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Mercado vs Espinosilla
Petitioner Celerino E. Mercado appeals the Decision[1]
dated April 28, 2008 and Resolution[2] dated Jul 22,
2008 o! the Court o! Appeals "CA# in CA$%.R. C& 'o.
8()80. *he CA dis+issed petitioner,s co+plaint[-] !or
reco.er o! possession, /uietin0 o! title, partial
declaration o! nullit o! deeds and docu+ents, and
da+a0es, on the 0round o! prescription.

The antecedent facts
Doroteo Espinocilla owned a parcel of land, Lot No. 552,
with an area of 570 sq. m., located at Magsasa !ven"e, #one
5, $"lan, %orsogon. !fter he died, his five children, %alvacion,
!spren, &sa'el, Macario, and Dionisia divided Lot No. 552 eq"all
among themselves. Later, Dionisia died witho"t iss"e ahead of
her fo"r si'lings, and Macario too( possession of Dionisia)s
share. &n an affidavit of transfer of real propert[)] dated
Novem'er *, *+,-, Macario claimed that Dionisia had donated
her share to him in Ma *+,5.
.hereafter, on !"g"st +, *+77, Macario and his da"ghters
$ett /"lla'a and %aida /a'elo sold[1] 225 sq. m. to his son
0oger Espinocilla, h"s'and of respondent $elen Espinocilla and
father of respondent 1erdinand Espinocilla. 2n March -, *+-5,
0oger Espinocilla sold[2] **, sq. m. to 3aridad !tien4a. 5er
act"al s"rve of Lot No. 552, respondent $elen Espinocilla
occ"pies *0+ sq. m., 3aridad !tien4a occ"pies *20 sq. m.,
3aroline 6" occ"pies 20+ sq. m., and petitioner, %alvacion7s son,
occ"pies *82 sq. m.[(]

The case for petitioner
5etitioner s"ed the respondents to recover two portions9
an area of 2-.5[8] sq. m. which he 'o"ght from !spren and
another 2-.5 sq. m. which allegedl 'elonged to him '"t was
occ"pied ' Macario)s ho"se.[3] :is claim has since 'een
modified to an alleged encroachment of onl 8+ sq. m. that he
claims m"st 'e ret"rned to him. :e avers that he is entitled to
own and possess *7* sq. m. of Lot No. 552, having inherited
*,2.5 sq. m. from his mother %alvacion and 'o"ght 2-.5 sq. m.
from his a"nt !spren. !ccording to him, his mother)s
inheritance is *,2.5 sq. m., that is, **, sq. m. from Doroteo
pl"s 2-.5 sq. m. from Dionisia. %ince the area he occ"pies is
onl *82 sq. m.,[10] he claims that respondents encroach on
his share ' 8+ sq. m.[11]

The case for respondents
0espondents agree that Doroteo)s five children each
inherited **, sq. m. of Lot No. 552. :owever, Macario)s share
increased when he received Dionisia)s share. Macario)s
increased share was then sold to his son 0oger, respondents)
h"s'and and father. 0espondents claim that the rightf"ll
possess the land the occ"p ' virt"e of acq"isitive
prescription and that there is no 'asis for petitioner)s claim of
encroachment.[12]

The trial courts decision

2n Ma *5, 200;, the 0egional .rial 3o"rt <0.3= r"led in
favor of petitioner and held that he is entitled to *7* sq. m. .he
0.3 fo"nd that petitioner inherited *,2.5 sq. m. from his mother
%alvacion and 'o"ght 2-.5 sq. m. from his a"nt !spren. .he
0.3 comp"ted that %alvacion, !spren, &sa'el and Macario each
inherited *,2.5 sq. m. of Lot No. 552. Each inherited **, sq.
m. from Doroteo and 2-.5 sq. m. from Dionisia. .he 0.3
f"rther r"led that Macario was not entitled to 22- sq. m. .h"s,
respondents m"st ret"rn 8+ sq. m. to petitioner who occ"pies
onl *82 sq. m.[1-]
.here 'eing no p"'lic doc"ment to prove Dionisia)s
donation, the 0.3 also held that Macario)s *+,- affidavit is void
and is an invalid rep"diation of the shares of his sisters
%alvacion, !spren, and &sa'el in Dionisia)s share. !ccordingl,
Macario cannot acq"ire said shares ' prescription. .he 0.3
f"rther held that the oral partition of Lot No. 552 ' Doroteo)s
heirs did not incl"de Dionisia)s share and that partition sho"ld
have 'een the main action. .h"s, the 0.3 ordered partition and
deferred the transfer of possession of the 8+ sq. m. pending
partition.[1)] .he dispositive portion of the 0.3 decision reads9
>:E0E120E, in view of the foregoing premises, the co"rt
iss"es the following 20DE0, th"s ?
a= 5artiall declaring the n"llit of the Deed of !'sol"te %ale of
5ropert dated !"g"st +, *+77 @ @ @ e@ec"ted ' Macario
Espinocilla, $ett E. /"lla'a and %aida E. /a'elo in favor of
0oger Espinocilla, insofar as it affects the portion or the share
'elonging to %alvacion Espinocilla, mother of Apetitioner,B
relative to the propert left ' Dionisia Espinocilla, incl"ding
A.a@ DeclarationB No. *8;;7 and other doc"ments of the same
nat"re and character which emanated from the said saleC
'= .o leave as is the Deeds of !'sol"te %ale of Ma **, *+-8
and March -, *+-5, it having 'een determined that the did not
involve the portion 'elonging to ApetitionerB @ @ @.
c= .o effect an effective and real partition among the heirs for
p"rposes of determining the e@act location of the share <**, sq.
m.= of the late Dionisia Espinocilla together with the 2-.5 sq. m.
'elonging to Apetitioner)sB mother %alvacion, as well as, the
e@act location of the 8+ sq. m. portion 'elonging to the
ApetitionerB 'eing encroached ' the ArespondentsB, with the
assistance of the 3ommissioner <Engr. 1"ndano= appointed '
this co"rt.
d= .o hold in a'eance the transfer of possession of the 8+ sq.
m. portion to the ApetitionerB pending the completion of the real
partition a'ove?mentioned.[11]

The CA decision

2n appeal, the 3! reversed the 0.3 decision and
dismissed petitioner)s complaint on the gro"nd that
e@traordinar acq"isitive prescription has alread set in in favor
of respondents. .he 3! fo"nd that Doroteo)s fo"r remaining
2
children made an oral partition of Lot No. 552 after Dionisia)s
death in *+,5 and occ"pied specific portions. .he oral partition
terminated the co?ownership of Lot No. 552 in *+,5. %aid
partition also incl"ded Dionisia)s share 'eca"se the lot was
divided into fo"r parts onl. !nd since petitioner)s complaint
was filed onl on D"l *8, 2000, the 3! concl"ded that
prescription has set in.[12] .he 3! disposed the appeal as
follows9
>:E0E120E, the appeal is /0!N.ED. .he assailed Ma
*5, 200; Decision of the 0egional .rial 3o"rt <0.3= of $"lan,
%orsogon is here' 0EEE0%ED and %E. !%&DE. .he 3omplaint
of the ApetitionerB is here' D&%M&%%ED. No costs.[1(]

The instant petition

.he core iss"e to 'e resolved is whether petitioner)s action
to recover the s"'Fect portion is 'arred ' prescription.
5etitioner confirms oral partition of Lot No. 552 '
Doroteo7s heirs, '"t claims that his share increased from **, sq.
m. to *7* sq. m. and that respondents encroached on his share
' 8+ sq. m. %ince an oral partition is valid, the corresponding
s"rve ordered ' the 0.3 to identif the 8+ sq. m. that m"st
'e ret"rned to him co"ld 'e made.[18] 5etitioner also alleges
that Macario committed fra"d in acq"iring his shareC hence, an
evidence add"ced ' him to F"stif s"ch acq"isition is
inadmissi'le. 5etitioner concl"des that if a person o'tains legal
title to propert ' fra"d or concealment, co"rts of eq"it will
impress "pon the title a so?called constr"ctive tr"st in favor of
the defra"ded part.[13]

The Courts ruling

>e affirm the 3! r"ling dismissing petitioner)s complaint
on the gro"nd of prescription.
5rescription, as a mode of acq"iring ownership and other
real rights over immova'le propert, is concerned with lapse of
time in the manner and "nder conditions laid down ' law,
namel, that the possession sho"ld 'e in the concept of an
owner, p"'lic, peacef"l, "ninterr"pted, and adverse. !cq"isitive
prescription of real rights ma 'e ordinar or e@traordinar.
2rdinar acq"isitive prescription req"ires possession in good
faith and with F"st title for *0 ears. &n e@traordinar
prescription, ownership and other real rights over immova'le
propert are acq"ired thro"gh "ninterr"pted adverse possession
for 80 ears witho"t need of title or of good faith.[20]
:ere, petitioner himself admits the adverse nat"re of
respondents) possession with his assertion that Macario)s
fra"d"lent acq"isition of Dionisia)s share created a constr"ctive
tr"st. &n a constr"ctive tr"st, there is neither a promise nor an
fid"ciar relation to spea( of and the so?called tr"stee <Macario=
neither accepts an tr"st nor intends holding the propert for
the 'eneficiar <%alvacion, !spren, &sa'el=. .he relation of
tr"stee and cestui que trust does not in fact e@ist, and the
holding of a constr"ctive tr"st is for the tr"stee himself, and
therefore, at all times adverse.[21] 5rescription ma s"pervene
even if the tr"stee does not rep"diate the relationship.[22]
.hen, too, respondents) "ninterr"pted adverse possession
for 55 ears of *0+ sq. m. of Lot No. 552 was esta'lished.
Macario occ"pied Dionisia)s share in *+,5 altho"gh his claim
that Dionisia donated it to him in *+,5 was onl made in a *+,-
affidavit. >e also agree with the 3! that Macario)s possession
of Dionisia)s share was p"'lic and adverse since his other co?
owners, his three other sisters, also occ"pied portions of Lot No.
552. &ndeed, the *+77 sale made ' Macario and his two
da"ghters in favor of his son 0oger confirms the adverse nat"re
of Macario)s possession 'eca"se said sale of 225 sq. m.[2-] was
an act of ownership over Macario)s original share and Dionisia)s
share. &n *+-5, 0oger also e@ercised an act of ownership when
he sold **, sq. m. to 3aridad !tien4a. &t was onl in the ear
2000, "pon receipt of the s"mmons to answer petitioner)s
complaint, that respondents) peacef"l possession of the
remaining portion <*0+ sq. m.= was interr"pted. $ then,
however, e@traordinar acq"isitive prescription has alread set in
in favor of respondents. .hat the 0.3 fo"nd Macario)s *+,-
affidavit void is of no moment. E@traordinar prescription is
"nconcerned with Macario)s title or good faith. !ccordingl, the
0.3 erred in r"ling that Macario cannot acq"ire ' prescription
the shares of %alvacion, !spren, and &sa'el, in Dionisia)s **,?sq.
m. share from Lot No. 552.
Moreover, the 3! correctl dismissed petitioner)s
complaint as an action for reconveance 'ased on an implied or
constr"ctive tr"st prescri'es in *0 ears from the time the right
of action accr"es.[2)] .his is the other (ind of prescription
"nder the 3ivil 3ode, called e@tinctive prescription, where rights
and actions are lost ' the lapse of time.[21] 5etitioner)s action
for recover of possession having 'een filed 55 ears after
Macario occ"pied Dionisia)s share, it is also 'arred ' e@tinctive
prescription. .he 3! while condemning Macario)s fra"d"lent act
of depriving his three sisters of their shares in Dionisia)s share,
eq"all emphasi4ed the fact that Macario)s sisters wasted their
opport"nit to q"estion his acts.
45ERE67RE, we DE'8 the petition for review on
certiorari for lac( of merit and A669RM the assailed Decision
dated !pril 2-, 200- and 0esol"tion dated D"l 22, 200- of the
3o"rt of !ppeals in 3!?/.0. 3E No. -7,-0.
No prono"ncement as to costs.
:7 7RDERED
'a.ales .s rias
*7RRE:, J.:
2n the *-th of Novem'er, *+0,, Eicente Navales filed a
complaint with the 3o"rt of 1irst &nstance of 3e'" against
E"logia 0ias and Ma@imo 0eq"iroso, claiming that the latter
sho"ld 'e sentenced to pa him the s"m of *,200 pesos,
5hilippine c"rrenc, as damages, together with costs and s"ch
other e@penses as the co"rt might consider F"st and eq"ita'le.
.o this end he alleged that the said defendants, witho"t d"e
ca"se, ordered the p"lling down and destr"ction of his ho"se
erected in Daan'"angan, town of Naga, &sland of 3e'", which
was ; meters in height with an area of -.70 sq"are meters, '"ilt
of wood with a nipa roof, and worth *,000 pesos, which amo"nt
he e@pended in its constr"ction. :e f"rther alleged that the
destr"ction too( place in the month of !pril, *+0,, and that,
notwithstanding his efforts, he had not o'tained an
3
reim'"rsement from the defendants, and that ' reason of their
ref"sal he had 'een preF"diced to the e@tent of 200 pesos,
5hilippine c"rrenc.
.he defendant, in answer to the foregoing complaint, denied all
and each one of the allegations therein contained, and as(ed
that F"dgment 'e entered dismissing the complaint with costs
against the plaintiff.
!fter considering the proofs s"'mitted ' 'oth parties and the
proceedings "pon the trial, the F"dge, on the *7th of Dan"ar,
*+0;, rendered F"dgment declaring that the decision entered '
the F"stice of the peace of Naga, and the order given ' virt"e
thereof were illegal, as well as the action of the dep"t sheriff
L"ciano $acao, that the defendant were there' lia'le for the
damages ca"sed to the plaintiff, which amo"nted to 500 pesos,
and that the defendants were sentenced to pa the said s"m to
the plaintiff, with costs. .he defendant "pon 'eing informed of
this decision, as(ed that it 'e set aside, and also moved for a
new trial on the gro"nd that the decision was not in accordance
with the weight of the evidence. .he motion was denied, to
which e@ception was ta(en, and at the req"est of the interested
part, the corresponding 'ill of e@ceptions was limited.
.he aim of this litigation, therefore, is to o'tain pament
thro"gh a F"dicial decision, of the damages said to have 'een
ca"sed ' the e@ec"tion of a F"dgment rendered ' the F"stice
of the peace, in an action for eFectment.
&t is "ndenia'le that, in order to remove from the land of E"logia
0ias, sit"ated within the F"risdiction of the town of Naga, the
ho"se which Eicente Navales had constr"cted thereon, ' virt"e
of the decision of the F"stice in the action instit"ted ' the said
E"logia 0ias against the owner of the ho"se , Eicente Navales,
the dep"t sheriff who carried the F"dgment into e@ec"tion was
o'liged to destro the said ho"se and removed it from the land,
according to the "s"al proced"re in the action for eFectment.
&n the order of e@ec"tion iss"ed to the dep"t sheriff, the
directive portion of the F"dgment of the F"stice of the peace was
inserted, and it contained the essential statement that the said
F"dgment, ' reason of its not having 'een appealed from, had
'ecome final, and from the contents of the same ma 'e
inferred that there had 'een an action for eFectment 'etween
the a'ove?named parties, and that there was no reason wh it
sho"ld not 'e enforced when it had alread 'ecome final and
acq"ired the nat"re of res adjudicata.
%ection 72 of the 3ode of 3ivil 5roced"re reads9
Execution. G &f no appeal from a F"dgment of a F"stice
of the peace shall 'e perfected as herein provided, the
F"stice of the peace shall, at the req"est of the
s"ccessf"l part, iss"e e@ec"tion for the enforcement of
the F"dgment, and the e@piration of the time limited '
law for the perfection of an appeal.
!ss"ming that the order for e@ec"tion of final F"dgment was
iss"ed in accordance with the law, and in view of the fact that it
has not 'een alleged nor proven that the sheriff when compling
with the same had committed trespass or e@ceeded his
f"nctions, it m"st 'e pres"med according to section 88, <*,= of
the said 3ode of 5roced"re, that the official d"t was reg"larl
performed. .herefore, it is not possi'le to imp"te lia'ilit to the
plaintiff who o'tained the F"dgment and the e@ec"tion thereof,
when the same was not disp"ted nor alleged to 'e n"ll or illegal,
and m"ch less to compel the pament of damages to the person
who was defeated in the action and sentenced to 'e eFected
from the land which he improperl occ"pied with his ho"se.
No proof has 'een s"'mitted that a contract had 'een entered
into 'etween the plaintiff and the defendants, or that the latter
had committed illegal acts or omissions or inc"rred in an (ind
of fa"lt or negligence, from an of which an o'ligation might
have arisen on the part of the defendants to indemnif the
plaintiff. 1or this reason, the claim for indemnit, on acco"nt of
acts performed ' the sheriff while enforcing a F"dgment, can
not "nder an consideration 'e s"stained. <!rt. *0-+, 3ivil
3ode.=
.he illegalit of the F"dgment of the F"stice of the peace, that of
the writ of e@ec"tion there"nder, or of the acts performed ' the
sheriff for the enforcement of the F"dgment, has not 'een
shown. .herefore, for the reasons herein'efore set forth, the
F"dgment appealed from is here' reversed, and the complaint
for damages filed ' Eicente Navales against E"logia 0ias and
Ma@imo 0eq"iroso is dismissed witho"t special r"ling as to costs.
%o ordered.
CA'D9DA &9RA*A, *7MA: &9RA*A, MA'7;9*7 &9RA*A,
EDER;9'DA &9RA*A, 'AP7;E7' &9RA*A, ARACE;8
&9RA*A, <E'A9DA &9RA*A, ;=<M9'DA &9RA*A, PAC9*A
&9RA*A, and E&A'%E;9'A &9RA*A, petitioners,
vs.
&9C*7R97 7C57A, MA>9M7 ?7R9;;A and *5E C7=R* 76
69R:* 9':*A'CE 76 CA&9*E, (th J=D9C9A; D9:*R9C*,
?RA'C5 &, stationed at ?AC77R, CA&9*E, respondents.
Remulla, Estrella & Associates for petitioners
Exequil C. Masanga! for respondents.

6ER'A'DE<, J.:
.his is an appeal ' certiorari, from the order of the 3o"rt of
1irst &nstance of 3avite, $ranch E, in 3ivil 3ase No. $?*8,
granting the motion of the defendants to dismiss the complaint
on the gro"nd that there is another action pending 'etween the
same parties for the same ca"se. 1
.he record shows that on %eptem'er 2,, *+75 one !rsenio
Eirata died as a res"lt of having 'een '"mped while wal(ing
along .aft !ven"e, 5asa 3it ' a passenger Feepne driven '
Ma@imo $orilla and registered in the name 2f Eictoria 2choaC
that $orilla is the emploer of 2choaC that for the death of
!rsenio Eirata, a action for homicide thro"gh rec(less
impr"dence was instit"ted on %eptem'er 25, *+75 against
Ma@imo $orilla in the 3o"rt of 1irst &nstance of 0i4al at 5asa
3it, doc(eted as 3 3ase No. 8*;2?5 of said co"rtC that at the
hearing of the said criminal case on Decem'er *2, *+75, !tt.
D"lio 1rancisco, the private prosec"tor, made a reservation to file
a separate civil action for damages against the driver on his
criminal lia'ilitC that on 1e'r"ar *+, *+7; !tt. D"lio 1rancisco
filed a motion in said c case to withdraw the reservation to file a
separate civil actionC that thereafter, the private prosec"tor
activel participated in the trial and presented evidence on the
damagesC that on D"ne 2+, *+7; the heirs of !rsenio Eirata
again reserved their right to instit"te a separate civil actionC that
on D"l *+, *+77 the heirs of !rsenio Eirata, petitioners herein,
commenced 3ivil No. $?*8, in the 3o"rt of 1irst &nstance of
3avite at $acoor, $ranch E, for damages 'ased on q"asi?delict
against the driver Ma@imo $orilla and the registered owner of
the Feepne, Eictorio 2choaC that on !"g"st *8, *+7; the
defendants, private respondents filed a motion to dismiss on the
gro"nd that there is another action, 3riminal 3ase No. 8*;2?5,
pending 'etween the same parties for the same ca"seC that on
%eptem'er -, *+7; the 3o"rt of 1irst &nstance of 0i4al at 5asa
3it a decision in 3riminal 3ase No. 8;*2?5 acq"itting the
4
acc"sed Ma@imo $orilla on the gro"nd that he ca"sed an inF"r
' name accidentC and that on Dan"ar 8*, *+77, the 3o"rt of
1irst &nstance of 3avite at $acoor granted the motion to 3ivil
3ase No. $?*8, for damages. 2
.he principal issue is @eather or not the o! the Arsenio
&irata, can prosecute an action !or the da+a0es Aased on
/uasi$delict a0ainst MaBi+o ?orilla and &ictoria 7choa,
driver and owner, respectivel on the passenger Feepne that
'"mped !rsenio Eirata.
&t is settled that in negligence cases the aggrieved parties ma
choose 'etween an action "nder the 0evised 5enal 3ode or of
q"asi?delict "nder !rticle 2*7; of the 3ivil 3ode of the
5hilippines. >hat is prohi'ited ' !rticle 2*77 of the 3ivil 3ode
of the 5hilippines is to recover twice for the same negligent act.
.he %"preme 3o"rt has held that9
!ccording to the 3ode 3ommission9 7.he
foregoing provision <!rticle 2*77= tho"gh at
first sight startling, is not so novel or
e@traordinar when we consider the e@act
nat"re of criminal and civil negligence. .he
former is a violation of the criminal law, while
the latter is a 7c"lpa aq"iliana7 or q"asi?delict,
of ancient origin, having alwas had its own
fo"ndation and individ"alit, separate from
criminal negligence. %"ch distinction 'etween
criminal negligence and 7c"lpa e@tra?
contract"al7 or q"asi?delito has 'een s"stained
' decision of the %"preme 3o"rt of %pain and
maintained as clear, so"nd and perfectl
tena'le ' Ma"ra, an o"tstanding %panish
F"rist. .herefore, "nder the proposed !rticle
2*77, acq"ittal from an acc"sation of criminal
negligence, whether on reasona'le do"'t or
not, shall not 'e a 'ar to a s"'seq"ent civil
action, not for civil lia'ilit arising from
criminal negligence, '"t for damages d"e to a
q"asi?delict or 7c"lpa aq"iliana7. $"t said article
forestalls a do"'le recover. <0eport of the
3ode 3ommission, p. *;2.=
!ltho"gh, again, this !rticle 2*77 does seem to
literall refer to onl acts of negligence, the
same arg"ment of D"stice $oco'o a'o"t
constr"ction that "pholds 7the spirit that given
life7 rather than that which is literal that (illeth
the intent of the lawma(er sho"ld 'e o'served
in appling the same. !nd considering that the
preliminar chapter on h"man relations of the
new 3ivil 3ode definitel esta'lishes the
separa'ilit and independence of lia'ilit in a
civil action for acts criminal in character <"nder
!rticles 2+ to 82= from the civil responsi'ilit
arising from crime fi@ed ' !rticle *00 of the
5enal 3ode, and, in a sense, the 0"les of
3o"rt, "nder %ections 2 and 8<c=, 0"le ***,
contemplate also the same separa'ilit, it is
7more congr"ent7 with the spirit of law, eq"it
and F"stice, and more in harmon with modern
progress7, to 'orrow the felicito"s lang"age in
0a(es vs. !tlantic /"lf and 5acific 3o., 7 5hil.
to 85+, to hod as >e do hold, that !rticle
2*7;, where it refers to 7fa"lt covers not onl
acts 7not p"nisha'le ' law7 '"t also criminal in
character, whether intentional and vol"ntar or
conseq"entl, a separate civil action lies
against the in a criminal act, whether or not he
is criminall prosec"ted and fo"nd g"ilt and
acq"itted, provided that the offended part is
not allowed, if he is act"all charged also
criminall, to recover damages on 'oth scores,
and wo"ld 'e entitled in s"ch event"alit onl
to the 'igger award of the, two ass"ming the
awards made in the two cases var. &n other
words the e@tinction of civil lia'ilit refereed to
in 5ar. <c= of %ection *8, 0"le ***, refers
e@cl"sivel to civil lia'ilit fo"nded on !rticle
*00 of the 0evised 5enal 3ode, whereas the
civil lia'ilit for the same act considered as a
q"asi?delict onl and not as a crime is not
e@ting"ished even ' a declaration in the
criminal case that the criminal act charged has
not happened or has not 'een committed '
the acc"sed. $rief stated, >e hold, in reitration
of /arcia, that c"lpa aq"ilina incl"des
vol"ntar and negligent acts which ma 'e
p"nisha'le ' law.-
.he petitioners are not see(ing to recover twice for the same
negligent act. $efore 3riminal 3ase No. 8*;2?5 was decided,
the manifested in said criminal case that the were filing a
separate civil action for damages against the owner and driver
of the passenger Feepne 'ased on quasi"delict. .he acq"ittal of
the driver, Ma@imo $orilla, of the crime charged in 3riminal 3ase
No. 8*;2?5 is not a 'ar to the prosec"tion of 3ivil 3ase No. $?
*8, for damages 'ased on q"asi?delict .he so"rce of the
o'ligation so"ght to 'e enforced in 3ivil 3ase No. $?*8, isquasi"
delict, not an act or omission p"nisha'le ' law. Hnder !rticle
**57 of the 3ivil 3ode of the 5hilippines, q"asi?delict and an act
or omission p"nisha'le ' law are two different so"rces of
o'ligation.
Moreover, for the petitioners to prevail in the action for
damages, 3ivil 3ase No. $?*8,, the have onl to esta'lish their
ca"se of action ' preponderance of the evidence.
>:E0E120E, the order of dismissal appealed from is here' set
aside and 3ivil 3ase No. $?*8, is reinstated and remanded to
the lower co"rt for f"rther proceedings, with costs against the
private respondents.
%2 20DE0ED.
57:P9C97 .s DAR
D E C 9 : 9 7 '
.inga, #.9


!t the core of this case is an o'sc"re old special law. .he
iss"e is whether a provision in the law prohi'iting the sale of the
properties donated to the charita'le organi4ation that was
incorporated ' the same law 'ars the implementation of
agrarian reform laws as regards said properties.

5etitioner :ospicio de %an Dose de $arili <I:ospicioJ= is a
charita'le organi4ation created as a 'od corporate in *+25 '
!ct No. 828+. .he law was enacted in order to formall accept
the offer made ' 5edro 3"i and $enigna 3"i to esta'lish a
5
home for the care and s"pport, free of charge, of indigent
invalids and incapacitated and helpless persons.A*B .he
:ospicio was to 'e maintained with the reven"es of the personal
and real properties to 'e endowed ' the 3"is and other donors.
A2B
%ection , of !ct No. 828+ provides that IAtBhe personal
and real propert donated to the A:ospicioB ' its fo"nders or '
other persons shall not 'e sold "nder an consideration.JA8B

2n *0 2cto'er *+-7, the Department of !grarian 0eform
0egional 2ffice <D!002= 0egion E&& iss"ed an order ordaining
that two parcels of land owned ' the :ospicio 'e placed "nder
2peration Land .ransfer in favor of twent?two <22= tillers
thereof as 'eneficiaries. 5residential Decree <5.D.= No. 27, a land
reform law, was cited as legal 'asis for the order. .he :ospicio
filed a motion for the reconsideration of the order with the
Department of !grarian 0eform <D!0= %ecretar, citing the
aforementioned %ection , of !ct No. 828+. &t arg"ed that !ct
No. 828+ is a special law, which co"ld not have 'een repealed
' 5.D. No. 27, a general law, or ' the latter)s general repealing
cla"se.
.he D!0 %ecretar reFected the motion for reconsideration
in an $rder dated 80 March *++7. .herein, the D!0 %ecretar
held that 5.D. No. 27 was a special law, as it applied onl to
partic"lar individ"als in the %tate, specificall the tenants of rice
and corn lands. Moreover, 5.D. No. 27, which covered all rice and
corn lands, provides no e@emptions 'ased on the manner of
acq"isition of the land ' the landowner.A,B
.he $rder of the D!0 %ecretar was assailed in a %etition
for Certiorari filed with the 3o"rt of !ppeals. &n a &ecisionA5B
dated + D"l *+++, the 3o"rt of !ppeals %pecial Eleventh
Division affirmed the D!0 %ecretar)s iss"ance. &t s"stained the
position of the 2ffice of the %olicitor /eneral <2%/= position that
%ection , of !ct No. 828+ was e@pressl repealed not onl '
5.D. No. 27, '"t also ' 0ep"'lic !ct No. ;;57, otherwise (nown
as the 3omprehensive !grarian 0eform Law of *+--, 'oth laws
'eing e@plicit in mandating the distri'"tion of agric"lt"ral lands
to q"alified 'eneficiaries. .he 3o"rt of !ppeals f"rther noted
that the s"'Fect lands did not fall among the e@emptions
provided "nder %ection *0 of 0ep. !ct No. ;;57. 1inall, the
appellate co"rt 'ro"ght into pla the aims of land reform,
affirming as it did Ithe need to distri'"te and create an
economic eq"ili'ri"m among the inha'itants of this land, most
especiall those with less privilege in life, o"r peasant
farmer.JA;B

Hnsatisfied with the 3o"rt of !ppeals) &ecision, the
:ospicio lodged the present %etition for Re'ie(. .he
:ospicio alleges that 5.D. No. 27, the 3!0L, and E@ec"tive
2rder No. ,07A7B all violate %ection *0, !rticle &&& of the
3onstit"tion, which provides that Ino law impairing the
o'ligation of contracts shall 'e passed.J More sedatel, the
:ospicio also arg"es that !ct No. 828+ was not repealed either
' 5.D. No. 27 or 0ep. !ct No. ;;57 and that the forced
disposition of the :ospicio)s landholdings wo"ld incapacitate the
discharge of its charita'le f"nctions, which eq"all promote
social F"stice and the "pliftment of the lives of the less
fort"nate.

2n the other hand, the 2%/, representing respondent
D!0, 'l"ntl replies that !ct No. 828+ was repealed ' 5.D. No.
27 and 0ep. !ct No. ;;57, which do not e@empt lands owned '
eleemosnar or charita'le instit"tions from the coverage of
those agrarian reform laws.

! 'rief recapit"lation of the relevant laws is in order.
BBK
5.D. No. 27, LDecreeing the Emancipation of .enants from
the $ondage of the %oil, .ransferring to .hem 2wnership of the
Land the .ill, and 5roviding the &nstr"ment and Mechanism
.herefor,J has once 'een to"ted as perhaps Ia radical sol"tion in
its pristine sense, one that goes at the root Aof the pro'lem of
land tenancB.JA-B &ts constit"tionalit was "pheld in &e Cha'e)
'. *o+el.A+B .he law generall Iordains the emancipation of
tenants and confers on them ownership of the lands the
till.JA*0B .he following provisions of 5.D. No. 27 have
concreti4ed this polic9

N2>, .:E0E120E, &, 1E0D&N!ND E. M!032%,
5resident of the 5hilippines, ' virt"e of the powers
vested in me ' the 3onstit"tion as 3ommander?
in?3hief of all the !rmed 1orces of the 5hilippines,
and p"rs"ant to 5roclamation No. *0-*, dated
%eptem'er 2*, *+72, and /eneral 2rder No. *
dated %eptem'er 22, *+72, as amended do here'
decree and order the emancipation of all tenant
farmers as of this da, 2cto'er 2*, *+72C

.his shall appl to tenant farmers of private
agric"lt"ral landsAA**BB primaril devoted to rice
and corn "nder a sstem of sharecrop or lease?
tenanc, whether classified as landed estate or notC

.he tenant farmer, whether in land classified as
landed estate or not, shall 'e deemed owner of a
portion constit"ting a famil?si4e farm of five <5=
hectares if not irrigated and three <8= hectares if
irrigatedC


&n all cases, the landowner ma retain an area of
not more than seven <7= hectares if s"ch
landowner is c"ltivating s"ch area or will now
c"ltivate itC


.he 3!0L was not et in effect when the D!002 and the
D!0 iss"ed their respective orders. %aid law vests 5.D. No. 27
with s"ppletor effect insofar as the earlier law does not r"n
inconsistent with the later law.A*2B Hnder %ection , of the 3!0L,
placed "nder coverage are all p"'lic and private agric"lt"ral
lands regardless of ten"rial arrangement and commodit
prod"ced, s"'Fect to the e@empted lands listed in %ection *0
thereof.
>e agree with the 3o"rt of !ppeals that neither 5.D. No.
27 nor the 3!0L e@empts the lands of the :ospicio or other
charita'le instit"tions from the coverage of agrarian reform.
Hltimatel, the res"lt arrived at in the assailed iss"ances sho"ld
'e affirmed. Nonetheless, 'oth the D!0 %ecretar and the
appellate co"rt failed to appreciate what to this 3o"rt is indeed
the decisi.e le0al di+ension of the case.

6
%ection , of !ct No. 828+ prohi'its the sale I"nder an
considerationJ of the lands donated to the :ospicio. $"t the land
transfers mandated "nder 5.D. No. 27 cannot 'e considered a
conventional sale "nder o"r civil laws.

/enerall, sale arises o"t of a contract"al o'ligation. .h"s,
it m"st meet the first essential req"isite of ever contract that is
the presence of consent.A*8B 3onsent implies an act of volition
in entering into the agreement.A*,B .he a'sence or vitiation of
consent renders the sale either void or voida'le.
&n this case, the deprivation of the :ospicio)s propert did
not arise as a conseq"ence of the :ospicio)s consent to the
transfer. .here was no meeting of minds 'etween the :ospicio,
on one hand, and the D!0 or the tenants, on the other, on the
properties and the ca"se which are to constit"te the
contractA*5B that is to serve "ltimatel as the 'asis for the
transfer of ownership of the s"'Fect lands.A*;B &nstead, the
o'ligation to transfer arises ' comp"lsion of law, partic"larl
5.D. No. 27.A*7B

!grarian reform is F"stified "nder the %tate)s inherent
power of eminent domain that ena'les it to forci'l acq"ire
private lands intended for p"'lic "se "pon pament of F"st
compensation to the owner.A*-B &t has even 'een characteri4ed
as 'eond the traditional e@ercise of eminent domain, '"t a
revol"tionar (ind of e@propriation. !s e@po"nded in the
landmar( case of Association of ,mall -ando(ners in the
%hilippines, .nc. '. ,ecretar! of Agrarian Reform, th"s9




. . . . :owever, we do not deal here with the
traditional e@ercise of the power of eminent
domain. *his is not an ordinar eBpropriation
@here onl a speci!ic propert o! relati.el
li+ited area is sou0ht to Ae taCen A the :tate
!ro+ its o@ner !or a speci!ic and perhaps local
purpose. 4hat @e deal @ith here is a
revolutionary Cind o! eBpropriation.

*he eBpropriation Ae!ore us a!!ects all pri.ate
a0ricultural lands @hene.er !ound and o!
@hate.er Cind as lon0 as the are in eBcess o!
the +aBi+u+ retention li+its allo@ed their
o@ners. .his (ind of e@propriation is intended for
the 'enefit not onl of a partic"lar comm"nit or of
a small segment of the pop"lation '"t of the entire
1ilipino nation, from all levels of o"r societ, from
the impoverished farmer to the land?gl"tted owner.
&ts p"rpose does not cover onl the whole territor
of this co"ntr '"t goes 'eond in time to the
foreseea'le f"t"re, which it hopes to sec"re and
edif with the vision and the sacrifice of the
present generation of 1ilipinos. /enerations et to
come are as involved in this program as we are
toda, altho"gh hopef"ll onl as 'eneficiaries of a
richer and more f"lfilling life we will g"arantee to
them tomorrow thro"gh o"r tho"ghtf"lness toda.
!nd, finall, let it not 'e forgotten that it is no less
than the 3onstit"tion itself that has ordained this
revol"tion in the farms, calling for La F"st
distri'"tionL among the farmers of lands that have
heretofore 'een the prison of their dreams '"t can
now 'ecome the (e at least to their deliverance.
A*+B


.his characteri4ation is warranted whether the
e@propriation is operative "nder the 3!0L or 5.D. No. 27, as
'oth laws are (eed into the same governmental o'Fective.
Moreover, "nder 'oth laws, the landowner is entitled to F"st
compensation for the properties ta(en.
.he twin process of e@propriation of lands "nder agrarian
reform and the pament of F"st compensation is a(in to a forced
sale, which has 'een aptl descri'ed in common law
F"risdictions as Isale made "nder the process of the co"rt, and
in the mode prescri'ed ' law,J and Iwhich is not the vol"ntar
act of the owner, s"ch as to satisf a de't, whether of a
mortgage, F"dgment, ta@ lien, etc.JA20B .he term has not 'een
precisel defined in this F"risdiction, '"t reference to the phrase
itself is made in !rticles 228, 282, 287 and 2,8 of the 3ivil
3ode, which "niforml e@empt the famil home Ifrom e@ec"tion,
forced sale, or attachment.JA2*B 6et a forced sale is clearl
different from the sales descri'ed "nder $oo( E of the 3ivil 3ode
which are conventional sales, as it does not arise from the
consens"al agreement of the vendor and vendee, '"t '
comp"lsion of law. %till, since law is recogni4ed as one of the
so"rces of o'ligation, there can 'e no disp"te on the efficac of
a forced sale, so long as it is a"thori4ed ' law.

.he cr"cial q"estion now arises, whether the sale
prohi'ited "nder %ection , of !ct No. 828+ incl"des even a
forced sale. 2f co"rse an overl literal reading of the provision
wo"ld F"stif s"ch incl"sion, '"t appropriatel a more
sophisticated approach to stat"tor constr"ction is warranted.

No sMance is req"ired to discern the intent of %ection ,. &t
ens"res that the properties received ' the :ospicio are not
alienated for profit ' the officers or administrators, in
contravention of the charita'le p"rpose for which the :ospicio
was created. .o an e@tent, it ma(es possi'le the perpet"al
operation of the :ospicio, which was empowered ' law to
operate for an indefinite period, ' ass"ring the e@istence of the
propert on which the :ospicio co"ld operate. >e also do not
do"'t that whatever fr"its of the forci'l retained propert
wo"ld also serve a so"rce of f"nding for the operations of the
:ospicio.

