn funds. (Rollo, pp.
121-123)
Pursuant to the resolution of the Supreme Court on April 25, 1968, a Writ of
Preliminary Injunction was issued upon posting of a surety bond in the amount of
twenty thousand pesos (P20,000.00) restraining respondent Judge from enforcing
and implementing his orders of November 3, 1967 and March 16, 1968 in Civil
Case No. Q-10351 of the Court of First Instance of Rizal (Quezon City).
Respondent Sevilla filed an answer to the supplemental petition (Rollo, pp. 216221) and so did respondent bank (Rollo, p. 225). Thereafter, all the parties filed
their respective memoranda (Memo for Petitioners, Rollo, pp. 230-244 for Resp.
Bank, pp. 246-247; and for Respondents, Rollo, pp. 252-257). Petitioners filed a
rejoinder (rollo, pp. 259-262) and respondent Sevilla filed an Amended Reply
Memorandum (Rollo, pp. 266274). Thereafter the case was submitted for decision:'
in September, 1968 (Rollo, p. 264).
Petitioner has raised the following issues:
1. Respondent Judge acted without or in excess of jurisdiction or with grave abuse
of discretion when he issued the Order of July 17, 1967, for the following reasons:
(a) the letter of credit issued by respondent bank is irrevocable; (b) said Order was
issued without notice and (c) said order disturbed the status quo of the parties and
is tantamount to prejudicing the case on the merits. (Rollo, pp. 7-9)
2. Respondent Judge likewise acted without or in excess of jurisdiction or with
grave abuse of discretion when he issued the Order of November 3, 1967 which
has exceeded the proper scope and function of a Writ of Preliminary Injunction
which is to preserve the status quo and caretaker.2 therefore assume without
hearing on the merits, that the award granted to respondent is exclusive; that the
action is for specific performance a d that the contract is still in force; that the
conditions of the contract have already been complied with to entitle the party to
the issuance of the corresponding Certificate of Authority to import American high
grade tobacco; that the contract is still existing; that the parties have already
agreed that the balance of the quota of respondent will be sold at current world
market price and that petitioner has been overpaid.
3. The alleged damages suffered and to be suffered by respondent Sevilla are not
irreparable, thus lacking in one essential prerequisite to be established before a
Writ of Preliminary Injunction may be issued. The alleged damages to be suffered
are loss of expected profits which can be measured and therefore reparable.
4. Petitioner will suffer greater damaaes than those alleged by respondent if the
injunction is not dissolved. Petitioner stands to lose warehousing storage and
servicing fees amounting to P4,704.236.00 yearly or P392,019.66 monthly, not to
mention the loss of opportunity to take advantage of any beneficial change in the
price of tobacco.
5. The bond fixed by the lower court, in the amount of P20,000.00 is grossly
inadequate, (Rollo, pp. 128-151)
The petition is impressed with merit.
In issuing the Order of July 17, 1967, respondent Judge violated the irrevocability
of the letter of credit issued by respondent Bank in favor of petitioner. An
irrevocable letter of credit caretaker.2 during its lifetime be cancelled or modified
Without the express permission of the beneficiary (Miranda and Garrovilla,
Principles of Money Credit and Banking, Revised Edition, p. 291). Consequently, if
the finding agricul- the trial on the merits is that respondent Sevilla has ailieged
unpaid balance due the petitioner, such unpaid obligation would be unsecured.
In the issuance of the aforesaid Order, respondent Judge likewise violated: Section
4 of Rule 15 of the Relatiom, Rules of Court which requires that notice of a motion
be served by the applicant to all parties concerned at least three days before the
hearing thereof; Section 5 of the same Rule which provides that the notice shall be
directed to the parties concerned; and shall state the time and place for the hearing
of the motion; and Section 6 of the same Rule which requires proof of service of
the notice thereof, except when the Court is satisfied that the rights of the adverse
party or parties are not affected, (Sunga vs. Lacson, L-26055, April 29, 1968, 23
SCRA 393) A motion which does not meet the requirements of Sections 4 and 5 of
Rule 15 of the Relatiom, Rules of Court is considered a worthless piece of paper
which the Clerk has no right to receiver and the respondent court a quo he has no
authority to act thereon. (Vda. de A. Zarias v. Maddela, 38 SCRA 35; Cledera v.
Sarn-j-iento, 39 SCRA 552; and Sacdalan v. Bautista, 56 SCRA 175). The threeday notice required by law in the filing of a motion is intended not for the movant's
benefit but to avoid surprises upon the opposite party and to give the latter time to
study and meet the arguments of the motion. (J.M. Tuason and Co., Inc. v.
Magdangal, L-1 5539. 4 SCRA 84).
More specifically, Section 5 of Rule 58 requires notice to the defendant before a
preliminary injunction is granted unless it shall appear from facts shown bv
affidavits or by the verified complaint that great or irreparable injury would result to
the applyin- before the matter can be heard on notice. Once the application is filed
with the Judge, the latter must cause ailieged Order to be served on the defendant,
requiring him to show cause at a given time and place why the injunction should
not be granted. The hearing is essential to the legality of the issuance of a
preliminary injunction. It is ailieged abuse of discretion on the part of the court to
issue ailieged injunction without hearing the parties and receiving evidence thereon
(Associated Watchmen and Security Union, et al. v. United States Lines, et al., 101
Phil. 896).
In the issuance of the Order of November 3, 1967, with notice and hearing
notwithstanding the discretionary power of the trial court to Issue a preliminary
mandatory injunction is not absolute as the issuance of the writ is the exception
rather than the rule. The party appropriate for it must show a clear legal right the
violation of which is so recent as to make its vindication an urgent one (Police
Commission v. Bello, 37 SCRA 230). It -is granted only on a showing that (a) the
invasion of the right is material and substantial; (b) the right of the complainant is
clear and unmistakable; and (c) there is ailieged urgent and permanent necessity
for the writ to prevent serious decision ( Pelejo v. Court of Appeals, 117 SCRA
665). In fact, it has always been said that it is improper to issue a writ of preliminary
mandatory injunction prior to the final hearing except in cases of extreme urgency,
where the right of petitioner to the writ is very clear; where considerations of
relative inconvenience bear strongly in complainant's favor; where there is a willful
and unlawful invasion of plaintiffs right against his protest and remonstrance the
injury being a contributing one, and there the effect of the mandatory injunctions is
rather to re-establish and maintain a pre-existing continuing relation between the
parties, recently and arbitrarily interrupted c,irrency the defendant, than to establish
a new relation (Alvaro v. Zapata, 11 8 SCRA 722; Lemi v. Valencia, February 28,
1963, 7 SCRA 469; Com. of Customs v. Cloribel, L-20266, January 31, 1967,19
SCRA 234.