.he sal"tariness of these o'Fectives is 'eond do"'t. .he
interests the see( to protect are present whether the
prohi'ition encompasses onl conventional sales, or even forced
sales. 6et to insist that %ection , li(ewise prohi'its sales or
dispositions ' operation of law wo"ld necessaril impl that the
:ospicio is also 'eond the reach of an form of F"dicial
e@ec"tion. .he charita'le nat"re of the :ospicio does not shield
it from s"scepti'ilit to civil lia'ilit, and an a'sol"te prohi'ition
on sales, whether forced or conventional, deprives whatever
F"dgment creditors of the :ospicio from an effective means of
enforcing relief.

>as it the intent of the framers of !ct No. 828+ to e@empt
7
the :ospicio from all F"dicial processes, even those arising from
civil transactionsN >e do not thin( so. .he contemporaneo"s
constr"ction of %ection , indicates that the prohi'ition intended
' the crafters of the law pertained onl to conventional sales,
and not forced sales. .he law was prom"lgated in *+25, or when
the %panish 3ivil 3ode of *--+ was in effect. .he provisions in
the 3ivil 3ode referring to Iforced salesJ were not derived from
the %panish 3ivil 3ode. 2n the other hand, the consens"al
nat"re of the contract of sale, and of
contracts in general, is recogni4ed "nder the %panish 3ivil 3ode.
Hnder !rticle *2;* of the %panish 3ivil 3ode, there is no
contract "nless the consent of the contracting parties e@ists.A22B

Evidentl, the word Isale,J as contemplated ' the framers of
the law in *+25, pertains to its concept in civil law, with the
req"isite of consent 'eing present. &t cannot refer to sales or
dispositions that arise ' operation of law, s"ch as thro"gh
F"dicial e@ec"tion, or, as in this case, e@propriation.




.h"s, we can hardl characteri4e the acq"isition of the
s"'Fect properties from the :ospicio for the 'enefit of the
tenants as a sale, within the contemplation of %ection , of !ct
No. 828+. .he transfer arises from comp"lsion of law, and not
the desire of an parties. Even if the :ospicio had vol"ntaril
offered to s"rrender its properties to agrarian reform, the
res"lting transaction wo"ld not 'e considered as a conventional
sale, since the o'ligation is created not o"t of the mandate of
the parties, '"t the will of the law.

.he D!002 $rder did note that %ection , of !ct No. 828+
is not applica'le in this case, since the transfer is comp"lsor on
the part of the landowner, "nli(e in
ordinar sale.A28B 0egretta'l, the D!0 %ecretar and the 3o"rt
of !ppeals failed to appl that so"nd principle, preferring to rel
instead on the concl"sion that %ection , was repealed ' 5.D.
No. 27 and the 3!0L.

Nonetheless, even ass"ming for the nonce that %ection ,
contemplates even forced sales s"ch as those thro"gh
e@propriation, we wo"ld agree with the D!0 %ecretar and the
3o"rt of !ppeals that %ection , is deemed repealed ' 5.D. No.
27 and the 3!0L.

.he scope of lands s"'Fected to agrarian reform "nder
these two laws is overwhelming. 5.D. No. 27 applies to all
private agric"lt"ral lands primaril devoted to rice and corn with
tenant farmers "nder a sstem of sharecrop or lease?tenanc,
A2,B while the 3!0L is even 'roader in scope, generall covering
all p"'lic and private agric"lt"ral lands regardless of ten"rial
arrangement and commodit prod"ced. Hnder %ection *0 of the
3!0L, the onl e@empted lands are9


Lands act"all, directl and e@cl"sivel "sed and
fo"nd to 'e necessar for par(s, wildlife, forest
reserves, reforestation, fish sanct"aries and
'reeding gro"nds, watersheds, and mangroves,
national defense, school sites and camp"ses
incl"ding e@perimental farm stations operated '
p"'lic or private schools for ed"cational p"rposes,
seeds and seedlings research and pilot prod"ction
centers, ch"rch sites and convents app"rtenant
thereto, mosq"e sites and &slamic centers
app"rtenant thereto, comm"nal '"rial gro"nds and
cemeteries, penal colonies and penal farms act"all
wor(ed ' the inmates, government and private
research and q"arantine centers and all lands with
eighteen percent <*-O= slope and over, e@cept
those alread developed . . . .


!rg"ing against Itoo literal an interpretationJ of %ection
*0, the :ospicio claims that Ia serio"s readingJ of the provision
is revelator of the spirit and intent of the e@emptions. &t arg"es
that there are three categories of e@emption as9 I<*= those
needed ' the nation, s"ch as par(s, wildlife and forest
reserves, fishponds and for national defense, etc.C <2= those for
ed"cational p"rposes s"ch as school sitesC and <8= for religio"s
and charita'le p"rposes li(e ch"rch sites, etc.JA25B .he :ospicio
then claims it falls "nder the third categor of Ireligio"s and
charita'le p"rposes.JA2;B

.o 'egin with, the terms Icharita'le p"rposesJ and
Icharita'le organi4ationsJ do not appear in %ection *0 of the
3!0L. 1or its part, :ospicio "nd"l ass"mes that charit is
integrall wedded to religiosit, despite the fact that there are
charita'le instit"tions that are avowedl sec"lar in orientation.
>e disagree that there is a clear intent or spirit to incl"de
properties held ' charita'le instit"tions, even those directl
"tili4ed for charita'le p"rposes, in the list of e@empted
properties "nder the 3!0L. %ection *0 does not incl"de
properties which are generall "sed for charita'le p"rposes,
s"ch as orphanages, from the e@emption. Not even all
properties owned ' religio"s instit"tions are e@empt, save for
those places of worship and the conventsP&slamic centers
app"rtenant thereto. Even ass"ming that the :ospicio were
act"all owned and operated ' the 3atholic 3h"rch, it still
wo"ld not 'e e@empted from the 3!0L.




&t is a@iomatic that where a general r"le is esta'lished ' a
stat"te with e@ceptions, the 3o"rt will not c"rtail nor add to the
latter ' implication, and it is a r"le that an e@press e@ception
e@cl"des all others.A27B >e cannot simpl imp"te into a stat"te
an e@ception which the 3ongress did not incorporate. Moreover,
general welfare legislation s"ch as land reform laws is to 'e
constr"ed in favor of the promotion of social F"stice to ens"re
the well?'eing and economic sec"rit of the people.A2-B %ince a
'road constr"ction of the provision listing the properties
e@empted "nder the 3!0L wo"ld tend to denigrate the aims of
agrarian reform, a strict application of these e@ceptions is in
order.

8
.he crafters of 5.D. No. 27 and the 3!0L were pres"ma'l
aware of the radical scale of the intended legislation, and the
massive effects on propert relations nationwide. 3onsidering
the magnit"de of the changes ordained in these laws, it wo"ld
'e foolhard to req"ire or e@pect the legislat"re to denominate
each and ever law that wo"ld 'e conseq"entl or logicall
amended or repealed ' the new laws. :ence, the via'ilit of
general repealing cla"ses, which are e@istent in 'oth 5.D. No.
27A2+B and the 3!0L,A80B as a means of repealing all previo"s
enactments inconsistent with revol"tionar new laws. .he
presence of s"ch general repealing cla"se in a later stat"te
clearl indicates the legislative intent to repeal all prior
inconsistent laws on the s"'Fect matter, whether the prior law is
a general law or a special law, or as in this case, a special
private law. >itho"t s"ch cla"se, a later general law will
ordinaril not repeal a prior special law on the same s"'Fect. $"t
with s"ch cla"se contained in the s"'seq"ent general law, the
prior special law will 'e deemed repealed, as the cla"se is a
clear legislative intent to 'ring a'o"t that res"lt.A8*B

%ho"ld we constr"e %ection , of !ct No. 828+ as 'arring
forced sales thro"gh e@propriation of the properties of the
:ospicio, s"ch prohi'ition wo"ld irreconcila'l co"ntermand 'oth
5.D. No. 27 and the 3!0L and their mandate to s"'Fect the
properties to agrarian reform. .he general repealing cla"ses of
the two later laws wo"ld then s"fficientl repeal %ection , of !ct
No. 828+, to the e@tent that it ma prohi'it e@propriation of
agric"lt"ral lands for agrarian reform.

%till, in light of o"r earlier determinative prono"ncement
that %ection , of !ct No. 828+ does not contemplate forced
sales as part of the prohi'ition therein, there "ltimatel is no
need to ma(e an a'Fect declaration that %ection , has indeed
'een repealed. &ndeed, the 3o"rt considers the prohi'ition on
%ection , as still effect"al, '"t onl insofar as it relates to
conventional sales "nder the 3ivil 3ode.

.he other arg"ments raised ' the :ospicio are similarl
'ereft of merit. &t wants "s to hold that 5.D. No. 27 and the
3!0L, 'oth enacted to implement the "rgentl needed polic of
agrarian reform, violate the non?impairment of contracts cla"se
"nder the $ill of 0ights. 6et the 'road sweep of this arg"ment
ignores the n"ances adopted ' this 3o"rt in interpreting
%ection *0 of !rticle &&&. >e have held that the %tate)s e@ercise
of police powers ma prevail over o'ligations imposed ' private
contracts.A82B Especiall in point is /a+iling '. 01A,A88B wherein
a law a"thori4ing the e@propriation of properties in favor of
q"alified sq"atter families was challenged on the 'asis of the
non?impairment cla"se. .he 3o"rt held9

.he stated o'Fective of the decree, namel, to
resolve the land ten"re pro'lem in the !gno?
Leveri4a area to allow the implementation of the
comprehensive development plans for this
depressed comm"nit, provides the F"stification for
the e@ercise of the police power of the %tate. .he
police power of the %tate has 'een descri'ed as
Lthe most essential, insistent and illimita'le of
powers.L &t is a power inherent in the %tate,
plenar, Ls"ita'l vag"e and far from precisel
defined, rooted in the conception that man in
organi4ing the state and imposing "pon the
government limitations to safeg"ard constit"tional
rights did not intend there' to ena'le individ"al
citi4ens or gro"p of citi4ens to o'str"ct
"nreasona'l the enactment of s"ch sal"tar
meas"re to ens"re comm"nal peace, safet, good
order and welfare.

.he o'Fection raised ' petitioners that 5.D. No.
*-0- impairs the o'ligations of contract is witho"t
merit. .he constit"tional g"arant of non?
impairment of o'ligations of contract is limited '
and s"'Fect to the e@ercise of the police power of
the %tate in the interest of p"'lic health, safet,
morals and general welfare.A8,B



More pertinentl, what the :ospicio alleges wo"ld 'e
impaired is not act"all a contract, '"t a legislative act, !ct No.
828+. .he :ospicio admits F"st as m"ch in its petition, IA!ct No.
828+B is not merel an ordinar contract '"t a contract enacted
into law . . . !ct No. 828+ is th"s a contract within the p"rview
of the impairment cla"se of the 3onstit"tion.JA85B

.he inanit of this arg"ment is palpa'le. .he non?
impairment cla"se reads9 INo law impairing the o'ligation of
contracts shall 'e passed.J &f, as the :ospicio arg"es, the
constit"tional provision applies as well to the impairment of
o'ligations created ' law, then %ection *0, !rticle &&& operates
to 'ar the legislat"re from amending or repealing its own
enactments. .his is of co"rse not the case, as the provision was
intended to shield the impairment of o'ligations created '
private agreements, and not ' legislative fiat. 3ertainl,
3ongress can at an time e@pressl amend or repeal an and all
sections of !ct No. 828+ witho"t fear of violating the non?
impairment cla"se of the 3onstit"tion. &n fine, %ection *0A8;B
of !ct 828+ provides that the privileges granted ' the !ct to
the :ospicio are s"'Fect to the conditions on the grant of
franchises as provided in the Dones Law. %ection 2- of the Dones
Law in t"rn provides in part, th"s9


No franchise or right shall 'e granted to an individ"al,
firm, or corporation e@cept "nder the conditions that it
shall 'e suADect to a+end+ent, alteration, or
repeal A the Con0ress of the Hnited %tates, and
that lands or right of "se and occ"pation of lands th"s
granted shall revert to the government ' which the
were respectivel granted "pon the termination of the
franchises and rights "nder which the were granted or
"pon their revocation or repeal. <Emphasis s"pplied.=


1inall, the :ospicio all"des to its f"nctions as a charita'le
instit"tion, which eq"all promote social F"stice and the
"pliftment of lives of the less fort"nate. &t notes that these
p"rposes are no less no'le than giving land to the landless,
whom the, with perhaps a to"ch of contempt, s"ggest are
Iperfectl health to care for themselves.JA87B
9

.he rationale for holding that the properties of the :ospicio
are covered ' 5.D. No. 27 and 0ep. !ct No. ;;57 is so well?
gro"nded in law that it o'viates an resort to the sordid game of
choosing which of the two competing aspirations is no'ler. .he
'od which wo"ld have "nq"estiona'le discretion in assigning
hierarchical val"es on the modalities ' which social F"stice ma
'e implemented is the legislat"re. Land reform affords the
opport"nit for the landless to 'rea( awa from the vicio"s ccle
of having to perpet"all rel on the (indness of others. $
ref"sing to e@empt properties owned ' charita'le instit"tions or
maintained for charita'le p"rposes from agrarian reform, the
legislat"re has indicated a polic choice which the 3o"rt is
'o"nd to implement.


>:E0E120E, the 5etition is DEN&ED. No prono"ncement
as to costs.

%2 20DE0ED.

%.R. 'o. 182-82 April 1, 2010
PE7P;E 76 *5E P59;9PP9'E:, 5laintiff?!ppellee,
vs.
D7M9'%7 PA'9*ERCE, !cc"sed?!ppellant.
0 E % 2 L H . & 2 N
;E7'ARD7$DE CA:*R7, J.:
$efore Hs is an appeal filed ' Domingo 5aniterce Martine4
<5aniterce= assailing the Decision
*
dated !"g"st 22, 200- of the
3o"rt of !ppeals in 3!?/.0. 30?:.3. No. 0*00*, entitled 5eople
of the 5hilippines v. Domingo 5aniterce,L which affirmed with
modification the Decision dated March 2, 2005 of the 0egional
.rial 3o"rt <0.3= of &riga 3it, $ranch 87, in 3riminal 3ase Nos.
;07;, ;077, ;07-, ;07+, ;0-0 and ;0-*.
2
.he 0.3 fo"nd
5aniterce g"ilt 'eond reasona'le do"'t of the crimes of 0ape
and !cts of Lascivio"sness.
&n fo"r &nformations, all dated 1e'r"ar **, 2002, ,th !ssistant
5rovincial 5rosec"tor :ed %. !ganan charged 5aniterce with
fo"r co"nts of rape of his da"ghter !!!. E@cept for the dates
8
of
the commission of the rapes, the fo"r &nformations identicall
read9
3riminal 3ase Nos. ;07;, ;077, ;07- and ;07+
.hat sometime in the ear *++7 in @ @ @ 5hilippines and within
the F"risdiction of this :onora'le 3o"rt, the a'ove?named
acc"sed, with grave a'"se of confidence 'eing the father of the
offended part with lewd designs ' means of force and
intimidation, did then and there willf"ll, "nlawf"ll and
felonio"sl s"cceed in having carnal (nowledge with his
da"ghter !!!, a *0 ear?old minor, against her will and witho"t
her consent, to her damage and preF"dice in s"ch amo"nt as
ma 'e awarded ' the :onora'le 3o"rt.
,
&n two !mended &nformations, 'oth dated Decem'er 8, 2002,
!ssistant 5rovincial 5rosec"tor Daniel M. %alvadora charged
5aniterce with two co"nts of rape of his other da"ghter $$$.
!side from the dates
5
of the commission of the rapes, the
&nformations similarl state9
3riminal 3ase Nos. ;0-0 and ;0-*
.hat on or a'o"t ;900 o)cloc( in the morning of !"g"st 2;, 2000
@ @ @ 5hilippines, and within the F"risdiction of this :onora'le
3o"rt, the a'ove?named acc"sed, with grave a'"se of
confidence 'eing the father of the offended part with lewd
designs ' means of force and intimidation, did then and there
willf"ll, "nlawf"ll and felonio"sl committed 0!5E "pon his *2?
ear old da"ghter $$$ ' then and there, caressing and
inserting his finger inside her vagina against her will and witho"t
her consent, to her damage and preF"dice in s"ch amo"nt as
ma 'e awarded ' the :onora'le 3o"rt.
;
>hen arraigned, 5aniterce pleaded not g"ilt to all the charges.
!fter trial on the merits, the 0.3 rendered a Decision on March
2, 2005, with the following dispositive portion9
>:E0E120E, in view of all the foregoing, the prosec"tion having
proved the g"ilt of acc"sed Domingo 5aniterce of the crimes of
0ape as charged in the aforementioned &nformations, he is
here' sentenced to s"ffer the penalties of imprisonment, to
wit9
&n 3riminal 3ase No. ;07;, he is here' sentenced to s"ffer the
penalt of imprisonment ranging from 12H0 <,= M2N.:% and
2NE <*= D!6 of arresto maor as minim"m to 12H0 <,= 6E!0%,
.>2 <2= M2N.:% !ND 2NE <*= D!6 of prision correccional as
ma@im"m for !cts of Lascivio"sness "nder !rticle 88; of the
0evised 5enal 3ode as the alleged molestation too( place in !pril
*++7 and 0! -858 too( effect onl on 2cto'er 22, *++7C
&n 3riminal 3ases Nos. ;077, ;07-, ;0-0 and ;0-*, he is
here' sentenced to s"ffer in each ever case the penalt of
imprisonment ranging from 12H0 <,= 6E!0%, .>2 <2= M2N.:%
and 2NE <*= D!6 of prision correccional as minim"m to E&/:.
<-= 6E!0% and 2NE <*= D!6 of prision maor as ma@im"m and
to pa !!! and $$$ 1ift .ho"sand 5esos <550,000.00= each as
moral damages and 1ift .ho"sand 5esos <550,000.00= as
e@emplar damagesC
&n 3riminal 3ase No. ;07+, he is here' sentenced to s"ffer the
penalt of DE!.: and to pa !!! the amo"nt of 1ift .ho"sand
5esos <550,000.00= as moral damages and 1ift .ho"sand 5esos
<550,000.00= as e@emplar damages.
7
2n D"ne ,, 2005, 5aniterce was committed to the $"rea" of
3orrections in M"ntinl"pa 3it.
5aniterce filed an appeal with the 3o"rt of !ppeals, which was
doc(eted as 3!?/.0. 30?:.3. No. 0*00*. .he appellate co"rt
rendered a Decision on !"g"st 22, 200- affirming the 0.3
F"dgment with modifications, to wit9
>:E0E120E, the Decision of the trial co"rt convicting D2M&N/2
5!N&.E03E is here' !11&0MED with the following
modifications9
*. 1or !cts of Lascivio"sness, in 3riminal 3ases Nos.
;077, ;07-, ;0-0 and ;0-*, appellant is here'
sentenced to s"ffer in each AandB ever case an
indeterminate prison term of si@ <;= months of arresto
ma!or, as minim"m, to si@ <;= ears of prision
correccional, as ma@im"m and to pa !!! and $$$
1ift .ho"sand 5esos <550,000.00= each as moral
damages and 1ift .ho"sand 5esos <550,000.00= as
e@emplar damagesC and
2. 1or 0ape, in 3riminal 3ase No. ;07+, appellant is
10
here' sentenced to s"ffer the penalt of Reclusion
%erpetua and to pa !!! the amo"nt of 1ift .ho"sand
5esos <550,000.00= as moral damages and 1ift
.ho"sand 5esos <550,000.00= as e@emplar damages.
.he decision of the trial co"rt finding appellant g"ilt for !cts of
Lascivio"sness in 3riminal 3ase No. ;07; is !11&0MED witho"t
an modification.
-
2n *; %eptem'er 200-, 5aniterce, thro"gh co"nsel, filed a
Notice of !ppeal with the 3o"rt of !ppeals conveing his
intention to appeal to "s the aforementioned Decision dated
!"g"st 22, 200- of the appellate co"rt. .he 3o"rt of !ppeals
gave d"e co"rse to 5aniterce)s Notice of !ppeal on %eptem'er
28, 200-,
+
and directed its D"dicial 0ecords Division to elevate
to "s the original records in 3!?/.0. 30?:.3. No. 0*00*.
2n *5 !pril 200+, we req"ired
*0
the parties to file their
s"pplemental 'riefs, and the Director of the $"rea" of
3orrections to confirm the commitment of 5aniterce at the
$"rea" of 3orrections and s"'mit his report thereon within *0
das from notice.
5aniterce filed his %"pplemental $rief
**
on D"ne *;, 200+, while
the 2ffice of the %olicitor /eneral filed a Manifestation
*2
on D"ne
*-, 200+ stating that it wo"ld no longer file a s"pplemental 'rief
considering that 5aniterce did not raise an new iss"e in his
appeal. 2n D"l 22, 200+, we s"'mitted /.0. No. *-;8-2 for
resol"tion.
:owever, in a letter dated 2cto'er *2, 200+, D"lio !. !rciaga,
the !ssistant Director for 5risons and %ec"rit of the $"rea" of
3orrections, informed "s that 5aniterce had died on !"g"st 22,
200+ at the New $ili'id 5rison :ospital. 5aniterce)s Death
3ertificate was attached to said letter.
/iven 5aniterce)s death, we are now faced with the q"estion of
the effect of s"ch death on the present appeal.
5aniterce)s death on !"g"st 22, 200+, d"ring the pendenc of
his appeal, e@ting"ished not onl his criminal lia'ilities for the
rape and acts of lascivio"sness committed against his
da"ghters, '"t also his civil lia'ilities solel arising from or
'ased on said crimes.2a(phi2
!ccording to !rticle -+<*= of the 0evised 5enal 3ode, criminal
lia'ilit is totall e@ting"ished9
*. $ the death of the convict, as to the personal penaltiesC and
as to pec"niar penalties, lia'ilit therefor is e@ting"ished onl
when the death of the offender occ"rs 'efore final F"dgment.
!ppling the foregoing provision, we laid down the following
g"idelines in 5eople v. $aotas
*8
9
*. Death of the acc"sed pending appeal of his
conviction e@ting"ishes his criminal lia'ilit as well as
the civil lia'ilit 'ased solel thereon. !s opined '
D"stice 0egalado, in this regard, Lthe death of the
acc"sed prior to final F"dgment terminates his criminal
lia'ilit and onl the civil lia'ilit directl arising from
and 'ased solel on the offense committed, i.e., civil
lia'ilit ex delicto in senso strictiore.L
2. 3orollaril, the claim for civil lia'ilit s"rvives
notwithstanding the death of <the= acc"sed, if the same
ma also 'e predicated on a so"rce of o'ligation other
than delict. !rticle **57 of the 3ivil 3ode en"merates
these other so"rces of o'ligation from which the civil
lia'ilit ma arise as a res"lt of the same act or
omission9
a= Law
'= 3ontracts
c= Q"asi?contracts
@ @ @ @
e= Q"asi?delicts
8. >here the civil lia'ilit s"rvives, as e@plained in
N"m'er 2 a'ove, an action for recover therefor ma
'e p"rs"ed '"t onl ' wa of filing a separate civil
action and s"'Fect to %ection *, 0"le *** of the *+-5
0"les on 3riminal 5roced"re as amended. .his separate
civil action ma 'e enforced either against the
e@ec"torPadministrator or the estate of the acc"sed,
depending on the so"rce of o'ligation "pon which the
same is 'ased as e@plained a'ove.
,. 1inall, the private offended part need not fear a
forfeit"re of his right to file this separate civil action '
prescription, in cases where d"ring the prosec"tion of
the criminal action and prior to its e@tinction, the
private?offended part instit"ted together therewith the
civil action. &n s"ch case, the stat"te of limitations on
the civil lia'ilit is deemed interr"pted d"ring the
pendenc of the criminal case, conforma'l with the
provisions of !rticle **55 of the 3ivil 3ode that sho"ld
there' avoid an apprehension on a possi'le privation
of right ' prescription.
*,
3learl, it is "nnecessar for the 3o"rt to r"le on 5aniterce)s
appeal. >hether or not he was g"ilt of the crimes charged has
'ecome irrelevant since, following !rticle -+<*= of the 0evised
5enal 3ode and o"r disq"isition in $aotas, even ass"ming
5aniterce had inc"rred criminal lia'ilities, the were totall
e@ting"ished ' his death. Moreover, 'eca"se 5aniterce)s appeal
was still pending and no final F"dgment of conviction had 'een
rendered against him when he died, his civil lia'ilities arising
from the crimes, 'eing civil lia'ilities e@ delicto, were li(ewise
e@ting"ished ' his death.
3onseq"entl, the appealed Decision dated !"g"st 22, 200- of
the 3o"rt of !ppeals R finding 5aniterce g"ilt of rape and acts
of lascivio"sness, sentencing him to imprisonment, and ordering
him to indemnif his victims R had 'ecome ineffect"al.
>:E0E120E, in view of the death of acc"sed?appellant Domingo
5aniterce Martine4, the Decision dated !"g"st 22, 200- of the
3o"rt of !ppeals in 3!?/.0. 30?:.3. No. 0*00* is %E. !%&DE
and 3riminal 3ase Nos. ;07;, ;077, ;07-, ;07+, ;0-0, and
;0-* 'efore the 0egional .rial 3o"rt of &riga 3it are
D9:M9::ED. 3osts de oficio.
%2 20DE0ED.
%.R. 'o. ;$-0111 6eAruar 1), 1380
MA'=E; M. :ERRA'7, petitioner,
vs.
CE'*RA; ?A'E 76 *5E P59;9PP9'E:F 7&ER:EA: ?A'E
76 MA'9;AF EMER9*7 M. RAM7:, :=:A'A ?. RAM7:,
EMER9*7 ?. RAM7:, JR., J7:E6A RAM7: DE;A RAMA,
57RAC97 DE;A RAMA, A'*7'97 ?. RAM7:, 69;7ME'A
RAM7: ;EDE:MA, R7D7;67 ;EDE:MA, &9C*7R9A RAM7:
*A'J=A*C7, and *E769;7 *A'J=A*C7, respondents.
11

C7'CEPC97', JR., J.:
5etition for mandamus and prohi'ition, with preliminar
inF"nction, that see(s the esta'lishment of Foint and solidar
lia'ilit to the amo"nt of .hree :"ndred 1ift .ho"sand 5esos,
with interest, against respondent 3entral $an( of the 5hilippines
and 2verseas $an( of Manila and its stoc(holders, on the
alleged fail"re of the 2verseas $an( of Manila to ret"rn the time
deposits made ' petitioner and assigned to him, on the gro"nd
that respondent 3entral $an( failed in its d"t to e@ercise strict
s"pervision over respondent 2verseas $an( of Manila to protect
depositors and the general p"'lic.
1
5etitioner also pras that
'oth respondent 'an(s 'e ordered to e@ec"te the proper and
necessar doc"ments to constit"te all properties fisted in !nne@
L7L of the !nswer of respondent 3entral $an( of the 5hilippines
in /.0. No. L?2+852, entitled 3Emerita M. Ramos, et al 's.
Central 4an of the %hilippines,3 into a tr"st f"nd in favor of
petitioner and all other depositors of respondent 2verseas $an(
of Manila. &t is also praed that the respondents 'e prohi'ited
permanentl from honoring, implementing, or doing an act
predicated "pon the validit or efficac of the deeds of
mortgage, assignment. andPor conveance or transfer of
whatever nat"re of the properties listed in !nne@ L7L of the
!nswer of respondent 3entral $an( in /.0. No. 2+852.
2
! so"ght for e@?parte preliminar inF"nction against 'oth
respondent 'an(s was not given ' this 3o"rt.
Hndisp"ted pertinent facts are9
2n 2cto'er *8, *+;; and Decem'er *2, *+;;, petitioner made a
time deposit, for one ear with ;O interest, of 2ne :"ndred
1ift .ho"sand 5esos <5*50,000.00= with the respondent
2verseas $an( of Manila.
-
3oncepcion ManeFa also made a
time deposit, for one ear with ;?SO interest, on March ;,
*+;7, of .wo :"ndred .ho"sand 5esos <5200,000.00= with the
same respondent 2verseas $an( of Manila.
)

2n !"g"st 8*, *+;-, 3oncepcion ManeFa, married to 1eli@'erto
M. %errano, assigned and conveed to petitioner Man"el M.
%errano, her time deposit of 5200,000.00 with respondent
2verseas $an( of Manila.
1

Notwithstanding series of demands for encashment of the
aforementioned time deposits from the respondent 2verseas
$an( of Manila, dating from Decem'er ;, *+;7 "p to March ,,
*+;-, not a single one of the time deposit certificates was
honored ' respondent 2verseas $an( of Manila.
2

0espondent 3entral $an( admits that it is charged with the d"t
of administering the 'an(ing sstem of the 0ep"'lic and it
e@ercises s"pervision over all doing '"siness in the 5hilippines,
'"t denies the petitioner7s allegation that the 3entral $an( has
the d"t to e@ercise a most rigid and stringent s"pervision of
'an(s, impling that respondent 3entral $an( has to watch
ever move or activit of all 'an(s, incl"ding respondent
2verseas $an( of Manila. 0espondent 3entral $an( claims that
as of March *2, *+;5, the 2verseas $an( of Manila, while
operating, was onl on a limited degree of 'an(ing operations
since the Monetar $oard decided in its 0esol"tion No. 822,
dated March *2, *+;5, to prohi'it the 2verseas $an( of Manila
from ma(ing new loans and investments in view of its chronic
reserve deficiencies against its deposit lia'ilities. .his limited
operation of respondent 2verseas $an( of Manila contin"ed "p
to *+;-.
(

0espondent 3entral $an( also denied that it is g"arantor of the
permanent solvenc of an 'an(ing instit"tion as claimed '
petitioner. &t claims that neither the law nor so"nd 'an(ing
s"pervision req"ires respondent 3entral $an( to advertise or
represent to the p"'lic an remedial meas"res it ma impose
"pon chronic delinq"ent 'an(s as s"ch action ma inevita'l
res"lt to panic or 'an( Lr"nsL. &n the ears *+;;?*+;7, there
were no findings to declare the respondent 2verseas $an( of
Manila as insolvent.
8

0espondent 3entral $an( li(ewise denied that a constr"ctive
tr"st was created in favor of petitioner and his predecessor in
interest 3oncepcion ManeFa when their time deposits were made
in *+;; and *+;7 with the respondent 2verseas $an( of Manila
as d"ring that time the latter was not an insolvent 'an( and its
operation as a 'an(ing instit"tion was 'eing salvaged ' the
respondent 3entral $an(.
3

0espondent 3entral $an( avers no (nowledge of petitioner7s
claim that the properties given ' respondent 2verseas $an( of
Manila as additional collaterals to respondent 3entral $an( of
the 5hilippines for the former7s overdrafts and emergenc loans
were acq"ired thro"gh the "se of depositors7 mone, incl"ding
that of the petitioner and 3oncepcion ManeFa.
10

&n /.0. No. L?2+8;2, entitled 3Emerita M. Ramos, et al. 's.
Central 4an of the %hilippines,3 a case was filed ' the
petitioner 0amos, wherein respondent 2verseas $an( of Manila
so"ght to prevent respondent 3entral $an( from closing,
declaring the former insolvent, and liq"idating its assets.
5etitioner Man"el %errano in this case, filed on %eptem'er ;,
*+;-, a motion to intervene in /.0. No. L?2+852, on the gro"nd
that %errano had a real and legal interest as depositor of the
2verseas $an( of Manila in the matter in litigation in that case.
0espondent 3entral $an( in /.0. No. L?2+852 opposed petitioner
Man"el %errano7s motion to intervene in that case, on the
gro"nd that his claim as depositor of the 2verseas $an( of
Manila sho"ld properl 'e ventilated in the 3o"rt of 1irst
&nstance, and if this 3o"rt were to allow %errano to intervene as
depositor in /.0. No. L?2+852, tho"sands of other depositors
wo"ld follow and th"s ca"se an avalanche of cases in this 3o"rt.
&n the resol"tion dated 2cto'er ,, *+;-, this 3o"rt denied
%errano7s, motion to intervene. .he contents of said motion to
intervene are s"'stantiall the same as those of the present
petition.
11
.his 3o"rt rendered decision in /.0. No. L?2+852 on 2cto'er ,,
*+7*, which 'ecame final and e@ec"tor on March 8, *+72,
favora'le to the respondent 2verseas $an( of Manila, with the
dispositive portion to wit9
>:E0E120E, the writs praed for in the
petition are here' granted and respondent
3entral $an(7s resol"tion Nos. *2;8, *2+0 and
*888 <that prohi'it the 2verseas $an( of
Manila to participate in clearing, direct the
s"spension of its operation, and ordering the
liq"idation of said 'an(= are here' ann"lled
and set asideC and said respondent 3entral
$an( of the 5hilippines is directed to compl
with its o'ligations "nder the Eoting .r"st
!greement, and to desist from ta(ing action in
violation therefor. 3osts against respondent
3entral $an( of the 5hilippines.
12
12
$eca"se of the a'ove decision, petitioner in this case filed a
motion for F"dgment in this case, praing for a decision on the
merits, adF"dging respondent 3entral $an( Fointl and severall
lia'le with respondent 2verseas $an( of Manila to the petitioner
for the 5850,000 time deposit made with the latter 'an(, with
all interests d"e thereinC and declaring all assets assigned or
mortgaged ' the respondents 2verseas $an( of Manila and the
0amos gro"ps in favor of the 3entral $an( as tr"st f"nds for the
'enefit of petitioner and other depositors.
1-

$ the ver nat"re of the claims and ca"ses of action against
respondents, the in realit are recover of time deposits pl"s
interest from respondent 2verseas $an( of Manila, and recover
of damages against respondent 3entral $an( for its alleged
fail"re to strictl s"pervise the acts of the other respondent
$an( and protect the interests of its depositors ' virt"e of the
constr"ctive tr"st created when respondent 3entral $an(
req"ired the other respondent to increase its collaterals for its
overdrafts said emergenc loans, said collaterals allegedl
acq"ired thro"gh the "se of depositors mone. .hese claims
sho"d 'e ventilated in the 3o"rt of 1irst &nstance of proper
F"risdiction as >e alread pointed o"t when this 3o"rt denied
petitioner7s motion to intervene in /.0. No. L?2+852. 3laims of
these nat"re are not proper in actions for mandam"s and
prohi'ition as there is no shown clear a'"se of discretion ' the
3entral $an( in its e@ercise of s"pervision over the other
respondent 2verseas $an( of Manila, and if there was, petitioner
here is not the proper part to raise that q"estion, '"t rather
the 2verseas $an( of Manila, as it did in /.0. No. L?2+852.
Neither is there anthing to prohi'it in this case, since the
q"estioned acts of the respondent 3entral $an( <the acts of
dissolving and liq"idating the 2verseas $an( of Manila=, which
petitioner here intends to "se as his 'asis for claims of damages
against respondent 3entral $an(, had 'een accomplished a long
time ago.
1"rthermore, 'oth parties overloo(ed one f"ndamental principle
in the nat"re of 'an( deposits when the petitioner claimed that
there sho"ld 'e created a constr"ctive tr"st in his favor when
the respondent 2verseas $an( of Manila increased its collaterals
in favor of respondent 3entral $an( for the former7s overdrafts
and emergenc loans, since these collaterals were acq"ired '
the "se of depositors7 mone.
$an( deposits are in the nat"re of irreg"lar deposits. .he are
reall loans 'eca"se the earn interest. !ll (inds of 'an(
deposits, whether fi@ed, savings, or c"rrent are to 'e treated as
loans and are to 'e covered ' the law on loans.
1)
3"rrent and
savings deposit are loans to a 'an( 'eca"se it can "se the
same. .he petitioner here in ma(ing time deposits that earn
interests with respondent 2verseas $an( of Manila was in realit
a creditor of the respondent $an( and not a depositor. .he
respondent $an( was in t"rn a de'tor of petitioner. 1ail"re of he
respondent $an( to honor the time deposit is fail"re to pa s
o'ligation as a de'tor and not a 'reach of tr"st arising from
depositar7s fail"re to ret"rn the s"'Fect matter of the deposit
>:E0E120E, the petition is dismissed for lac( of merit, with
costs against petitioner.
%2 20DE0ED.
Antonio, A+ad ,antos, ##., concur.
4arredo 5Chairman6 #., concur in the judgment on the of the
concurring opinion of #ustice Aquino.
:A'*7: &: C7=R* 76 APPEA;:
.:E 211&3E 21 %2L/EN vs !6!L!
D E 3 & % & 2 N


3:&32?N!#!0&2, #.9


$efore this 3o"rt is a 5etition for 0eview on Certiorari,A*B "nder
0"le ,5 of the 0evised 0"les of 3o"rt, filed ' petitioner 2ffice
of the %olicitor /eneral <2%/=, see(ing the reversal and setting
aside of the DecisionA2B dated 25 Dan"ar 2007 of the 3o"rt of
!ppeals in 3!?/.0. 3E No. 7;2+-, which affirmed in toto the
Doint DecisionA8B dated 2+ Ma 2002 of the 0egional .rial 3o"rt
<0.3= of Ma(ati 3it, $ranch *8-, in 3ivil 3ases No. 00?*20- and
No. 00?*2*0C and <2= the 0esol"tionA,B dated *, March 2007 of
the appellate co"rt in the same case which denied the Motion for
0econsideration of the 2%/. .he 0.3 adF"dged that
respondents !ala Land &ncorporated <!ala Land=, 0o'insons
Land 3orporation <0o'insons=, %hangri?la 5la4a 3orporation
<%hangri?la=, and %M 5rime :oldings, &nc. <%M 5rime= co"ld not
'e o'liged to provide free par(ing spaces in their malls to their
patrons and the general p"'lic.

0espondents !ala Land, 0o'insons, and %hangri?la maintain
and operate shopping malls in vario"s locations in Metro Manila.
0espondent %M 5rime constr"cts, operates, and leases o"t
commercial '"ildings and other str"ct"res, among which, are
%M 3it, ManilaC %M 3enterpoint, %ta. Mesa, ManilaC %M 3it,
North !ven"e, Q"e4on 3itC and %M %o"thmall, Las 5iTas.

.he shopping malls operated or leased o"t ' respondents have
par(ing facilities for all (inds of motor vehicles, either ' wa of
par(ing spaces inside the mall '"ildings or in separate '"ildings
andPor adFacent lots that are solel devoted for "se as par(ing
spaces. 0espondents !ala Land, 0o'insons, and %M 5rime
spent for the constr"ction of their own par(ing facilities.
0espondent %hangri?la is renting its par(ing facilities, consisting
of land and '"ilding specificall "sed as par(ing spaces, which
were constr"cted for the lessor)s acco"nt.

0espondents e@pend for the maintenance and administration of
their respective par(ing facilities. .he provide sec"rit
personnel to protect the vehicles par(ed in their par(ing facilities
and maintain order within the area. &n t"rn, the collect the
following par(ing fees from the persons ma(ing "se of their
par(ing facilities, regardless of whether said persons are mall
patrons or not9

Respondent

ParCin0 6ees
!ala Land 2n wee(das, 525.00 for the first fo"r ho"rs and
13
5*0.00 for ever s"cceeding ho"rC on wee(ends,
flat rate of 525.00 per da

0o'insons 520.00 for the first three ho"rs and 5*0.00 for
ever s"cceeding ho"r

%hangri?la 1lat rate of 580.00 per da

%M 5rime 5*0.00 to 520.00 <depending on whether the
par(ing space is o"tdoors or indoors= for the first
three ho"rs and 5+ min"tes, and 5*0.00 for
ever s"cceeding ho"r or fraction thereof


.he par(ing tic(ets or cards iss"ed ' respondents to vehicle
owners contain the stip"lation that respondents shall not 'e
responsi'le for an loss or damage to the vehicles par(ed in
respondents) par(ing facilities.

&n *+++, the %enate 3ommittees on .rade and 3ommerce and
on D"stice and :"man 0ights cond"cted a Foint investigation for
the following p"rposes9 <*= to inq"ire into the legalit of the
prevalent practice of shopping malls of charging par(ing feesC
<2= ass"ming arguendo that the collection of par(ing fees was
legall a"thori4ed, to find o"t the 'asis and reasona'leness of
the par(ing rates charged ' shopping mallsC and <8= to
determine the legalit of the polic of shopping malls of dening
lia'ilit in cases of theft, ro''er, or carnapping, ' invo(ing the
waiver cla"se at the 'ac( of the par(ing tic(ets. %aid %enate
3ommittees invited the top e@ec"tives of respondents, who
operate the maFor malls in the co"ntrC the officials from the
Department of .rade and &nd"str <D.&=, Department of 5"'lic
>or(s and :ighwas <D5>:=, Metro Manila Development
!"thorit <MMD!=, and other local government officialsC and the
5hilippine Motorists !ssociation <5M!= as representative of the
cons"mers) gro"p.

!fter three p"'lic hearings held on 80 %eptem'er, 8 Novem'er,
and * Decem'er *+++, the afore?mentioned %enate 3ommittees
Fointl iss"ed %enate 3ommittee 0eport No. 225A5B on 2 Ma
2000, in which the concl"ded9

&n view of the foregoing, the 3ommittees find that the collection
of par(ing fees ' shopping malls is contrar to the National
$"ilding 3ode and is therefor AsicB illegal. >hile it is tr"e that
the 3ode merel req"ires malls to provide par(ing spaces,
witho"t specifing whether it is free or not, 'oth 3ommittees
'elieve that the reasona'le and logical interpretation of the
3ode is that the par(ing spaces are for free. .his interpretation
is not onl reasona'le and logical '"t finds s"pport in the act"al
practice in other co"ntries li(e the Hnited %tates of !merica
where par(ing spaces owned and operated ' mall owners are
free of charge.

1ig"rativel spea(ing, the 3ode has Ie@propriatedJ the land for
par(ing R something similar to the s"'division law which req"ire
developers to devote so m"ch of the land area for par(s.

Moreover, !rticle && of 0.!. No. +78, <3ons"mer !ct of the
5hilippines= provides that Iit is the polic! of the ,tate to protect
the interest of the consumers, promote the general (elfare and
esta+lish standards of conduct for +usiness and industr!.7
2'vio"sl, a contrar interpretation <i.e., F"stifing the
collection of par(ing fees= wo"ld 'e going against the declared
polic of 0.!. 78+,.

%ection 20* of the National $"ilding 3ode gives the
responsi'ilit for the administration and enforcement of the
provisions of the 3ode, incl"ding the imposition of penalties for
administrative violations thereof to the %ecretar of 5"'lic
>or(s. .his set "p, however, is not 'eing carried o"t in realit.

&n the position paper s"'mitted ' the Metropolitan Manila
Development !"thorit <MMD!=, its chairman, DeFomar 3. $ina,
acc"ratel pointed o"t that the %ecretar of the D5>: is
responsi'le for the implementationPenforcement of the National
$"ilding 3ode. !fter the enactment of the Local /overnment
3ode of *++*, the local government "nits <L/H)s= were tas(ed to
discharge the reg"lator powers of the D5>:. :ence, in the
local level, the $"ilding 2fficials enforce all r"lesP reg"lations
form"lated ' the D5>: relative to all '"ilding plans,
specifications and designs incl"ding par(ing space
req"irements. .here is, however, no single national department
or agenc directl tas(ed to s"pervise the enforcement of the
provisions of the 3ode on par(ing, notwithstanding the national
character of the law.A;B


%enate 3ommittee 0eport No. 225, th"s, contained the following
recommendations9

&n light of the foregoing, the 3ommittees on .rade and
3ommerce and D"stice and :"man 0ights here' recommend
the following9

*. .he 2ffice of the %olicitor /eneral sho"ld instit"te the
necessar action to enFoin the collection of par(ing fees as well
as to enforce the penal sanction provisions of the National
$"ilding 3ode. .he 2ffice of the %olicitor /eneral sho"ld
li(ewise st"d how ref"nd can 'e e@acted from mall owners who
contin"e to collect par(ing fees.

2. .he Department of .rade and &nd"str p"rs"ant to the
provisions of 0.!. No. 78+,, otherwise (nown as the 3ons"mer
!ct of the 5hilippines sho"ld enforce the provisions of the 3ode
relative to par(ing. .owards this end, the D.& sho"ld form"late
the necessar implementing r"les and reg"lations on par(ing in
shopping malls, with prior cons"ltations with the local
14
government "nits where these are located. 1"rthermore, the
D.&, in coordination with the D5>:, sho"ld 'e empowered to
reg"late and s"pervise the constr"ction and maintenance of
par(ing esta'lishments.

8. 1inall, 3ongress sho"ld amend and "pdate the National
$"ilding 3ode to e@pressl prohi'it shopping malls from
collecting par(ing fees ' at the same time, prohi'it them from
invo(ing the waiver of lia'ilit.A7B


0espondent %M 5rime thereafter received information that,
p"rs"ant to %enate 3ommittee 0eport No. 225, the D5>:
%ecretar and the local '"ilding officials of Manila, Q"e4on 3it,
and Las 5iTas intended to instit"te, thro"gh the 2%/, an action
to enFoin respondent %M 5rime and similar esta'lishments from
collecting par(ing fees, and to impose "pon said esta'lishments
penal sanctions "nder 5residential Decree No. *0+;, otherwise
(nown as the National $"ilding 3ode of the 5hilippines <National
$"ilding 3ode=, and its &mplementing 0"les and 0eg"lations
<&00=. >ith the threatened action against it, respondent %M
5rime filed, on 8 2cto'er 2000, a 5etition for Declarator
0eliefA-B "nder 0"le ;8 of the 0evised 0"les of 3o"rt, against
the D5>: %ecretar and local '"ilding officials of Manila,
Q"e4on 3it, and Las 5iTas. %aid 5etition was doc(eted as 3ivil
3ase No. 00?*20- and assigned to the 0.3 of Ma(ati 3it,
$ranch *8-, presided over ' D"dge %i@to Marella, Dr. <D"dge
Marella=. &n its 5etition, respondent %M 5rime praed for
F"dgment9

a= Declaring 0"le U&U of the
&mplementing 0"les and 0eg"lations of the
National $"ilding 3ode as "ltra vires, hence,
"nconstit"tional and voidC

'= Declaring Aherein respondent %M
5rimeB)s clear legal right to lease par(ing
spaces app"rtenant to its department stores,
malls, shopping centers and other commercial
esta'lishmentsC and

c= Declaring the National $"ilding 3ode
of the 5hilippines &mplementing 0"les and
0eg"lations as ineffective, not having 'een
p"'lished once a wee( for three <8=
consec"tive wee(s in a newspaper of general
circ"lation, as prescri'ed ' %ection 2** of
5residential Decree No. *0+;.

A0espondent %M 5rimeB f"rther pras for s"ch
other reliefs as ma 'e deemed F"st and
eq"ita'le "nder the premises.A+B


.he ver ne@t da, , 2cto'er 2000, the 2%/ filed a
5etition for Declarator 0elief and &nF"nction <with 5raer for
.emporar 0estraining 2rder and >rit of 5reliminar &nF"nction=
A*0B against respondents. .his 5etition was doc(eted as 3ivil
3ase No. 00?*2*0 and raffled to the 0.3 of Ma(ati, $ranch *85,
presided over ' D"dge 1rancisco $. &'a <D"dge &'a=.
5etitioner praed that the 0.39

*. !fter s"mmar hearing, a temporar
restraining order and a writ of preliminar
inF"nction 'e iss"ed restraining respondents
from collecting par(ing fees from their
c"stomersC and

2. !fter hearing, F"dgment 'e rendered
declaring that the practice of respondents in
charging par(ing fees is violative of the
National $"ilding 3ode and its &mplementing
0"les and 0eg"lations and is therefore invalid,
and ma(ing permanent an inF"nctive writ
iss"ed in this case.

2ther reliefs F"st and eq"ita'le "nder the
premises are li(ewise praed for.A**B


2n 28 2cto'er 2000, D"dge &'a of the 0.3 of Ma(ati
3it, $ranch *85, iss"ed an 2rder consolidating 3ivil 3ase No.
00?*2*0 with 3ivil 3ase No. 00?*20- pending 'efore D"dge
Marella of 0.3 of Ma(ati, $ranch *8-.

!s a res"lt of the pre?trial conference held on the
morning of - !"g"st 200*, the 0.3 iss"ed a 5re?.rial 2rderA*2B
of even date which limited the iss"es to 'e resolved in 3ivil
3ases No. 00?*20- and No. 00?*2*0 to the following9

*. 3apacit of the plaintiff A2%/B in 3ivil 3ase No. 00?*2*0
to instit"te the present proceedings and relative thereto whether
the controvers in the collection of par(ing fees ' mall owners
is a matter of p"'lic welfare.

2. >hether declarator relief is proper.

8. >hether respondent !ala Land, 0o'insons,
%hangri?La and %M 5rime are o'ligated to provide par(ing
spaces in their malls for the "se of their patrons or the p"'lic in
general, free of charge.

,. Entitlement of the parties of AsicB award of
damages.A*8B


2n 2+ Ma 2002, the 0.3 rendered its Doint Decision in
3ivil 3ases No. 00?*20- and No. 00?*2*0.

.he 0.3 resolved the first two iss"es affirmativel. &t
r"led that the 2%/ can initiate 3ivil 3ase No. 00?*2*0 "nder
5residential Decree No. ,7- and the !dministrative 3ode of
*+-7.A*,B &t also fo"nd that all the req"isites for an action for
declarator relief were present, to wit9

.he req"isites for an action for declarator
relief are9 <a= there is a F"sticia'le
controversC <'= the controvers is 'etween
15
persons whose interests are adverseC <c= the
part see(ing the relief has a legal interest in
the controversC and <d= the iss"e involved is
ripe for F"dicial determination.

%M, the petitioner in 3ivil 3ase No. 00*?*20-
AsicB is a mall operator who stands to 'e
affected directl ' the position ta(en ' the
government officials s"ed namel the
%ecretar of 5"'lic :ighwas and the $"ilding
2fficials of the local government "nits where it
operates shopping malls. .he 2%/ on the
other hand acts on a matter of p"'lic interest
and has ta(en a position adverse to that of the
mall owners whom it s"ed. .he constr"ction of
new and 'igger malls has 'een anno"nced, a
matter which the 3o"rt can ta(e F"dicial notice
and the "nsettled iss"e of whether mall
operators sho"ld provide par(ing facilities, free
of charge needs to 'e resolved.A*5B


!s to the third and most contentio"s iss"e, the 0.3
prono"nced that9

.he $"ilding 3ode, which is the ena'ling law
and the &mplementing 0"les and 0eg"lations
do not impose that par(ing spaces shall 'e
provided ' the mall owners free of charge.
!'sent s"ch directiveA,B !ala Land,
0o'insons, %hangri?la and %M A5rimeB are
"nder no o'ligation to provide them for free.
!rticle **5- of the 3ivil 3ode is clear9

I2'ligations derived from law
are not pres"med. 2nl
those e@pressl determined
in this 3ode or in special
laws are demanda'le and
shall 'e reg"lated ' the
precepts of the law which
esta'lishes themC and as to
what has not 'een foreseen,
' the provisions of this
$oo( <*0+0=.AJB

@ @ @ @

.he provision on ratios of par(ing slots to
several varia'les, li(e shopping floor area or
c"stomer area fo"nd in 0"le U&U of the
&mplementing 0"les and 0eg"lations cannot 'e
constr"ed as a directive to provide free
par(ing spaces, 'eca"se the ena'ling law, the
$"ilding 3ode does not so provide. @ @ @.

.o compel !ala Land, 0o'insons, %hangri?La
and %M A5rimeB to provide par(ing spaces for
free can 'e considered as an "nlawf"l ta(ing
of propert right witho"t F"st compensation.

5ar(ing spaces in shopping malls are privatel
owned and for their "se, the mall operators
collect fees. .he legal relationship co"ld 'e
either lease or deposit. &n either caseA,B the
mall owners have the right to collect mone
which translates into income. %ho"ld par(ing
spaces 'e made free, this right of mall owners
shall 'e gone. .his, witho"t F"st
compensation. 1"rther, loss of effective
control over their propert will ens"e which is
frowned "pon ' law.

.he presence of par(ing spaces can 'e viewed
in another light. .he can 'e loo(ed at as
necessar facilities to entice the p"'lic to
increase patronage of their malls 'eca"se
witho"t par(ing spaces, going to their malls
will 'e inconvenient. .hese areA,B howeverA,B
'"siness considerations which mall operators
will have to decide for themselves. .he are
not s"fficient to F"stif a legal concl"sion, as
the 2%/ wo"ld li(e the 3o"rt to adopt that it is
the o'ligation of the mall owners to provide
par(ing spaces for free.A*;B


.he 0.3 then held that there was no s"fficient evidence to
F"stif an award for damages.

.he 0.3 finall decreed in its 2+ Ma 2002 Doint Decision
in 3ivil 3ases No. 00?*20- and No. 00?*2*0 that9

120 .:E 0E!%2N% /&EEN, the 3o"rt declares
that !ala LandA,B &nc., 0o'insons Land
3orporation, %hangri?la 5la4a 3orporation and
%M 5rime :oldingsA,B &nc. are not o'ligated to
provide par(ing spaces in their malls for the
"se of their patrons or p"'lic in general, free
of charge.

!ll co"nterclaims in 3ivil 3ase No. 00?*2*0 are
dismissed.

No prono"ncement as to costs.A*7B


3!?/.0. 3E No. 7;2+- involved the separate appeals of
the 2%/A*-B and respondent %M 5rimeA*+B filed with the 3o"rt
of !ppeals. .he sole assignment of error of the 2%/ in its
!ppellant)s $rief was9

.:E .0&!L 32H0. E00ED &N :2LD&N/ .:!.
.:E N!.&2N!L $H&LD&N/ 32DE D&D N2.
&N.END M!LL 5!0V&N/ %5!3E% .2 $E 10EE
21 3:!0/EACBA20B


while the fo"r errors assigned ' respondent %M 5rime in its
!ppellant)s $rief were9

&

.:E .0&!L 32H0. E00ED &N 1!&L&N/ .2
DE3L!0E 0HLE U&U 21 .:E &M5LEMEN.&N/
0HLE% !% :!E&N/ $EEN EN!3.ED 8-TRA
9.RE,, :EN3E, HN32N%.&.H.&2N!L !ND
E2&D.
16

&&

.:E .0&!L 32H0. E00ED &N 1!&L&N/ .2
DE3L!0E .:E &M5LEMEN.&N/ 0HLE%
&NE11E3.&EE 120 N2. :!E&N/ $EEN
5H$L&%:ED !% 0EQH&0ED $6 L!>.

&&&

.:E .0&!L 32H0. E00ED &N 1!&L&N/ .2
D&%M&%% .:E 2%/)% 5E.&.&2N 120
DE3L!0!.206 0EL&E1 !ND &NDHN3.&2N 120
1!&LH0E .2 EU:!H%. !DM&N&%.0!.&EE
0EMED&E%.

&E

.:E .0&!L 32H0. E00ED &N 1!&L&N/ .2
DE3L!0E .:!. .:E 2%/ :!% N2 LE/!L
3!5!3&.6 .2 %HE !NDP20 .:!. &. &% N2. !
0E!L 5!0.6?&N?&N.E0E%. &N .:E &N%.!N.
3!%E.A2*B


0espondent 0o'insons filed a Motion to Dismiss !ppeal of
the 2%/ on the gro"nd that the lone iss"e raised therein
involved a p"re q"estion of law, not reviewa'le ' the 3o"rt of
!ppeals.

.he 3o"rt of !ppeals prom"lgated its Decision in 3!?/.0.
3E No. 7;2+- on 25 Dan"ar 2007. .he appellate co"rt agreed
with respondent 0o'insons that the appeal of the 2%/ sho"ld
s"ffer the fate of dismissal, since Ithe iss"e on whether or not
the National $"ilding 3ode and its implementing r"les req"ire
shopping mall operators to provide par(ing facilities to the p"'lic
for freeJ was evidentl a q"estion of law. Even so, since 3!?
/.0. 3E No. 7;2+- also incl"ded the appeal of respondent %M
5rime, which raised iss"es worth of consideration, and in order
to satisf the demands of s"'stantial F"stice, the 3o"rt of
!ppeals proceeded to r"le on the merits of the case.

&n its Decision, the 3o"rt of !ppeals affirmed the capacit
of the 2%/ to initiate 3ivil 3ase No. 00?*2*0 'efore the 0.3 as
the legal representative of the government,A22B and as the one
dep"ti4ed ' the %enate of the 0ep"'lic of the 5hilippines
thro"gh %enate 3ommittee 0eport No. 225.

.he 3o"rt of !ppeals reFected the contention of respondent %M
5rime that the 2%/ failed to e@ha"st administrative remedies.
.he appellate co"rt e@plained that an administrative review is
not a condition precedent to F"dicial relief where the q"estion in
disp"te is p"rel a legal one, and nothing of an administrative
nat"re is to 'e or can 'e done.

.he 3o"rt of !ppeals li(ewise ref"sed to r"le on the validit of
the &00 of the National $"ilding 3ode, as s"ch iss"e was not
among those the parties had agreed to 'e resolved ' the 0.3
d"ring the pre?trial conference for 3ivil 3ases No. 00?*20- and
No. 00?*2*0. &ss"es cannot 'e raised for the first time on
appeal. 1"rthermore, the appellate co"rt fo"nd that the
controvers co"ld 'e settled on other gro"nds, witho"t to"ching
on the iss"e of the validit of the &00. &t referred to the settled
r"le that co"rts sho"ld refrain from passing "pon the
constit"tionalit of a law or implementing r"les, 'eca"se of the
principle that 'ars F"dicial inq"ir into a constit"tional q"estion,
"nless the resol"tion thereof is indispensa'le to the
determination of the case.

Lastl, the 3o"rt of !ppeals declared that %ection -08 of the
National $"ilding 3ode and 0"le U&U of the &00 were clear and
needed no f"rther constr"ction. %aid provisions were onl
intended to control the occ"panc or congestion of areas and
str"ct"res. &n the a'sence of an e@press and clear provision of
law, respondents co"ld not 'e o'liged and e@pected to provide
par(ing slots free of charge.

.he fallo of the 25 Dan"ar 2007 Decision of the 3o"rt of
!ppeals reads9

45ERE67RE, premises considered, the instant
appeals are DE'9ED. !ccordingl, appealed
Decision is here' A669RMED in toto.A28B


&n its 0esol"tion iss"ed on *, March 2007, the 3o"rt of
!ppeals denied the Motion for 0econsideration of the 2%/,
finding that the gro"nds relied "pon ' the latter had alread
'een caref"ll considered, eval"ated, and passed "pon ' the
appellate co"rt, and there was no strong and cogent reason to
modif m"ch less reverse the assailed F"dgment.

.he 2%/ now comes 'efore this 3o"rt, via the instant
5etition for 0eview, with a single assignment of error9

.:E 32H0. 21 !55E!L% %E0&2H%L6 E00ED &N
!11&0M&N/ .:E 0HL&N/ 21 .:E L2>E0
32H0. .:!. 0E%52NDEN.% !0E N2.
2$L&/ED .2 502E&DE 10EE 5!0V&N/ %5!3E%
.2 .:E&0 3H%.2ME0% 20 .:E 5H$L&3.A2,B


.he 2%/ arg"es that respondents are mandated to
provide free par(ing ' %ection -08 of the National $"ilding
3ode and 0"le U&U of the &00.

!ccording to %ection -08 of the National $"ilding 3ode9

:EC*97' 80-. Percenta0e o! :ite
7ccupanc

<a= Ma@im"m site occ"panc shall 'e
governed ' the "se, tpe of constr"ction, and
height of the '"ilding and the "se, area,
nat"re, and location of the siteC and s"'Fect to
the provisions of the local 4oning req"irements
and in accordance with the r"les and
reg"lations prom"lgated ' the %ecretar.


&n connection therewith, 0"le U&U of the old &00,A25B
provides9
17

R=;E >9> G PARE9'% A'D ;7AD9'%
:PACE REH=9REME'*:

5"rs"ant to %ection -08 of the National
$"ilding 3ode <5D *0+;= providing for
ma@im"m site occ"panc, the following
provisions on par(ing and loading space
req"irements shall 'e o'served9

*. .he par(ing space
ratings listed 'elow are
minim"m off?street
req"irements for specific
"sesPocc"pancies for
'"ildingsPstr"ct"res9

*.* .he si4e of
an average
a"tomo'ile par(ing
slot shall 'e
comp"ted as 2.,
meters ' 5.00
meters for
perpendic"lar or
diagonal par(ing,
2.00 meters ' ;.00
meters for parallel
par(ing. ! tr"c( or
'"s par(ingPloading
slot shall 'e
comp"ted at a
minim"m of 8.;0
meters ' *2.00
meters. .he par(ing
slot shall 'e drawn
to scale and the total
n"m'er of which
shall 'e indicated on
the plans and
specified whether or
not par(ing
accommodations,
are attendant?
managed. <%ee
%ection 2 for
comp"tation of
par(ing
req"irements=.

@ @ @ @

*.7
Neigh'orhood
shopping center R *
slotP*00 sq. m. of
shopping floor area


.he 2%/ avers that the aforeq"oted provisions sho"ld
'e read together with %ection *02 of the National $"ilding 3ode,
which declares9

:EC*97' 102. Declaration o! Polic

&t is here' declared to 'e the polic of the
%tate to safeg"ard life, health, propert, and
p"'lic welfare, consistent with the principles of
so"nd environmental management and
controlC and to this end, ma(e it the p"rpose
of this 3ode to provide for all '"ildings and
str"ct"res, a framewor( of minim"m standards
and req"irements to reg"late and control their
location, site, design, q"alit of materials,
constr"ction, "se, occ"panc, and
maintenance.


.he req"irement of free?of?charge par(ing, the 2%/ arg"es,
greatl contri'"tes to the aim of safeg"arding Ilife, health,
propert, and p"'lic welfare, consistent with the principles of
so"nd environmental management and control.J !deq"ate
par(ing spaces wo"ld contri'"te greatl to alleviating traffic
congestion when complemented ' q"ic( and eas access
thereto 'eca"se of free?charge par(ing. Moreover, the power to
reg"late and control the "se, occ"panc, and maintenance of
'"ildings and str"ct"res carries with it the power to impose fees
and, conversel, to control ?? partiall or, as in this case,
a'sol"tel ?? the imposition of s"ch fees.

.he 3o"rt finds no merit in the present 5etition.

.he e@plicit directive of the afore?q"oted stat"tor and
reg"lator provisions, garnered from a plain reading thereof, is
that respondents, as operatorsPlessors of neigh'orhood
shopping centers, sho"ld provide par(ing and loading spaces, in
accordance with the minim"m ratio of one slot per *00 sq"are
meters of shopping floor area. .here is nothing therein
pertaining to the collection <or non?collection= of par(ing fees '
respondents. &n fact, the term Ipar(ing feesJ cannot even 'e
fo"nd at all in the entire National $"ilding 3ode and its &00.

%tat"tor constr"ction has it that if a stat"te is clear
and "neq"ivocal, it m"st 'e given its literal meaning and applied
witho"t an attempt at interpretation.A2;B %ince %ection -08 of
the National $"ilding 3ode and 0"le U&U of its &00 do not
mention par(ing fees, then simpl, said provisions do not
reg"late the collection of the same. .he 0.3 and the 3o"rt of
!ppeals correctl applied !rticle **5- of the New 3ivil 3ode,
which states9

!rt. **5-. 2'ligations derived from law are
not pres"med. 2nl those eBpressl
deter+ined in this 3ode or in special laws are
demanda'le, and shall 'e reg"lated ' the
precepts of the law which esta'lishes themC
and as to what has not 'een foreseen, ' the
provisions of this $oo(. <Emphasis o"rs.=


:ence, in order to 'ring the matter of par(ing fees
within the am'it of the National $"ilding 3ode and its &00, the
2%/ had to resort to specio"s and fee'le arg"mentation, in
which the 3o"rt cannot conc"r.

.he 2%/ cannot rel on %ection *02 of the National
18
$"ilding 3ode to e@pand the coverage of %ection -08 of the
same 3ode and 0"le U&U of the &00, so as to incl"de the
reg"lation of par(ing fees. .he 2%/ limits its citation to the first
part of %ection *02 of the National $"ilding 3ode declaring the
polic of the %tate Ito safeg"ard life, health, propert, and p"'lic
welfare, consistent with the principles of so"nd environmental
management and controlJC '"t totall ignores the second part of
said provision, which reads, Iand to this end, ma(e it the
p"rpose of this 3ode to provide for all '"ildings and str"ct"res,
a !ra+e@orC o! +ini+u+ standards and re/uire+ents to
reg"late and control their location, site, design, q"alit of
materials, constr"ction, "se, occ"panc, and maintenance.J
>hile the first part of %ection *02 of the National $"ilding 3ode
las down the %tate polic, it is the second part thereof that
e@plains how said polic shall 'e carried o"t in the 3ode.
%ection *02 of the National $"ilding 3ode is not an all?
encompassing grant of reg"lator power to the D5>: %ecretar
and local '"ilding officials in the name of life, health, propert,
and p"'lic welfare. 2n the contrar, it limits the reg"lator
power of said officials to ens"ring that the minim"m standards
and req"irements for all '"ildings and str"ct"res, as set forth in
the National $"ilding 3ode, are complied with.

3onseq"entl, the 2%/ cannot claim that in addition to
fi@ing the minim"m req"irements for par(ing spaces for
'"ildings, 0"le U&U of the &00 also mandates that s"ch par(ing
spaces 'e provided ' '"ilding owners free of charge. &f 0"le
U&U is not covered ' the ena'ling law, then it cannot 'e added
to or incl"ded in the implementing r"les. .he r"le?ma(ing
power of administrative agencies m"st 'e confined to details for
reg"lating the mode or proceedings to carr into effect the law
as it has 'een enacted, and it cannot 'e e@tended to amend or
e@pand the stat"tor req"irements or to em'race matters not
covered ' the stat"te. !dministrative reg"lations m"st alwas
'e in harmon with the provisions of the law 'eca"se an
res"lting discrepanc 'etween the two will alwas 'e resolved in
favor of the 'asic law.A27B

1rom the 0.3 all the wa to this 3o"rt, the 2%/
repeatedl referred to Repu+lic '. :on)alesA2-B and Cit! of
$)amis '. -umapasA2+B to s"pport its position that the %tate
has the power to reg"late par(ing spaces to promote the health,
safet, and welfare of the p"'licC and it is ' virt"e of said
power that respondents ma 'e req"ired to provide free par(ing
facilities. .he 2%/, tho"gh, failed to consider the s"'stantial
differences in the fact"al and legal 'ac(gro"nds of these two
cases from those of the 5etition at 'ar.

&n Repu+lic, the M"nicipalit of Mala'on so"ght to eFect
the occ"pants of two parcels of land of the p"'lic domain to give
wa to a road?widening proFect. &t was in this conte@t that the
3o"rt prono"nced9

&ndiscriminate par(ing along 1. %evilla
$o"levard and other main thoro"ghfares was
prevalentC this, of co"rse, ca"sed the '"ild "p
of traffic in the s"rro"nding area to the great
discomfort and inconvenience of the p"'lic
who "se the streets. .raffic congestion
constit"tes a threat to the health, welfare,
safet and convenience of the people and it
can onl 'e s"'stantiall relieved ' widening
streets and providing adeq"ate par(ing areas.


.he 3o"rt, in Cit! of $)amis, declared that the 3it had
'een clothed with f"ll power to control and reg"late its streets
for the p"rpose of promoting p"'lic health, safet and welfare.
.he 3it can reg"late the time, place, and manner of par(ing in
the streets and p"'lic placesC and charge minimal fees for the
street par(ing to cover the e@penses for s"pervision, inspection
and control, to ens"re the smooth flow of traffic in the environs
of the p"'lic mar(et, and for the safet and convenience of the
p"'lic.

Repu+lic and Cit! of $)amis involved par(ing in the
local streetsC in contrast, the present case deals with privatel
owned par(ing facilities availa'le for "se ' the general p"'lic.
&n Repu+lic and Cit! of $)amis, the concerned local
governments reg"lated par(ing p"rs"ant to their power to
control and reg"late their streetsC in the instant case, the D5>:
%ecretar and local '"ilding officials reg"late par(ing p"rs"ant
to their a"thorit to ens"re compliance with the minim"m
standards and req"irements "nder the National $"ilding 3ode
and its &00. >ith the difference in s"'Fect matters and the
'ases for the reg"lator powers 'eing invo(ed, Repu+lic and
Cit! of $)amis do not constit"te precedents for this case.

&ndeed, Repu+lic and Cit! of $)amis 'oth contain
prono"ncements that wea(en the position of the 2%/ in the
case at 'ar. &n Repu+lic, the 3o"rt, instead of placing the
'"rden on private persons to provide par(ing facilities to the
general p"'lic, mentioned the trend in other F"risdictions
wherein the m"nicipal governments themselves too( the
initiative to ma(e more par(ing spaces availa'le so as to
alleviate the traffic pro'lems, th"s9

Hnder the Land .ransportation and .raffic
3ode, par(ing in designated areas along p"'lic
streets or highwas is allowed which clearl
indicates that provision for par(ing spaces
serves a "sef"l p"rpose. &n other F"risdictions
where traffic is at least as vol"mino"s as here,
the provision ' m"nicipal governments of
par(ing space is not limited to par(ing along
p"'lic streets or highwas. .here has 'een a
mar(ed trend to '"ild off?street par(ing
facilities with the view to removing par(ed cars
from the streets. >hile the provision of off?
street par(ing facilities or carpar(s has 'een
commonl "nderta(en ' private enterprise,
m"nicipal governments have 'een constrained
to p"t "p carpar(s in response to p"'lic
necessit where private enterprise had failed
to (eep "p with the growing p"'lic demand.
!merican co"rts have "pheld the right of
m"nicipal governments to constr"ct off?street
par(ing facilities as clearl redo"nding to the
p"'lic 'enefit.A80B


&n Cit! of $)amis, the 3o"rt a"thori4ed the collection ' the 3it
of minimal fees for the par(ing of vehicles along the streets9 so
wh then sho"ld the 3o"rt now precl"de respondents from
collecting from the p"'lic a fee for the "se of the mall par(ing
facilitiesN Hndo"'tedl, respondents also inc"r e@penses in the
19
maintenance and operation of the mall par(ing facilities, s"ch as
electric cons"mption, compensation for par(ing attendants and
sec"rit, and "p(eep of the phsical str"ct"res.

&t is not s"fficient for the 2%/ to claim that Ithe power
to reg"late and control the "se, occ"panc, and maintenance of
'"ildings and str"ct"res carries with it the power to impose fees
and, conversel, to control, partiall or, as in this case,
a'sol"tel, the imposition of s"ch fees.J ;irstl!, the fees within
the power of reg"lator agencies to impose are re0ulator
!ees. &t has 'een settled law in this F"risdiction that this 'road
and all?compassing governmental competence to restrict rights
of li'ert and propert carries with it the "ndenia'le power to
collect a reg"lator fee. &t loo(s to the enactment of specific
meas"res that govern the relations not onl as 'etween
individ"als '"t also as 'etween private parties and the political
societ.A8*B .r"e, if the reg"lator agencies have the power to
impose reg"lator fees, then conversel, the also have the
power to remove the same. Even so, it is worth to note that
the present case does not involve the imposition ' the D5>:
%ecretar and local '"ilding officials of reg"lator fees "pon
respondentsC '"t the collection ' respondents of parCin0 !ees
from persons who "se the mall par(ing facilities. ,econdl!,
ass"ming arguendo that the D5>: %ecretar and local '"ilding
officials do have reg"lator powers over the collection of par(ing
fees for the "se of privatel owned par(ing facilities, the cannot
allow or prohi'it s"ch collection ar'itraril or whimsicall.
>hether allowing or prohi'iting the collection of s"ch par(ing
fees, the action of the D5>: %ecretar and local '"ilding
officials m"st pass the test of classic reasona'leness and
propriet of the meas"res or means in the promotion of the
ends so"ght to 'e accomplished.A82B

Veeping in mind the aforementioned test of
reasona'leness and propriet of meas"res or means, the 3o"rt
notes that %ection -08 of the National $"ilding 3ode falls "nder
3hapter - on ;i0ht and &entilation. Evidentl, the 3ode
deems it necessar to reg"late site occ"panc to ens"re that
there is proper lighting and ventilation in ever '"ilding.
5"rs"ant thereto, 0"le U&U of the &00 req"ires that a '"ilding,
depending on its specific "se andPor floor area, sho"ld provide a
minim"m n"m'er of par(ing spaces. .he 3o"rt, however, fails
to see the connection 'etween reg"lating site occ"panc to
ens"re proper light and ventilation in ever '"ilding 'is"<"'is
reg"lating the collection ' '"ilding owners of fees for the "se of
their par(ing spaces. 3ontrar to the averment of the 2%/, the
former does not necessaril incl"de or impl the latter. &t totall
escapes this 3o"rt how lighting and ventilation conditions at the
malls co"ld 'e affected ' the fact that par(ing facilities thereat
are free or paid for.

.he 2%/ attempts to provide the missing lin( '
arg"ing that9

Hnder %ection -08 of the National $"ilding
3ode, complimentar par(ing spaces are
req"ired to enhance light and ventilation, that
is, to avoid traffic congestion in areas
s"rro"nding the '"ilding, which certainl
affects the ventilation within the '"ilding itself,
which otherwise, the anne@ed par(ing spaces
wo"ld have served. 1ree?of?charge par(ing
avoids traffic congestion ' ens"ring q"ic( and
eas access of legitimate shoppers to off?
street par(ing spaces anne@ed to the malls,
and there' removing the vehicles of these
legitimate shoppers off the '"s streets near
the commercial esta'lishments.A88B


.he 3o"rt is "nconvinced. .he National $"ilding 3ode
reg"lates Auildin0s, ' setting the minim"m specifications and
req"irements for the same. &t does not concern itself with
tra!!ic con0estion in areas s"rro"nding the '"ilding. &t is
alread a stretch to sa that the National $"ilding 3ode and its
&00 also intend to solve the pro'lem of traffic congestion aro"nd
the '"ildings so as to ens"re that the said '"ildings shall have
adeq"ate lighting and ventilation. Moreover, the 3o"rt cannot
simpl ass"me, as the 2%/ has apparentl done, that the traffic
congestion in areas aro"nd the malls is d"e to the fact that
respondents charge for their par(ing facilities, th"s, forcing
vehicle owners to F"st par( in the streets. .he 3o"rt notes that
despite the fees charged ' respondents, vehicle owners still "se
the mall par(ing facilities, which are even f"ll occ"pied on
some das. Eehicle owners ma 'e par(ing in the streets onl
'eca"se there are not eno"gh par(ing spaces in the malls, and
not 'eca"se the are deterred ' the par(ing fees charged '
respondents. 1ree par(ing spaces at the malls ma even have
the opposite effect from what the 2%/ envisioned9 more people
ma 'e enco"raged ' the free par(ing to 'ring their own
vehicles, instead of ta(ing p"'lic transport, to the mallsC as a
res"lt, the par(ing facilities wo"ld 'ecome f"ll sooner, leaving
more vehicles witho"t par(ing spaces in the malls and par(ed in
the streets instead, ca"sing even more traffic congestion.

>itho"t "sing the term o"tright, the 2%/ is act"all
invo(ing police power to F"stif the reg"lation ' the %tate,
thro"gh the D5>: %ecretar and local '"ilding officials, of
privatel owned par(ing facilities, incl"ding the collection ' the
ownersPoperators of s"ch facilities of par(ing fees from the
p"'lic for the "se thereof. .he 3o"rt finds, however, that in
totall prohi'iting respondents from collecting par(ing fees from
the p"'lic for the "se of the mall par(ing facilities, the %tate
wo"ld 'e acting 'eond the 'o"nds of police power.