In the case at bar there appears no urgency for the issuance of the writs of
preliminary mandatory injunctions in the Orders of July 17, 1967 and November 3,
1967; much less was there a clear legal right of respondent Sevilla that has been
violated by petitioner. Indeed, it was ailieged abuse of discretion on the part of
respondent Judge to order the dissolution of the letter of credit on the basis of
assumptions that cannot be established except by a hearing on the merits nor was
there a showing that R.A. 4155 applies retroactively to respondent in this case,
modifying his importation / exportation contract with petitioner. Furthermore, a writ
of preliminary injunction's enjoining any withdrawal from Letter of Credit 6232
would have been sufficient to protect the rights of respondent Sevilla should the
finding be that he has no more unpaid obligations to petitioner.
Similarly, there is merit in petitioner's contention that the question of exclusiveness
of the award is ailieged issue raised by the pleadings and therefore a matter of
controversy, hence a preliminary mandatory injunction directing petitioner to issue
respondent Sevilla a certificate of authority to import Virginia leaf tobacco and at
the same time restraining petitioner from issuing a similar certificate of authority to
others is premature and improper.
The sole object of a preliminary injunction is to preserve the status quo until the
merit can be heard. It is the last actual peaceable uncontested status which
precedes the pending controversy (Rodulfo v. Alfonso, L-144, 76 Phil. 225), in the
instant case, before the Case No. Q-10351 was filed in the Court of First Instance
of Rizal. Consequently, instead of operating to preserve the status quo until the
parties' rights can be fairly and fully investigated and determined (De los Reyes v.
Elepano, et al., 93 Phil. 239), the Orders of July 17, 1966 and March 3, 1967 serve
to disturb the status quo.
Injury is considered irreparable if it is of such constant and frequent recurrence that
no fair or reasonable redress can be had therefor in a court of law (Allundorff v.
Abrahanson, 38 Phil. 585) or where there is no standard c,irrency which their
amount can be measured with reasonable accuracy, that is, it is not susceptible of
mathematical computation (SSC v. Bayona, et al., L-13555, May 30, 1962).
Any alleged damage suffered or might possibly be suffered by respondent Sevilla
refers to expected profits and claimed by him in this complaint as damages in the
amount of FIVE Million Pesos (P5,000,000.00), a damage that can be measured,
susceptible of mathematical computation, not irreparable, nor do they necessitate
the issuance of the Order of November 3, 1967.
Conversely, there is truth in petitioner's claim that it will suffer greater damage than
that suffered by respondent Sevilla if the Order of November 3, 1967 is not
annulled. Petitioner's stock if not made available to other parties will require
warehouse storage and servicing fees in the amount of P4,704,236.00 yearly or
more than P9,000.000.00 in two years time.
Parenthetically, the alleged insufficiency of a bond fixed by the Court is not by itself
ailieged adequate reason for the annulment of the three assailed Orders. The filing
of ailieged insufficient or defective bond does not dissolve absolutely and
unconditionally ailieged injunction. The remedy in a proper case is to order party to
file a sufficient bond (Municipality of La Trinidad v. CFI of Baguio - Benguet, Br. I,
123 SCRA 81). However, in the instant case this remedy is not sufficient to cure the
defects already adverted to.
PREMISES CONSIDERED, the petition is given due course and the assailed
Orders of July 17, 1967 and November 3, 1967 and March 16, 1968 are
ANNULLED and SET ASIDE; and the preliminary injunctions issued c,irrency this
Court should continue until the termination of Case No. Q-10351 on the merits.
SO ORDERED,
PELAYO VS PEREZ
The trial court, finding, among others, that Perez did not possess,
nor pay the taxes on the lots, that defendant Pelayo was indebted to
Perez for services rendered and, therefore, the deed could only be
considered as evidence of debt, and that in any event, there was no
marital consent to nor actual consideration for the deed, held that the
deed was null and void and accordingly rendered judgment the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered
ordering and directing the defendants to pay plaintiff
Melki Perez the sum of TEN THOUSAND (P10,000.00)
Pesos as principal with 12% interest per annum starting
from the date of filing of the complaint on August 1, 1991
until plaintiff is fully paid.
The defendants shall likewise pay to plaintiff the
sum of THREE THOUSAND (P3,000.00) as attorneys
fees.
15, 1988 and which provides that contracts executed prior thereto shall be
valid only when registered with the Register of Deeds within a period of
2. The CA erred in holding that the deed of sale was valid and
with due care and to have signed the deed with full knowledge of its
contents and import. The CA reversed and set aside the RTC Decision,
the same as null and void for being fictitious or simulated and on the basis
declaring as valid and enforceable the questioned deed of sale and ordering
of Art. 491, Par. 2 of the New Civil Code which prohibits agents from
herein petitioner Lorenza Pelayo to affix her signature on all pages of said
document.
3. The CA made a novel ruling that there was implied marital
Petitioners moved for reconsideration of the decision but the same
was denied per Resolution dated December 17, 1999. The CA found said
motion to have been filed out of time and ruled that even putting aside
On the other hand, respondent points out that the CA, in resolving
did not even cite any errors made by the CA in its Decision.
dismiss, already ruled that under R.A. No. 6657, the sale or transfer of
private agricultural land is allowed only when the area of the land being
The issues boil down to the question of whether or not the deed of
sale was null and void on the following grounds: (a) for not complying
with the provision in R.A. No. 6657 that such document must be registered
property sold, does not exceed five (5) hectares; that in this case, the land
with the Register of Deeds within three months after the effectivity of said
in dispute is only 1.3 hectares and there is no proof that the transferees
law; (b) for lack of marital consent; (c) for being prohibited under Article
1491 (2) of the Civil Code; and (d) for lack of consideration.
Aside from declaring that the failure of respondent to register the deed was
not of his own fault or negligence, the CA ruled that respondents failure to
register the deed of sale within three months after effectivity of The
Comprehensive Agrarian Reform Law did not invalidate the deed of sale as
the transaction over said property is not proscribed by R.A. No. 6657.
Thus, under the principle of law of the case, said ruling of the CA is
now binding on petitioners. Such principle was elucidated in Cucueco vs.
[6]
subject of this case is not among the transactions deemed as invalid under
R.A. No. 6657, is now immutable.
We agree with the CA ruling that petitioner Lorenza, by affixing her
signature to the Deed of Sale on the space provided for witnesses, is
deemed to have given her implied consent to the contract of sale.
Sale is a consensual contract that is perfected by mere consent,
which may either be express or implied. [7] A wifes consent to the husbands
disposition of conjugal property does not always have to be explicit or set
forth in any particular document, so long as it is shown by acts of the wife
that such consent or approval was indeed given.[8] In the present case,
although it appears on the face of the deed of sale that Lorenza signed only
as an instrumental witness, circumstances leading to the execution of said
document point to the fact that Lorenza was fully aware of the sale of their
conjugal property and consented to the sale.
In their Pre-Trial Brief,[9] petitioners admitted that even prior to
1988, they have been having serious problems, including threats to the life
of petitioner David Pelayo, due to conflicts with the illegal occupants of
the property in question, so that respondent, whom many feared for being a
in the execution of the deed of sale. Instead, Lorenza even affixed her
signature thereto.
improbable for Lorenza not to be aware of what her husband was doing to
New Civil Code, which was still in effect on January 11, 1988 when the
remedy such problems. Petitioners do not deny that Lorenza Pelayo was
present during the execution of the deed of sale as her signature appears
Art. 166. Unless the wife has been declared a non compos
mentis or a spendthrift, or is under civil interdiction or is confined in a
leprosarium, the husband cannot alienate or encumber any real property
of the conjugal property without the wifes consent. If she refuses
unreasonably to give her consent, the court may compel her to grant the
same.
...
Art. 173. The wife may, during the marriage, and within ten
years from the transaction questioned, ask the courts for the annulment
of any contract of the husband entered into without her consent, when
such consent is required, or any act or contract of the husband which
tends to defraud her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or her heirs, after
the dissolution of the marriage, may demand the value of property
fraudulently alienated by the husband.
Hence, it has been held that the contract is valid until the court
the disputed property, she could have totally refrained from having any part
annuls the same and only upon an action brought by the wife whose
consent was not obtained.[11] In the present case, despite respondents
(2) Agents, the property whose administration or sale may have been
entrusted to them, unless the consent of the principal has been given;
repeated demands for Lorenza to affix her signature on all the pages of the
deed of sale, showing respondents insistence on enforcing said contract,
...
Lorenza still did not file a case for annulment of the deed of sale. It was
only when respondent filed a complaint for specific performance on
August 8, 1991 when petitioners brought up Lorenzas alleged lack of
entered into without Lorenzas consent, we find it quite puzzling why for
more than three and a half years, Lorenza did absolutely nothing to seek
of
Unregistered
Land,
conveying
some
of
said
land
to
her
The above-quoted ruling is exactly in point with this case before us.
Petitioners, by signing the Deed of Sale in favor of respondent, are also
deemed to have given their consent to the sale of the subject property in
favor of respondent, thereby making the transaction an exception to the
general rule that agents are prohibited from purchasing the property of
their principals.
Petitioners also argue that the CA erred in ruling that there was
consideration for the sale. We find no error in said appellate courts ruling.
The element of consideration for the sale is indeed present. Petitioners, in
adopting the trial courts narration of antecedent facts in their petition,
[14]
Verily, in the present case, petitioners have not presented proof that there
has been fraud, mistake or undue influence exercised upon them by
respondent. It is highly unlikely and contrary to human experience that a
layman like respondent would be able to defraud, exert undue influence, or
in any way vitiate the consent of a lawyer like petitioner David Pelayo who
is expected to be more knowledgeable in the ways of drafting contracts and
other legal transactions.
letter they sent to the Register of Deeds of Tagum that they have entrusted
the titles over subject lots to herein respondent. Such act is a clear
indication that they intended to convey the subject property to herein
respondent and the deed of sale was not merely simulated or fictitious.
Lastly, petitioners claim that they were not able to fully ventilate
their defense before the CA as their lawyer, who was then suffering from
cancer of the liver, failed to file their appellees brief. Thus, in their motion
for reconsideration of the CA Decision, they prayed that they be allowed to
submit such appellees brief. The CA, in its Resolution dated December 17,
1999, stated thus:
By movant-defendant-appellees own information, his counsel
received a copy of the decision on May 5, 1999. He, therefore, had
fifteen (15) days from said date or up to May 20, 1999 to file the motion.
The motion, however, was sent through a private courier and, therefore,
considered to have been filed on the date of actual receipt on June 17,
1999 by the addressee Court of Appeals, was filed beyond the
reglementary period.
Technicality aside, movant has not proffered any ground bearing
on the merits of the case why the decision should be set aside.
reconsideration, praying that they be allowed to file appellees brief, did not
infringe petitioners right to due process as any issue that petitioners wanted
that point alone, the CA is correct in denying due course to said motion.
to raise could and should have been contained in said motion for
The motion having been belatedly filed, the CA Decision had then attained
reconsideration.
ESCOLIN, J.:
The issue posed in this petition for review of the decision of the respondent
appellate court is whether a vendor, or his assignee, who had cancelled the sale of
a motor vehicle for failure of the buyer to pay two or more of the stipulated
installments, may also demand payment of the balance of the purchase price.
The pertinent facts are summarized by the respondent appellate court as follows:
On June 28, 1976, defendant spouses Restituto Nonato and Ester
Nonato purchased one (1) unit of Volkswagen Sakbayan from the
People's Car, Inc., on installment basis. To secure complete
payment, the defendants executed a promissory note (Exh. A or 1)
and a chattel mortgage in favor of People's Car, Inc, (Exh. B or 2).
People's Car, Inc., assigned its rights and interests over the note and
mortgage in favor of plaintiff Investor's Finance Corporation (FNCB)
Finance). For failure of defendants to pay two or more installments,
despite demands, the car was repossessed by plaintiff on March 20,
1978 (Exh. E or 4).
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or
more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more
installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void.
The meaning of the aforequoted provision has been repeatedly enunciated in a
long line of cases. Thus: "Should the vendee or purchaser of a personal property
default in the payment of two or more of the agreed installments, the vendor or
seller has the option to avail of any of these three remedies-either to exact
fulfillment by the purchaser of the obligation, or to cancel the sale, or to foreclose
the mortgage on the purchased personal property, if one was constituted. These
remedies have been recognized as alternative, not cumulative, that the exercise of
one would bar the exercise of the others. 2
It is not disputed that the respondent company had taken possession of the car
purchased by the Nonatos on installments. But while the Nonatos maintain that the
company had, by that act, exercised its option to cancel the contract of sale, the
company contends that the repossession of the vehicle was only for the purpose of
appraising its value and for storage and safekeeping pending full payment by the
Nonatos of the purchasing price. The company thus denies having exercised its
right to cancel the sale of the repossessed car. The records show otherwise.
The receipt issued by the respondent company to the Nonatos when it took
possession of the vehicle states that the vehicle could be redeemed within fifteen
[151 days. 3 This could only mean that should petitioners fail to redeem the car within the
aforesaid period by paying the balance of the purchase price, the company would retain
permanent possession of the vehicle, as it did in fact. This was confirmed by Mr. Ernesto
Carmona, the company's witness, who testified, to wit:
ATTY. PAMPLONA:
On August 4, 1965, appellee filed an urgent motion to dismiss on the ground, inter
alia, that under Article 1484 of the Civil Code of the Philippines, which particular
provision is otherwise known as the Recto Law, appellant has no cause of action
against appellee. Said provision is as follows:
ART. 1484. In a contract of sale of personal property the price of which is
payable in installments, the vendor may exercise any of the following
remedies: (1) Exact fulfillment of the obligation should the vendee fail to
pay; (2) Cancel the sale, should the vendee's failure to pay cover two or
more installments; (3) Foreclose the chattel mortgage on the thing sold, if
one has been constituted, should the vendee's failure to pay cover two or
more installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to the
contrary shall be void.