5olice power is the power of promoting the p"'lic
welfare ' restraining and reg"lating the "se of li'ert and
propert. &t is "s"all e@erted in order to merel reg"late the
"se and enFoment of the propert of the owner. .he power to
reg"late, however, does not incl"de the power to prohi'it. !
fortiori, the power to reg"late does not incl"de the power to
confiscate. 5olice power does not involve the ta(ing or
confiscation of propert, with the e@ception of a few cases where
there is a necessit to confiscate private propert in order to
destro it for the p"rpose of protecting peace and order and of
promoting the general welfareC for instance, the confiscation of
an illegall possessed article, s"ch as opi"m and firearms. A8,B

>hen there is a ta(ing or confiscation of private
propert for p"'lic "se, the %tate is no longer e@ercising police
power, '"t another of its inherent powers, namel, eminent
domain. Eminent domain ena'les the %tate to forci'l acq"ire
private lands intended for p"'lic "se "pon pament of F"st
compensation to the owner.A85B
20

Normall, of co"rse, the power of eminent domain
res"lts in the ta(ing or appropriation of title to, and possession
of, the e@propriated propertC '"t no cogent reason appears
wh the said power ma not 'e availed of onl to impose a
'"rden "pon the owner of condemned propert, witho"t loss of
title and possession.A8;B &t is a settled r"le that neither
acq"isition of title nor total destr"ction of val"e is essential to
ta(ing. &t is "s"all in cases where title remains with the private
owner that inq"ir sho"ld 'e made to determine whether the
impairment of a propert is merel reg"lated or amo"nts to a
compensa'le ta(ing. ! reg"lation that deprives an person of
the profita'le "se of his propert constit"tes a ta(ing and
entitles him to compensation, "nless the invasion of rights is so
slight as to permit the reg"lation to 'e F"stified "nder the police
power. %imilarl, a police reg"lation that "nreasona'l restricts
the right to "se '"siness propert for '"siness p"rposes
amo"nts to a ta(ing of private propert, and the owner ma
recover therefor.A87B

!ltho"gh in the present case, title to andPor possession
of the par(ing facilities remainPs with respondents, the
prohi'ition against their collection of par(ing fees from the
p"'lic, for the "se of said facilities, is alread tantamo"nt to a
ta(ing or confiscation of their properties. .he %tate is not onl
req"iring that respondents devote a portion of the latter)s
properties for "se as par(ing spaces, '"t is also mandating that
the give the p"'lic access to said par(ing spaces for free. %"ch
is alread an e@cessive intr"sion into the propert rights of
respondents. Not onl are the 'eing deprived of the right to
"se a portion of their properties as the wish, the are f"rther
prohi'ited from profiting from its "se or even F"st recovering
therefrom the e@penses for the maintenance and operation of
the req"ired par(ing facilities.

.he r"ling of this 3o"rt in Cit! :o'ernment of =ue)on
Cit! '. #udge ErictaA8-B is edifing. .herein, the 3it
/overnment of Q"e4on 3it passed an ordinance o'liging private
cemeteries within its F"risdiction to set aside at least si@ percent
of their total area for charit, that is, for '"rial gro"nds of
deceased pa"pers. !ccording to the 3o"rt, the ordinance in
q"estion was n"ll and void, for it a"thori4ed the ta(ing of private
propert witho"t F"st compensation9

.here is no reasona'le relation 'etween the
setting aside of at least si@ <;= percent of the
total area of all private cemeteries for charit
'"rial gro"nds of deceased pa"pers and the
promotion of7 health, morals, good order,
safet, or the general welfare of the people.
.he ordinance is act"all a ta(ing witho"t
compensation of a certain area from a private
cemeter to 'enefit pa"pers who are charges
of the m"nicipal corporation. &nstead of7
'"ilding or maintaining a p"'lic cemeter for
this p"rpose, the cit passes the '"rden to
private cemeteries.

7.he e@propriation witho"t compensation of a
portion of private cemeteries is not covered '
%ection *2<t= of 0ep"'lic !ct 587, the 0evised
3harter of Q"e4on 3it which empowers the
cit co"ncil to prohi'it the '"rial of the dead
within the center of pop"lation of the cit and
to provide for their '"rial in a proper place
s"'Fect to the provisions of general law
reg"lating '"rial gro"nds and cemeteries.
>hen the Local /overnment 3ode, $atas
5am'ansa $lg. 887 provides in %ection *77<q=
that a sangg"niang panl"ngsod ma Lprovide
for the '"rial of the dead in s"ch place and in
s"ch manner as prescri'ed ' law or
ordinanceL it simpl a"thori4es the cit to
provide its own cit owned land or to '" or
e@propriate private properties to constr"ct
p"'lic cemeteries. .his has 'een the law, and
practise in the past. &t contin"es to the
present. E@propriation, however, req"ires
pament of F"st compensation. .he
q"estioned ordinance is different from laws
and reg"lations req"iring owners of
s"'divisions to set aside certain areas for
streets, par(s, plagro"nds, and other p"'lic
facilities from the land the sell to '"ers of
s"'division lots. .he necessities of p"'lic
safet, health, and convenience are ver clear
from said req"irements which are intended to
ins"re the development of comm"nities with
sal"'rio"s and wholesome environments. .he
'eneficiaries of the reg"lation, in t"rn, are
made to pa ' the s"'division developer
when individ"al lots are sold to homeowners.


&n concl"sion, the total prohi'ition against the collection
' respondents of par(ing fees from persons who "se the mall
par(ing facilities has no 'asis in the National $"ilding 3ode or its
&00. .he %tate also cannot impose the same prohi'ition '
generall invo(ing police power, since said prohi'ition amo"nts
to a ta(ing of respondents) propert witho"t pament of F"st
compensation.

/iven the foregoing, the 3o"rt finds no more need to
address the iss"e persistentl raised ' respondent %M 5rime
concerning the "nconstit"tionalit of 0"le U&U of the &00. &n
addition, the said iss"e was not among those that the parties,
d"ring the pre?trial conference for 3ivil 3ases No. *2?0- and No.
00?*2*0, agreed to s"'mit for resol"tion of the 0.3. &t is
li(ewise a@iomatic that the constit"tionalit of a law, a
reg"lation, an ordinance or an act will not 'e resolved ' co"rts
if the controvers can 'e, as in this case it has 'een, settled on
other gro"nds.A8+B

45ERE67RE, the instant 5etition for 0eview on
Certiorari is here' DE'9ED. .he Decision dated 25 Dan"ar
2007 and 0esol"tion dated *, March 2007 of the 3o"rt of
!ppeals in 3!?/.0. 3E No. 7;2+-, affirming in toto the Doint
Decision dated 2+ Ma 2002 of the 0egional .rial 3o"rt of Ma(ati
3it, $ranch *8-, in 3ivil 3ases No. 00?*20- and No. 00?*2*0
are here' A669RMED. No costs.

%7 7RDERED.

%.R. 'o. 121810 Dece+Aer (, 2001
21
%52H%E% &N23EN3&2 !ND !D20!3&2N %!N !N.2N&2,
petitioners,
vs.
C7=R* 76 APPEA;: A'D :P7=:E: MAR97 A'D
%RE%7R97 %ER7'9M7, respondents.
H=9:=M?9'%, J.:
.his is a petition for review see(ing the reversal of the decision
*
dated !pril 2-, *++5, of the 3o"rt of !ppeals in 3!?/.0. %5 No.
8527* affirming the orders dated Ma 5, *++,,
2
D"l *2, *++,
8
and %eptem'er *, *++,,
,
respectivel, of the 0egional .rial
3o"rt of Malolos $"lacan, $ranch 22, granting the motion for
e@ec"tion of compromise F"dgment dated %eptem'er 22, *++8
in 3ivil 3ase No. 288?M?+2.
.he facts, as c"lled from the records, are as follows9
5rivate respondents spo"ses Mario and /regoria /eronimo
o'tained a loan in the amo"nt of 2ne Million .went Eight
.ho"sand 5esos <5*,02-,000= from petitioners, the spo"ses
&nocencio and !doracion %an !ntonio. .o sec"re the loan,
private respondents mortgaged two parcels of land covered '
.3. No. 0.?;;58 with an area of *0,8+0 sq"are meters and .3.
No. 0.?;;52 with an area of 2,55; sq"are meters, 'oth sit"ated
in $arrio .a'e, /"ig"into, $"lacan. %"'seq"entl, private
respondents o'tained an additional loan of Nine :"ndred 1ift
Nine 5esos <5++*,-5+= with an interest of 8.88O per month,
th"s ma(ing their total o'ligation in the amo"nt of .wo Million
Nineteen .ho"sand Eight :"ndred 1ift Nine 5esos
<52,0*+,-5+=, paa'le on or 'efore 1e'r"ar *5, *++*. 5rivate
respondents failed to pa the loan and the interest on the d"e
date, hence, the mortgage was e@tra?F"diciall foreclosed.
D"ring the a"ction sale, petitioners, 'eing the highest 'idder
'o"ght the two parcels of land.
$efore the one?ear redemption period e@pired, private
respondents filed a complaint for ann"lment of e@tra?F"dicial
foreclos"re with preliminar mandator inF"nction, doc(eted as
3ivil 3ase No. 288?M?+2, with the 0egional .rial 3o"rt of
$"lacan, $ranch 22. !fter the parties presented their respective
evidence, the s"'mitted to the co"rt on %eptem'er *;, *++8, a
compromise agreement dated !"g"st 25, *++8, the terms and
conditions of which are q"oted as follows9
32ME N2> parties assisted ' their respective
co"nsels and 'efore the :onora'le 3o"rt most
respectf"ll s"'mit this compromise agreement, the
terms and conditions of which are9
*. 1or a consideration of .>2 M&LL&2N 5E%2%
<52,000,000.00= 5hilippine 3"rrenc in hand received
toda ' the defendants spo"ses &nocencio and
!doracion %an !ntonio from the plaintiffs, defendants
%an !ntonio will e@ec"te a deed of
resalePreconveancePredemption of that s"'Fect
propert covered ' .3. No. 0.?;;58 <.?20+250= of the
0egistr of Deeds of $"lacan incl"ding its
improvementsC
2. 1or the releasePresalePreconveance of the other
propert involved in the case descri'ed in .3. No. 0.?
;;52 <.?2+;7,,= of the other propert involved in the
case descri'ed in .3. No. 0.?;;52 <.?2+;7,,= of the
0egistr of Deeds of $"lacan together with its
improvements, plaintiffs o'ligate themselves to transfer
the ownership of the following to the defendants %an
!ntonio.
a. .hat lot incl"ding its improvements sit"ated
in $rg. ."ct"can, M"nicipalit of /"ig"into,
$"lcan, covered ' .3. No. 2+-82, $l(. ,, Lot
No. 8 consisting of *85 sq"are metersC
'. .hat lot sit"ated in $rg. ."ct"can,
M"nicipalit of /"ig"into, $"lcan covered '
.3. No. 8007-, $l(. +, Lot 27 consisting of 7-
sq"are metersC
c. !nother lot sit"ated in $rg. ."ct"can,
M"nicipalit of /"ig"into, $"lcan, covered '
.3. No. 8007+, $l(. No. 8- consisting of 75
sq"are meters.
>ithin si@ <;= months from signing of this compromise
agreement sim"ltaneo"s to which deliver of the title to
the afore?mentioned properties in the names of the
defendants %an !ntonio, the defendants %an !ntonio
will e@ec"te the corresponding instr"ment of
resalePreconveancePredemption over that properl
together with its improvements covered ' .3. No. 0.?
;;52 <.?2+;7,,=, for the p"rpose of the cancellation of
the ann"lment of the sale in the title s"'Fect to the
condition that sho"ld plaintiffs fail to deliver the titles to
the three lots heretofore mentioned to the defendants
%an !ntonio, the said plaintiffs shall 'e deemed to have
waived and reno"nced an all rights, claims and
demands whatsoever the ma have over that propert
covered ' .3. No. 0.?;;52 <.?2+;7,,= incl"ding its
improvements and thenceforth 'ind themselves to
respect the right of ownership, and possession of the
defendants %an !ntonio over said propert, or to pa
.wo Million 5esos <52,000,000.00= within the same
periodC
8. .hat the parties f"rther agree to set aside an claim,
damages and co"nter?claims the ma have against
each otherC
,. .hat in the meantime, the possession of the plaintiffs
of the s"'Fect propert covering .3. No. ;;52 <.?
2+;7,,= and .3. No. 0.?;;58 <.?20+250= shall it 'e
respectC <%&3=
5. .his compromise agreement shall 'e in f"ll
settlement of the o'ligations of the plaintiffs with
respect to Vas"latan ng %anglaan dated 1e'r"ar *,,
*+-+ and the %"sog ng Vas"latan ng %anglaan dated
D"l *;, *++0, s"'Fect matter of the complaint, and
those related there.
;. .his compromise agreement is immediatel
e@ec"tor <"nderscoring s"pplied=.
5
1inding the a'ove to 'e in order, the trial co"rt approved the
same in its order dated %eptem'er 22, *++8, th"s9
! caref"l per"sal of the 3ompromise !greement dated
!"g"st 25, *++8 reveals that the terms and conditions
thereof are not contrar to law, morals and p"'lic
polic.
!3320D&N/L6, the compromise agreement dated
!"g"st 25, *++8 is here' !5502EED. .he parties are
enFoined to compl faithf"ll with their o'ligation "nder
said agreement.
%2 20DE0ED.
;
22
&n accordance with the stip"lations in paragraph * of the
3ompromise !greement, petitioners e@ec"ted a 3ertificate of
0edemption and 3ancellation of %ale covering .3. No. 0.?;;58
after private respondents paid them .wo Million 5esos
<52,000,000=. 5rivate respondents, however, failed to transfer
the ownership and deliver the titles of the three parcels of land
descri'ed in paragraph 2 of the agreement or to pa 2 Million
5esos within the si@?month period from !"g"st 25, *++8. &t was
onl on March ,, *++,, after the lapse of si@ months that private
respondents delivered the three titles to petitioners. !s the
deliver was 'eond the agreed si@?month period, petitioners
ref"sed to accept the same or e@ec"te an instr"ment for the
resale, reconveance or redemption of the propert covered '
.3. No. 0.?;;52. 3onseq"entl, .3. No. 0.?;;52 was cancelled
and in lie" thereof, .3. No. .?,722+ was iss"ed in the names of
petitioners.
5rivate respondents filed a motion for e@ec"tion of the
%eptem'er 22, *++8 order with the trial co"rt. .his was granted
on Ma 5, *++,. 5etitioners filed a motion for reconsideration
'"t this was denied on D"l *2, *++,. ! second motion for
reconsideration ' petitioners was li(ewise denied in an order
dated %eptem'er *, *++,.
5etitioners filed a 5etition for 3ertiorari with application for a
.emporar 0estraining 2rder andPor >rit of 5reliminar
&nF"nction with the 3o"rt of !ppeals. !s said earlier, the 3o"rt of
!ppeals denied the petition on !pril 2-, *++5, th"s9
>:E0E120E, the petition for certiorari is here'
DEN&ED DHE 32H0%E, and is D&%M&%%ED. .he 2rders
of respondent co"rt dated Ma *A5B, D"l *2, and
%eptem'er *, *++, are !11&0MED.
%2 20DE0ED.
7
:ence this petition for review wherein petitioners aver that the
3o"rt of !ppeals erred in9
&. W0HL&N/ .:!. .:E 20DE0 D!.ED M!6 5, *++, D&D
N2. %H$%.!N.&!LL6 !MEND .:E 1&N!L !ND
EUE3H.206 DHD/MEN. 0ENDE0ED $!%ED 2N !
32M502M&%E !/0EEMEN..
&&. W0HL&N/ .:!. .:E 50&N3&5LE 21 EQH&.6 &% !
/02HND .2 DH%.&16 .:E !MENDMEN. 21 ! 1&N!L
!ND EUE3H.206 DHD/MEN..
&&&. W0HL&N/ .:!. .:E DEL!6 &N .:E DEL&EE06 21
.:E .&.LE% &% !..0&$H.!$LE .2 .:E 0E/&%.E0 21
DEED% 21 $HL!3!N.
&E. W!55L6&N/ !0.&3LE **+* 21 .:E NE> 3&E&L
32DE.
E. WN2. 0HL&N/ .:!. .:E 32M502M&%E !/0EEMEN.
&% &MMED&!.EL6 EUE3H.206 !% 502E&DED &N
5!0!/0!5: ; .:E0E21.
E&. W N2. 0HL&N/ .:!. 5E.&.&2NE0% :!EE !L0E!D6
32M5L&ED >&.: 5!0!/0!5: * 21 .:E 32M502M&%E
!/0EEMEN..
-
&n s"m, petitioners raise the following iss"es for o"r resol"tion9
*. Did the trial co"rt err in granting the writ to e@ec"te
the compromise F"dgmentN
2. &s !rticle **+* of the New 3ivil 3ode applica'le in
this caseN
2n the first iss"e, did the trial co"rt err in granting the writ to
e@ec"te the compromise F"dgmentN 5etitioners claim that the
trial co"rt did. .he compromise agreement approved ' the trial
co"rt in its order dated %eptem'er 22, *++8, provided that
private respondents had si@ months within which to deliver the
titles. &f the failed, ownership of the land covered ' .3. No.
0.?;;52 wo"ld 'e transferred to petitioners. 5etitioners contend
that F"dgement 'ased on a compromise is concl"sive "pon the
parties and is immediatel e@ec"tor. &t has the force and effect
of res judicata, hence it cannot 'e modified. .he trial co"rt
therefore, cannot compel petitioners, via a writ of e@ec"tion, to
accept the three titles 'eond the si@?month period, 'eca"se it
is in effect an amendment to the compromise agreement,
petitioners said. .he e@plain that even on eq"ita'le
considerations this was not allowed 'eca"se once a decision
'ecomes final, the co"rt which rendered it loses F"risdiction over
the case and it can no longer 'e modified e@cept for clerical
errors.
5etitioners also contend that private respondents sho"ld not
'lame the 0egister of Deeds for the dela in the deliver of the
three titles since private respondents s"'mitted the registration
doc"ments to the 0egister of Deeds onl on March 2, *++,,
'eond the si@?month period deadline.
1"rther, petitioners den that the are g"ilt of dela for not
e@ec"ting the deed of resale, reconveance or redemption
despite their receipt of two million pesos. .he said that as earl
as !"g"st 25, *++8, the alread e@ec"ted a 3ertificate of
0edemption and 3ancellation of %ale of the land covered ' .3.
No. 0.?;;58.
5rivate respondents co"nter that there has 'een no modification
of the final F"dgment when the trial F"dge iss"ed the writ of
e@ec"tion, as the F"dge iss"ed the writ of e@ec"tion, as the
F"dge was merel performing a ministerial d"t. !lso, private
respondents den that the delivered the three titles late and if
ever the deliver was delaed it was the 0egister of Deeds who
was to 'lame. 5rivate respondents additionall point o"t that in
reciprocal o'ligations, li(e the ones in this case, dela sets in
onl when one part f"lfills his o'ligation and the other is "na'le
to perform his part of the o'ligation. Li(ewise, a person
o'ligated to deliver something inc"rs in dela onl after
demand. !s herein petitioners have not et made demand and
as the have not et performed their part of the agreement,
which was the e@ec"tion of the deed of reconveance, dela '
private respondents has not et occ"rred.
>e find petitioners7 petition impressed with merit.
! compromise agreement, once approved ' final order of the
co"rt, has the force of res judicata 'etween the parties and
sho"ld not 'e dist"r'ed e@cept for vices of consent or forger.
+
&n this case, the compromise agreement clearl provided private
respondents si@ months, i.e., from !"g"st 25, *++8 to 1e'r"ar
25, *++,, to deliver the titles to the three parcels of land
descri'ed in the agreement. &f after the lapse of the said period
and no deliver is et made ' private respondents, ownership
over the land covered ' .3. No. 0.?;;52 wo"ld 'e transferred
to petitioners. !s the facts of this case show, private
respondents failed to deliver the titles on 1e'r"ar 25, *++,, as
it was onl on March ,, *++,, when the gave the titles to
petitioners. :ence, p"rs"ant to the terms of the compromise
agreement, petitioners co"ld rightf"ll ref"se acceptance of the
titles. &t was error therefore for the trial co"rt to grant the writ
of e@ec"tion in favor of private respondents 'eca"se it
effectivel compelled petitioners to accept deliver of the three
titles in e@change for the release of the land covered ' .3. No.
0.?;;52 even after the lapse of the si@?month period.
23
5rivate respondents claim that the trial co"rt, in iss"ing the writ,
was merel performing a ministerial d"t. >hile it 'ecomes the
trial co"rt7s ministerial d"t to iss"e a writ of e@ec"tion ma 'e
ref"sed on eq"ita'le gro"nds.
*0
&n this case, it will 'e "nF"st to
petitioners if we compel them to accept the three titles despite
the lapse of the agreed period. 3ontract"al o'ligations 'etween
parties have the force of law 'etween them and a'sent an
allegation that the same are contrar to law, morals, good
c"stoms, p"'lic order or p"'lic polic, the m"st 'e complied
with in good faith.
**
$oth the trial co"rt and the 3o"rt of !ppeals attri'"ted to the
0egister of Deeds private respondents7 dela in the deliver of
the three titles. $"t as shown in their decisions, private
respondents s"'mitted to the 0egister of Deeds the pertinent
doc"ments for registration of the three titles in petitioners7 name
onl on March 2, *++,, 'eond the si@?month period.
*2
5rivate
respondents co"ld have done so earlier, '"t the did not. .his
onl shows that private respondents did not intend to tr"l
compl with their o'ligations.
!s to the alleged dela on the part of petitioners in e@ec"ting
the Deed of 0esale and 0econveance, we find that this point
serves onl to conf"se the 3o"rt on the real facts of the case.
Despite the fact that the compromise agreement involved two
parcels of land "p for redemption, private respondents did not
indicate as to which parcel of land petitioners did not e@ec"te a
deed of resale.
*8
Nevertheless, private respondents admitted
that petitioners alread e@ec"ted a 3ertificate of 0edemption.
*,
1or "s, this was s"fficient compliance of petitioners7 d"t "nder
the 3ompromise !greement.
Lastl, is !rticle **+* of the New 3ivil 3ode
*5
applica'le in this
caseN !ccording to petitioners, the 3o"rt of !ppeals erred when
it fo"nd that private respondents7 dela did not constit"te
s"'stantial 'reach to warrant rescission of the compromise
agreement. .he assert that the were not see(ing rescission of
the compromise agreement '"t its f"ll enforcement regardless
of whether the dela is slight or s"'stantial.
>hile indeed private respondents did not meet head on this
iss"e, we find that it sho"ld 'e properl addressed. &n filing the
petition 'efore the 3o"rt of !ppeals, petitioners so"ght the
appellate co"rt7s declaration that the trial co"rt committed grave
a'"se of discretion. &n their view, the trial co"rt sho"ld have
enforced the compromise agreement instead of rescinding it.
.h"s, it was error for the 3o"rt of !ppeals to appl !rticle **+*
of the New 3ivil 3ode which concerns rescission of contract.
!pplica'le here is !rticle **5+ which enFoins compliance in good
faith ' the parties who entered into a valid contract.
*;
3ompromise agreements are contracts, where' the parties
"nderta(e reciprocal o'ligations to avoid litigation, or p"t an end
to one alread commenced.
*7
45ERE67RE, the petition is %RA'*ED. .he decision dated
!pril 2-, *++5, and resol"tion dated %eptem'er **, *++5, of the
3o"rt of !ppeals in 3!?/.0. %5 No. 8527* are RE&ER:ED A'D
:E* A:9DE. !ccordingl, the orders dated Ma 5, *++,, D"l *2,
*++, and %eptem'er *, *++,, of the 0egional .rial 3o"rt of
Malolos, $"lacan, $ranch 22, are here' declared '=;; A'D
&79D. 5rivate respondents are ordered to cease and desist from
dist"r'ing the ownership and possession ' petitioners of the
parcel of land covered ' .3. No. 0.?;;52. 3osts against
private respondents.
:7 7RDERED.
%7;A'%C7 .s C7':*R=C*97' C7MPA'8
D E C 9 : 9 7 '
C7R7'A, J.I

.he facts of this case are straightforward.A*B

>illiam /olangco 3onstr"ction 3orporation <>/33= and
the 5hilippine 3ommercial &nternational $an( <53&$= entered
into a contract for the constr"ction of the e@tension of 53&$
.ower && <denominated as 53&$ .ower &&, E@tension 5roFect
AproFectB=A2B on 2cto'er 20, *+-+. .he proFect incl"ded, among
others, the application of a granitite wash?o"t finishA8B on the
e@terior walls of the '"ilding.

53&$, with the conc"rrence of its cons"ltant .3/&
Engineers <.3/&=, accepted the t"rnover of the completed wor(
' >/33 in a letter dated D"ne *, *++2. .o answer for an
defect arising within a period of one ear, >/33 s"'mitted a
g"arantee 'ond dated D"l *, *++2 iss"ed ' Malaan &ns"rance
3ompan, &nc. in compliance with the constr"ction contract.A,B

.he controvers arose when portions of the granitite wash?
o"t finish of the e@terior of the '"ilding 'egan peeling off and
falling from the walls in *++8. >/33 made minor repairs after
53&$ req"ested it to rectif the constr"ction defects. &n *++,,
53&$ entered into another contract with $rains and $rawn
3onstr"ction and Development 3orporation to re?do the entire
granitite wash?o"t finish after >/33 manifested that it was Inot
in a position to do the new finishing wor(,J tho"gh it was willing
to share part of the cost. 53&$ inc"rred e@penses amo"nting to
5**,;;5,000 for the repair wor(.

53&$ filed a req"est for ar'itration with the 3onstr"ction
&nd"str !r'itration 3ommission <3&!3= for the reim'"rsement
of its e@penses for the repairs made ' another contractor. &t
complained of >/33)s alleged non?compliance with their
contract"al terms on materials and wor(manship. >/33
interposed a co"nterclaim for 55,777,*57.-, for material cost
adF"stment.

.he 3&!3 declared >/33 lia'le for the constr"ction defects
in the proFect.A5B >/33 filed a petition for review with the
3o"rt of !ppeals <3!= which dismissed it for lac( of merit.A;B
&ts motion for reconsideration was similarl denied.A7B

&n this petition for review on certiorari, >/33 raises this
main q"estion of law9 whether or not petitioner >/33 is lia'le
for defects in the granitite wash?o"t finish that occ"rred after
the lapse of the one?ear defects lia'ilit period provided in !rt.
U& of the constr"ction contract.A-B

>e r"le in favor of >/33.
24

.he controvers pivots on a provision in the constr"ction
contract referred to as the defects lia+ilit! period9

!0.&3LE U& R /H!0!N.EE

Hnless otherwise specified for specific wor(s, and
witho"t preF"dice to the rights and ca"ses of action of the
2>NE0 "nder !rticle *728 of the 3ivil 3ode, the C7'*RAC*7R
hereA 0uarantees the @orC stipulated in this Contract,
and shall +aCe 0ood an de!ect in +aterials and
@orC+anship @hich [Aeco+es] e.ident @ithin one "1#
ear a!ter the !inal acceptance o! the @orC. .he
32N.0!3.20 shall leave the wor( in perfect order "pon
completion and present the final certificate to the EN/&NEE0
promptl.

&f in the opinion of the 2>NE0 and EN/&NEE0, the
32N.0!3.20 has failed to act promptl in rectifing an defect
in the wor( which appears within the period mentioned a'ove,
the 2>NE0 and the EN/&NEE0 ma, at their own discretion,
"sing the /"arantee $ond amo"nt for corrections, have the
wor( done ' another contractor at the e@pense of the
32N.0!3.20 or his 'ondsmen.

5o@e.er, nothin0 in this section shall in an @a
a!!ect or relie.e the C7'*RAC*7R,: responsiAilit to the
74'ER. 2n the completion of the AwBor(s, the 32N.0!3.20
shall clear awa and remove from the site all constr"ctional
plant, s"rpl"s materials, r"''ish and temporar wor(s of ever
(ind, and leave the whole of the AsBite and AwBor(s clean and in
a wor(manli(e condition to the satisfaction of the EN/&NEE0 and
2>NE0.A+B <emphasis o"rs=
!ltho"gh 'oth parties 'ased their arg"ments on the same
stip"lations, the reached conflicting concl"sions. ! caref"l
reading of the stip"lations, however, leads "s to the concl"sion
that >/33)s arg"ments are more tena'le.
Autonomy of contracts
.he a"tonomo"s nat"re of contracts is en"nciated in
!rticle *80; of the 3ivil 3ode.

!rticle *80;. .he contracting parties ma esta'lish s"ch
stip"lations, cla"ses, terms and conditions as the ma deem
convenient, provided the are not contrar to law, morals, good
c"stoms, p"'lic order, or p"'lic polic.
2'ligations arising from contracts have the force of law
'etween the parties and sho"ld 'e complied with in good faith.
A*0B &n characteri4ing the contract as having the force of law
'etween the parties, the law stresses the o'ligator nat"re of
a 'inding and valid agreement.

.he provision in the constr"ction contract providing for a
defects lia'ilit period was not shown as contrar to law,
morals, good c"stoms, p"'ic order or p"'lic polic. $ the
nat"re of the o'ligation in s"ch contract, the provision limiting
lia'ilit for defects and fi@ing specific g"arant periods was not
onl fair and eq"ita'leC it was also necessar. >itho"t s"ch
limitation, the contractor wo"ld 'e e@pected to ma(e a
perpet"al g"arantee on all materials and wor(manship.

.he adoption of a one?ear g"arantee, as done ' >/33 and
53&$, is esta'lished "sage in the 5hilippines for private and
government constr"ction contracts.A**B .he contract did not
specif a different period for defects in the granitite wash?o"t
finishC hence, an defect therein sho"ld have 'een 'ro"ght to
>/33)s attention within the one?ear defects lia'ilit period in
the contract.

>e cannot co"ntenance an interpretation that "ndermines a
contract"al stip"lation freel and validl agreed "pon. .he
co"rts will not relieve a part from the effects of an "nwise or
"nfavora'le contract freel entered into.A*2B
A.Bhe incl"sion in a written contract for a piece of wor(
A,B s"ch as the one in q"estion, of a provision defining a
warrant period against defects, is not "ncommon. .his (ind of
a stip"lation is of partic"lar importance to the contractor, for as
a general r"le, after the lapse of the period agreed "pon therein,
he ma no longer 'e held acco"nta'le for whatever defects,
deficiencies or imperfections that ma 'e discovered in the wor(
e@ec"ted ' him.A*8B
9nterpretation o! contracts

.o challenge the g"arantee period provided in !rticle U& of the
contract, 53&$ calls o"r attention to !rticle ;2.2 which provides9

;2.2 Hnf"lfilled 2'ligations

Notwithstanding the iss"e of the Defects Lia'ilit
3ertificateA,B the Contractor and the 7@ner shall re+ain
liaAle !or the !ul!ill+ent o! an oAli0ation[,] incurred
under the pro.isions o! the Contract prior to the issue o!
the De!ects ;iaAilit Certi!icate[,] @hich re+ains
unper!or+ed at the ti+e such De!ects ;iaAilit Certi!icate
is issuedA. !ndB for the p"rpose of determining the nat"re and
e@tent of an s"ch o'ligation, the 3ontract shall 'e deemed to
remain in force 'etween the parties of the 3ontract. <emphasis
o"rs=


.he defects in the granitite wash?o"t finish were not the
Io'ligationJ contemplated in !rticle ;2.2. &t was not an
o'ligation that remained "nperformed or "nf"lfilled at the time
the defects lia'ilit certificate was iss"ed. .he alleged defects
occ"rred more than a ear from the final acceptance ' 53&$.

!n e@amination of !rticle *7*+ of the 3ivil 3ode is enlightening9

!rt. *7*+. !cceptance of the wor( ' the emploer relieves the
25
contractor of lia'ilit for an defect in the wor(, "nless9

<*= .he defect is hidden and the emploer is not, '
his special (nowledge, e@pected to recogni4e the sameC or

<2= .he emploer e@pressl reserves his rights against
the contractor ' reason of the defect.

.he lower co"rts conFect"red that the peeling off of the granitite
wash?o"t finish was pro'a'l d"e to Idefective materials and
wor(manship.J .his the characteri4ed as hidden or latent
defects. >e, however, do not agree with the concl"sion that the
alleged defects were hidden.

1irst, 53&$)s team of e@pertsA*,B <who were specificall
emploed to detect s"ch defects earl on= s"pervised >/33)s
wor(manship. %econd, >/33 reg"larl s"'mitted progress
reports and photographs. .hird, >/33 wor(ed "nder fair and
transparent circ"mstances. 53&$ had access to the site and it
e@ercised reasona'le s"pervision over >/33)s wor(. 1o"rth,
53&$ iss"ed several Ip"nch listsJ for >/33)s compliance 'efore
the iss"ance of 53&$)s final certificate of acceptance. 1ifth, 53&$
s"pplied the materials for the granitite wash?o"t finish. !nd
finall, 53&$)s team of e@perts gave their conc"rrence to the
t"rnover of the proFect.

.he p"rpose of the defects lia'ilit period was precisel to give
53&$ additional, al'eit limited, opport"nit to o'lige >/33 to
ma(e good an defect, hidden or otherwise, discovered within
one ear.

3ontrar to the 3!)s concl"sion, the first sentence of the third
paragraph of !rticle U& on g"arantee previo"sl q"oted did not
operate as a 'lan(et e@ception to the one?ear g"arantee period
"nder the first paragraph. Neither did it modif, e@tend, n"llif
or s"persede the categorical terms of the defects lia'ilit period.

Hnder the circ"mstances, there were no hidden defects for
which >/33 co"ld 'e held lia'le. Neither was there an other
defect for which 53&$ made an e@press reservation of its rights
against >/33. &ndeed, the contract sho"ld not 'e interpreted to
favor the one who ca"sed the conf"sion, if an. .he contract was
prepared ' .3/& for 53&$.A*5B

45ERE67RE, the petition is here' %RA'*ED. .he
decision of the 3o"rt of !ppeals in 3!?/.0. %5 No. ,**52 is
A''=;ED and :E* A:9DE.

:7 7RDERED.
Metropolitan AanC .s +arinas

.his is a petition for review on certiorari "nder 0"le ,5 of
the 0"les of 3o"rt, see(ing to ann"l and set aside the 3o"rt of
!ppeals <3!= DecisionA*B dated D"l 8*, 2007, affirming with
modification the 0egional .rial 3o"rt <0.3= decisionA2B dated
2cto'er *,, 200,.

.he fact"al and proced"ral antecedents are as follows9

%ometime in !pril *++-, respondent Larr MariTas
ret"rned to the 5hilippines from the Hnited %tates of !merica.
:e opened a personal dollar savings acco"ntA8B ' depositing
H%X*00,000.00 with petitioner Metropolitan $an( and .r"st
3ompan. 2n !pril *8, *++-, respondent o'tained a loan from
petitioner in the amo"nt of 52,800,000.00, evidenced '
5romissor Note No. 855-78.A,B 1rom the initial deposit of
H%X*00,000.00, respondent withdrewA5B H%X;7,227.+5,A;B then
deposited it "nder !cco"nt No. 0?2;,00*7*?; <1oreign 3"rrenc
Deposit A13DB No. 505;7*=,A7B which he "sed as sec"ritA-B for
the 52,800,000.00 loan.

0espondent s"'seq"entl opened two more foreign
c"rrenc acco"nts Y !cco"nt No. 0?2;,002,,?5 <13D No.
505;--=A+B and !cco"nt No. 0?2;,?00857?8 <13D No. 78+-0+=
A*0B Y depositing therein H%X25,000.00 and H%X*7,000.00,
respectivel. 2n !pril 80, *+++, respondent o'tained a second
loan of 5;,5,*50.00,A**B sec"redA*2B ' !cco"nt No. 0?2;,?
00857?8 <13D No. 78+-0+=.

>hen he inq"ired a'o"t his dollar deposits, respondent
discovered that petitioner made ded"ctions against the former)s
acco"nts. 2n Ma 8*, *+++, respondent, thro"gh his co"nsel,
demanded from petitioner a proper and complete acco"nting of
his dollar deposits, and the restoration of his deposits to their
proper amo"nt witho"t the ded"ctions.A*8B &n response,
petitioner e@plained that the ded"ctions made from respondent)s
dollar acco"nts were "sed to pa the interest d"e on the latter)s
loan with the former. .hese ded"ctions, according to petitioner,
were a"thori4ed ' respondent thro"gh the Deeds of
!ssignment with 5ower of !ttorne vol"ntaril e@ec"ted '
respondent.A*,B

Hnsatisfied, and 'elieving that the ded"ctions were
"na"thori4ed, respondent commenced an action for &amages
against petitioner and its Va'ihasnan, 5araTaq"e 3it $ranch
Manager E@pedito 1ernande4 <1ernande4= 'efore the 0.3, Las
5iTas 3it. .he case was doc(eted as 3ivil 3ase No. ++?0*72
and was raffled to $ranch 255. >hile admitting the e@istence of
the 52,800,000.00 and 5;,5,*50.00 loans, respondent claimed
that when he signed the loan doc"ments, the were all in 'lan(
and the were act"all filled "p ' petitioner. !side from the
complete acco"nting of his dollar acco"nts and the restoration of
the tr"e amo"nts of his deposits, respondent so"ght the
pament of 5,00,000.00 as moral damages, 5*00,000.00 as
e@emplar damages, and 5*00,000.00 as attorne)s fees.A*5B

2n its part, petitioner insisted that respondent freel and
vol"ntaril signed the loan doc"ments. >hile admitting the f"ll
pament of respondent)s 52,800,000.00 and 5;,5,*50.00 loans,
petitioner claimed that the paments were made "sing the
former)s H%X;7,227.+5, H%X25,000.00, and H%X*7,000.00 time
deposits. !ccordingl, there was nothing to acco"nt for and
restore. $ wa of co"nterclaim, petitioner praed for the
26
pament of 5200,000.00 as attorne)s fees, 5*,000,000.00 as
moral damages, and 5500,000.00 as e@emplar damages.A*;B

!s no amica'le settlement was reached, trial on the
merits ens"ed.
27
2n 2cto'er *,, 200,, the 0.3 rendered a decision in
favor of respondent, the dispositive portion of which reads9

>:E0E120E, the foregoing considered, F"dgment is
here' rendered in favor of plaintiff Larr MariATBas, and against
the defendants Metropolitan $an( and .r"st 3ompan and
E@pedito 1ernande4, ordering the said defendants to acco"nt for
the dollar deposits of the plaintiff in the amo"nts of
H%X80,000.00 and H%X25,000.00, respectivel, and then ret"rn
the same, incl"ding the interests d"e thereon rec(oned from 8*
Ma *+++ "ntil f"ll paid.

Li(ewise, the defendants are here' directed to pa to
the herein plaintiff the following amo"nts, to wit9

*. 5*00,000.00 in moral damagesC

2. 550,000.00 in e@emplar damagesC

8. 550,000.00 as and ' wa of attorne)s feesC and

,. 3osts of s"it.

%2 20DE0ED.A*7B

.he 0.3 s"stained the validit and reg"larit of the loan
doc"ments signed ' respondent, and conseq"entl the
e@istence of the 52,800,000.00 and 5;,5,*50.00 loans o'tained
from petitioner. !c(nowledging the f"ll pament of 'oth loans,
the trial co"rt fo"nd that the paments were made from
respondent)s foreign c"rrenc deposits, partic"larl !cco"nt
N"m'ers 0?2;,00*7*?; <13D No. 505;7*= and 0?2;,?00857?8
<13D No. 78+-0+=, amo"nting to H%X;7,227.+5 and
H%X*7,000.00, respectivel. .here is no do"'t that respondent
specificall assigned these acco"nts to sec"re the pament of
his loans p"rs"ant to the Deeds of !ssignment with 5ower of
!ttorne. :ence, the ded"ctions made from s"ch acco"nts were
valid. :owever, the 0.3 fo"nd that petitioner sho"ld acco"nt for
and event"all ret"rn the H%X80,000.00 and H%X25,000.00
deposits of respondent since the were not assigned to answer
for the latter)s loans, and that an ded"ctions made from these
acco"nts were, therefore, illegal. 3onseq"entl, petitioner was
made to answer for damages s"ffered ' respondent.A*-B $eing
the petitioner)s Va'ihasnan $ranch Manager, 1ernande4 was
declared solidaril lia'le with petitioner.

2n appeal, the 3! modified the 0.3 decision ' a'solving
1ernande4 from lia'ilit. .he appellate co"rt held that 1ernande4
co"ld not 'e made to answer for acts done in the performance
of his d"t a'sent an showing that he assented to patentl
"nlawf"l acts of the corporation or was g"ilt of 'ad faith or
gross negligence in directing its affairs, or that he agreed to hold
himself personall and solidaril lia'le with the corporation.A*+B
No proof was add"ced in this regard.

:ence, the instant petition raising the following iss"es9

*. >:E.:E0 20 N2. .:E :2N20!$LE 32H0. 21 !55E!L%
E00ED &N 20DE0&N/ 5E.&.&2NE0 .2 !332HN. 120 !ND
0E.H0N .2 0E%52NDEN. .:E %HM% 21 H%X80,000.00 !ND
H%X25,000.00.

2. >:E.:E0 20 N2. .:E :2N20!$LE 32H0. 21 !55E!L%
E00ED &N :2LD&N/ 5E.&.&2NE0 L&!$LE .2 0E%52NDEN. 120
M20!L !ND EUEM5L!06 D!M!/E%, !% >ELL !% !..20NE6)%
1EE% !ND 32%.% 21 %H&..A20B

5etitioner assails the 3! Decision affirming the former)s
c"lpa'ilit for ma(ing "nlawf"l ded"ctions from respondent)s
dollar acco"nts witho"t the latter)s consent. !dditionall, it
q"estions the award of moral and e@emplar damages, as well
as attorne)s fees.
28
>e agree with the 3!)s fact"al findings as to the deposits
and withdrawals made and loans o'tained ' respondent. >e do
not, however, agree with its concl"sion that petitioner a'sol"tel
lac(ed the a"thorit to ma(e ded"ctions from respondent)s
deposits for the pament of his o"tstanding o'ligations.

&t is apt to stress the well?settled principle that fact"al findings
of the trial co"rt, affirmed ' the 3!, are 'inding and concl"sive
"pon this 3o"rt.A2*B &n the a'sence of an showing that the
findings complained of are totall devoid of s"pport in the
evidence on record, or that the are so glaringl erroneo"s as to
constit"te serio"s a'"se of discretion, s"ch findings m"st stand.
A22B .he 3o"rt is not a trier of facts, its F"risdiction 'eing
limited to reviewing onl errors of law that ma have 'een
committed ' the lower co"rts.A28B &t is not the f"nction of the
3o"rt to anal4e or weigh all over again the evidence or
premises s"pportive of s"ch fact"al determination.A2,B .he law
creating the 3! was intended mainl to ta(e awa from the
%"preme 3o"rt the wor( of e@amining the evidence, so that it
ma confine its tas( to the determination of q"estions which do
not call for the reading and st"d of transcripts containing the
testimon of witnesses.A25B

&n the present case, we find no F"stification to deviate
from the fact"al findings of the trial co"rt and the appellate
co"rt. 5etitioner has "tterl failed to convince "s that the
assailed findings are devoid of 'asis or are not s"pported '
s"'stantial evidence.
29
&t is noteworth that respondent opened fo"r acco"nts
with petitioner9 *= !cco"nt No. 22;,?00*,5?0 for
H%X*00,000.00C 2= !cco"nt No. 0?2;,00*7*?; <13D No.
505;7*= for H%X;7,227.+5C 8= !cco"nt No. 0?2;,002,,?5 <13D
No. 505;--= for H%X25,000.00C and ,= !cco"nt No. 0?2;,?
00857?8 <13D No. 78+-0+= for H%X*7,000.00. !dmittedl,
respondent withdrew X70,000.00 from !cco"nt No. 22;,?
00*,5?0, leaving a 'alance of X80,000.00.

&t is li(ewise "ndisp"ted that respondent o'tained two separate
loans from petitioner in amo"nts of 52,800,000.00 and
5;,5,*50.00. .hese were evidenced ' promissor notes and
sec"red ' respondent)s two dollar acco"nts Y !cco"nt
N"m'ers 0?2;,00*7*?; <13D No. 505;7*= and 0?2;,?00857?8
<13D No. 78+-0+= Y for H%X;7,227.+5 and H%X*7,000.00,
respectivel. 0espondent)s first loan of 52,800,000.00, o'tained
on !pril *8, *++-, was paa'le on !pril -, *+++C while the
second loan of 5;,5,*50.00, o'tained on !pril 80, *+++, was
paa'le on !pril 2,, 2000. 0ecords show that the first loan was
paid on !pril 2*, *+++, with the pament therefor ta(en from
!cco"nt No. 0?2;,00*7*?;. .he second loan, on the other hand,
was paid on Ma *0, *+++, o"t of respondent)s !cco"nt No. 0?
2;,?00857?8. &t sho"ld 'e clarified, tho"gh, that these
paments referred onl to the pament of the principal
<52,800,000.00 and 5;,5,*50.00= of respondent)s loans,
e@cl"sive of interests stip"lated in the promissor notes
e@ec"ted ' the latter.

!side from o'ligating himself to pa 52,800,000.00 as principal,
respondent also agreed to pa interest at the rate of 22.+2+O
per annum <not monthl= from !pril *8, *++- "ntil f"ll pament.
!s respondent made f"ll pament of the principal on !pril 2*,
*+++, respondent was also o'liged to pa interest "ntil that
date. !s to the 5;,5,*50.00 loan, respondent agreed to pa
interest at the rate of *;.+-7O per annum.
0espondent later discovered that his acco"nts with petitioner
were all depleted. Hpon inq"ir from petitioner, it e@plained that
p"rs"ant to the Deeds of !ssignment with 5ower of !ttorne
e@ec"ted ' respondent, it ded"cted from respondent)s acco"nts
the interest d"e on his loans.

3ontrar to the concl"sions of the 0.3 and the 3!, we find that
petitioner is empowered to ma(e lawf"l ded"ctions from
respondent)s acco"nts for s"ch amo"nts d"e it. .his is
a"thori4ed in the 5romissor Notes and Deeds of !ssignment
with 5ower of !ttorne e@ec"ted ' respondent, to wit9

&P>e here' give the $an( a general lien "pon, andPor right of
set?off andPor right to hold andPor appl to the loan acco"nt, or
an claim of the $an( against an of "s, all mPo"r rights, title
and interest in and to the 'alance of ever deposit acco"nt,
mone, negotia'le instr"ments, commercial papers, notes,
'onds, stoc(s, dividends, sec"rities, interest, credits, chose in
action, claims, demands, f"nds or an interest in an thereof,
and in an other propert, rights and interest of an of "s or an
evidence thereof, which have 'een, or at an time shall 'e
delivered to, or otherwise come into the possession, control or
c"stod of the $an( or an of its s"'sidiaries, affiliates, agents
or correspondents now or antime hereafter, for an p"rpose,
whether or not accepted for the p"rpose or p"rposes for which
the are delivered or intended. 1or this p"rpose, &P>e here'
appoint the $an( as mPo"r irrevoca'le !ttorne?in?fact with f"ll
power of s"'stit"tionPdelegation to sign or endorse an and all
doc"ments and perform an and all acts and things req"ired or
necessar in the premises.A2;B

Effective "pon defa"lt in the pament of 30ED&., or an part
thereof, the !%%&/N20 here' grants to the !%%&/NEE, f"ll
power and a"thorit to collectPwithdraw the
depositPproceedsPreceiva'lesP investmentsPsec"rities and appl
the collectionPdeposit to the pament of the o"tstanding
principal, interest and other charges on the 30ED&.. 1or this
p"rpose, the !%%&/N20 here' names, constit"tes and appoints
the !%%&/NEE as hisPits tr"e and lawf"l !ttorne?in?1act, with
powers of s"'stit"tion, to as(, demand, collect, s"e for, recover
and receive the
depositPproceedsPreceiva'lesPinvestmentsPsec"rities or an part
thereof, as well as to encash, negotiate and endorse chec(s,
drafts and other commercial papersPinstr"ments received ' and
paid to the !%%&/NEE, incident thereto and to e@ec"te all
instr"ments and agreements connected therewith. ! written
3ertification ' the !%%&/NEE of the amo"nt of its claims from
the !%%&/N20 andPor the $2002>E0 shall 'e concl"sive on the
!%%&/N20 andPor the $2002>E0 a'sent manifest error.A27B


!s provided in !rticle **5+ of the 3ivil 3ode, Io'ligations arising
from contract have the force of law 'etween the contracting
parties and sho"ld 'e complied with in good faith.J Eeril, parties
ma freel stip"late their d"ties and o'ligations which perforce
wo"ld 'e 'inding on them. Not 'eing rep"gnant to an legal
proscription, the agreement entered into 'etween petitioner and
respondent m"st 'e respected and given the force of law
'etween them.A2-B

Hpon the mat"rit of the first loan on !pril -, *+++, petitioner
was a"thori4ed to a"tomaticall ded"ct, ' wa of offsetting,
respondent)s o"tstanding de't <incl"ding interests= to it from the
latter)s deposit acco"nts and their acc"m"lated interest.
0espondent did not o'Fect to the ded"ction made from the
proceeds of !cco"nt No. 0?2;,00*7*?;, '"t wo"ld limit s"ch
ded"ction onl to the pament of the principal of 52,800,000.00.
:owever, it sho"ld 'e 'orne in mind that in addition to the
a"thorit to effect the said ded"ction for the principal loan
amo"nt, petitioner was a"thori4ed to ma(e f"rther ded"ctions
for interest paments at the rate of 22.+2+O per annum "ntil
!pril 2*, *+++.

>ith respect to the second loan, 'arel a month after the
e@ec"tion of the promissor note and definitel prior to the
mat"rit date, respondent alread paid the principal of
5;,5,*50.00 o"t of the deposited amo"nt in !cco"nt No. 0?2;,?
00857?8. 5"rs"ant to the promissor note, respondent agreed to
pa interest at the rate of *;.+-7O per annum. >hile it is
conceded that petitioner had the right to offset the "npaid
interests d"e it against the deposits of respondent, the iss"e of
whether it acted F"dicio"sl is an entirel different matter.A2+B
!s '"siness affected with p"'lic interest, and 'eca"se of the
nat"re of their f"nctions, 'an(s are "nder o'ligation to treat the
acco"nts of their depositors with metic"lo"s care, alwas having
in mind the fid"ciar nat"re of their relationship.A80B

30
5"rs"ant to the a'ove disq"isition, it is clear that despite s"ch
a"thorit, petitioner sho"ld still acco"nt for whatever e@cess
ded"ctions made on respondent)s deposits and ret"rn to
respondent s"ch amo"nts ta(en from him. .o 'e s"re,
respondent had interest?earning deposits with petitioner in
accordance with their agreement. 2n the other hand, after
respondent paid the principal on !pril 2*, *+++ and Ma *0,
*+++ on the two loans which he o'tained from petitioner, the
latter had the a"thorit to ma(e ded"ctions for the pament of
interest as stip"lated in respondent)s promissor notes.

>hen we consider the total amo"nt of respondent)s deposits in
his dollar acco"nts incl"sive of interests earned vis?Z?vis his
total o'ligations to petitioner, we find that the total depletion of
his acco"nts is not warranted. :ence, we find no reason to
dist"r' the 3! concl"sion on the award of damages. !s aptl
e@plained in 4an of the %hilippine .slands '. Court of Appeals>

1or the a'ove reasons, the 3o"rt finds no reason to dist"r' the
award of damages granted ' the 3! against petitioner. .his
whole incident wo"ld have 'een avoided had petitioner adhered
to the standard of diligence e@pected of one engaged in the
'an(ing '"siness. ! depositor has the right to recover
reasona'le moral damages even if the 'an()s negligence ma
not have 'een attended with malice and 'ad faith, if the former
s"ffered mental ang"ish, serio"s an@iet, em'arrassment and
h"miliation. Moral damages are not meant to enrich a
complainant at the e@pense of defendant. &t is onl intended to
alleviate the moral s"ffering she has "ndergone. .he award of
e@emplar damages is F"stified, on the other hand, when the
acts of the 'an( are attended ' malice, 'ad faith or gross
negligence. .he award of reasona'le attorne)s fees is proper
where e@emplar damages are awarded. &t is proper where
depositors are compelled to litigate to protect their interest.A8*B


45ERE67RE, premises considered, the 3o"rt of !ppeals
Decision dated D"l 8*, 2007 is here' A669RMED with
M7D969CA*97'. 5etitioner is ordered to acco"nt for
respondent)s dollar deposits incl"sive of interests, s"'Fect to its
right to ded"ct from the said deposits his loan o'ligations
amo"nting to 52,800,000.00, pl"s interest at 22.+2+O per
annum "ntil f"ll pament on !pril 2*, *+++C and 5;,5,*50.00,
pl"s interest at *;.+-7O per annum "ntil f"ll pament on Ma
*0, *+++. !fter s"ch acco"nting, petitioner shall restore to
respondent whatever e@cess amo"nts ma have 'een ded"cted
from s"ch deposits, together with the earned interests.

!ll other aspects of the assailed decision :*A'D.
P59;9PP9'E C5AR*ER
9':=RA'CE C7RP7RA*97', vs P59;9PP9'E 'A*97'A;
C7':*R=C*97' C7RP7RA*97',
?R97', J.9

5etitioner 5hilippine 3harter &ns"rance 3orporation <%C.C=
s"'mits the present motion for the reconsiderationA*B of o"r
0esol"tion dated Decem'er *7, 200-, which denied d"e co"rse
to its petition for review on certiorari.A2B &t see(s to reinstate
the petition and effect a reversal of the 3o"rt of !ppeals <CA=
DecisionA8B and 0esol"tionA,B dated Dan"ar 7, 200- and
2cto'er 2+, 200-, respectivel, in 3!?/.0. 3E No. -;+,-. &n its
petition, the petitioner imp"tes reversi'le error on the appellate
co"rt for r"ling that it is lia'le "nder 53&3 $ond No. 275,7 and
"nder 53&3 $ond No. 275,;, as the latter 'ond was not covered
' the complaint for collection of s"m of mone filed '
respondent 5hilippine National 3onstr"ction 3orporation <%0CC=.
A5B

.he facts, as drawn from the records, are 'riefl s"mmari4ed
'elow.

5N33 is engaged in the constr"ction '"siness and tollwa
operations. 2n 2cto'er *;, *++7, 5N33 cond"cted a p"'lic
'idding for the s"ppl of la'or, materials, tools, s"pervision,
eq"ipment, and other incidentals necessar for the fa'rication
and deliver of 27 toll'ooths to 'e "sed for the a"tomation of
toll collection along the e@presswas. 2rlando Valingo </alingo=
won in the 'idding and was awarded the contract.

2n Novem'er *8, *++7, 5N33 iss"ed R in favor of Valingo R
5"rchase 2rder <%.$.= No. 7*02,L for 25 "nits of toll'ooths for a
total of 52,*00,000.00, and 5.2. No. 7*025L for two "nits of
toll'ooths amo"nting to 5*;-,000.00. .hese iss"ances were
s"'Fect to the condition, among others, that each 5.2. shall 'e
covered ' a s"ret 'ond eq"ivalent to *00O of the total down
pament <50O of the total cost reflected on the 5.2.=, and that
the s"ret 'ond shall contin"e in f"ll force "ntil the s"pplier shall
have complied with all the "nderta(ings and covenants to the
f"ll satisfaction of 5N33.

Valingo, hence, posted s"ret 'onds R %"ret $ond Nos. 275,;
and 275,7 R iss"ed ' the 53&3 and whose terms and
conditions read9

:uret ?ond 'o. 2(1)2

.o s"ppl la'or, materials, tools, s"pervision eq"ipment, and
other incidentals necessar for the fa'rication and deliver of
.wo <2= Hnits .oll $ooth at %an 1ernando &nterchange %$ Entr
as per 5"rchase 2rder No. 7*025L, cop of which is attached as
!nne@ I!.J .his 'ond also g"arantees the repament of the
down pament or whatever 'alance thereof in the event of
fail"re on the part of the 5rincipal to finish the proFect d"e to his
own fa"lt.

&t is "nderstood that the lia'ilit of the %"ret "nder this 'ond
shall in no case e@ceed the s"m of 5-,,000.00, 5hilippine
3"rrenc.A;B


:uret ?ond 'o. 2(1)(

.o s"ppl la'or, materials, tools, s"pervision eq"ipment, and
other incidentals necessar for the fa'rication and deliver of
.went?five <25= Hnits .oll $ooth at designated .oll 5la4a as per
5"rchase 2rder No. 7*02,L, cop of which is attached as !nne@
31
I!.J .his 'ond also g"arantees the repament of the down
pament or whatever 'alance thereof in the event of fail"re on
the part of the 5rincipal to finish the proFect d"e to his own
fa"lt.

&t is "nderstood that the lia'ilit of the %"ret "nder this 'ond
shall in no case e@ceed the s"m of 5*,050,000.00, 5hilippine
3"rrenc.A7B


.o ill"strate, the 53&3 s"ret 'onds are in the amo"nts
corresponding to down paments on each 5.2., as follows9

:uret ?ond
'o.
Purchase 7rder =nits
Co.ered
*otal Cost :uret A+ount
<eq"ivalent to 50O
down pament=
$ond No. 2(1)( 5.2. No. 7*02,L 21 52,*00,000
$ond No. 2(1)2 5.2. No. 7*025L 2 5 *;-,000


$oth s"ret 'onds also contain the following conditions9 <*=
the lia'ilit of 53&3 "nder the 'onds e@pires on March *;, *++-C
and <2= a @ritten eBtraDudicial de+and +ust !irst Ae
tendered to the suret, PC9C, @ithin 11 das !ro+ the
eBpiration dateF other@ise PC9C shall not Ae liaAle
thereunder and the oAli0ee @ai.es the ri0ht to clai+ or
!ile an court action to collect on the Aond. .he following
stip"lation appears in the last paragraph of these 'onds9

.he lia'ilit of 5:&L&55&NE 3:!0.E0 &N%H0!N3E 320520!.&2N
"nder this 'ond will e@pire on March *;, *++-. 1"rthermore, it is
here' agreed and "nderstood that P59;9PP9'E C5AR*ER
9':=RA'CE C7RP7RA*97' @ill not Ae liaAle !or an clai+
not presented to it in @ritin0 @ithin 696*EE' "11# DA8:
!ro+ the eBpiration o! this Aond, and that the 7Ali0ee
hereA @ai.es its ri0ht to clai+ or !ile an court action
a0ainst the :uret a!ter the ter+ination o! 696*EE' "11#
DA8: !ro+ the ti+e its cause o! action accrues.A-B
<Emphasis s"pplied.=


5N33 released two chec(s to Valingo representing the down
pament of 50O of the total proFect cost, which were properl
receipted ' Valingo.A+B Valingo in t"rn s"'mitted the two 53&3
s"ret 'onds sec"ring the down paments, which 'onds were
accepted ' 5N33.

2n March 8, ,, and 5, *++-, Valingo made partialPinitial deliver
of fo"r "nits of toll'ooths "nder 5.2. No. 7*02,L. :owever, the
toll'ooths delivered were incomplete or were not fa'ricated
according to 5N33 specifications. Valingo failed to deliver the
other 28 toll'ooths "p to the time of filing of the complaintC
despite demands, he failed and ref"sed to compl with his
o'ligation "nder the 52s.

2n March +, *++-, si@ das 'efore the e@piration of the s"ret
'onds and after the e@piration of the deliver period provided for
"nder the award, 5N33 filed a @ritten eBtraDudicial clai+
against 53&3 notifing it of Valingo)s defa"lt and demanding the
repament of the down pament on 5.2. No. 7*02,L as sec"red
' PC9C ?ond 'o. 2(1)(, in the amo"nt of 5*,050,000.00.
.he claim went "nheeded despite repeated demands. 1or this
reason, on !pril 2,, 200*, 5N33 filed with the 0egional .rial
3o"rt <RTC=, Mandal"ong 3it a complaint for collection of a
s"m of mone against Valingo and 53&3.A*0B 5N337s complaint
against 53&3 called solel on 53&3 $ond No. 275,7C it did not
raise or plead collection under PC9C ?ond 'o. 2(1)2
@hich secured the do@n pa+ent o! P8),000.00 on P.7.
'o. (1021;.

53&3, in its answer, arg"ed that the partial deliver of fo"r o"t of
the 25 "nits of toll'ooth ' Valingo "nder 5.2. No. 7*02,L
sho"ld red"ce Valingo7s o'ligation.

.he 0.3, ' Decision of 2cto'er 8*, 2005, r"led in favor of
5N33 and ordered 53&3 and Valingo to Fointl and severall pa
the latter 5*,050,000.00, representing the val"e of 53&3 $ond
No. 275,7, pl"s legal interest from last demand, and
550,000.00 as attorne7s fees. 0econsideration of the trial
co"rt7s decision was denied. *he trial court +ade no rulin0
on PC9C,s liaAilit under PC9C ?ond 'o. 2(1)2, a clai+
that @as not pleaded in the co+plaint.

2n appeal, the 3!, ' DecisionA**B of Dan"ar 7, 200-, held
that the 0.3 erred in r"ling that 53&37s lia'ilit is limited onl to
the pament of 5*,050,000.00 "nder 53&3 $ond No. 275,7
which sec"red the down pament on 5.2. No. 7*02,L. *he
appellate court held that PC9C, as suret, is liaAle Dointl
and se.erall @ith Ealin0o !or the a+ount o! the t@o
Aonds securin0 the t@o P7s to Ealin0oF thus, the CA also
held PC9C liaAle under PC9C ?ond 'o. 2(1)2 @hich
secured the P8),000.00 do@n pa+ent on P.7. 'o.
(1021;.

0econsideration having 'een denied ' the appellate co"rt in its
0esol"tionA*2B of 2cto'er 2+, 200-, the 53&3 lodged a petition
for review on certiorariA*8B 'efore this 3o"rt.

.he 3o"rt, ' 0esol"tion of Decem'er *7, 200-, denied d"e
co"rse to the petition.A*,B :ence, the 53&3 filed the present
motion for reconsideration s"'mitting the following iss"es for
o"r resol"tion9

&. >:E.:E0 .:E !55ELL!.E 32H0. E00ED &N 0HL&N/
.:!. 53&3 %:2HLD !L%2 $E :ELD L&!$LE HNDE0 $2ND N2.
275,;, 32LLE3.&2N HNDE0 >:&3: >!% N2. %H$DE3. 21
0E%52NDEN. 5N337s 32M5L!&N. 120 32LLE3.&2N 21 %HM 21
M2NE6C

&&. >:E.:E0 .:E 3:E3V% &%%HED &N I*++7J $6
0E%52NDEN. 5N33 .2 V!L&N/2 >E0E /&EEN *0 M2N.:%
50&20 .2 .:E !>!0D 21 .:E 502DE3. !ND !M2HN.% .2
32N3E!LMEN. 21 M!.E0&!L 1!3. E&.&!.&N/ .:E %H0E.6
$2ND% &%%HED $6 .:E 5E.&.&2NE0C and

&&&. >:E.:E0 .:E !55ELL!.E 32H0. E00ED &N :2LD&N/
5E.&.&2NE0 53&3 L&!$LE 120 !..20NE67% 1EE%.


.he second iss"e is a fact"al matter not proper in proceedings
'efore this 3o"rt. .he 53&3)s position that the chec(s were
iss"ed *0 months prior to the award had alread 'een reFected
' 'oth the 0.3 and the 3!C 'oth fo"nd that the ear I*++7J
appearing on the chec(s was a mere tpographical error which
32
sho"ld have 'een written as I*++-.JA*5B 3onseq"entl, we shall
no longer disc"ss the 53&37s allegation of material concealmentC
the fact"al findings of the 0.3, as affirmed ' the 3!, are
concl"sive on "s.

2"r consideration shall foc"s on the remaining two iss"es.

.he 53&3 presents, as its first iss"e, the arg"ment that IAwBhen
the 3o"rt of !ppeals rendered F"dgment on $ond No. 275,;,
which was not s"'Fect of respondent7s complaint, on the gro"nd
that respondent was incorrect in not filing s"it for $ond No.
275,;, the 3o"rt of !ppeals virt"all acted as lawer for
respondent.JA*;B

4e !ind the PC9C,s position +eritorious.

.he iss"e 'efore "s calls for a disc"ssion of a co"rt)s 'asic
appreciation of allegations in a complaint. .he f"ndamental r"le
is that reliefs granted a litigant are limited to those specificall
praed for in the complaintC other reliefs praed for ma 'e
granted onl when related to the specific praer<s= in the
pleadings and s"pported ' the evidence on record.
Necessaril, an s"ch relief ma 'e granted onl where a ca"se
of action therefor e@ists, 'ased on the complaint, the pleadings,
and the evidence on record.

%ection 2, 0"le 2 of the *++7 0"les of 3ivil 5roced"re defines a
ca"se of action as the act or omission ' which a part violates
the right of another. &t is the delict or the wrongf"l act or
omission committed ' the defendant in violation of the primar
right of the plaintiff.A*7B &ts essential elements are as follows9

*. ! right in favor of the plaintiff ' whatever means and "nder
whatever law it arises or is createdC

2. !n o'ligation on the part of the named defendant to respect
or not to violate s"ch rightC and

8. !ct or omission on the part of s"ch defendant in violation of
the right of the plaintiff or constit"ting a 'reach of the o'ligation
of the defendant to the plaintiff for which the latter ma
maintain an action for recover of damages or other appropriate
relief.A*-B

2nl "pon the occ"rrence of the last element does a
ca"se of action arise, giving the plaintiff the right to maintain an
action in co"rt for recover of damages or other appropriate
relief.A*+B

Each of the s"ret 'onds iss"ed ' 53&3 created a right in favor
of 5N33 to collect the repament of the 'onded down paments
made on the two 52s if contractor Valingo defa"lts on his
o'ligation "nder the award to fa'ricate and deliver to 5N33 the
toll'ooths contracted for. 3oncomitantl, 53&3, as s"ret, had
the o'ligation to compl with its "nderta(ing "nder the 'onds to
repa 5N33 the down paments the latter made on the 52s if
Valingo defa"lts.

&t m"st 'e 'orne in mind that each of the two 'onds is a distinct
contract ' itself, s"'Fect to its own terms and conditions. .he
each contain a provision that the s"ret, 53&3, will not 'e lia'le
for an claim not presented to it in writing within *5 das from
the e@piration of the 'ond, and that the o'ligee <5N33= there'
waives its right to claim or file an co"rt action against the
s"ret <53&3= after the termination of *5 das from the time its
ca"se of action accr"es. *his written claim provision
creates a condition precedent !or the accrual o!I "1#
PC9C,s oAli0ation to co+pl @ith its pro+ise under the
particular Aond, and o! "2# P'CCJs ri0ht to collect or sue
on these Aonds. PC9C,s liaAilit to repa the Aonded
do@n pa+ents arises onl upon P'CCJs !ilin0 o! a
@ritten clai+ G noti!in0 PC9C o! principal Ealin0o,s
de!ault and de+andin0 collection under the Aond G @ithin
11 das !ro+ the Aond,s eBpir date. P'CC,s !ailure to
co+pl @ith the @ritten clai+ pro.ision has the e!!ect o!
eBtin0uishin0 PC9C,s liaAilit and constitutes a @ai.er A
P'CC o! the ri0ht to clai+ or sue under the Aond.

Lia'ilit on a 'ond is contract"al in nat"re and is
ordinaril restricted to the o'ligation e@pressl ass"med therein.
>e have repeatedl held that the e@tent of a s"ret7s lia'ilit is
determined onl ' the cla"se of the contract of s"retship and
' the conditions stated in the 'ond. &t cannot 'e e@tended '
implication 'eond the terms of the contract.A20B Eq"all 'asic
is the principle that o'ligations arising from contracts have the
force of law 'etween the parties and sho"ld 'e complied with in
good faith.A2*B Nothing can stop the parties from esta'lishing
stip"lations, cla"ses, terms and conditions as the ma deem
convenient, provided the are not contrar to law, morals, good
c"stoms, p"'lic order, or p"'lic polic.A22B :ere, nothing in the
records shows the invalidit of the written claim provisionC
therefore, the parties m"st strictl and in good faith compl with
this req"irement.

.he records reveal that 5N33 complied with the written claim
provision, '"t onl with respect to 53&3 $ond No. 275,7. 5N33
filed an e@traF"dicial demand with 53&3 informing it of Valingo)s
defa"lt "nder the award and demanding the repament of the
'onded down pament on 5.2. No. 7*02,L. 3onversel, nothing
in the records shows that 5N33 ever complied with the
provision with respect to 53&3 $ond No. 275,;. >h 5N33
complied with the written claim provision with respect to 53&3
$ond No. 275,7, '"t not with respect to 53&3 $ond No. 275,;,
has not 'een e@plained ' 5N33. =nder the circu+stances,
P'CC,s cause o! action @ith respect to PC9C ?ond 'o.
2(1)2 did not and cannot eBist, such that no relie! !or
collection thereunder +a Ae .alidl a@arded.

5ence, the trial court,s decision !indin0 PC9C liaAle solel
under PC9C ?ond 'o. 2(1)( is correct G not onl Aecause
collection under the other Aond, PC9C ?ond 'o. 2(1)2,
@as not raised or pleaded in the co+plaint, Aut !or the
+ore i+portant reason that no cause o! action arose in
P'CC,s !a.or @ith respect to this Aond. Conse/uentl,
the appellate court @as in error !or includin0 liaAilit
under PC9C ?ond 'o. 2(1)2.
33

5N33 insists that conforma'l with the r"ling of the 3!, it
sho"ld 'e entitled to collection "nder 53&3 $ond No. 275,;,
altho"gh collection there"nder was not specificall raised or
pleaded in its complaint, 'eca"se the 'ond was attached to the
complaint and formed part of the records. !lso, considering that
53&3)s lia'ilit as s"ret has 'een d"l proven 'efore the trial
and appellate co"rts, 5N33 posits that it is entitled to repament
"nder 53&3 $ond No. 275,;.

5N33 might 'e all"ding to %ection 2<c=, 0"le 7 of the 0"les of
3o"rt, which provides that a pleading shall specif the relief
so"ght, '"t ma add a general praer for s"ch f"rther or other
reliefs as ma 'e deemed F"st and eq"ita'le. Hnder this r"le, a
co"rt can grant the relief warranted ' the allegation and the
proof even if it is not specificall so"ght ' the inF"red partC
A28B the incl"sion of a general praer ma F"stif the grant of a
remed different from or together with the specific remed
so"ght,A2,B if the facts alleged in the complaint and the
evidence introd"ced so warrant.A25B

>e find 5N33)s arg"ment to 'e misplaced. ! general praer for
Iother reliefs F"st and eq"ita'leJ appearing on a complaint or
pleading normall ena'les the co"rt to award reliefs s"pported
' the complaint or other pleadings, ' the facts admitted at the
trial, and ' the evidence add"ced ' the parties, even if these
reliefs are not specificall praed for in the complaint. >e
cannot, however, grant 5N33 the Iother reliefJ of recovering
"nder 53&3 $ond No. 275,; 'eca"se of the respect d"e the
contract"al stip"lations of the parties. >hile it is tr"e that
53&3)s lia'ilit "nder 53&3 $ond No. 275,; wo"ld have 'een
clear "nder ordinar circ"mstances <considering that Valingo7s
defa"lt "nder his contract with 5N33 is now 'eond disp"te=, it
cannot 'e denied that the 'ond contains a written claim
provision, and compliance with it is essential for the accr"al of
53&3)s lia'ilit and 5N33)s right to collect "nder the 'ond.

!s alread disc"ssed, this provision is the law 'etween the
parties on the matter of lia'ilit and collection "nder the 'ond.
Vnowing f"ll well that 53&3 $ond No. 275,; is a matter of
record, d"l proven and s"scepti'le of the co"rt)s scr"tin, the
trial and appellate co"rts m"st respect the terms of the 'ond
and cannot F"st disregard its terms and conditions in the
a'sence of an showing that the are contrar to law, morals,
good c"stoms, p"'lic order, or p"'lic polic. 1or its fail"re to file
a written claim with 53&3 within *5 das from the 'ond)s e@pir
date, 5N33 clearl waived its right to collect "nder 53&3 $ond
No. 275,;. .hat, wittingl or "nwittingl, 5N33 did not collect
"nder one 'ond in favor of calling on the other creates no other
concl"sion than that the right to collect "nder the former had
'een lost. 3onseq"entl, 5N33)s ca"se of action with respect to
53&3 $ond No. 275,; cannot F"ridicall e@ist and no relief
therefore ma 'e validl given. :ence, the 3! invalidl
rendered F"dgment with respect to 53&3 $ond No. 275,;, and
its award 'ased on this 'ond m"st 'e deleted.
2n the third iss"e, we hold that 53&3 sho"ld 'e held lia'le for
the attorne7s fees 5N33 inc"rred in 'ringing s"it. 53&3)s "nF"st
ref"sal to pa despite 5N33)s written claim compelled the latter
to hire the services of an attorne to collect on 53&3 $ond No.
275,7.

45ERE67RE, premises considered, we :E* A:9DE o"r
0esol"tion of Decem'er *7, 200- and %RA'* the present
motion for reconsideration. .he petition for review on certiorari
is PAR*;8 %RA'*ED. .he assailed 3o"rt of !ppeals Decision
of Dan"ar 7, 200- and 0esol"tion of 2cto'er 2+, 200- are
here' A669RMED @ith M7D969CA*97', deleting petitioner
53&37s lia'ilit "nder 53&3 $ond No. 275,;. !ll other matters in
the assailed 3o"rt of !ppeals decision and resol"tion are
A669RMED.