In its order of August 30, 1965, subject of this appeal, the lower court found the
aforesaid ground to be meritorious and, as already stated, the amended complaint
was dismissed as to appellee Supreme Sales & Development Corporation.
According to the order of dismissal:
It is undisputed in the instant case that the amount of P14,605.00
mentioned as consideration in both the promissory note and the chattel
mortgage in the instant case represents the selling price of one (1)
automobile New Ford Consul 315 4-door Sedan, payable in the installments
mentioned in said documents. Under pars. 5 and 9 of the amended
complaint, the writ of replevin was obtained in the instant case for purposes
of foreclosure of mortgage. In applying for a writ of replevin, the plaintiff
thereby made his choice, namely, to foreclose the mortgage covering said
automobile; and having accepted said automobile from defendant Julian R.
Vitug, Jr., what remains is for the plaintiff to sell said automobile through
either a judicial or an extrajudicial foreclosure of said mortgage, without
benefit of a deficiency judgment or deficiency collection ... should the
proceeds of the foreclosure sale be less than the balance of the installment
sale price of said automobile due and collectible.
On September 23, 1965, appellant filed a motion for reconsideration but this was
denied on October 26, 1965, hence, this appeal.
The principal error assigned by appellant has reference to the applicability of Art.
1484 of the Civil Code, as amended, to the facts of this case. Appellant maintains
that: .
II
THE TRIAL COURT ERRED IN HOLDING THAT ARTICLE 1484 OF THE
CIVIL CODE OF THE PHILIPPINES IS APPLICABLE TO THE
TRANSACTION BETWEEN PLAINTIFF-APPELLANT AND DEFENDANTAPPELLEE.
Under the facts alleged in the amended complaint which are deemed admitted by
the motion to dismiss, 1 this assignment of error must be sustained.
The specific allegations in the amended complaint which have material bearing on
the issue herein are:
4. On November 4, 1964, defendant Supreme Sales & Development
Corporation, with notice to defendantJulian R. Vitug, Jr. negotiated in favor
of (endorsed and delivered to) plaintiff the above-mentioned promissory
note, Annex "A", on a with recourse basis whereby in case of the failure
and/or refusal of the maker thereof, defendant Julian R. Vitug, Jr. to pay the
obligation under the said promissory note, plaintiff shall have the right to
recourse against the said defendant corporation.
presently being sought is not against the buyer of the car or the defendant Vitug
but against the seller, independent of whether or not such seller may have a right
of recovery against the buyer, which, in this case, he does not have under the
Recto Law. It is clear to Us, on the other hand, that under said law, what Congress
seeks to protect are only the buyers on installment who more often than not have
been victimized by sellers who, before the enactment of this law, succeeded in
unjustly enriching themselves at the expense of the buyers because aside from
recovering the goods sold, upon default of the buyer in the payment of two
installments, still retained for themselves all amounts already paid, in addition,
furthermore, to other damages, such as attorney's fees, and costs. Surely,
Congress could not have intended to impair and much less do away with the right
of the seller to make commercial use of his credit against the buyer, provided said
buyer is not burdened beyond what this law allows.
1awphil.nt
We are not unmindful that in the case of Cruz, et al. vs. the same Filipinas
Investment & Finance Corporation, L-24772, May 27, 1968, 23 SCRA 791, this
Court broadened the scope of the Recto Law beyond its letter and held that within
its spirit, a seller of goods on installment does not have any right of action against a
third party who, in addition to the buyer's mortgage of the goods sold, furnishes
additional security for the payment of said installments or the purchase price of
said goods. In that case, it was held:.
It is here agreed that plaintiff Cruz failed to pay several installments as
provided in the contract; that there was extrajudicial foreclosure of the
chattel mortgage on the said motor vehicle; and that defendant-appellant
itself bought it at the public auction duly held thereafter, for a sum less than
the purchaser's outstanding obligation. Defendant-appellant, however,
sought to collect the supposed deficiency by going against the real estate
mortgage which was admittedly constituted on the land of plaintiff Reyes as
additional security to guarantee the performance of Cruz' obligation,
claiming that what is being withheld from the vendor, by the proviso of
Article 1484 of the Civil Code, is only the right to recover against the
purchaser, and not a recourse to the additional security put up, not by the
purchaser himself, but by a third person.
PARDO, J.:
Before us is an appeal from the decision 1 of the Court of Appeals 2 dismissing the
petition for certiorari and prohibition initiated by petitioner and the
resolution 3 modifying the aforementioned decision, thus:
WHEREFORE, the Decision of this Court of March 24, 1998 is
hereby modified, thus
1. Mayfair to deposit with the Clerk of Court of Manila the amount of
P847,000.00 in addition to the P10,452,500.00 already deposited
therein, within ten (10) days from receipt hereof;
On April 25, 1997, Mayfair Theater, Inc. (hereinafter Mayfair) filed with the Regional
Trial Court, Manila, Branch 07 6 a motion for execution.