:7 7RDERED.
?E'9*7 DE ;7: RE8E:, plainti!!$appellant,
.s.
&ER7'9CA A;7JAD7, de!endant$appellee.
Ramon &iono, for appellant.
0o appearance for appellee.
*7RRE:, J.:
2n or a'o"t Dan"ar 22, *+05, Eeronica !loFado received, as a
loan, from $enito de los 0ees that the s"m 5;7 .;0, for the
p"rpose of paing a de't she owed to 2limpia #a'alla. &t was
agreed 'etween !loFado and 0ees that the de'tor sho"ld
remain as a servant in the ho"se and in the service of her
creditor, witho"t an ren"meration whatever, "ntil she sho"ld
find some one who wo"ld f"rnish her with the said s"m where
with to repeat the loan. .he defendant, Eeronica !loFado,
afterwards left the ho"se of the plaintiff, on March *2, *+0;,
witho"t having paid him her de't, nor did she do so at an
s"'seq"ent date, notwithstanding his demands. .he plaintiff,
therefore, on the *5th of march, *+0;, filed s"it in the co"rt of
the F"stice of the peace of %anta 0osa, La Lag"na, against
Eeronica !loFado to recover the said s"m or, in a contrar case,
to compel her to ret"rn to his service. .he trial having 'een had,
the F"stice of the peace, on !pril *,, *+0;, rendered F"dgment
where' he sentenced the defendant to pa to the plaintiff the
s"m claimed and declared that, in case the de'tor sho"ld 'e
insolvent, she sho"ld 'e o'liged to f"lfill the agreement 'etween
her and the plaintiff. .he costs of the trial were assessed against
the defendant.
.he defendant appealed from the said F"dgment to the 3o"rt of
1irst &nstance to which the plaintiff, after the case had 'een
doc(eted ' the cler( of co"rt, made a motion on Ma ,, *+0;,
req"esting that the appeal interposed ' the defendant 'e
disallowed, with the costs of 'oth instances against her. .he
gro"nds alleged in s"pport of this motion. were that the appeal
had 'een filed on the si@th da following that when F"dgment
was rendered in the trial, on !pril *,th, and that it, therefore,
did not come within the period of the five das prescri'ed '
section 7; of the 3ode of 3ivil 5roced"re, as proven ' the
certificate iss"ed ' the F"stice of the peace of %anta 0osa. .he
3o"rt of 1irst &nstance, however, ' order of D"l *;, *+0;,
overr"led the motion of the plaintiff?appellee, for the reasons
therein stated, namel, that the defendant was not notified of
the F"dgment rendered in the case on !pril *,th of that ear
"ntil the *;th of the same month, and the appeal having 'een
filed fo"r das later, on the 20th, it co"ld having seen that the
five das specified ' section 7; of the 3ode of 3ivil 5roced"re
had not e@pired. .he plaintiff was advised to reprod"ce his
complaint within ten das, in order that d"e proced"re might he
had there"pon.
34
.he plaintiff too( e@ception to the aforementioned order and at
the same time reprod"ced the complaint he had filed in the
co"rt of the F"stice of the peace, in which, after relating to the
facts herein'efore stated, added that the defendant, 'esides the
s"m a'ove?mentioned, had also received from the plaintiff,
"nder the same conditions, vario"s small amo"nts 'etween the
dates of Dan"ar 22, *+05, and March *0, *+0;, aggregating
altogether 5**.+7, and that the had not 'een repaid to him. :e
therefore as(ed that F"dgment 'e rendered sentencing the
defendant to compl with the said contract and to pa to the
plaintiff the s"ms referred to, amo"nting in all to 57+.57, and
that "ntil this amo"nt sho"ld have 'een in paid, the defendant
sho"ld remain grat"ito"sl in the service of plaintiff7s ho"sehold,
and that she sho"ld pa the costs of the trial.
.he defendant, in her written answer of !"g"st *5, *+0;, to the
aforesaid complaint, denied the allegations contained in
paragraphs * and 2 of the complaint and alleged that, altho"gh
she had left the plaintiff7s service, it was 'eca"se the latter had
paid her no s"m whatever for the services she had rendered in
his ho"se. .he defendant li(ewise denied the conditions
e@pressed in paragraph , of the complaint, averring that the
effects p"rchased, to the amo"nt of 5**.+7, were in the
possession of the plaintiff, who ref"sed to deliver them to her.
%he therefore as(ed that she 'e a'solved from the complaint
and that the plaintiff 'e a'solved from the complaint the wages
d"e her for the services she had rendered.
.he case came to trial on 2cto'er *+, *+0;, and, after the
prod"ction of testimon ' 'oth parties, the F"dge, on
Novem'er 2*st of the same ear, rendered F"dgment a'solving
the defendant from the complain, with the costs against the
plaintiff, and sentencing the latter to pa to the former the s"m
of 52.,8, the 'alance fo"nd to e@ist 'etween the defendant7s
de't of 57+.57 and the wages d"e her ' the plaintiff, which
amo"nted to 5-2. .he plaintiff, on the ;th of Decem'er, filed a
written e@ception to the F"dgment aforesaid thro"gh the reg"lar
channels, and moved for a new trial on the gro"nd that the
findings of fact set forth in the F"dgment were manifestl
contrar to the weight of the evidence. .his motion was
overr"led on the *7th of the same month, to which e@ception
was ta(en ' the appellant, who afterwards filed the proper 'ill
of e@ceptions, which was approved, certified, and forwarded to
the cler( of this co"rt.
.he present s"it, initiated in a F"stice of the peace co"rt and
appealed to the 3o"rt of 1irst &nstance of La Lag"na at a time
prior to the enactment of !ct No. *;27, which went into effect
on D"l *, *+07, which limited to two instances the proced"re to
'e o'served in ver'al actions, concerns the collection of certain
s"m received as a loan ' the defendant from the plaintiff, and
of the wages earned ' the former for services rendered as a
servant in the said plaintiff7s ho"se.
Notwithstanding the denial of the defendant, it is a fact clearl
proven, as fo"nd in the F"dgment appealed from, that the
plaintiff did deliver to :ermenegildo de los %antos the s"m of
5;7.;0 to pa a de't was paid ' De los %antos with the
(nowledge and in 'ehalf of the said defendant who, of her free
will, entered the service of the plaintiff and promised to pa him
as soon as she sho"ld find the mone wherewith to do so.
.he d"t to pa the said s"m, as well as that of 5**.+7
delivered to the defendant in small amo"nts d"ring the time that
she was in the plaintiff7s ho"se, is "nq"estiona'le, inasm"ch as
it is a positive de't demanda'le of the defendant ' her creditor.
<!rts. *75,, **70, 3ivil 3ode.= :owever, the reason alleged '
the plaintiff as a 'asis for the loan is "ntena'le, to wit, that the
defendant was o'liged to render service in his ho"se as a
servant witho"t rem"neration whatever and to remain therein so
long as she had not paid her de't, inasm"ch as this condition is
contrar to law and moralit. <!rt. *255, 3ivil 3ode.=
Domestic services are alwas to 'e rem"nerated, and no
agreement ma s"'sist in law in which it is stip"lated that an
domestic service shall 'e a'sol"tel grat"ito"s, "nless it 'e
admitted that slaver ma 'e esta'lished in this co"ntr thro"gh
a covenant entered into 'etween the interested parties.
!rticles *5-8, *5-,, and *5-5 of the 3ivil 3ode prescri'e r"les
governing the hiring of services of domestics servants, the
conditions of s"ch hire, the term d"ring which the service ma
rendered and the wages that accr"e to the servant, also the
d"ties of the latter and of the master. .he first of the articles
cited provides that a hiring for life ' either of the contracting
parties is void, and, according to the last of three articles F"st
mentioned, 'esides what is prescri'ed in the preceding articles
with regard to masters and servants, the provisions of special
laws and local ordinances shall 'e o'served.
D"ring the regime of the former sovereignt, the police
reg"lations governing domestic service, of the date of
%eptem'er +, *-,-, were in force, article *+ of which it is
ordered that all "s"rio"s cond"ct toward the servants and
emploees of ever class is prohi'ited, and the master who,
"nder prete@t of an advance of pa or of having paid the de'ts
or the ta@es of his servant, shall have s"cceeded in retaining the
latter in his service at his ho"se, shall 'e compelled to pa to
s"ch servant all arrears d"e him and an damages he ma have
occasioned him, and the master shall also 'e fined.
.he aforementioned article *5-5 of the 3ivil 3ode "ndo"'tedl
refers to the provisions of the reg"lations F"st cited.
>hen legal reg"lations prohi'it even a "s"rio"s contract and all
a'"ses preF"dicial to s"'ordinates and servant, in connection
with their salaries and wages, it will 'e "nderstood at once that
the compact where' service rendered ' a domestic servant in
the ho"se of an inha'itant of this co"ntr is to 'e grat"ito"s, is
in all respects reprehensi'le and cens"ra'leC and conseq"entl,
the contention of the plaintiff, that "ntil the defendant shall have
paid him her de't she m"st serve him in his ho"se grat"ito"sl
is a'sol"tel inadmissi'le.
.he trial record discloses no legal reason for the reFection of the
findings of fact and of law contained in the F"dgment appealed
from, nor for an allowance of the errors attri'"ted appealed
from, nor for an allowance of the errors attri'"ted theretoC on
the contrar, the reasons hereina'ove stated show the propriet
of the said F"dgment.
1or the foregoing reasons, and accepting those set forth in the
F"dgment appealed from, it is proper, in o"r opinion, to affirm
and we here' affirm the said F"dgment, with the costs against
the appellant.
Arellano, C. #., #ohnson, Moreland and Trent, ##., conc"r.
%.R. 'o. 2121
RA6AE; M7;9'A 8 :A;&AD7R, plainti!!$appellee,
.s.
A'*7'97 DE ;A R9&A, de!endant$appellant.
:i++s and :ale, for appellant.
%ills+ur! and ,utro, for appellee.
MAPA, #.>
.his is an action to recover a de't d"e "pon a contract e@ec"ted
D"l 27, *+08, where' plaintiff transferred to the defendant the
35
a'aca and copra@ '"siness theretofore carried on ' him at
vario"s places in the &sland of 3atand"anes, with all the
propert and right pertaining to the said '"siness, or the s"m of
*8,,;8; pesos and *2 cents, paa'le in Me@ican c"rrenc or its
eq"ivalent in local c"rrenc. Defendant paid at the time of the
e@ec"tion of the contract, on acco"nt of the p"rchase price, the
s"m of 588,;5+ pesos and 8 cents, promising to pa the 'alance
on three installments 588,;5+ pesos and 8 cents each, with
interest at the rate of 5 per cent per ann"m from the date of the
contract. .he first installment 'ecame d"e D"l 27, *+0,. &t was
for the recover of this first installment that their action was
'ro"ght in the 3o"rt of 1irst &nstance of the 3it of Manila.
Defendant dem"rred to the complaint on the gro"nd that the
co"rt had no F"risdiction of the s"'Fect of the action. .he co"rt
overr"led the dem"rrer and defendant ref"sed to and did not, as
a matter of fact, answer plaintiff)s complaint.
D"dgment having 'een rendered in favor of the plaintiff for the
s"m of 88,;5+ pesos and 8 cents, Me@ican c"rrenc, eq"al to
80,052 pesos and 70 centavos, 5hilippine c"rrenc, an interest
thereon at the rate of 5 per cent per ann"m from D"l 27, *+08
and costs, the defendant d"l e@cepted.
.he appellant relies "pon fo"r assignments of error. .he first
error assigned ' him is that the co"rt had no F"risdiction of the
s"'Fect of the action.
&t is alleged in s"pport of this contention that plaintiff and
defendant were residents of the &sland of 3atand"anes, as
wo"ld appear, as the plaintiff is concerned, from a power of
attorne, e@ec"ted ' him to !ntonio EalleFo Ealencia and
introd"ced in evidence d"ring the trial. .his power of attorne
was e@ec"ted !"g"st 22, *+0*. .he instr"ment in fact contains
the statement that plaintiff was a resident of 3atand"anes.
Nothing is said however, either in the power of attorne or in the
contract "pon which this action is 'ased, as to the residence of
the defendant.
.he complaint was filed March *0, *+05, and it alleges that 'oth
plaintiff and defendant were residents of the cit of Manila. .his
allegation was not either generall or specificall denied ' the
defendant, who ref"sed and failed to give an answer to the
complaint, having merel dem"rred thereto. .his allegation,
therefore, m"st 'e dem"rred admitted. .he power of attorne
a'ove referred to having 'een e@ec"ted in !"g"st, *+0*, does
not and can not ' itself prove that the parties were not)
residents of the cit of Manila in March, *+05, when the
complaint was filed. .he act"al residence, and not that which
the parties had fo"r ears, prior to the filing of the complaint, is
the one that sho"ld govern the q"estion as to the F"risdiction of
the co"rt.
! personal action li(e this for the record of a de't ma 'e
'ro"ght, "nder section 877 of the 3ode of the 3ivil 5roced"re, in
the 3o"rt of 1irst &nstance of the province where the plaintiff
resides or in the province where the defendant ma reside, at
the election of the plaintiff. $oth parties to this case 'eing
residents the cit of Manila, it is apparent that the 3o"rt of 1irst
&nstance of that cit had F"risdiction to tr and determine this
action.
&t is f"rther "rged in s"pport of the alleged want of F"risdiction
on the part of the co"rt 'elow, that the parties had m"t"all
designated in the contract in q"estion the town of $ato, &slands
of 3atand"anes, as the place where all F"dicial and e@traF"dicial
acts necessar "nder the terms thereof sho"ld ta(e place.
5aragraph + of the contract contains in fact a stip"lation to that
effect. .his the appellant claims amo"nted to an e@press
s"'mission ' the contracting parties to F"risdiction of the 3o"rt
of 1irst &nstance of the 5rovince of !l'a, in which the town of
$ato was located, all other co"rts 'eing there' inhi'ited from
e@ercising F"risdiction over actions arising "nder the contract.
>e are of the opinion that the designation of the town of $ato
made ' the parties had no legal force and co"ld not have the
effect of depriving the 3o"rt of 1irst &nstance of Manila of the
F"risdiction conferred on it ' law. .his wo"ld 'e tr"e even
tho"gh it ma 'e granted that the parties act"all intended to
waive the rights of domicile and e@pressl s"'mit themselves to
the e@cl"sive F"risdiction of the 3o"rt of 1irst &nstance of !l'a,
contended the appellant, all of which it ma 'e said seems to 'e
ver do"'tf"l, F"dging from the vag"e and "ncertain manner in
which the designation was made. .he F"risdiction of a co"rt is
filed ' law and not ' the will of the parties. !s a matter of
p"'lic polic, parties can onl stip"late in regard to that which is
e@pressl a"thori4ed ' law. %ection 877 of the 3ode of 3ivil
5roced"re provides a plain and definite r"le for the p"rpose of
determining the F"risdiction of co"rts according to the nat"re of
the action. Neither that section nor an other provision of law, of
which we have an (nowledge, a"thori4es the parties to s"'mit
themselves ' an e@press stip"lation to the F"risdiction of a
partic"lar co"rt to the e@cl"sion of the co"rt d"l vested with
s"ch F"risdiction. >e conseq"entl hold that the agreement
'etween the parties to s"'mit themselves to the F"risdiction of
the 3o"rt of 1irst &nstance of !l'a, if there was an s"ch
agreement, was n"ll and void, in so far as it had for its o'Fect to
deprive the 3o"rt of 1irst &nstance of Manila of its own
F"risdiction.
!rticles *255 and *27- of the 3ivil 3ode relied "pon ' the
appellant in his 'rief are not applica'le to cases relating to the
F"risdiction of co"rts. .he Law of 5roced"re and not the 3ivil
3ode 3ase and defines the F"risdiction of co"rts. &t is not tr"e as
contended ' the appellant that the right which litigants had
"nder the %panish law to s"'mit themselves to the F"risdiction
of a partic"lar co"rt was governed ' the provisions of the 3ivil
3ode. %"ch right was recogni4ed and governed ' the provisions
of the Law of 5roced"re and not ' the s"'stantive law. .he
right to contract, recogni4ed in the 3ivil 3ode and referred to '
appellant, has nothing to do with the right to esta'lish and fi@
the F"risdiction of a co"rt. .his right can onl 'e e@ercised '
the legislative 'ranch of the /overnment, the onl one vested
with the necessar power to ma(e r"les governing the s"'Fect.
&n this connection it ma 'e said that the F"risdiction of a co"rt
can not 'e the s"'Fect?matter of a contract.
.he second error assigned ' the appellant is that the co"rt
erred in fi@ing in 5hilippine c"rrenc the s"m which the appellee
sho"ld recover, witho"t hearing evidence as to the relative val"e
of Me@ican and 5hilippine c"rrenc. .he amo"nt so"ght to 'e
recovered in this action, "nder the terms of the contract, was
88,-5+ pesos and 8 cents, paa'le in Mexican currenc!, or its
equi'alent in local currenc!.
&n paragraph , of the complaint it is alleged that ?
Hnder the terms of the contract the act"al amo"nt
d"e from defendant to plaintiff, converted into
5hilippine c"rrenc is 2-,0,+ pesos and *+
centavos . . .
.his contention was not denied ' the defendant, who, as has
'een said 'efore, simpl dem"rred to the complaint. 5laintiff)s
allegation m"st therefore 'e deemed admitted. 3onseq"entl it
was not necessar for the co"rt to hear evidence as to the
relative val"e of Me@ican and 5hilippine c"rrenc. .here is no
36
disp"te 'etween the parties as to the fact that the 88,;5+ pesos
and 8 3ents, Me@ican c"rrenc, referred to in the contract, were
eq"al to 2-,0,+ pesos and *+ centavos, 5hilippine c"rrenc, at
the time of the filing of the complaint.
.he proof req"ired ' section 8 of !ct No. *0,5, cited ' the
appellant, sho"ld 'e received onl when the parties disagree as
to the relative val"e of the c"rrenc. .he co"rt 'elow did not,
therefore, err in not hearing evidence "pon this point, even
"nder the ass"mption that no s"ch evidence as heard in regard
thereto, as claimed ' the appellant.
.he appellant also assigns as error the fact that defendant was
given the option to pa the de't either in Me@ican or 5hilippine
c"rrenc, claiming that the co"rt sho"ld have directed pament
to 'e made in the latter c"rrenc as req"ired ' !ct No. *0,5.
!ss"ming that this contention is correct, it sho"ld nevertheless
'e tr"e that it did not preF"dice an of his essential rights. :e
was rather favored there', since he was given an option to pa
in whatever c"rrenc he might see fit. &t is well (nown that in
the case of an alternative o'ligation the de'tor has the right to
choose the method of meeting the o'ligation "nless the creditor
has e@pressl reserved that right to himself. <!rt. **82 of the
3ivil 3ode.=
.he alleged violation ' the co"rt 'elow of the provisions of !ct
No. *0,5 in this partic"lar respect is not therefore, a s"fficient
gro"nd for the reversal of the F"dgment. %ection 508 of the
3ode of 3ivil 5roced"re provides that no F"dgment shall 'e
reversed for s"ch error as has not preF"diced the s"'stantial
rights of the e@cepting part.
.he third error assigned ' the appellant is that the co"rt erred
in rendering F"dgment in a s"m larger than that so"ght to 'e
recovered in the complaint. .he praer of the complaint is for
the specific amo"nt of 2-,0,+ pesos and *+ centavos, 5hilippine
c"rrenc, and the co"rt in its F"dgment ordered the defendant to
pa to the plaintiff 80,052 pesos and 70 centavos, in the same
c"rrenc.
%ection *2; of the 3ode of 3ivil 5roced"re provides in part as
follows9
.he relief granted to the plaintiff, if there 'e no
answer, can not exceed that (hich he shall ha'e
demanded in his complaint. . . .J
.he defendant failed to answer. Hnder s"ch circ"mstances
plaintiff co"ld not have o'tained more than what he had
demanded in his complaint. 5laintiff)s demand was for the s"m
of 2-,0,+ pesos and *+ centavos onl. .he co"rt had no power
to enter F"dgment in favor of the plaintiff for 80,052 pesos and
70 centavos. >e hold that this was error on the part of the trial
co"rt. .he F"dgment of the co"rt 'elow sho"ld 'e modified in
this respect.
.he fo"rth and last error assigned ' the appellant is that the
co"rt too( into consideration as the 'asis of its F"dgment the
contract in q"estion, the same 'eing n"ll and void. .he appellant
alleges in s"pport of his contention that the contract did not
'ear the internal?reven"e stamp req"ired ' !ct No. *0,5 of the
5hilippine 3ommission enacted Dan"ar 27, *+0,, and relies
partic"larl "pon the provisions of sections + and *0 of the act.
%ection + reads in part as follows9
Ever chec(, draft, note, 'ond, 'ill of e@change,
and ever contract whatsoever paa'le in local
c"rrenc . . . shall 'e pres"ma'l s"'Fect to the
ta@es levied in accordance (ith the pro'isions of
this act, and the o'ligation shall rest "pon the
drawer or ma(er, or holder or 'eneficiar . . . who
claims e@emption, to prove that he is entitled to
an of the e@emptions provided in this act. No
chec(, draft, note, 'ond, 'ill of e@change, or an
contract whatsoever paa'le in local c"rrenc shall
'e e@empted from the pament of the stamp ta@
provided for in sections si@ and seven of this act
"nless the contract for which e@emption is claimed
shall 'e registered with the 3ollector of &nternal
0even"e or his dep"t 'efore 2cto'er first,
nineteen h"ndred and fo"r, and a certificate 'e
attached thereto ' the 3ollector of &nternal
0even"e, or his dep"t, certifing to the
e@emption.
Hnder section *0 ?
Ever chec(, draft, note, 'ond, 'ill of e@change,
and ever contract whatsoever which is not
properl stamped in accordance (ith the
pro'isions of this act, shall 'e void. . . .
.he two sections a'ove q"oted refer to other provisions of the
same !ct No. *0,5. %ection + refers e@pressl to sections ; and
7. %ection +, as well as section *0, refers to doc"ments which
sho"ld 'e stamped in accordance (ith the pro'isions of the
same act. .hese provisions are contained in sections ; and 7
a'ove referred to, the doc"ments s"'Fect to the stamp ta@ 'eing
therein en"merated.
%ection ; provides that ?
Ever chec(, note, draft, 'ond, 'ill of e@change,
and ever contract whatsoever paa'le wholl or
in part in local c"rrenc, and dra(n or made upon
or su+sequent to $cto+er first, nineteen hundred
and four, shall 'ear "pon its face an internal?
reven"e stamp or stamps of the face val"e in
5hilippine c"rrenc to the amo"nt hereinafter
provided.
.his same section in s"'sections <a=, <+=, <c=, <d=, <e=, 5f6, and
<g,= en"merates the e@emptions referred to in section + a'ove
q"oted.
%ection 7 provides as follows9
Ever transfer of ownership, ' indorsement or
otherwise, after %eptem'er thirtieth, nineteen
h"ndred and fo"r, of a chec(, draft, note, 'ond,
'ill of e@change, or an contract whatsoever
paa'le wholl or in part in local c"rrenc in the
5hilippine &slands after the thirtieth of %eptem'er,
nineteen h"ndred and fo"r, . . . shall 'e
considered a separate and distinct contract, and
as s"ch shall req"ire a stamp or stamps.
&t seems clear from the lang"age of these two latter sections
that onl s"ch contracts paa'le in local c"rrenc as were made
on or after 2cto'er *, *+0,, are s"'Fect to the stamp ta@. .he
provisions of the section in q"estion are ver clear and leave no
room for do"'t. %ections + and *0 are merel s"pplementar to
sections ; and 7. .he provide a method for proving the
e@emption from the stamp ta@ and penalt in case of fail"re to
compl with the provisions of sections ; and 7. .hese latter
sections are the ones which req"ire a stamp ta@ "pon all
37
contracts paa'le in local c"rrenc and declare what doc"ments
shall 'e s"'Fect to s"ch ta@. &t is therefore necessar to
constr"e these sections together with sections + and *0 in order
to arrive at the proper concl"sion. ! f"ll and correct
interpretation of the act in q"estion wo"ld not 'e possi'le if we
onl consider the two latter sections. .he are, as has 'een said
'efore, merel s"pplementar to the preceding sections.
.he contract "nder consideration was e@ec"ted D"l 27, *+08.
%"ch contract was not s"'Fect to the stamp ta@ provided in !ct
No. *0,5. .he penalt of n"llit prescri'ed in section *0 of the
act is not applica'le to that contract. .he co"rt, therefore,
committed no error in finding that the a'sence of reven"e stamp
did not render the contract void.
.he F"dgment of the co"rt 'elow is here' affirmed, provided,
however, that the plaintiff shall onl 'e entitled to recover from
the defendant the s"m of 2-,0,+ pesos and *+ centavos,
5hilippine c"rrenc, with accr"ed interest thereon from D"l 27,
*+08, "ntil f"ll paid, at the rate of 5 per cent per ann"m, no
special order 'eing made as to costs of this appeal.
!fter the e@piration of twent das from the date hereof let
F"dgment 'e entered accordingl, and let the case 'e remanded
to the 3o"rt of 1irst &nstance for s"ch action as ma 'e proper.
%o ordered.
Arellano, C.#., #ohnson, Carson and ?illard, ##., concur.
R=?E' MA'9A%7, petitioner, vs. *5E C7=R* 76 APPEA;:
"6irst Di.ision#, 57'. R=?E' C. A8:7', in his capacit as
Actin0 Presidin0 Jud0e, Re0ional *rial Court, ?ranch 9&,
?a0uio Cit, and A;6RED7 ?7AD7, respondents.
D E 3 & % & 2 N
MEND2#!, #.>
5etitioner 0"'en Maniago was the owner of sh"ttle '"ses which
were "sed in transporting emploees of the .e@as &nstr"ments,
<5hils.=, &nc. from $ag"io 3it proper to its plant site at the
E@port 5rocessing !"thorit in Loa(an, $ag"io 3it.
2n Dan"ar 7, *++0, one of his '"ses fig"red in a vehic"lar
accident with a passenger Feepne owned ' private respondent
!lfredo $oado along Loa(an 0oad, $ag"io 3it. !s a res"lt of the
accident, a criminal case for rec(less impr"dence res"lting in
damage to propert and m"ltiple phsical inF"ries was filed on
March 2, *++0 against petitioner)s driver, :erminio !ndaa, with
the 0egional .rial 3o"rt of $ag"io 3it, $ranch &&&, where it was
doc(eted as 3riminal 3ase No. 75*,?0. ! month later, on !pril
*+, *++0, a civil case for damages was filed ' private
respondent $oado against petitioner himself .he complaint,
doc(eted as 3ivil 3ase No. 2050?0, was assigned to $ranch &E of
the same co"rt.
5etitioner moved for the s"spension of the proceedings in the
civil case against him, citing the pendenc of the criminal case
against his driver. $"t the trial co"rt, in its order dated !"g"st
80, *++*, denied petitioner)s motion on the gro"nd that
p"rs"ant to the 3ivil 3ode, the action co"ld proceed
independentl of the criminal action, in addition to the fact that
the petitioner was not the acc"sed in the criminal case.
5etitioner too( the matter on certiorari and prohi'ition to the
3o"rt of !ppeals, maintaining that the civil action co"ld not
proceed independentl of the criminal case 'eca"se no
reservation of the right to 'ring it separatel had 'een made in
the criminal case.
2n Dan"ar 8*, *++2, the 3o"rt of !ppeals dismissed his
petition on the a"thorit of :arcia '. ;lorido,* and A+ellana '.
Mara'e,2 which it held allowed a civil action for damages to 'e
filed independentl of the criminal action even tho"gh no
reservation to file the same has 'een made. .herefore, it was
held, the trial co"rt correctl denied petitioner)s motion to
s"spend the proceedings in the civil case.8
:ence this petition for review on certiorari. .here is no disp"te
that private respondent, as offended part in the criminal case,
did not reserve the right to 'ring a separate civil action, 'ased
on the same accident, either against the driver, :erminio
!ndaa, or against the latter)s emploer, herein petitioner 0"'en
Maniago. .he q"estion is whether despite the a'sence of s"ch
reservation, private respondent ma nonetheless 'ring an action
for damages against petitioner "nder the following provisions of
the 3ivil 3ode9
!rt. 2*7;. >hoever ' act or omission ca"ses damage to
another, there 'eing fa"lt or negligence, is o'liged to pa for the
damage done. %"ch fa"lt or negligence, if there is no pre?
e@isting contract"al relation 'etween the parties, is called a
q"asi?delict and is governed ' the provisions of this 3hapter.
!rt. 2*-0. .he o'ligation imposed ' !rticle 2*7; is demanda'le
not onl for one)s own acts or omissions, '"t also for those of
persons for whom one is responsi'le.
@@@ @@@ @@@
Emploers shall 'e lia'le for the damages ca"sed ' their
emploees and ho"sehold helpers acting within the scope of
their assigned tas(s, even tho"gh the former are not engaged in
an '"siness or ind"str.
!rt. 2*77 states that responsi'ilit for fa"lt or negligence "nder
the a'ove?q"oted provisions is entirel separate and distinct
from the civil lia'ilit arising from negligence "nder the 0evised
5enal 3ode.
:owever, 0"le *** of the 0evised 0"les of 3riminal 5roced"re,
while reiterating that a civil action "nder these provisions of the
3ivil 3ode ma 'e 'ro"ght separatel from the criminal action,
provides that the right to 'ring it m"st 'e reserved. .his 0"le
reads9
%ection *. .nstitution of criminal and ci'il actions. ? >hen a
criminal action is instit"ted, the civil action for the recover of
civil lia'ilit is impliedl instit"ted with the criminal action,
"nless the offended part waives the civil action, reserves his
right to instit"te it separatel, or instit"tes the civil action prior
to the criminal action.
%"ch civil action incl"des recover of indemnit "nder the
0evised 5enal 3ode, and damages "nder !rticles 82, 88, 8, and
2*7; of the 3ivil 3ode of the 5hilippines arising from the same
act or omission of the acc"sed.
@@@ @@@ @@@
.he reservation of the right to instit"te the separate civil actions
shall 'e made 'efore the prosec"tion starts to present its
evidence and "nder circ"mstances affording the offended part
a reasona'le opport"nit to ma(e s"ch reservation.
@@@ @@@ @@@
%ec. 8. ?hen ci'il action ma! proceed independentl!. ? &n the
cases provided for in !rticles 82, 88, 8, and 2*7; of the 3ivil
3ode of the 5hilippines, the independent civil action which has
'een reserved ma 'e 'ro"ght ' the offended part, shall
proceed independentl of the criminal action, and shall req"ire
onl a preponderance of evidence.
38
$ased on these provisions, petitioner arg"es that the civil action
against him was impliedl instit"ted in the criminal action
previo"sl filed against his emploee 'eca"se private
respondent did not reserve his right to 'ring this action
separatel. <.he records show that while this case was pending
in the 3o"rt of !ppeals, the criminal action was dismissed on
D"l *0, *++2 for fail"re of the prosec"tion to file a formal offer
of its evidence, with the conseq"ence that the prosec"tion failed
to prosec"te its case. !ccordingl, it seems to 'e petitioner)s
arg"ment that since the civil action to recover damages was
impliedl instit"ted with the criminal action, the dismissal of the
criminal case 'ro"ght with it the dismissal of the civil action.=
5rivate respondent admits that he did not reserve the right to
instit"te the present civil action against !ndaa)s emploer. :e
contends, however, that the rights provided in !rts. 2*7; and
2*77 of the 3ivil 3ode are s"'stantive rights and, as s"ch, their
enforcement cannot 'e conditioned on a reservation to 'ring the
action to enforce them separatel. 5rivate respondent cites in
s"pport of his position statements made in A+ellana '. Mara'e,,
Ta!ag '. Alcantara,5 Madeja '. Caro,; and #arantilla '. Court of
Appeals,7 to the effect that the req"irement to reserve the civil
action is s"'stantive in character and, therefore, is 'eond the
r"lema(ing power of this 3o"rt "nder the 3onstit"tion.-
!fter considering the arg"ments of the parties, we have reached
the concl"sion that the right to 'ring an action for damages
"nder the 3ivil 3ode m"st 'e reserved as req"ired ' 0"le ***,
[ *, otherwise it sho"ld 'e dismissed.
&.
!. .o 'egin with, [* q"ite clearl req"ires that a reservation
m"st 'e made to instit"te separatel all civil actions for the
recover of civil lia'ilit, otherwise the will 'e deemed to have
'een instit"ted with the criminal case. %"ch civil actions are not
limited to those which arise Ifrom the offense charged,J as
originall provided in 0"le *** 'efore the amendment of the
0"les of 3o"rt in *+--. &n other words the right of the inF"red
part to s"e separatel for the recover of the civil lia'ilit
whether arising from crimes 5ex delicto6 or from q"asi delict
"nder !rt. 2*7; of the 3ivil 3ode m"st 'e reserved otherwise
the will 'e deemed instit"ted with the criminal action.+
.h"s 0"le ***, [* of the 0evised 0"les of 3riminal 5roced"re
e@pressl provides9
%ection *. .nstitution of criminal and ci'il actions.? >hen a
criminal action is instit"ted, the civil action for the recover of
civil lia'ilit is impliedl instit"ted with the criminal action,
"nless the offended part waives the civil action, reserves his
right to instit"te it separatel, or instit"tes the civil action prior
to the criminal action.
%"ch civil action incl"des recover of indemnit "nder the
0evised 5enal 3ode, and damages "nder !rticles 82, 88, 8, and
2*7; of the 3ivil 3ode of the 5hilippines arising from the same
act or omission of the acc"sed.
$. .here are statements in some cases impling that 0"le ***,
[[* and 8 are 'eond the r"lema(ing power of the %"preme
3o"rt "nder the 3onstit"tion. ! caref"l e@amination of the
cases, however, will show that approval of the filing of separate
civil action for damages even tho"gh no reservation of the right
to instit"te s"ch civil action had 'een reserved rests on
considerations other than that no reservation is needed.
&n :arcia '. ;lorido*0 the right of an inF"red person to 'ring an
action for damages even if he did not ma(e a reservation of his
action in the criminal prosec"tion for phsical inF"ries thro"gh
rec(less impr"dence was "pheld on the gro"nd that ' 'ringing
the civil action the inF"red parties had Iin effect a'andoned their
right to press for recover of damages in the criminal case. . ..
Hndo"'tedl an offended part loses his right to intervene in the
prosec"tion of a criminal case, not onl when he has waived the
civil action or e@pressl reserved his right to instit"te, '"t also
when he has act"all instit"ted the civil action. 1or ' either of
s"ch actions his interest in the criminal case has
disappeared.J** .he statement that 0"le ***, [ * of the *+;,
0"les is Ian "na"thori4ed amendment of s"'stantive law,
!rticles 82, 88 and 8, of the 3ivil 3ode, which do not provide for
the reservationJ is not the r"ling of the 3o"rt '"t onl an aside,
q"oted from an o'servation made in the footnote of a decision
in another case.*2
!nother case cited ' private respondent in s"pport of his
contention that the civil case need not 'e reserved in the
criminal case is A+ellana '. Mara'e*8 in which the right of
persons inF"red in a vehic"lar accident to 'ring a separate action
for damages was s"stained despite the fact that the right to
'ring it separatel was not reserved. $"t the 'asis of the
decision in that case was the fact that the filing of the civil case
was eq"ivalent to a reservation 'eca"se it was made after the
decision of the 3it 3o"rt convicting the acc"sed had 'een
appealed. 5"rs"ant to 0"le *28, [7 of the *+;, 0"les, this had
the effect of vacating the decision in the criminal case so that
technicall, the inF"red parties co"ld still reserve their right to
instit"te a civil action while the criminal case was pending in the
3o"rt of 1irst &nstance. .he statement Ithe right of a part to
s"e for damages independentl of the criminal action is a
s"'stantive right which cannot 'e frittered awa ' a
constr"ction that co"ld render it n"gatorJ witho"t raising a
Iserio"s constit"tional q"estionJ*, was thrown in onl as
additional s"pport for the r"ling of the 3o"rt.
2n the other hand, in Madeja '. Caro*5 the 3o"rt held that a
civil action for damages co"ld proceed even while the criminal
case for homicide thro"gh rec(less impr"dence was pending and
did not have to await the termination of the criminal case
precisel 'eca"se the widow of the deceased had reserved her
right to file a separate civil action for damages. >e do not see
how this case can lend s"pport to the view of private
respondent.
&n #arantilla '. Court of Appeals*; the r"ling is that the acq"ittal
of the acc"sed in the criminal case for phsical inF"ries thro"gh
rec(less impr"dence on the gro"nd of reasona'le do"'t is not a
'ar to the filing of an action for damages even tho"gh the filing
of the latter action was not reserved. .his is 'eca"se of !rt. 2+
of the 3ivil 3ode which provides that Iwhen an acc"sed is
acq"itted on the gro"nd that his g"ilt has not 'een proved
'eond reasona'le do"'t, a civil action for damages for the
same act or omission ma 'e instit"ted.J .his r"ling o'vio"sl
cannot appl to this case 'eca"se the 'asis of the dismissal of
the criminal case against the driver is the fact that the
prosec"tion failed to prove its case as a res"lt of its fail"re to
ma(e a formal offer of its evidence. 0"le *82, [8, of the
0evised 0"les on Evidence provides that I.he co"rt shall
consider no evidence which has not 'een formall offered. .he
p"rpose for which the evidence is offered m"st 'e specified.J
.o the same effect are the holdings in Ta!ag, ,r. '. Alcantara,*7
4onite '. *osa*- and &iong 4i Chu '. Court of Appeals.*+ %ince
!rt. 2+ of the 3ivil 3ode a"thori4es the 'ringing of a separate
civil action in case of acq"ittal on reasona'le do"'t and "nder
the 0evised 0"les of 3riminal 5roced"re s"ch action is not
req"ired to 'e reserved, it is plain that the statement in these
cases that to req"ire a reservation to 'e made wo"ld 'e to
39
sanction an "na"thori4ed amendment of the 3ivil 3ode
provisions is a mere dict"m. !s alread noted in connection with
the case of :arcia '. ;lorido, that statement was not the r"ling
of the 3o"rt '"t onl an o'servation 'orrowed from another
case.20
.he short of it is that the r"lings in these cases are consistent
with the proposition herein made that, on the 'asis of 0"le ***,
[[*?8, a civil action for the recover of civil lia'ilit is, as a
general r"le, impliedl instit"ted with the criminal action, e@cept
onl <*= when s"ch action arising from the same act or
omission, which is the s"'Fect of the criminal action, is waivedC
<2= the right to 'ring it separatel is reserved or <8= s"ch action
has 'een instit"ted prior to the criminal action. Even if an action
has not 'een reserved or it was 'ro"ght 'efore the instit"tion of
the criminal case, the acq"ittal of the acc"sed will not 'ar
recover of civil lia'ilit "nless the acq"ittal is 'ased on a finding
that the act from which the civil lia'ilit might arise did not e@ist
'eca"se of !rt. 2+ of the 3ivil 3ode.
&ndeed the q"estion on whether the criminal action and the
action for recover of the civil lia'ilit m"st 'e tried in a single
proceeding has alwas 'een regarded a matter of proced"re
and, since the r"lema(ing power has 'een conferred ' the
3onstit"tion on this 3o"rt, it is in the (eeping of this 3o"rt. .h"s
the s"'Fect was provided for ' /.2. No. 5-, the first 0"les of
3riminal 5roced"re "nder the !merican r"le. %ec. *07 of these
2rders provided9
.he privileges now sec"red ' law to the person claiming to 'e
inF"red ' the commission of an offense to ta(e part in the
prosec"tion of the offense and to recover damages for the inF"r
s"stained ' reason of the same shall not 'e held to 'e a'ridged
' the provisions of this orderC '"t s"ch person ma appear and
shall 'e heard either individ"all or ' attorne at all stages of
the case, and the co"rt "pon conviction of the acc"sed ma
enter F"dgment against him for the damages occasioned ' his
wrongf"l act. &t shall, however, 'e the d"t of the promotor
fiscal to direct the prosec"tion, s"'Fect to the right of the person
inF"red to appeal from an decision of the co"rt dening him a
legal right.
.his was s"perseded ' the *+,0 0"les of 3o"rt, 0"le *0; of
which provided9
%E3. 2@. .nter'ention of the offended part! in criminal action. ?
Hnless the offended part has waived the civil action or
e@pressl reserved the right to instit"te it after the termination
of the criminal case, and s"'Fect to the provisions of %ection ,
hereof, he ma intervene, personall or ' attorne, in the
prosec"tion of the offense.
.his 0"le was amended thrice, in *+;,, in *+-5 and lastl in
*+--. .hro"gh all the shifts or changes in polic as to the civil
action arising from the same act or omission for which a criminal
action is 'ro"ght, one thing is clear9 .he change has 'een
effected ' this 3o"rt. >hatever contrar impression ma have
'een created ' :arcia '. ;lorid2* and its progen22 m"st
therefore 'e deemed to have 'een clarified and settled ' the
new r"les which req"ire reservation of the right to recover the
civil lia'ilit, otherwise the action will 'e deemed to have 'een
instit"ted with the criminal action.
3ontrar to private respondent)s contention, the req"irement
that 'efore a separate civil action ma 'e 'ro"ght it m"st 'e
reserved does not impair, diminish or defeat s"'stantive rights,
'"t onl reg"lates their e@ercise in the general interest of
orderl proced"re. .he req"irement is merel proced"ral in
nat"re. 1or that matter the 0evised 5enal 3ode, ' providing in
!rt. *00 that an person criminall lia'le is also civill lia'le,
gives the offended part the right to 'ring a separate civil
action, et no one has ever q"estioned the r"le that s"ch action
m"st 'e reserved 'efore it ma 'e 'ro"ght separatel.
&ndeed, the req"irement that the right to instit"te actions "nder
the 3ivil 3ode separatel m"st 'e reserved is not incompati'le
with the independent character of s"ch actions. .here is a
difference 'etween allowing the trial of civil actions to proceed
independentl of the criminal prosec"tion and req"iring that,
'efore the ma 'e instituted at all, a reservation to 'ring them
separatel m"st 'e made. 5"t in another wa, it is the cond"ct
of the trial of the civil action ? not its instit"tion thro"gh the
filing of a complaint ? which is allowed to proceed independentl
of the o"tcome of the criminal case.
3. .here is a practical reason for req"iring that the right to 'ring
an independent civil action "nder the 3ivil 3ode separatel m"st
'e reserved. &t is to avoid the filing of more than one action for
the same act or omission against the same part. !n award
made against the emploer, whether 'ased on his s"'sidiar
civil lia'ilit "nder !rt. *08 of the 0evised 5enal 3ode or his
primar lia'ilit "nder !rt. 2*-0 of the 3ivil 3ode, is "ltimatel
recovera'le from the acc"sed.28
&n the present case, the criminal action was filed against the
emploee, '"s driver. :ad the driver 'een convicted and fo"nd
insolvent, his emploer wo"ld have 'een held s"'sidiaril lia'le
for damages. $"t if the right to 'ring a separate civil action
<whether arising from the crime or from q"asi?delict= is
reserved, there wo"ld 'e no possi'ilit that the emploer wo"ld
'e held lia'le 'eca"se in s"ch a case there wo"ld 'e no
prono"ncement as to the civil lia'ilit of the acc"sed. &n s"ch a
case the instit"tion of a separate and independent civil action
"nder the 3ivil 3ode wo"ld not res"lt in the emploee 'eing held
lia'le for the same act or omission. .he r"le req"iring
reservation in the end serves to implement the prohi'ition
against do"'le recover for the same act or omission.2, !s held
in 4arredo '. :arcia,25 the inF"red part m"st choose which of
the availa'le ca"ses of action for damages he will 'ring. &f he
fails to reserve the filing of a separate civil action he will 'e
deemed to have elected to recover damages from the '"s driver
on the 'asis of the crime. &n s"ch a case his ca"se of action
against the emploer will 'e limited to the recover of the
latter)s s"'sidiar lia'ilit "nder !rt. *08 of the 0evised 5enal
3ode.
&&.
Nor does it matter that the action is against the emploer to
enforce his vicario"s lia'ilit "nder !rt. 2*-0 of the 3ivil 3ode.
.ho"gh not an acc"sed in the criminal case, the emploer is
ver m"ch a part, as long as the right to 'ring or instit"te a
separate action <whether arising from crime or from q"asi delict=
is not reserved.2; .he r"ling that a decision convicting the
emploee is 'inding and concl"sive "pon the emploer Inot onl
with regard to its civil lia'ilit '"t also with regard to its amo"nt
'eca"se the lia'ilit of an emploer cannot 'e separated '"t
follows that of his emploeeJ27 is tr"e not onl with respect to
the civil lia'ilit arising from crime '"t also with respect to the
civil lia'ilit "nder the 3ivil 3ode. %ince whatever is recovera'le
against the emploer is "ltimatel recovera'le ' him from the
emploee, the polic against do"'le recover req"ires that onl
one action 'e maintained for the same act or omission whether
the action is 'ro"ght against the emploee or against his
emploer. .h"s in &ula! '. Court of Appeals2- this 3o"rt held
that an emploer ma 'e s"ed "nder !rt. 2*-0 of the 3ivil 3ode
and that the right to 'ring the action did not have to 'e reserved
'eca"se, having instit"ted 'efore the criminal case against the
40
emploee, the filing of the civil action against the emploer
constit"ted an e@press reservation of the right to instit"te its
separatel.
45ERE67RE, the decision appealed from is 0E%E0EED and the
complaint against petitioner is D&%M&%%ED.
%2 20DE0ED.
0egalado <3hairman=, 0omero and 5"no, DD., conc"r.
:A' 9;DE67':7 ;9'E:, 9'C., and ED=ARD7 JA&9ER,
petitioners, vs. C7=R* 76 APPEA;: "*hirteenth Di.ision#
and P97'EER 9':=RA'CE and :=RE*8 C7RP7RA*97',
respondents.
D E 3 & % & 2 N
M!0.&NE#, #.9
!t aro"nd 8980 in the afternoon of D"ne 2,, *++*, a .oota Lite
!ce Ean 'eing driven ' its owner !nnie H. Dao and a passenger
'"s of herein petitioner %an &ldefonso Lines, &nc. <hereafter,
%&L&= fig"red in a vehic"lar mishap at the intersection of D"lia
Eargas !ven"e and 0odrig"e4 Lan"4a !ven"e in 5asig, Metro
Manila, totall wrec(ing the .oota van and inF"ring Ms. Dao and
her two <2= passengers in the process.
! criminal case was thereafter filed with the 0egional .rial 3o"rt
of 5asig on %eptem'er *-, *++* charging the driver of the '"s,
herein petitioner Ed"ardo Davier, with rec(less impr"dence
res"lting in damage to propert with m"ltiple phsical inF"ries.
!'o"t fo"r <,= months later, or on Dan"ar *8, *++2, herein
private respondent 5ioneer &ns"rance and %"ret 3orporation
<5&%3=, as ins"rer of the van and s"'rogee, filed a case for
damages against petitioner %&L& with the 0egional .rial 3o"rt of
Manila, see(ing to recover the s"ms it paid the ass"red "nder a
motor vehicle ins"rance polic as well as other damages,
totaling 55;,,500.00 <5,5,,000.00 as act"alPcompensator
damagesC 550,000.00 as e@emplar damagesC 550,000.00 as
attorne7s feesC 5*0,000.00 as litigation e@pensesC and 5500.00
as appearance fees.=A*B
>ith the iss"es having 'een Foined "pon the filing of the
petitioners7 answer to the complaint for damages and after
s"'mission ' the parties of their respective pre?trial 'riefs,
petitioners filed on %eptem'er *-, *++2 a Manifestation and
Motion to %"spend 3ivil 5roceedings gro"nded on the pendenc
of the criminal case against petitioner Davier in the 5asig 0.3
and the fail"re of respondent 5&%3 to ma(e a reservation to file
a separate damage s"it in said criminal action. .his was denied
' the Manila 0egional .rial 3o"rt in its 2rder dated D"l 2*,
*++8,A2B r"ling th"s9
L!nswering the first q"estion th"s posed, the co"rt holds that
plaintiff ma legall instit"te the present civil action even in the
a'sence of a reservation in the criminal action. .his is so
'eca"se it falls among the ver e@ceptions to the r"le cited '
the movant.
L&t is tr"e that the general r"le is that once a criminal action has
'een instit"ted, then civil action 'ased thereon is deemed
instit"ted together with the criminal action, s"ch that if the
offended part did not reserve the filing of the civil action when
the criminal action was filed, then s"ch filing of the civil action is
therefore 'arredC on the other hand, if there was s"ch
reservation, still the civil action cannot 'e instit"ted "ntil final
F"dgment has 'een rendered in the criminal actionC
L$"t, this r"le <%ection 2, 0"le ***, 0evised 0"les of 3o"rt= is
s"'Fect to e@emptions, the same 'eing those provided for in
%ection 8 of the same r"le which states9
7%ection 8. >hen civil action ma proceed independentl. ? &n
the cases provided for in !rticles 82, 88, 8, and 2*7; of the
3ivil 3ode of the 5hilippines, the independent civil action which
was 'een reserved ma 'e 'ro"ght ' the offended part, shall
proceed independentl of the criminal action, and shall req"ire
onl a preponderance of evidence.7
L$esides, the req"irement in %ection 2 of 0"le *** of the former
0"les on 3riminal 5roced"re that there 'e a reservation in the
criminal case of the right to instit"te an independent civil action
has 'een declared as not in accordance with law. &t is regarded
as an "na"thori4ed amendment to o"r s"'stantive law, i.e., the
3ivil 3ode which does not req"ire s"ch reservation. &n fact, the
reservation of the right to file an independent civil action has
'een deleted from %ection 2, 0"le *** of the *+-5 0"les on
3riminal 5roced"re, in consonance with the decisions of this
3o"rt declaring s"ch req"irement of a reservation as ineffective.
<$onite vs. #osa, *;2 %30! *-0=
L1"rther, the 3o"rt r"les that a s"'rogee?plaintiff ma instit"te
and prosec"te the civil action, it 'eing allowed ' !rticle 2207 of
the 3ivil 3ode.L
!fter their motion for reconsideration of said D"l 2*, *++8
2rder was denied, petitioners elevated the matter to this 3o"rt
'ia petition for certiorari which was, however, referred to p"'lic
respondent 3o"rt of !ppeals for disposition. 2n 1e'r"ar 2,,
*++5, a decision adverse to petitioners once again was rendered
' respondent co"rt, "pholding the assailed Manila 0egional .rial
3o"rt 2rder in this wise9
L! separate civil action lies against the offender in a criminal act,
whether or not he is criminall prosec"ted and fo"nd g"ilt or
acq"itted, provided that the offended part is not allowed <if the
tortfeasor is act"all charged also criminall=, to recover
damages on 'oth scores, and wo"ld 'e entitled in s"ch
event"alit onl to the 'igger award of the two, ass"ming the
awards made in the two cases var.
L.o s"'ordinate the civil action contemplated in the said articles
to the res"lt of the criminal prosec"tion ? whether it 'e
conviction or acq"ittal ? wo"ld render meaningless the
independent character of the civil action and the clear inF"nction
in !rt. 8*, that this action ma proceed independentl of the
criminal proceedings and regardless of the res"lt of the latter.
L&n 6a("lt 5hil. vs. 3!, the %"preme 3o"rt said9
7Even if there was no reservation in the criminal case and that
the civil action was not filed 'efore the filing of the criminal
action '"t 'efore the prosec"tion presented evidence in the
criminal action, and the F"dge handling the criminal case was
informed thereof, then the act"al filing of the civil action is even
far 'etter than a compliance with the req"irement of an e@press
reservation that sho"ld 'e made ' the offended part 'efore
the prosec"tion presented its evidence.7
L.he p"rpose of this r"le req"iring reservation is to prevent the
offended part from recovering damages twice for the same act
or omission.
L%"'stantial compliance with the reservation req"irement ma,
therefore, 'e made ' ma(ing a manifestation in the criminal
case that the private respondent has instit"ted a separate and
independent civil action for damages.
L2ft?repeated is the dict"m that co"rts sho"ld not place "nd"e
importance on technicalities when ' so doing, s"'stantial
F"stice is sacrificed. >hile the r"les of proced"re req"ire
41
adherence, it m"st 'e remem'ered that said r"les of proced"re
are intended to promote, not defeat, s"'stantial F"stice, and
therefore, the sho"ld not 'e applied in a ver rigid and
technical sense.L
:ence, this petition for review after a motion for reconsideration
of said respondent co"rt F"dgment was denied.
.he two <2= cr"cial iss"es to 'e resolved, as posited '
petitioners, are9
*= &f a criminal case was filed, can an independent civil action
'ased on q"asi?delict "nder !rticle 2*7; of the 3ivil 3ode 'e
filed if no reservation was made in the said criminal caseN
2= 3an a s"'rogee of an offended part maintain an independent
civil action d"ring the pendenc of a criminal action when no
reservation of the right to file an independent civil action was
made in the criminal action and despite the fact that the private
complainant is activel participating thro"gh a private
prosec"tor in the aforementioned criminal caseN
>e r"le for petitioners.
2n the chief iss"e of LreservationL, at the fore is %ection 8, 0"le
*** of the 0"les of 3o"rt which reads9
L%ec. 8. >hen civil action ma proceed independentl. ?? &n the
cases provided for in !rticles 82, 88, 8, and 2*7; of the 3ivil
3ode of the 5hilippines, the independent civil action which has
'een reserved ma 'e 'ro"ght ' the offended part, shall
proceed independentl of the criminal action, and shall req"ire
onl a preponderance of evidence.L
.here is no disp"te that these so?called Lindependent civil
actionsL 'ased on the aforementioned 3ivil 3ode articles are the
e@ceptions to the primac of the criminal action over the civil
action as set forth in %ection 2 of 0"le ***.A8B :owever, it is
easil ded"ci'le from the present wording of %ection 8 as
'ro"ght a'o"t ' the *+-- amendments to the 0"les on
3riminal 5roced"re ?? partic"larl the phrase LW (hich has +een
reser'edL ?? that the LindependentL character of these civil
actions does not do awa with the reservation req"irement. &n
other words, prior reservation is a condition sine qua non 'efore
an of these independent civil actions can 'e instit"ted and
thereafter have a contin"o"s determination apart from or
sim"ltaneo"s with the criminal action. .hat this sho"ld now 'e
the controlling proced"ral r"le is confirmed ' no less than
retired D"stice Dose 6. 1eria, remedial law e@pert and a mem'er
of the committee which drafted the *+-- amendments, whose
learned e@planation on the matter was aptl pointed o"t '
petitioners, to wit9
L.he *+-- amendment e@pands the scope of the civil action
which is deemed impliedl instit"ted with the criminal action
"nless waived, reserved or previo"sl instit"ted @@@.
Hnder the present 0"le as amended, s"ch a civil action incl"des
not onl recover of indemnit "nder the 0evised 5enal 3ode
and damages "nder !rticles 82, 88, 8, of the 3ivil 3ode of the
5hilippines, '"t also damages "nder !rticle 2*7; of the said
code. @@@
2'Fections were raised to the incl"sion in this 0"le of quasi"
delicts "nder !rticle 2*7; of the 3ivil 3ode of the 5hilippines.
:owever, in view of !rticle 2*77 of the said code which provides
that the offended part ma not recover twice for the same act
or omission of the acc"sed, and in line with the polic of
avoiding m"ltiplicit of s"its, these o'Fections were overr"led. &n
an event, the offended part is not precl"ded from filing a civil
action to recover damages arising from q"asi?delict 'efore the
instit"tion of the criminal action, or from reserving his right to
file s"ch a separate civil action, F"st as he is not precl"ded from
filing a civil action for damages "nder !rticles 82, 88 and 8,
'efore the instit"tion of the criminal action, or from reserving
his right to file s"ch a separate civil action. &t is onl in those
cases where the offended part has not previo"sl filed a civil
action or has not reserved his right to file a separate civil action
that his civil action is deemed impliedl instit"ted with the
criminal action.
&t sho"ld 'e noted that while it was r"led in !'ella vs. Marave
<57 %30! *0;= that a reservation of the right to file an
independent civil action is not necessar, s"ch a reservation is
necessar "nder the amended r"le. >itho"t s"ch reservation,
the civil action is deemed impliedl instit"ted with the criminal
action, "nless previo"sl waived or instit"ted. <Hnderscoring
o"rs. D"stice Dose 6. 1eria A0et.B, *+-- !mendments to the *+-5
0"les on 3riminal 5roced"re, a pamphlet, p"'lished ' 3entral
Law'oo( 5"'lishing 3o., &nc., 5hilippine Legal %t"dies, %eries
No. 8, 5?;=.A,B
%haring the same view on the indispensa'ilit of a prior
reservation is Mr. D"stice 1loren4 D. 0egalado, whose analsis of
the historical changes in 0"le *** since the *+;, 0"les of 3o"rt
is eq"all ill"minating. .h"s,
L*. Hnder 0"le *** of the *+;, 0"les of 3o"rt, the civil lia'ilit
arising from the offense charged was impliedl instit"ted with
the criminal action, "nless s"ch civil action was e@pressl waived
or reserved. .he offended part was a"thori4ed to 'ring an
independent civil action in the cases provided for in !rticles 8*,
82, 88, 8, and 2*77 of the 3ivil 3ode provided s"ch right was
reserved.
&n the *+-5 0"les on 3riminal 5roced"re, the same 0"le ***
thereof reiterated said provision on the civil lia'ilit arising from
the offense charged. .he independent civil actions, however,
were limited to the cases provided for in !rticles 82, 88 and 8,
of the 3ivil 3ode, o'vio"sl 'eca"se the actions contemplated in
!rticles 8* and 2*77 of said 3ode are not lia'ilities ex delicto.
1"rthermore, no reservation was req"ired in order the civil
actions in said !rticles 82, 88 and 8, ma 'e p"rs"ed
separatel.
2. .he present amendments introd"ced ' the %"preme 3o"rt
have the following nota'le feat"res on this partic"lar proced"ral
aspect, 'i)9
a. .he civil action which is
impliedl instit"ted with the criminal
action, 'arring a waiver, reservation
or prior instit"tion thereof, need not
arise from the offense charged, as the
phrase 7arising from the offense
charged7 which creates that ne@"s
has 'een specificall eliminated.
'. .he independent civil
actions contemplated in the present
0"le *** incl"de the quasi"delicts
provided for in !rt. 2*7; of the 3ivil
3ode, in addition to the cases
provided in !rts. 82, 88 and 8,
thereof. &t is necessar, however, that
the civil lia'ilit "nder all the said
articles arise 7from the same act or
omission of the acc"sed.7
1"rthermore, a reservation of the
right to instit"te these separate civil
42
actions is again req"ired, otherwise,
said civil actions are impliedl
instit"ted with the criminal action,
"nless the former are waived or filed
ahead of the criminal action.L
<Emphasis s"pplied.=A5B
&n fact, a deeper reading of the LAault %hils. 's. CAL caseA;B
relied "pon ' respondent co"rt reveals an ac(nowledgement of
the reservation req"irement. !fter recogni4ing that the civil case
instit"ted ' private respondent therein 0o 3amaso
<represented ' his father David 3amaso= against petitioner
6a("lt 5hils. <the owner of the motorccle that sideswiped 0o
3amaso, onl five ears old at the time of the accident= and
Larr %alvado <the driver of the motorccle= d"ring the
pendenc of the criminal case against %alvado for rec(less
impr"dence res"lting to slight phsical inF"ries, as one 'ased on
tort, this 3o"rt said9
L.he civil lia'ilit so"ght arising from the act or omission of the
acc"sed in this case is a quasi"delict as defined "nder !rticle
2*7; of the 3ivil 3ode as follows9
@ @ @ @ @ @ @ @ @
L.he aforecited r"le Areferring to the amended %ection *,
0"le***B req"iring s"ch previo"s reservation also covers quasi"
delict as defined "nder !rticle 2*7; of the 3ivil 3ode arising
from the same act or omission of the acc"sedL<Hnderscoring
s"pplied=.
$"t what prompted the 3o"rt to validate the instit"tion and non?
s"spension of the civil case involved in LAaultL was the pec"liar
facts attendant therein. .h"s,
L!ltho"gh the separate civil action filed in this case was witho"t
previo"s reservation in the criminal case, nevertheless since it
was instit"ted 'efore the prosec"tion presented evidence in the
criminal action, and the F"dge handling the criminal case was
informed thereof, then the act"al filing of the civil action is even
far 'etter than a compliance with the req"irement of an e@press
reservation that sho"ld 'e made ' the offended part 'efore
the prosec"tion presents its evidenceL
.he distinct fact"al scenario in LAaultL simpl does not o'tain in
this case. No satisfactor proof e@ists to show that private
respondent 5&%37s damage s"it was instit"ted 'efore the
prosec"tion presented its evidence in the criminal case pending
in the 5asig 0egional .rial 3o"rt. Neither is there an indication
that the F"dge presiding over the criminal action has 'een made
aware of the civil case. &t is in this light that reliance on the
LAaultL case is indeed misplaced.
Now that the necessit of a prior reservation is the standing r"le
that shall govern the instit"tion of the independent civil actions
referred to in 0"le *** of the 0"les of 3o"rt, past
prono"ncements that view the reservation req"irement as an
L"na"thori4ed amendmentL to s"'stantive law ? i.e., the 3ivil
3ode, sho"ld no longer 'e controlling. .here m"st 'e a renewed
adherence to the time?honored dict"m that proced"ral r"les are
designed, not to defeat, '"t to safeg"ard the ends of s"'stantial
F"stice. !nd for this no'le reason, no less than the 3onstit"tion
itself has mandated this 3o"rt to prom"lgate r"les concerning
the enforcement of rights with the end in view of providing a
simplified and ine@pensive proced"re for the speed disposition
of cases which sho"ld not diminish, increase or modif
s"'stantive rights.A7B 1ar from altering s"'stantive rights, the
primar p"rpose of the reservation is, to 'orrow the words of
the 3o"rt in LCaBos '. %eraltaL9A-B
LW to avoid m"ltiplicit of s"its, to g"ard against oppression and
a'"se, to prevent delas, to clear congested doc(ets, to simplif
the wor( of the trial co"rtC in short, the attainment of F"stice
with the least e@pense and ve@ation to the parties?litigants.L
3learl then, private respondent 5&%3, as s"'rogee "nder !rticle
2207 of the 3ivil 3ode,A+B is not e@empt from the reservation
req"irement with respect to its damages s"it 'ased on quasi"
delict arising from the same act or omission of petitioner Davier
complained of in the criminal case. !s private respondent 5&%3
merel stepped into the shoes of Ms. Dao <as owner of the
ins"red .oota van=, then it is 'o"nd to o'serve the proced"ral
req"irements which Ms. Dao o"ght to follow had she herself
instit"ted the civil case.
45ERE67RE, premises considered, the assailed decision of the
3o"rt of !ppeals dated 1e'r"ar 2,, *++5 and the 0esol"tion
dated !pril 8, *++5 dening the motion for reconsideration
thereof are here' 0EEE0%ED and %E. !%&DE. .he
LM!N&1E%.!.&2N !ND M2.&2N .2 %H%5END 3&E&L
5023EED&N/%L filed ' petitioners is /0!N.ED.
%2 20DE0ED.
0egalado, <3hairman=, Melo, 5"no, and Mendo4a, DD., conc"r.
%.R. 'o. ;$18(13 7ctoAer -1, 132)
P9;AR J7AH=9', E* A;., plaintiffs?appellants,
vs.
6E;9> A'9CE*7, E* A;., defendants?appellee.
Arturo 4. Atien)a & ;. 4. del Rosario for plaintiff appellants.
&. A. /arganilla for defendants"appellees.
RE%A;A, J.:
.his case comes to Hs for review directl from the 3o"rt of 1irst
&nstance of Manila. .he facts are not in disp"te. .he are as
follows9
>hile 5ilar Doaq"in was on the sidewal( of !viles %treet, Manila,
on !pril 27, *+;0, a ta@ica' driven ' 1eli@ !niceto and owned
' 0"perto 0odelas '"mped her !s a res"lt, she s"ffered
phsical inF"ries.
!niceto was charged with serio"s phsical inF"ries thro"gh
rec(less impr"dence in the M"nicipal 3o"rt <now the 3it 3o"rt=
of Manila. :e was s"'seq"entl fo"nd g"ilt and sentenced to
imprisonment. :owever, no r"ling was made on his civil lia'ilit
to the offended part in view of the latter7s reservation to file a
separate civil action for damages for the inF"ries s"ffered ' her.
!niceto appealed the F"dgment of conviction to the 3o"rt of 1irst
&nstance of Manila. >hile the criminal case was th"s pending
appeal, 5ilar Doaq"in, the inF"red part, filed this case for
damages in the 3o"rt of 1irst &nstance of Manila, in accordance
with the reservation which she had earlier made. 1eli@ !niceto
and 0"perto 0odelas, driver and owner, respectivel, of the
ta@ica' were made part defendants.
!t the trial of this case, the plaintiff 'loc(ed all attempts of
0odelas to prove that, as emploer, he had e@ercised d"e
diligence in the selection and s"pervision of his emploee, on
the gro"nd that s"ch a defense is not availa'le in a civil action
'ro"ght "nder the 5enal 3ode to recover the s"'sidiar civil
lia'ilit arising from the crime. .he lower co"rt s"stained
plaintiff7s o'Fection. :owever, it dismissed the case on the
gro"nd that in the a'sence of a final F"dgment of conviction
against the driver in the criminal case, an action to enforce the
emploer7s s"'sidiar civil lia'ilit wo"ld 'e premat"re. %"ch
lia'ilit, the trial co"rt added, ma onl 'e enforced on proof of
43
the insolvenc of the emploee. :ence, this appeal.
.he iss"e in this case is9 Ma an emploee7s primar civil lia'ilit
for crime and his emploer7s s"'sidiar lia'ilit therefor 'e
proved in a separate civil action even while the criminal case
against the emploee is still pendingN
.o 'egin with, o'ligations arise from law, contract, q"asi?
contract, crime and q"asi?delict.
*
!ccording to appellant, her
action is one to enforce the civil lia'ilit arising from crimes.
>ith respect to o'ligations arising from crimes, !rticle **;* of
the New 3ivil 3ode provides9
3ivil o'ligations arising from criminal offenses shall 'e
governed ' the penal laws, su+ject to the provisions of
article 2*77, and of the pertinent pro'isions of Chapter
C, %reliminar!, .itle, on :"man 0elations, and of .itle
UE&&& of this $oo(, reg"lating damages. <Emphasis
s"pplied=
.he 0evised 5enal 3ode provides in t"rn that Lever person
criminall lia'le for a felon is also civill lia'leL
2
and that in
defa"lt of the persons criminall lia'le, emploers, teachers
persons and corporations engaged in an (ind of ind"str shall
'e civill lia'le for felonies committed ' their servants, p"pils,
wor(men, apprentices or emploees in the discharge of their
d"ties.
8
!s this 3o"rt held in 3it of Manila '. Manila Electric Co., 52 5hil.
5-;9
... .he 5enal 3ode a"thori4es the determination of
s"'sidiar lia'ilit. .he 3ivil 3ode negatives its
applica'ilit providing that civil o'ligations arising from
crimes or misdemeanors shall 'e governed ' the
provisions of the 5enal 3ode. &n other words, the 5enal
3ode affirms its F"risdiction while the 3ivil 3ode
negatives its F"risdiction.
&t is now settled that for an emploer to 'e s"'sidiaril lia'le,
the following req"isites m"st 'e present9 <*= .hat an emploee
has committed a crime in the discharge of his d"tiesC <2= that
said emploee is insolvent and has not satisfied his civil lia'ilitC
<8= that the emploer is engaged in some (ind of ind"str. <*
5adilla, 3riminal Law, 0evised 5enal 3ode 7+, A*+;,B=
>itho"t the conviction of the emploee, the emploer cannot 'e
s"'sidiaril lia'le.
Now, it is no reason to 'ring s"ch action against the emploer
on the gro"nd that in cases of defamation, fra"d and phsical
inF"ries, !rticle 88 of the 3ivil 3ode a"thori4es a civil action that
is Lentirel separate, and distinct from the criminal action,L
<3arangdang v. %antiago, 5* 2./. 2-7-C 0ees v. De la 0osa, 52
2./. ;5,-C Dogi v. 6atco, /. 0. No. L?+;28, Dan"ar 22, *+57=.
3an !rticle 88 a'ove cited 'e made applica'le to an emploer in
a civil action for s"'sidiar lia'ilitN .he answer to this q"estion
is "ndo"'tedl in the negative.
>hat this article 88 a"thori4es is an action against the emploee
on his primar civil lia'ilit. &t cannot appl to an action against
the emploer to enforce his s"'sidiar civil lia'ilit as stated
a'ove, 'eca"se s"ch lia'ilit arises onl after conviction of the
emploee in the criminal case. !n action 'ro"ght against him
'efore the conviction of his emploee is premat"re.
&n cases of negligence, the inF"red part or his heirs has the
choice, 'etween an action to enforce the civil lia'ilit arising
from crime "nder !rticle *00 of the 0evised 5enal 3ode and an
action for quasi"delict "nder !rticles 2*7;?2*+, of the 3ivil
3ode. <%ee $arredo v. /arcia and !lmario, 78 5hil. ;07C 5ar(er
v. 5anlilio, et al., +* 5hil. *=
&f he chooses an action for quasi"delict, he ma hold an
emploer lia'le for the negligent act of the emploee s"'Fect,
however, to the emploer7s defense of e@ercise of the diligence
of a good father of the famil. <!rt. 2*-0, 3ivil 3ode=
2n the other hand, sho"ld he choose to prosec"te his action
"nder !rticle *00 of the 5enal 3ode, he can hold the emploer
s"'sidiaril lia'le onl "pon prior conviction of the emploee.
>hile a separate and independent civil action for damages ma
'e 'ro"ght against the emploee "nder !rticle 88 of the 3ivil
3ode, no s"ch action ma 'e filed against the emploer on the
latter7s s"'sidiar civil lia'ilit 'eca"se s"ch lia'ilit is governed
not ' the 3ivil 3ode '"t ' the 5enal 3ode, "nder which
conviction of the emploee is a condition sine qua non for the
emploer7s s"'sidiar lia'ilit. &f the co"rt tring the emploee7s
lia'ilit adF"dges the emploee lia'le, '"t the co"rt tring the
criminal action acq"its the emploee, the s"'seq"ent insolvenc
of the emploee cannot ma(e the emploer s"'sidiar lia'le to
the offended part or to the latter7s heirs.
>:E0E120E, the decision appealed from is affirmed, witho"t
prono"ncement as to costs.
4eng)on, C.#., 4autista Angelo, Concepcion, Re!es, #.4.-.,
4arrera, %aredes, &i)on, Maalintal, 4eng)on, #.%., and *aldi'ar,
##., conc"r.
PAC9: .s M7RA;E:
D E C 9 : 9 7 '

CARP97, J.I

*he Case


.his petition for reviewA*B assails the ** Ma 2005
DecisionA2B and the *+ !"g"st 2005 0esol"tion of the 3o"rt of
!ppeals in 3!?/.0. 3E No. ;0;;+.

*he 6acts

2n *7 Dan"ar *++5, petitioners !lfredo 5. 5acis and 3leopatra
D. 5acis <petitioners= filed with the trial co"rt a civil case for
damages against respondent Derome Dovanne Morales
<respondent=. 5etitioners are the parents of !lfred Dennis 5acis,
Dr. <!lfred=, a *7?ear old st"dent who died in a shooting
incident inside the .op /"n 1irearms and !mm"nitions %tore
<g"n store= in $ag"io 3it. 0espondent is the owner of the g"n
store.

.he facts as fo"nd ' the trial co"rt are as
follows9

2n Dan"ar *+, *++*, !lfred Dennis
5acis, then *7 ears old and a first ear
44
st"dent at the $ag"io 3olleges 1o"ndation
ta(ing "p $% 3omp"ter %cience, died d"e to a
g"nshot wo"nd in the head which he s"stained
while he was at the .op /"n 1irearmAsB and
!mm"nitionAsB %tore located at Hpper Ma'ini
%treet, $ag"io 3it. .he g"n store was owned
and operated ' defendant Derome Dovanne
Morales.

>ith !lfred 5acis at the time of the shooting were !ristedes
Mati'ag and Dason :er'olario. .he were sales agents of the
defendant, and at that partic"lar time, the careta(ers of the g"n
store.

.he '"llet which (illed !lfred Dennis 5acis was fired from a
g"n 'ro"ght in ' a c"stomer of the g"n store for repair.

.he g"n, an !M. !"tomag && 3al. 22 0imfire Magn"m with %erial
No. %N?:8,*+, <E@hi'it IQJ=, was left ' defendant Morales in a
drawer of a ta'le located inside the g"n store.

Defendant Morales was in Manila at the time. :is emploee
!rmando Darnag"e, who was the reg"lar careta(er of the g"n
store was also not aro"nd. :e left earlier and req"ested sales
agents Mati'ag and :er'olario to loo( after the g"n store while
he and defendant Morales were awa. Darnag"e entr"sted to
Mati'ag and :er'olario a '"nch of (es "sed in the g"n store
which incl"ded the (e to the drawer where the fatal g"n was
(ept.

&t appears that Mati'ag and :er'olario
later 'ro"ght o"t the g"n from the drawer and
placed it on top of the ta'le. !ttracted ' the
sight of the g"n, the o"ng !lfred Dennis 5acis
got hold of the same. Mati'ag as(ed !lfred
Dennis 5acis to ret"rn the g"n. .he latter
followed and handed the g"n to Mati'ag. &t
went off, the '"llet hitting the o"ng !lfred in
the head.

! criminal case for homicide was filed against Mati'ag 'efore
'ranch E&& of this 3o"rt. Mati'ag, however, was acq"itted of the
charge against him 'eca"se of the e@empting circ"mstance of
IaccidentJ "nder !rt. *2, par. , of the 0evised 5enal 3ode.


$ agreement of the parties, the
evidence add"ced in the criminal case for
homicide against Mati'ag was reprod"ced and
adopted ' them as part of their evidence in
the instant case.A8B

2n - !pril *++-, the trial co"rt rendered its decision in
favor of petitioners. .he dispositive portion of the decision
reads9

>:E0E120E, premises considered,
F"dgment is here' rendered in favor of the
plaintiffs A%po"ses !lfredo 5. 5acis and
3leopatra D. 5acisB and against the defendant
ADerome Dovanne MoralesB ordering the
defendant to pa plaintiffs G
<*= 580,000.00 as indemnit for the
death of !lfred 5acisC
<2= 52+,,87.;5 as act"al damages for the
hospitali4ation and '"rial
e@penses inc"rred ' the
plaintiffsC
<8= 5*00,000.00 as compensator
damagesC
<,= 5*00,000.00 as moral
damagesC
<5= 550,000.00 as attorne)s
fees.

%2 20DE0ED.A,B


0espondent appealed to the 3o"rt of !ppeals. &n its
DecisionA5B dated ** Ma 2005, the 3o"rt of !ppeals reversed
the trial co"rt)s Decision and a'solved respondent from civil
lia'ilit "nder !rticle 2*-0 of the 3ivil 3ode.A;B

5etitioners filed a motion for reconsideration, which the 3o"rt of
!ppeals denied in its 0esol"tion dated *+ !"g"st 2005.

:ence, this
petition.

*he *rial Court,s Rulin0

.he trial co"rt held respondent civill lia'le for the death of
!lfred "nder !rticle 2*-0 in relation to !rticle 2*7; of the 3ivil
3ode.A7B .he trial co"rt held that the accidental shooting of
!lfred which ca"sed his death was partl d"e to the negligence
of respondent)s emploee !ristedes Mati'ag <Mati'ag=. Mati'ag
and Dason :er'olario <:er'olario= were emploees of
respondent even if the were onl paid on a commission 'asis.
Hnder the 3ivil 3ode, respondent is lia'le for the damages
ca"sed ' Mati'ag on the occasion of the performance of his
d"ties, "nless respondent proved that he o'served the diligence
of a good father of a famil to prevent the damage. .he trial
co"rt held that respondent failed to o'serve the req"ired
diligence when he left the (e to the drawer containing the
loaded defective g"n witho"t instr"cting his emploees to 'e
caref"l in handling the loaded g"n.

*he
Court o! Appeals, Rulin0

.he 3o"rt of !ppeals held that respondent cannot 'e held civill
lia'le since there was no emploer?emploee relationship
'etween respondent and Mati'ag. .he 3o"rt of !ppeals fo"nd
that Mati'ag was not "nder the control of respondent with
respect to the means and methods in the performance of his
45
wor(. .here can 'e no emploer?emploee relationship where
the element of control is a'sent. .h"s, !rticle 2*-0 of the 3ivil
3ode does not appl in this case and respondent cannot 'e held
lia'le.

1"rthermore, the 3o"rt of !ppeals r"led that even if respondent
is considered an emploer of Mati'ag, still respondent cannot 'e
held lia'le since no negligence can 'e attri'"ted to him. !s
e@plained ' the 3o"rt of !ppeals9

/ranting arg"endo that an emploer?
emploee relationship e@isted 'etween
!ristedes Mati'ag and the defendant?
appellant, we find that no negligence can 'e
attri'"ted to him.

Negligence is 'est e@emplified in the case of 5icart vs.
%mith <87 5hil. -0+=. .he test of negligence is this9

I@ @ @. 3o"ld a
pr"dent man, in the position
of the person to whom
negligence is attri'"ted,
foresee harm to the person
inF"red as a reasona'le
conseq"ence of the co"rse
a'o"t to 'e p"rs"edN &f so,
the law imposes a d"t on
the actor to refrain from that
co"rse or ta(e preca"tion
against its mischievo"s
res"lts, and the fail"re to do
so constit"tes negligence. @ @
@.J

Defendant?appellant maintains that he is not g"ilt of
negligence and lac( of d"e care as he did not fail to o'serve the
diligence of a good father of a famil. :e s"'mits that he (ept
the firearm in one of his ta'le drawers, which he loc(ed and
s"ch is alread an indication that he too( the necessar
diligence and care that the said g"n wo"ld not 'e accessi'le to
anone. :e p"ts AsicB that his store is engaged in selling
firearms and amm"nitions. %"ch items which are per se
dangero"s are (ept in a place which is properl sec"red in order
that the persons coming into the g"n store wo"ld not 'e a'le to
ta(e hold of it "nless it is done intentionall, s"ch as when a
c"stomer is interested to p"rchase an of the firearms,
amm"nitions and other related items, in which case, he ma 'e
allowed to handle the same.