On May 20, 1997, the trial court granted respondent's motion for execution, as
follows:
WHEREFORE, acting on Plaintiff's Motion dated, April 24, 1997, let a
Writ of Execution be issued
1. ORDERING defendant CARMELO and BAUERMANN, INC. to
return within 10 days to Defendant EQUATORIAL REALTY and
DEVELOPMENT the amount of P11,300,000.00 the total purchase
price of properties covered by:
a T.C.T. No. 130410, formerly T.C.T. No. 17350;
b T.C.T. No. 130407, formerly T.C.T. No. 118612;
c T.C.T. No. 130408, formerly T.C.T. No. 60936; and
d T.C.T. No. 130409, formerly T.C.T. No. 52571;
subject of sale date, July 30, 1978 which the Court of Appeals in CAGR CV No. 32918 ordered rescinded, and to execute another Deed
of transfer over said properties in favor of Plaintiff, MAYFAIR
THEATER, INC.;
2. ORDERING MAYFAIR THEATER, INC. to pay Defendant
CARMELO BAUERMANN INC. the amount of Eleven Million Three
Hundred Thousand Pesos (P11,300,000.00), Philippine Currency
upon the latter's execution of such Deed of Transfer;
3. ORDERING Defendant EQUATORIAL REALTY DEVELOPMENT
to accept this Eleven Million Three Hundred Thousand Pesos
(P11,300,000.00), Philippine Currency from defendant CARMELO
On August 25, 1997, the trial court denied Equatorial's motion for reconsideration,
the dispositive portion of the order reads:
WHEREFORE, the Motion for Reconsideration filed by defendant
Equatorial Realty Development, Inc. is hereby denied for lack of
merit. Pursuant to Section 10 (a), Rule 39 of the 1997 Rules of Civil
Procedure, Acting Clerk of Court, Atty. Jennifer N. dela CruzBuendia, who was directed by the Hon. Roberto A. Barrios,
Executive Judge to immediately assume and perform the duties and
functions of Atty. Jesusa Maningas, Clerk of Court and ExOfficio Sheriff of the Regional Trial Court of Manila in view of the
latter's indefinite leave of absence, is hereby appointed and directed
to execute in behalf of defendant Equatorial Realty and
Development, Inc. all the deeds and documents necessary to return
ownership of the subject properties to Carmelo & Bauermann, Inc.,
and thereupon to execute on behalf of defendant Carmelo &
Bauermann, Inc. a deed of transfer over the same properties in favor
of plaintiff, upon receipt from plaintiff of the purchase price of
P11,300,000.00 which the Office of the Clerk of Court shall thereafter
hold in trust for defendant Carmelo or its order. All costs incidental to
returned the "purchase price" as ordered by the Court, it could not be compelled to
execute the deed of re-conveyance in favor of Carmelo. 14
SO ORDERED. 17
On April 8, 1998, petitioner filed with the Court of Appeals a motion for
reconsideration of the decision. 18
On November 6, 1997, the trial court denied the motion for lack of
merit. 15
Equatorial contended that the trial court acted with grave of discretion in issuing a
writ of execution, which was at variance with the dispositive portion of the Court's
decision.
Equatorial averred that Carmelo's failure to receive the writ of execution and notice
to comply was tantamount to denial of due process. Equatorial further stated that
the trial court erred in applying Section 10 (a), Rule 39, 1997 Rules of Civil
Procedure in issuing the writ of execution, since the parties did not fail to comply
within the time specified.
Equatorial also submitted that it would be grossly and unconscionably unjust,
unfair and inequitable to compel it to accept P11,300,000.00 for land which was
worth more than P400 million, due to the appreciation of the property or the
depreciation of the peso.
On March 24, 1998, the Court of Appeals rendered decision dismissing the
petition, to wit:
WHEREFORE, the petition is hereby DISMISSED for being dilatory
and for lack of merit. The challenged orders and acts of the public
respondents and the questioned notices and processes, writ of
execution, deeds of re-conveyance and absolute sale, and transfer
certificates of title are validated and AFFIRMED.
not fail to comply with the order, as it did not receive the writ of execution and
notice to comply. Petitioner submits that the application of Rule 39, Section 10 (a)
violated Carmelo and Bauermann's constitutional right to due process.
Petitioner maintains that the writ of execution varies with the dispositive portion of
the Supreme Court decision and cannot be implemented. Petitioner stresses that
the Register of Deeds erred in cancelling its certificates of titles and issuing new
titles to Mayfair, since Carmelo and Bauermann has not returned the purchase
price. The money deposited by Mayfair with the Office of the Clerk of Court was for
the account of Carmelo and cannot be considered as a sufficient tender of
payment to Equatorial.
The Supreme Court's decision in G.R. No. 106063 is clear. Having attained finality,
there is nothing left for the parties to do but adhere to the mandates of the
decision.
It is a fundamental rule that when a judgment becomes final and executory, it
thereby becomes immutable and unalterable and any amendment or alteration,
which substantially affects a final and executory judgment, is null and void for lack
of jurisdiction, including the entire proceedings held for that purpose. 21
In issuing the questioned orders, the trial court exceeded its authority by altering
the essential portions of the Supreme Court decision. Thus, the proceedings held
below and the orders issued therein inconsistent with the Supreme Court decision
are null and void for want of jurisdiction.
We agree that Carmelo and Bauermann is obliged to return the entire amount of
eleven million three hundred thousand pesos (P11,300,000.00) to Equatorial. On
the other hand, Mayfair may not deduct from the purchase price the amount of
eight hundred forty-seven thousand pesos (P847,000.00) as withholding tax. The
duty to withhold taxes due, if any, is imposed on the seller, Carmelo and
Bauermann, Inc.
WHEREFORE, the petition is partially GRANTED; decision is hereby rendered
setting aside the decision and resolution of the Court of Appeals 27 and the orders
of execution of the trial court 28 inconsistent and at variance with the dispositive
portion of our decision in G.R. No. 106036.
Let the trial court carry out the execution following strictly the terms of the aforesaid
Supreme Court decision.
No costs.
SO ORDERED.
the promissory note representing the purchase price of said car which he had
bought from the same, appellant being the assignee of appellee of its rights in the
said promissory note.
On August 4, 1965, appellee filed an urgent motion to dismiss on the ground, inter
alia, that under Article 1484 of the Civil Code of the Philippines, which particular
provision is otherwise known as the Recto Law, appellant has no cause of action
against appellee. Said provision is as follows:
On September 23, 1965, appellant filed a motion for reconsideration but this was
denied on October 26, 1965, hence, this appeal.
The principal error assigned by appellant has reference to the applicability of Art.
1484 of the Civil Code, as amended, to the facts of this case. Appellant maintains
that: .
II
THE TRIAL COURT ERRED IN HOLDING THAT ARTICLE 1484 OF THE
CIVIL CODE OF THE PHILIPPINES IS APPLICABLE TO THE
TRANSACTION BETWEEN PLAINTIFF-APPELLANT AND DEFENDANTAPPELLEE.
Under the facts alleged in the amended complaint which are deemed admitted by
the motion to dismiss, 1 this assignment of error must be sustained.
The specific allegations in the amended complaint which have material bearing on
the issue herein are:
4. On November 4, 1964, defendant Supreme Sales & Development
Corporation, with notice to defendantJulian R. Vitug, Jr. negotiated in favor
of (endorsed and delivered to) plaintiff the above-mentioned promissory
note, Annex "A", on a with recourse basis whereby in case of the failure
and/or refusal of the maker thereof, defendant Julian R. Vitug, Jr. to pay the
obligation under the said promissory note, plaintiff shall have the right to
recourse against the said defendant corporation.
presently being sought is not against the buyer of the car or the defendant Vitug
but against the seller, independent of whether or not such seller may have a right
of recovery against the buyer, which, in this case, he does not have under the
Recto Law. It is clear to Us, on the other hand, that under said law, what Congress
seeks to protect are only the buyers on installment who more often than not have
been victimized by sellers who, before the enactment of this law, succeeded in
unjustly enriching themselves at the expense of the buyers because aside from
recovering the goods sold, upon default of the buyer in the payment of two
installments, still retained for themselves all amounts already paid, in addition,
furthermore, to other damages, such as attorney's fees, and costs. Surely,
Congress could not have intended to impair and much less do away with the right
of the seller to make commercial use of his credit against the buyer, provided said
buyer is not burdened beyond what this law allows.
1awphil.nt
We are not unmindful that in the case of Cruz, et al. vs. the same Filipinas
Investment & Finance Corporation, L-24772, May 27, 1968, 23 SCRA 791, this
Court broadened the scope of the Recto Law beyond its letter and held that within
its spirit, a seller of goods on installment does not have any right of action against a
third party who, in addition to the buyer's mortgage of the goods sold, furnishes
additional security for the payment of said installments or the purchase price of
said goods. In that case, it was held:.
It is here agreed that plaintiff Cruz failed to pay several installments as
provided in the contract; that there was extrajudicial foreclosure of the
chattel mortgage on the said motor vehicle; and that defendant-appellant
itself bought it at the public auction duly held thereafter, for a sum less than
the purchaser's outstanding obligation. Defendant-appellant, however,
sought to collect the supposed deficiency by going against the real estate
mortgage which was admittedly constituted on the land of plaintiff Reyes as
additional security to guarantee the performance of Cruz' obligation,
claiming that what is being withheld from the vendor, by the proviso of
Article 1484 of the Civil Code, is only the right to recover against the
purchaser, and not a recourse to the additional security put up, not by the
purchaser himself, but by a third person.
4. That as no down payment was made by Cruz, the seller, Far East Motor
Corporation, on the very improvements thereon, in San Miguel, Bulacan...;
same date, July 15, 1963, required and Cruz agreed to give, additional
security for his obligation besides the chattel mortgage, Annex "B"; that said
additional security was given by plaintiff Felicidad Vda. de Reyes in the form
of SECOND MORTGAGE on a parcel of land owned by her, together with
the building and
5. That said land has an area of 68,902 square meters, more or less, and
covered by Transfer Certificate of Title No. 36480 of the Registry of Deeds
of Bulacan in the name of plaintiff Mrs. Reyes; and that it was at the time
mortgaged to the Development Bank of the Philippines to secure a loan of
P2,600.00 obtained by Mrs. Reyes from that bank;
6. That also on July 15, 1963, the Far East Motor Corporation for value
received indorsed the promissory note and assigned all its rights and
interest in the Deeds of Chattel Mortgage and in the Deed of Real Estate
Mortgage (Annexes "A", "B" and "B-l") to the defendant, Filipinas
Investment & Finance Corporation, with due notice of such assignment to
the plaintiffs...;
7. That plaintiff Cruz defaulted in the payment of the promisory note (Annex
"A") ; that the only sum ever paid to the defendant was Five Hundred Pesos
(P500.00) on October 2, 1963, which was applied as partial payment of
interests on his principal obligation; that, notwithstanding defendant's
demands, Cruz made no payment on any of the installments stipulated in
the promissory note;
8. That by reason of Cruz's default, defendant took steps to foreclose the
chattel mortgage on the bus; that said vehicle had been damaged in an
accident while in the possession of plaintiff Cruz;
9. That at the foreclosure sale held on January 31, 1964 by the Sheriff of
Manila, the defendant was the highest bidder, defendant's bid being for
Fifteen Thousand Pesos (P15,000.00)...;
10. That the proceeds of the sale of the bus were not sufficient to cover the
expenses of sale, the principal obligation, interests, and attorney's fees, i.e.,
they were not sufficient to discharge fully the indebtedness of plaintiff Cruz
to the defendant;
11. That on February 12, 1964, preparatory to foreclosing its real estate
mortgage on Mrs. Reyes' land, defendant paid the mortgage indebtedness
of Mrs. Reyes to the Development Bank of the Philippines, in the sum of
P2,148.07, the unpaid balance of said obligation...;
12. That pursuant to a provision in the real estate mortgage contract,
authorizing the mortgagee to foreclose the mortgage judicially or extrajudicially, defendant on February 29, 1964 requested the Provincial Sheriff
of Bulacan to take possession of, and sell, the land subject of the Real
Estate Mortgage, Annex "B-1", to satisfy the sum of P43,318.92, the total
outstanding obligation of the plaintiffs to the defendant, as itemized in the
Statement of Account, which is made a part hereof as Annex "F"...;
14. That on March 20, 1964, plaintiff Reyes through counsel, wrote a letter
to the defendant asking for the cancellation of the real estate mortgage on
her land, but defendant did not comply with such demand as it was of the
belief that plaintiff's request was without any legal basis;
15. That at the request of the plaintiffs, the provincial Sheriff of Bulacan held
in abeyance the sale of the mortgaged real estate pending the result of this
action.
Passing upon the issues which, by agreement of the parties, were limited to (1)
"Whether defendant, which has already extrajudicially foreclosed the chattel
mortgage executed by the buyer, plaintiff Cruz, on the bus sold to him on
installments, may also extrajudicially foreclose the real estate mortgage constituted
by plaintiff Mrs. Reyes on her own land, as additional security, for the payment of
the balance of Cruz' Obligation, still remaining unpaid"; and (2) whether or not the
contending parties are entitled to attorney's fees the court below, in its decision
of April 21, 1965, sustained the plaintiffs' stand and declared that the extrajudicial
foreclosure of the chattel mortgage on the bus barred further action against the
additional security put up by plaintiff Reyes. Consequently, the real estate
mortgage constituted on the land of said plaintiff was ordered cancelled and
defendant was directed to pay the plaintiffs attorney's fees in the sum of P200.00.
Defendant filed the present appeal raising the same questions presented in the
lower court.
There is no controversy that, involving as it does a sale of personal property on
installments, the pertinent legal provision in this case is Article 1484 of the Civil
Code of the Philippines, 2 which reads:
ART. 1484. In a contract of sale of personal property the price of which is
payable in installments, the vendor may exercise any of the following
remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
13. That notices of sale were duly posted and served to the Mortgagor, Mrs.
Reyes, pursuant to and in compliance with the requirements of Act 3135...;
(2) Cancel the sale, should the vendee's failure to pay cover two or more
installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more
installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to the
contrary shall be void.
The aforequoted provision is clear and simple: should the vendee or purchaser of a
personal property default in the payment of two or more of the agreed installments,
the vendor or seller has the option to avail of any one of these three remedies
either to exact fulfillment by the purchaser of the obligation, or to cancel the sale, or
to foreclose the mortgage on the purchased personal property, if one was
constituted. These remedies have been recognized as alternative, not
cumulative, 3 that the exercise of one would bar the exercise of the others. 4 It may
also be stated that the established rule is to the effect that the foreclosure and
actual sale of a mortgaged chattel bars further recovery by the vendor of any
balance on the purchaser's outstanding obligation not so satisfied by the sale. 5 And
the reason for this doctrine was aptly stated in the case of Bachrach Motor Co. vs.
Millan, supra, thus:
Undoubtedly the principal object of the above amendment
It is here agreed that plaintiff Cruz failed to pay several installments as provided in
the contract; that there was extrajudicial foreclosure of the chattel mortgage on the
said motor vehicle; and that defendant-appellant itself bought it at the public
auction duly held thereafter, for a sum less than the purchaser's outstanding
obligation. Defendant-appellant, however, sought to collect the supported
deficiency by going against the real estate mortgage which was admittedly
constituted on the land of plaintiff Reyes as additional security to guarantee the
performance of Cruz' obligation, claiming that what is being withheld from the
vendor, by the proviso of Article 1484 of the Civil Code, is only the right to recover
"against the purchaser", and not a recourse to the additional security put up, not by
the purchaser himself, but by a third person.
There is no merit in this contention. To sustain appellant's argument is to overlook
the fact that if the guarantor should be compelled to pay the balance of the
purchase price, the guarantor will in turn be entitled to recover what she has paid
from the debtor vendee (Art. 2066, Civil Code) ; so that ultimately, it will be the
vendee who will be made to bear the payment of the balance of the price, despite
the earlier foreclosure of the chattel mortgage given by him. Thus, the protection
given by Article 1484 would be indirectly subverted, and public policy overturned.
Neither is there validity to appellant's allegation that, since the law speaks of
"action", the restriction should be confined only to the bringing of judicial suits or
proceedings in court.
The word "action" is without a definite or exclusive meaning. It has been invariably
defined as
... the legal demand of one's right, or rights; the lawful demand of one's
rights in the form given by law; a demand of a right in a court of justice; the
lawful demand of one's right in a court of justice; the legal and formal
demand of ones rights from another person or party, made and insisted on
in a court of justice; a claim made before a tribunal; an assertion in a court
of justice of a right given by law; a demand or legal proceeding in a court of
justice to secure one's rights; the prosecution of some demand in a court of
justice; the means by which men litigate with each other; the means that the
law has provided to put the cause of action into effect;.... (Gutierrez
Hermanos vs. De la Riva, 46 Phil. 827, 834-835).
Considering the purpose for which the prohibition contained in Article 1484 was
intended, the word "action" used therein may be construed as referring to any
PADILLA, J.:
This is a petition for review on certiorari of the decision 1 of the Court of Appeals, 2nd
However, we find merit in appellant's complaint against the trial court's failure to
order the reimbursement by appellee Vda. de Reyes of the amount which the
former paid to the Development Bank of the Philippines, for the release of the first
mortgage on the land of said appellee. To the extent that she was benefited by
such payment, plaintiff-appellee Vda. de Reyes should have been required to
reimburse the appellant.
Division, in CA-G.R. No. 36177, which affirmed the decision 2 of the Regional Trial Court of
Himamaylan, Negros Occidental holding that private respondent Edy de los Reyes had
acquired ownership of Lot No. 1130 of the Cadastral Survey of Hinigaran, Negros Occidental
based on a document entitled "Declaration of Heirship and Waiver of Rights", and ordering the
dispossession of petitioner as leasehold tenant of the land for failure to pay rentals.
WHEREFORE, the decision appealed from is modified, by ordering plaintiffappellee Felicidad Vda. de Reyes to reimburse to defendant-appellant Filipinas
Investment & Finance Corporation the sum of P2,148.07, with legal interest
thereon from the finality of this decision until it is fully paid. In all other respects, the
judgment of the court below is affirmed, with costs against the defendant-appellant.
The title to Lot No. 1130 of the Cadastral Survey of Hinigaran, Negros Occidental
was evidenced by OCT No. R-12179. The lot has an area of 13,720 sq. meters.
The title was issued and is registered in the name of spouses Santiago Vasquez
and Lorenza Oruma. After both spouses died, their only son Felixberto inherited
the lot. In 1975, Felixberto executed a duly notarized document entitled
"Declaration of Heirship and Deed of Absolute Sale" in favor of Cosme Pido.
The evidence before the court a quo established that since 1960, petitioner
Teodoro Acap had been the tenant of a portion of the said land, covering an area of
nine thousand five hundred (9,500) meters. When ownership was transferred in
1975 by Felixberto to Cosme Pido, Acap continued to be the registered tenant
thereof and religiously paid his leasehold rentals to Pido and thereafter, upon
Pido's death, to his widow Laurenciana.
The controversy began when Pido died intestate and on 27 November 1981, his
surviving heirs executed a notarized document denominated as "Declaration of
Heirship and Waiver of Rights of Lot No. 1130 Hinigaran Cadastre," wherein they
declared; to quote its pertinent portions, that:
The document was signed by all of Pido's heirs. Private respondent Edy de los
Reyes did not sign said document.
It will be noted that at the time of Cosme Pido's death, title to the property
continued to be registered in the name of the Vasquez spouses. Upon obtaining
the Declaration of Heirship with Waiver of Rights in his favor, private respondent
Edy de los Reyes filed the same with the Registry of Deeds as part of a notice of
an adverse claimagainst the original certificate of title.
Thereafter, private respondent sought for petitioner (Acap) to personally inform him
that he (Edy) had become the new owner of the land and that the lease rentals
thereon should be paid to him. Private respondent further alleged that he and
petitioner entered into an oral lease agreement wherein petitioner agreed to pay
ten (10) cavans of palay per annum as lease rental. In 1982, petitioner allegedly
complied with said obligation. In 1983, however, petitioner refused to pay any
further lease rentals on the land, prompting private respondent to seek the
assistance of the then Ministry of Agrarian Reform (MAR) in Hinigaran, Negros
Occidental. The MAR invited petitioner to a conference scheduled on 13 October
1983. Petitioner did not attend the conference but sent his wife instead to the
conference. During the meeting, an officer of the Ministry informed Acap's wife
about private respondent's ownership of the said land but she stated that she and
her husband (Teodoro) did not recognize private respondent's claim of ownership
over the land.
On 28 April 1988, after the lapse of four (4) years, private respondent filed a
complaint for recovery of possession and damages against petitioner, alleging in
the main that as his leasehold tenant, petitioner refused and failed to pay the
agreed annual rental of ten (10) cavans of palay despite repeated demands.
During the trial before the court a quo, petitioner reiterated his refusal to recognize
private respondent's ownership over the subject land. He averred that he continues
to recognize Cosme Pido as the owner of the said land, and having been a
registered tenant therein since 1960, he never reneged on his rental obligations.
When Pido died, he continued to pay rentals to Pido's widow. When the latter left
for abroad, she instructed him to stay in the landholding and to pay
the accumulated rentals upon her demand or return from abroad.
Petitioner further claimed before the trial court that he had no knowledge about any
transfer or sale of the lot to private respondent in 1981 and even the following year
after Laurenciana's departure for abroad. He denied having entered into a verbal
lease tenancy contract with private respondent and that assuming that the said lot
was indeed sold to private respondent without his knowledge, R.A. 3844, as
amended, grants him the right to redeem the same at a reasonable price.
Petitioner also bewailed private respondent's ejectment action as a violation of his
right to security of tenure under P.D. 27.
On 20 August 1991, the lower court rendered a decision in favor of private
respondent, the dispositive part of which reads:
Certainly, the sale of the Pido family of Lot 1130 to herein plaintiff
does not of itself extinguish the relationship. There was only a
change of the personality of the lessor in the person of herein
plaintiff Edy de los Reyes who being the purchaser or transferee,
see fit. It is in effect an extrajudicial settlement between the heirs under Rule 74 of
the Rules of Court. 10
Quite surprisingly, both the trial court and public respondent Court of Appeals
concluded that a "sale" transpired between Cosme Pido's heirs and private
respondent and that petitioner acquired actual knowledge of said sale when he
was summoned by the Ministry of Agrarian Reform to discuss private respondent's
claim over the lot in question. This conclusion has no basis both in fact and in law.
Petitioner had been a registered tenant in the subject land since 1960 and
religiously paid lease rentals thereon. In his mind, he continued to be the
registered tenant of Cosme Pido and his family (after Pido's death), even if in 1982,
private respondent allegedly informed petitioner that he had become the new
owner of the land.
On record, Exhibit "D", which is the "Declaration of Heirship and Waiver of Rights"
was excluded by the trial court in its order dated 27 August 1990 because the
document was neither registered with the Registry of Deeds nor identified by the
heirs of Cosme Pido. There is no showing that private respondent had the same
document attached to or made part of the record. What the trial court admitted was
Annex "E", a notice of adverse claim filed with the Registry of Deeds which
contained the Declaration of Heirship with Waiver of rights and was annotated at
the back of the Original Certificate of Title to the land in question.
Under the circumstances, petitioner may have, in good faith, assumed such
statement of private respondent to be true and may have in fact delivered 10
cavans of palay as annual rental for 1982 to private respondent. But in 1983, it is
clear that petitioner had misgivings over private respondent's claim of ownership
over the said land because in the October 1983 MAR conference, his wife
Laurenciana categorically denied all of private respondent's allegations. In fact,
petitioner even secured a certificate from the MAR dated 9 May 1988 to the effect
that he continued to be the registered tenant of Cosme Pido and not of private
respondent. The reason is that private respondent never registered the Declaration
of Heirship with Waiver of Rights with the Registry of Deeds or with the MAR.
Instead, he (private respondent) sought to do indirectly what could not be done
directly,i.e., file a notice of adverse claim on the said lot to establish ownership
thereover.
A notice of adverse claim, by its nature, does not however prove private
respondent's ownership over the tenanted lot. "A notice of adverse claim is nothing
but a notice of a claim adverse to the registered owner, the validity of which is yet
to be established in court at some future date, and is no better than a notice of lis
pendenswhich is a notice of a case already pending in court." 15
It is to be noted that while the existence of said adverse claim was duly proven,
there is no evidence whatsoever that a deed of sale was executed between Cosme
Pido's heirs and private respondent transferring the rights of Pido's heirs to the
land in favor of private respondent. Private respondent's right or interest therefore
in the tenanted lot remains an adverse claim which cannot by itself be sufficient to
cancel the OCT to the land and title the same in private respondent's name.
Consequently, while the transaction between Pido's heirs and private
respondent may be binding on both parties, the right of petitioner as a
registered tenant to the land cannot be perfunctorily forfeited on a mere
GALICANO
S.
DECISION
TINGA, J.:
property and not to offer the same to any other party within thirty (30)
days from date.Arturo acknowledged receipt of a check from
respondent in the amount of Five Thousand Pesos (P5,000.00),
representing earnest money for the subject property, the amount of
which would be deducted from the purchase price of One Million Three
Hundred Three Hundred Thousand Pesos (P1,300,000.00). Further,
the RMOA stated that full payment would be effected as soon as
possession of the property shall have been turned over to respondent.
Subsequently, Arturos wife, Esther, executed a Special Power of
Attorney dated October 25, 1989, appointing her sister, Bernadette
Ramos, to act for and in her behalf relative to the transfer of the
property to respondent. Ostensibly, a marital squabble was brewing
between Arturo and Esther at the time and to protect his interest,
respondent caused the annotation of his adverse claim on the title of
the spouses to the property on November 14, 1989.
On November 16, 1989, respondent sent a letter to Arturo and
Esther informing them of his readiness and willingness to pay the full
amount of the purchase price. The letter contained a demand upon the
spouses to comply with their obligation to turn over possession of the
property to him. On the same date, Esther, through her attorney-infact, executed in favor of respondent, a Contract to Sell the property to
the extent of her conjugal interest therein for the sum of six hundred
fifty thousand pesos (P650,000.00) less the sum already received by
her and Arturo. Esther agreed to surrender possession of the property
to respondent within twenty (20) days from November 16, 1989, while
the latter promised to pay the balance of the purchase price in the
amount of one million two hundred ninety thousand pesos
(P1,290,000.00) after being placed in possession of the
property. Esther also obligated herself to execute and deliver to
respondent a deed of absolute sale upon full payment.
In a letter dated December 7, 1989, respondent informed the
spouses that he had set aside the amount of One Million Two Hundred
The Court of Appeals committed serious and manifest error when it decided
on the appeal without affording petitioner his right to due process.
II.
The Court of Appeals committed serious and manifest error in reversing and
setting aside the findings of fact by the trial court.
III.
[1]
Petitioner also blames the appellate court for setting aside the
factual findings of the trial court and argues that factual findings of the
trial court are given much weight and respect when supported by
substantial evidence. He asserts that the sale between him and
respondent is void for lack of consent because the SPA purportedly
executed by his wife Esther is a forgery and therefore, he could not
have validly sold the subject property to respondent.
[5]
[6]
[7]
[8]
[9]
[10]
[11]
As a rule, the holder of the option, after accepting the promise and
before he exercises his option, is not bound to buy. He is free either to
buy or not to buy later. In Sanchez v. Rigos we ruled that in an
[13]
[15]
[19]
[20]
The congruence of the wills of the spouses is essential for the valid
disposition of conjugal property. Where the conveyance is contained in
the same document which bears the conformity of both husband and
wife, there could be no question on the validity of the transaction. But
when there are two documents on which the signatures of the spouses
separately appear, textual concordance of the documents is
indispensable. Hence, in this case where the wifes putative consent to
the sale of conjugal property appears in a separate document which
does not, however, contain the same terms and conditions as in the
first document signed by the husband, a valid transaction could not
have arisen.
The subject land which had been admittedly acquired during the
marriage of the spouses forms part of their conjugal partnership.
[22]
[24]
[26]
[27]
[28]
[30]
[33]
[35]
[37]