>e agree. M"ch as >e smpathi4e with the famil of the
deceased, defendant?appellant is not to 'e 'lamed. :e e@ercised
d"e diligence in (eeping his loaded g"n while he was on a
'"siness trip in Manila. :e placed it inside the drawer and loc(ed
it. &t was ta(en awa witho"t his (nowledge and a"thorit.
>hatever happened to the deceased was p"rel accidental.A-B
*he 9ssues

5etitioners raise the following iss"es9

&. .:E !55ELL!.E 32H0. 32MM&..ED %E0&2H% E0020 &N
0ENDE0&N/ .:E DE3&%&2N !ND 0E%2LH.&2N &N QHE%.&2N &N
D&%0E/!0D 21 L!> !ND DH0&%50HDEN3E $6 0EEE0%&N/ .:E
20DE0 21 .:E 0E/&2N!L .0&!L 32H0. <$0!N3: 5+= 21
$!/H&2 3&.6 N2.>&.:%.!ND&N/ 3LE!0, !H.:EN.&3
0E320D% !ND .E%.&M2N&E% 50E%EN.ED DH0&N/ .:E .0&!L
>:&3: NE/!.E !ND 32N.0!D&3. &.% 1&ND&N/%.

&&. .:E !55ELL!.E 32H0. 32MM&..ED /0!EE, 0EEE0%&$LE
E0020 &N 0ENDE0&N/ .:E DE3&%&2N !ND 0E%2LH.&2N &N
QHE%.&2N $6 DE5!0.&N/ 102M .:E !33E5.ED !ND H%H!L
32H0%E 21 DHD&3&!L 5023EED&N/% .:E0E$6 &/N20&N/ .:E
1!3.H!L 1&ND&N/% 21 .:E 0E/&2N!L .0&!L 32H0. <$0!N3:
5+= 21 $!/H&2 3&.6 %:2>&N/ 5E.&.&2NE0)% 3LE!0 0&/:.%
.2 .:E !>!0D 21 D!M!/E%.A+B



*he Rulin0 o! the Court

>e find the petition meritorio"s.

.his case for damages arose o"t of the accidental
shooting of petitioners) son. Hnder !rticle **;*A*0B of the 3ivil
3ode, petitioners ma enforce their claim for damages 'ased on
the civil lia'ilit arising from the crime "nder !rticle *00A**B of
the 0evised 5enal 3ode or the ma opt to file an independent
civil action for damages "nder the 3ivil 3ode. &n this case,
instead of enforcing their claim for damages in the homicide
case filed against Mati'ag, petitioners opted to file an
independent civil action for damages against respondent whom
the alleged was Mati'ag)s emploer. 5etitioners 'ased their
claim for damages "nder !rticles 2*7; and 2*-0 of the 3ivil
3ode.


Hnli(e the s"'sidiar lia'ilit of the emploer "nder !rticle
*08A*2B of the 0evised 5enal 3ode,A*8B the lia'ilit of the
emploer, or an person for that matter, "nder !rticle 2*7; of
the 3ivil 3ode is primar and direct, 'ased on a person)s own
negligence. !rticle 2*7; states9

!rt. 2*7;. >hoever ' act or omission ca"ses damage
to another, there 'eing fa"lt or negligence, is o'liged to pa for
the damage done. %"ch fa"lt or negligence, if there is no pre?
e@isting contract"al relation 'etween the parties, is called q"asi?
delict and is governed ' the provisions of this 3hapter.


.his case involves the accidental discharge of a firearm
inside a g"n store. Hnder 5N5 3irc"lar No. +, entitled the I5olic
on 1irearms and !mm"nition DealershipP0epair,J a person who is
in the '"siness of p"rchasing and selling of firearms and
amm"nition m"st maintain 'asic sec"rit and safet
req"irements of a g"n dealer, otherwise his License to 2perate
46
Dealership will 'e s"spended or canceled.A*,B
&ndeed, a higher degree of care is req"ired of someone
who has in his possession or "nder his control an instr"mentalit
e@tremel dangero"s in character, s"ch as dangero"s weapons
or s"'stances. %"ch person in possession or control of
dangero"s instr"mentalities has the d"t to ta(e e@ceptional
preca"tions to prevent an inF"r 'eing done there'.A*5B
Hnli(e the ordinar affairs of life or '"siness which involve little
or no ris(, a '"siness dealing with dangero"s weapons req"ires
the e@ercise of a higher degree of care.

!s a g"n store owner, respondent is pres"med to 'e
(nowledgea'le a'o"t firearms safet and sho"ld have (nown
never to (eep a loaded weapon in his store to avoid
"nreasona'le ris( of harm or inF"r to others. 0espondent has
the d"t to ens"re that all the g"ns in his store are not loaded.
1irearms sho"ld 'e stored "nloaded and separate from
amm"nition when the firearms are not needed for read?access
defensive "se.A*;B >ith more reason, g"ns accepted ' the
store for repair sho"ld not 'e loaded precisel 'eca"se the are
defective and ma ca"se an accidental discharge s"ch as what
happened in this case. 0espondent was clearl negligent when
he accepted the g"n for repair and placed it inside the drawer
witho"t ens"ring first that it was not loaded. &n the first place,
the defective g"n sho"ld have 'een stored in a va"lt. $efore
accepting the defective g"n for repair, respondent sho"ld have
made s"re that it was not loaded to prevent an "ntoward
accident. &ndeed, respondent sho"ld never accept a firearm
from another person, "ntil the clinder or action is open and he
has personall chec(ed that the weapon is completel "nloaded.
A*7B 1or failing to ins"re that the g"n was not loaded,
respondent himself was negligent. 1"rthermore, it was not
shown in this case whether respondent had a License to 0epair
which a"thori4es him to repair defective firearms to restore its
original composition or enhance or "pgrade firearms.A*-B

3learl, respondent did not e@ercise the degree of care and
diligence req"ired of a good father of a famil, m"ch less the
degree of care req"ired of someone dealing with dangero"s
weapons, as wo"ld e@empt him from lia'ilit in this case.

45ERE67RE, we %RA'* the petition. >e :E* A:9DE
the ** Ma 2005 Decision and the *+ !"g"st 2005 0esol"tion of
the 3o"rt of !ppeals in 3!?/.0. 3E No. ;0;;+. >e
RE9':*A*E the trial co"rt)s Decision dated - !pril *++-.

:7 7RDERED.


.R. 'o. ;$12213 March 11, 1318
AMAD7 P9CAR*, plaintiff?appellant,
vs.
6RA'E :M9*5, JR., defendant?appellee.
Alejo Ma+anag for appellant.
:. E. Camp+ell for appellee.
:*REE*, J.I
&n this action the plaintiff, !mado 5icart, see(s to recover of the
defendant, 1ran( %mith, Fr., the s"m of 58*,000, as damages
alleged to have 'een ca"sed ' an a"tomo'ile driven ' the
defendant. 1rom a F"dgment of the 3o"rt of 1irst &nstance of the
5rovince of La Hnion a'solving the defendant from lia'ilit the
plaintiff has appealed.
.he occ"rrence which gave rise to the instit"tion of this action
too( place on Decem'er *2, *+*2, on the 3arlatan $ridge, at
%an 1ernando, La Hnion. &t appears that "pon the occasion in
q"estion the plaintiff was riding on his pon over said 'ridge.
$efore he had gotten half wa across, the defendant approached
from the opposite direction in an a"tomo'ile, going at the rate
of a'o"t ten or twelve miles per ho"r. !s the defendant neared
the 'ridge he saw a horseman on it and 'lew his horn to give
warning of his approach. :e contin"ed his co"rse and after he
had ta(en the 'ridge he gave two more s"ccessive 'lasts, as it
appeared to him that the man on horse'ac( 'efore him was not
o'serving the r"le of the road.
.he plaintiff, it appears, saw the a"tomo'ile coming and heard
the warning signals. :owever, 'eing pert"r'ed ' the novelt of
the apparition or the rapidit of the approach, he p"lled the
pon closel "p against the railing on the right side of the 'ridge
instead of going to the left. :e sas that the reason he did this
was that he tho"ght he did not have s"fficient time to get over
to the other side. .he 'ridge is shown to have a length of a'o"t
75 meters and a width of ,.-0 meters. !s the a"tomo'ile
approached, the defendant g"ided it toward his left, that 'eing
the proper side of the road for the machine. &n so doing the
defendant ass"med that the horseman wo"ld move to the other
side. .he pon had not as et e@hi'ited fright, and the rider had
made no sign for the a"tomo'ile to stop. %eeing that the pon
was apparentl q"iet, the defendant, instead of veering to the
right while et some distance awa or slowing down, contin"ed
to approach directl toward the horse witho"t dimin"tion of
speed. >hen he had gotten q"ite near, there 'eing then no
possi'ilit of the horse getting across to the other side, the
defendant q"ic(l t"rned his car s"fficientl to the right to
escape hitting the horse alongside of the railing where it as then
standingC '"t in so doing the a"tomo'ile passed in s"ch close
pro@imit to the animal that it 'ecame frightened and t"rned its
'od across the 'ridge with its head toward the railing. &n so
doing, it as str"c( on the hoc( of the left hind leg ' the flange
of the car and the lim' was 'ro(en. .he horse fell and its rider
was thrown off with some violence. 1rom the evidence add"ced
in the case we 'elieve that when the accident occ"rred the free
space where the pon stood 'etween the a"tomo'ile and the
railing of the 'ridge was pro'a'l less than one and one half
meters. !s a res"lt of its inF"ries the horse died. .he plaintiff
received cont"sions which ca"sed temporar "nconscio"sness
and req"ired medical attention for several das.
.he q"estion presented for decision is whether or not the
defendant in mane"vering his car in the manner a'ove
descri'ed was g"ilt of negligence s"ch as gives rise to a civil
o'ligation to repair the damage doneC and we are of the opinion
that he is so lia'le. !s the defendant started across the 'ridge,
he had the right to ass"me that the horse and the rider wo"ld
pass over to the proper sideC '"t as he moved toward the center
of the 'ridge it was demonstrated to his ees that this wo"ld not
'e doneC and he m"st in a moment have perceived that it was
too late for the horse to cross with safet in front of the moving
vehicle. &n the nat"re of things this change of sit"ation occ"rred
while the a"tomo'ile was et some distance awaC and from this
moment it was not longer within the power of the plaintiff to
escape 'eing r"n down ' going to a place of greater safet. .he
control of the sit"ation had then passed entirel to the
defendantC and it was his d"t either to 'ring his car to an
immediate stop or, seeing that there were no other persons on
the 'ridge, to ta(e the other side and pass s"fficientl far awa
47
from the horse to avoid the danger of collision. &nstead of doing
this, the defendant ran straight on "ntil he was almost "pon the
horse. :e was, we thin(, deceived into doing this ' the fact
that the horse had not et e@hi'ited fright. $"t in view of the
(nown nat"re of horses, there was an apprecia'le ris( that, if
the animal in q"estion was "nacq"ainted with a"tomo'iles, he
might get e@ited and F"mp "nder the conditions which here
confronted him. >hen the defendant e@posed the horse and
rider to this danger he was, in o"r opinion, negligent in the ee
of the law.
.he test ' which to determine the e@istence of negligence in a
partic"lar case ma 'e stated as follows9 Did the defendant in
doing the alleged negligent act "se that person wo"ld have "sed
in the same sit"ationN &f not, then he is g"ilt of negligence. .he
law here in effect adopts the standard s"pposed to 'e s"pplied
' the imaginar cond"ct of the discreet paterfamilias of the
0oman law. .he e@istence of negligence in a given case is not
determined ' reference to the personal F"dgment of the actor
in the sit"ation 'efore him. .he law considers what wo"ld 'e
rec(less, 'lameworth, or negligent in the man of ordinar
intelligence and pr"dence and determines lia'ilit ' that.
.he q"estion as to what wo"ld constit"te the cond"ct of a
pr"dent man in a given sit"ation m"st of co"rse 'e alwas
determined in the light of h"man e@perience and in view of the
facts involved in the partic"lar case. !'stract spec"lations
cannot here 'e of m"ch val"e '"t this m"ch can 'e profita'l
said9 0easona'le men govern their cond"ct ' the
circ"mstances which are 'efore them or (nown to them. .he
are not, and are not s"pposed to 'e, omniscient of the f"t"re.
:ence the can 'e e@pected to ta(e care onl when there is
something 'efore them to s"ggest or warn of danger. 3o"ld a
pr"dent man, in the case "nder consideration, foresee harm as a
res"lt of the co"rse act"all p"rs"edN &f so, it was the d"t of
the actor to ta(e preca"tions to g"ard against that harm.
0easona'le foresight of harm, followed ' ignoring of the
s"ggestion 'orn of this prevision, is alwas necessar 'efore
negligence can 'e held to e@ist. %tated in these terms, the
proper criterion for determining the e@istence of negligence in a
given case is this9 3ond"ct is said to 'e negligent when a
pr"dent man in the position of the tortfeasor wo"ld have
foreseen that an effect harmf"l to another was s"fficientl
pro'a'le to warrant his foregoing cond"ct or g"arding against
its conseq"ences.
!ppling this test to the cond"ct of the defendant in the present
case we thin( that negligence is clearl esta'lished. ! pr"dent
man, placed in the position of the defendant, wo"ld in o"r
opinion, have recogni4ed that the co"rse which he was p"rs"ing
was fra"ght with ris(, and wo"ld therefore have foreseen harm
to the horse and the rider as reasona'le conseq"ence of that
co"rse. Hnder these circ"mstances the law imposed on the
defendant the d"t to g"ard against the threatened harm.
&t goes witho"t saing that the plaintiff himself was not free
from fa"lt, for he was g"ilt of antecedent negligence in planting
himself on the wrong side of the road. $"t as we have alread
stated, the defendant was also negligentC and in s"ch case the
pro'lem alwas is to discover which agent is immediatel and
directl responsi'le. &t will 'e noted that the negligent acts of
the two parties were not contemporaneo"s, since the negligence
of the defendant s"cceeded the negligence of the plaintiff ' an
apprecia'le interval. Hnder these circ"mstances the law is that
the person who has the last fair chance to avoid the impending
harm and fails to do so is chargea'le with the conseq"ences,
witho"t reference to the prior negligence of the other part.
.he decision in the case of 0(es vs. !tlantic, /"lf and 5acific 3o.
<7 5hil. 0ep., 85+= sho"ld perhaps 'e mentioned in this
connection. .his 3o"rt there held that while contri'"tor
negligence on the part of the person inF"red did not constit"te a
'ar to recover, it co"ld 'e received in evidence to red"ce the
damages which wo"ld otherwise have 'een assessed wholl
against the other part. .he defendant compan had there
emploed the plaintiff, as a la'orer, to assist in transporting iron
rails from a 'arge in Manila har'or to the compan7s ards
located not far awa. .he rails were conveed "pon cars which
were ha"led along a narrow trac(. !t certain spot near the
water7s edge the trac( gave wa ' reason of the com'ined
effect of the weight of the car and the insec"rit of the road
'ed. .he car was in conseq"ence "psetC the rails slid offC and
the plaintiff7s leg was ca"ght and 'ro(en. &t appeared in
evidence that the accident was d"e to the effects of the tphoon
which had dislodged one of the s"pports of the trac(. .he co"rt
fo"nd that the defendant compan was negligent in having failed
to repair the 'ed of the trac( and also that the plaintiff was, at
the moment of the accident, g"ilt of contri'"tor negligence in
wal(ing at the side of the car instead of 'eing in front or 'ehind.
&t was held that while the defendant was lia'le to the plaintiff '
reason of its negligence in having failed to (eep the trac( in
proper repair nevertheless the amo"nt of the damages sho"ld
'e red"ced on acco"nt of the contri'"tor negligence in the
plaintiff. !s will 'e seen the defendant7s negligence in that case
consisted in an omission onl. .he lia'ilit of the compan arose
from its responsi'ilit for the dangero"s condition of its trac(. &n
a case li(e the one now 'efore "s, where the defendant was
act"all present and operating the a"tomo'ile which ca"sed the
damage, we do not feel constrained to attempt to weigh the
negligence of the respective parties in order to apportion the
damage according to the degree of their relative fa"lt. &t is
eno"gh to sa that the negligence of the defendant was in this
case the immediate and determining ca"se of the accident and
that the antecedent negligence of the plaintiff was a more
remote factor in the case.
! point of minor importance in the case is indicated in the
special defense pleaded in the defendant7s answer, to the effect
that the s"'Fect matter of the action had 'een previo"sl
adF"dicated in the co"rt of a F"stice of the peace. &n this
connection it appears that soon after the accident in q"estion
occ"rred, the plaintiff ca"sed criminal proceedings to 'e
instit"ted 'efore a F"stice of the peace charging the defendant
with the infliction of serio"s inF"ries <lesiones graves=. !t the
preliminar investigation the defendant was discharged ' the
magistrate and the proceedings were dismissed. 3onceding that
the acq"ittal of the defendant at the trial "pon the merits in a
criminal prosec"tion for the offense mentioned wo"ld 'e res
adF"dicata "pon the q"estion of his civil lia'ilit arising from
negligence ?? a point "pon which it is "nnecessar to e@press an
opinion ?? the action of the F"stice of the peace in dismissing the
criminal proceeding "pon the preliminar hearing can have no
effect. <%ee H. %. vs. $an4"ela and $an4"ela, 8* 5hil. 0ep.,
5;,.=
1rom what has 'een said it res"lts that the F"dgment of the
lower co"rt m"st 'e reversed, and F"dgment is her rendered
that the plaintiff recover of the defendant the s"m of two
h"ndred pesos <5200=, with costs of other instances. .he s"m
here awarded is estimated to incl"de the val"e of the horse,
medical e@penses of the plaintiff, the loss or damage occasioned
to articles of his apparel, and lawf"l interest on the whole to the
date of this recover. .he other damages claimed ' the plaintiff
are remote or otherwise of s"ch character as not to 'e
recovera'le. %o ordered.
Arellano, C.#., Torres, Carson, Araullo, A'anceBa, and ;isher,
48
##., conc"r.
#ohnson, #., reserves his vote.
?P9 E>PRE:: CARD C7RP7RA*97', petitioner, vs. C7=R*
76 APPEA;: and R9CARD7 J. MARA:9%A', respondents.
D E 3 & % & 2 N
V!5HN!N, #.9
.he q"estion 'efore this 3o"rt is whether private respondent
can recover moral damages arising from the cancellation of his
credit card ' petitioner credit card corporation.
.he facts of the case are as stated in the decision of the
respondent co"rt,A*B to wit9
.he case arose from the dishonor of the credit card of the
plaintiff !tt. 0icardo D. Marasigan ' 3afe !driatico, a '"siness
esta'lishment accredited with the defendant?appellant $5&
E@press 3ard 3orporation <$E33 for 'revit= on Decem'er -,
*+-+ when the plaintiff entertained some g"ests thereat.
.he records of this case show that plaintiff, who is a lawer '
profession was a complimentar mem'er of $E33 from 1e'r"ar
*+-- to 1e'r"ar *+-+ and was iss"ed 3redit 3ard No. *00?0*2?
558, with a credit limit of 58,000.00 and with a monthl 'illing
ever 27th of the month <E@h. N=, s"'Fect to the terms and
conditions stip"lated in the contract <E@h. *?'=. :is mem'ership
was renewed for another ear or "ntil 1e'r"ar *++0 and the
credit limit was increased to 55,000.00 <E@h. !=. .he plaintiff
oftentimes e@ceeded his credit limits <E@hs. &, &?* to &?*2= '"t
this was never ta(en against him ' the defendant and even his
mode of paing his monthl 'ills in chec( was tolerated. .heir
contract"al relations went on smoothl "ntil his statement of
acco"nt for 2cto'er, *+-+ amo"nting to 5-,+-7.-, was not paid
in d"e time. .he plaintiff admitted having inadvertentl failed to
pa his acco"nt for the said month 'eca"se he was in Q"e4on
province attending to some professional and personal
commitments. :e was informed ' his secretar that defendant
was demanding immediate pament of his o"tstanding acco"nt,
was req"iring him to iss"e a chec( for 5*5,000.00 which wo"ld
incl"de his f"t"re 'ills, and was threatening to s"spend his
credit card. 5laintiff iss"ed 1ar East $an( and .r"st 3o. 3hec(
No. ,+,;75 in the amo"nt of 5*5,000.00, postdated Decem'er
*5, *+-+ which was received on Novem'er 28, *+-+ ' .ess
Loren4o, an emploee of the defendant <E@hs. D and D?*=, who in
t"rn gave the said chec( to Deng !ngeles, a co?emploee who
handles the acco"nt of the plaintiff. .he chec( remained in the
c"stod of Deng !ngeles. Mr. 0o'erto Maniq"i4, head of the
collection department of defendant was formall informed of the
postdated chec( a'o"t a wee( later. 2n Novem'er 2-, *+-+,
defendant served plaintiff a letter ' ordinar mail informing him
of the temporar s"spension of the privileges of his credit card
and the incl"sion of his acco"nt n"m'er in their 3a"tion List. :e
was also told to refrain from f"rther "se of his credit card to
avoid an inconveniencePem'arrassment and that "nless he
settles his o"tstanding acco"nt with the defendant within 5 das
from receipt of the letter, his mem'ership will 'e permanentl
cancelled <E@h. 8=. .here is no showing that the plaintiff
received this letter 'efore Decem'er -, *+-+. 3onfident that he
had settled his acco"nt with the iss"ance of the postdated
chec(, plaintiff invited some g"ests on Decem'er -, *+-+ and
entertained them at 3afM !driatico. >hen he presented his
credit card to 3afM !driatico for the 'ill amo"nting to 5785.82,
said card was dishonored. 2ne of his g"ests, Mar Ellen 0ingler,
paid the 'ill ' "sing her own credit card, a Hni'an(ard <E@hs.
M, M?* and M?2=.
&n a letter addressed to the defendant dated Decem'er *2,
*+-+, plaintiff req"ested that he 'e sent the e@act 'illing d"e
him as of Decem'er *5, *+-+, to withhold the deposit of his
postdated chec( and that said chec( 'e ret"rned to him 'eca"se
he had alread instr"cted his 'an( to stop the pament thereof
as the defendant violated their agreement that the plaintiff iss"e
the chec( to the defendant to cover his acco"nt amo"nting to
onl 5-,+-7.-, on the condition that the defendant will not
s"spend the effectivit of the card <E@h. D=. ! letter dated
Decem'er *;, *+-+ was sent ' the plaintiff to the manager of
1E$.3, 0amada $ranch, Manila req"esting the 'an( to stop the
pament of the chec( <E@hs. E, E?*=. No repl was received '
plaintiff from the defendant to his letter dated Decem'er *2,
*+-+. 5laintiff sent defendant another letter dated March *2,
*++0 reminding the latter that he had long rescinded and
cancelled whatever arrangement he entered into with defendant
and req"esting for his correct 'illing, less the improper charges
and penalties, and for an e@planation within five <5= das from
receipt thereof wh his card was dishonored on Decem'er -,
*+-+ despite ass"rance to the contrar ' defendant7s
personnel?in?charge, otherwise the necessar co"rt action shall
'e filed to hold defendant responsi'le for the h"miliation and
em'arrassment s"ffered ' him <E@h. 1=. 5laintiff alleged
f"rther that after a few das, a certain !tt. !l'ano,
representing himself to 'e wor(ing with office of !tt. Lope4,
called him inq"iring as to how the matter can 'e threshed o"t
e@traF"diciall '"t the latter said that s"ch is a serio"s matter
which cannot 'e disc"ssed over the phone. .he defendant
served its final demand to the plaintiff dated March 2*, *++0
req"iring him to pa in f"ll his overd"e acco"nt, incl"ding
stip"lated fees and charges, within 5 das from receipt thereof
or face co"rt action also to replace the postdated chec( with
cash within the same period or face criminal s"it for violation of
the $o"ncing 3hec( Law <E@h. /PE@h. *8=. .he plaintiff, in a
repl letter dated !pril 5, *++0 <E@h. :=, demanded defendant7s
compliance with his req"est in his first letter dated March *2,
*++0 within three <8= das from receipt, otherwise the plaintiff
will file a case against them, @ @ @.A2B
.h"s, on Ma 7, *++0 private respondent filed a complaint for
damages against petitioner 'efore the 0egional .rial 3o"rt of
Ma(ati, $ranch *50, doc(eted as 3ivil 3ase No. +0?**7,.
!fter trial, the trial co"rt r"led for private respondent, finding
that herein petitioner a'"sed its right in contravention of !rticle
*+ of the 3ivil 3ode.A8B .he dispositive portion of the decision
reads9
>herefore, F"dgment is here' rendered ordering the
defendant to pa plaintiff the following9
*. 5*00,000.00 as moral damagesC
2. 550,000.00 as e@emplar damagesC and
8. 520,000.00 ' wa of attorne7s fees.
2n the other hand, plaintiff is ordered to pa defendant its
o"tstanding o'ligation in the amo"nt of 5*,,,8+.,*, amo"nt
d"e as of Decem'er *5, *+-+.A,B
.he trial co"rt7s r"ling was 'ased on its findings and concl"sions,
to wit9
.here is no q"estion that plaintiff had 'een in defa"lt in the
pament of his 'illings for more than two months, prompting
defendant to call him and reminded him of his o'ligation.
Hna'le to personall tal( with him, this 3o"rt is convinced that
somehow one or another emploee of defendant called him "p
more than once.
:owever, while it is tr"e that, as indicated in the terms and
49
conditions of the application for $5& credit card, "pon fail"re of
the cardholder to pa his o"tstanding o'ligation for more than
thirt <80= das, the defendant can a"tomaticall s"spend or
cancel the credit card, that reserved right sho"ld not have 'een
a'"sed, as it was in fact a'"sed, in plaintiff7s case. >hat is
more pec"liar here is that there have 'een admitted
comm"nications 'etween plaintiff and defendant prior to the
s"spension or cancellation of plaintiff7s credit card and his
incl"sion in the ca"tion list. :owever, nowhere in an of these
comm"nications was there ever a hint given to plaintiff that his
card had alread 'een s"spended or cancelled. &n fact, the
3o"rt o'served that while defendant was tring its 'est to
pers"ade plaintiff to "pdate its acco"nt and pa its o'ligation, it
had alread ta(en steps to s"spendPcancel plaintiff7s card and
incl"de him in the ca"tion list. >hile the 3o"rt admires
defendant7s diplomac in dealing with its clients, it cannot help
'"t frown "pon the 'ac(handed wa defendant dealt with
plaintiff7s case. 1or despite .ess Loren4o7s denial, there is
reason to 'elieve that plaintiff was indeed ass"red ' defendant
of the contin"ed honoring of his credit card so long as he pas
his o'ligation of 5*5,000.00. >orst, "pon receipt of the
postdated chec(, defendant (ept the same "ntil a few das
'efore it 'ecame d"e and said chec( was presented to the head
of the collection department, Mr. Maniq"i4, to ta(e steps
thereon, res"lting to the em'arrassing sit"ation plaintiff fo"nd
himself in on Decem'er -, *+-+. Moreover, Mr. Maniq"i4 himself
admitted that his req"est for plaintiff to replace the chec( with
cash was not 'eca"se it was a postdated chec( '"t merel to
tall the pament with the acco"nt d"e.
Li(ewise, the 3o"rt is not pers"aded ' the sweeping denials
made ' .ess Loren4o and her claim that her onl participation
was to receive the s"'Fect chec(. :er immediate s"perior, Mr.
Maniq"i4 testified that he had instr"cted Loren4o to
comm"nicate with plaintiff once or twice to req"est the latter to
replace the q"estioned chec( with cash, th"s giving s"pport to
the testimon of plaintiff7s witness, Dolores Q"i4on, that it was
one .ess Loren4o who she had tal(ed over the phone regarding
plaintiff7s acco"nt and plaintiff7s own statement that it was this
woman who ass"red him that his card has not et 'een and will
not 'e cancelledPs"spended if he wo"ld pa defendant the s"m
of 5*5,000.00.
Now, on the iss"e of whether or not "pon receipt of the s"'Fect
chec(, defendant had agreed that the card shall remain
effective, the 3o"rt ta(es note of the following9
*. !n emploee of defendant corporation "nconditionall
accepted the s"'Fect chec( "pon its deliver, despite its 'eing a
postdated oneC and the amo"nt did not tall with plaintiff7s
o'ligationC
2. Defendant did not den nor controvert plaintiff7s claim that all
his paments were made in chec(sC
8. Defendant7s main witness, Mr. Maniq"i4, categoricall stated
that the req"est for plaintiff to replace his postdated chec( with
cash was merel for the p"rpose of talling plaintiff7s
o"tstanding o'ligation with his pament and not to q"estion the
postdated chec(C
,. .hat the card was s"spended almost a wee( after receipt of
the postdated chec(C
5. .hat despite the man instances that defendant co"ld have
informed plaintiff over the phone of the cancellation or
s"spension of his credit card, it did not do so, which co"ld have
prevented the incident of Decem'er -, *+-+, the notice
allegedl sent thr" ordinar mail is not onl "nrelia'le '"t ta(es
a long time. %"ch action as s"spension of credit card m"st 'e
immediatel relaed to the person affected so as to avoid
em'arrassing sit"ations.
;. !nd that the postdated chec( was deposited on Decem'er 20,
*+-+.
&n view of the foregoing o'servations, it is needless to sa that
there was indeed an arrangement 'etween plaintiff and the
defendant, as can 'e inferred from the acts of the defendant7s
emploees, that the s"'Fect credit card is still good and co"ld
still 'e "sed ' the plaintiff as it wo"ld 'e honored ' the d"l
accredited esta'lishment of defendant.A5B
Not satisfied with the 0egional .rial 3o"rt7s decision, petitioner
appealed to the 3o"rt of !ppeals, which, in a decision
prom"lgated on March +, *++5 r"led in its dispositive portion9
>:E0E120E, premises considered, the decision appealed from
is here' !11&0MED with the M2D&1&3!.&2N that the
defendant?appellant shall pa the plaintiff?appellee the
following9 550,000.00 as moral damagesC 525,000.00 as
e@emplar damagesC and 5*0,000.00 ' wa of attorne7s fees.
%2 20DE0ED.A;B
:ence, the present petition on the following assignment of
errors9
&
.:E L2>E0 32H0. E00ED &N DE3L!0&N/ .:!. .:E0E >!%
&NDEED !N !/0EEMEN. 20 !00!N/EMEN. EN.E0ED &N.2
$E.>EEN .:E 5!0.&E% >:E0E&N .:E DE1END!N. 0EQH&0ED
.:E 5L!&N.&11 .2 &%%HE ! 52%.D!.ED 3:E3V &N &.% 1!E20
&N .:E !M2HN. 21 5*5,000.00 !% 5!6MEN. 120 :&% 2EE0DHE
!332HN.%, >&.: .:E 32ND&.&2N .:!. .:E 5L!&N.&117%
30ED&. 3!0D >&LL N2. $E %H%5ENDED 20 3!N3ELLED.
&&
.:E L2>E0 32H0. E00ED &N :2LD&N/ DE1END!N. L&!$LE
120 D!M!/E% !ND !..20NE67% 1EE% !0&%&N/ 2H. 102M .:E
D&%:2N20 21 .:E 5L!&N.&117% 30ED&. 3!0D.A7B
>e find the petition meritorio"s.
.he first iss"e to 'e resolved is whether petitioner had the right
to s"spend the credit card of the private respondent.
Hnder the terms and conditions of the credit card, signed ' the
private respondent, an card with o"tstanding 'alances after
thirt <80= das from original 'illingPstatement shall
a"tomaticall 'e s"spended, th"s9
5!6MEN. 21 3:!0/E% ? $E33 shall f"rnish the 3ardholder a
monthl statement of acco"nt made thro"gh the "se of the
3!0D and the 3ardholder agrees that all charges made thro"gh
the "se of the 3!0D shall 'e paid ' the 3ardholder on or
'efore the last da for paments, which is twent <20= das
from the date of the said statement of acco"nt, and s"ch
pament d"e date ma 'e changed to an earlier date if the
3ardholder7s acco"nt is considered overd"e andPor with 'alances
in e@cess of the approved credit limitC or to s"ch other date as
ma 'e deemed proper ' the 3!0D iss"er with notice to the
3ardholder on the same monthl statement of acco"nt. &f the
last da for pament falls on a %at"rda, %"nda or :olida, the
last da for pament a"tomaticall 'ecomes the last wor(ing
da prior to said pament date. :owever, notwithstanding the
a'sence or lac( of proof of service of the statement of charges
to the 3ardholder, the latter shall pa an or all charges made
thro"gh the "se of the 3!0D within thirt <80= das from the
50
date or dates thereof. 1ail"re of 3ardholder to pa an and all
charges made thro"gh the 3!0D within the pament period as
stated in the statement of charges or within thirt <80= das
from act"al date or dates whichever occ"r earlier, shall render
him in defa"lt witho"t the necessit of demand from $E33,
which the 3ardholder e@pressl waives. .hese charges or
'alance thereof remaining "npaid after the pament d"e date
indicated on the monthl statement of acco"nt shall 'ear
interest at the rate of 8O per month and an additional penalt
fee eq"ivalent to another 8O of the amo"nt d"e for ever
month or a fraction of a month7s dela. 502E&DED, that if there
occ"rs an change on the prevailing mar(et rates. $E33 shall
have the option to adF"st the rate of interest andPor penalt fee
d"e on the o"tstanding o'ligation with prior notice to the
3ardholder.
@@@ @@@ @@@
!n 3!0D with o"tstanding 'alances "npaid after thirt <80=
das from original 'illingPstatement date shall a"tomaticall 'e
s"spended, and those with acco"nts "npaid after si@t <;0= das
from said original 'illingPstatement date shall a"tomaticall 'e
cancelled, witho"t preF"dice to $E337s right to s"spend or cancel
an 3!0D an time and for whatever reason. &n case of defa"lt
in his o'ligation as provided for in the preceding paragraph,
3ardholder shall s"rrender his 3!0D to $E33 and shall in
addition to the interest and penalt charges aforementioned,
pa the following liq"idated damages andPor fees <a= a collection
fee of 25O of the amo"nt d"e if the acco"nt is referred to a
collection agenc or attorneC <'= a service fee of 5*00 for ever
dishonored chec( iss"ed ' the 3ardholder in pament of his
acco"nt, with preF"dice, however, to $E337s right of considering
3ardholder7s o'ligation "npaid, ca'le cost for demanding
pament or advising cancellation of mem'ership shall also 'e for
3ardholder7s acco"ntC and <c= a final fee eq"ivalent to 25O of
the "npaid 'alance, e@cl"sive of litigation e@penses and F"dicial
costs, if the pament of the acco"nt is enforced thro"gh co"rt
action.A-B
.he aforeq"oted provision of the credit card cannot 'e an
clearer. $ his own admission, private respondent made no
pament within thirt das for his original 'illingPstatement
dated 27 %eptem'er *+-+. Neither did he ma(e pament for his
original 'illingPstatement dated 27 2cto'er *+-+. 3onseq"entl,
as earl as 2- 2cto'er *+-+, thirt das from the non?pament
of his 'illing dated 27 %eptem'er *+-+, petitioner corporation
co"ld a"tomaticall s"spend his credit card.
.he ne@t iss"e is whether prior to the s"spension of private
respondent7s credit card on 2- Novem'er *+-+, the parties
entered into an agreement where' the card co"ld still 'e "sed
and wo"ld 'e d"l honored ' d"l accredited esta'lisments.
>e agree with the findings of the respondent co"rt, that there
was an arrangement 'etween the parties, wherein the petitioner
req"ired the private respondent to iss"e a chec( worth 5*5,000
as pament for the latter7s 'illings. :owever, we find that the
private respondent was not a'le to compl with his o'ligation.
!s the testimon of private respondent himself 'ears o"t, the
agreement was for the immediate pament of the o"tstanding
acco"nt9
Q &n said statement of acco"nt that o" are s"pposed to pa
the 5-,+7,.-, the charge of interest and penalties, did o" note
thatN
! 6es, sir. & noted the date.
Q >henN
! >hen & ret"rned from the Q"e4on province, sir.
Q >henN
! & thin( Novem'er 22, sir.
Q %o that 'efore o" "sed again the credit card o" were not
a'le to pa immediatel this 5-,+-7.-, in cashN
! & paid 5*5,000.00, sir.
Q M q"estion Mr. >itness is, did o" pa this 5-,+-7.-, in
charge of interest and penalties immediatel in cashN
! &n cash no, '"t in chec(, sir.
Q 6o" said that o" noted the word LimmediatelL in 'old
letters in o"r statement of acco"nt, wh did o" not pa
immediatelN
! $eca"se & received that late, sir.
Q 6es, on Novem'er 22 when o" received from the secretar
of the defendant telling o" to pa the principal amo"nt of
5-,+-7.-,, wh did o" not paN
! .here was a comm"nication 'etween me and the defendant,
& was req"ired to pa 5-,000.00 '"t & paid in chec( for
5*5,000.00, sir.
Q Do o" have an evidence to show that the defendant
req"ired o" to pa in chec( for 5*5,000.00N
! 6es, sir.
Q >here is itN
! &t was ' telecomm"nication, sir.
Q %o there is no written comm"nication 'etween o" and the
defendantN
! .here was none, sir.
Q .here is no written agreement which sas that 5-,+-7.-,
sho"ld 'e paid for 5*5,000.00 in chec(, there is noneN
! 6es, no written agreement, sir.
Q !nd o" as a lawer o" (now that a chec( is not
considered as cash speciall when it is postdated sent to the
defendantN
! .hat is correct, sir.
3learl, the p"rpose of the arrangement 'etween the parties on
Novem'er 22, *+-+, was for the immediate pament of the
private respondent7s o"tstanding acco"nt, in order that his
credit card wo"ld not 'e s"spended.
!s agreed "pon ' the parties, on the following da, private
respondent did iss"e a chec( for 5*5,000. :owever, the chec(
was postdated *5 Decem'er *+-+. %ettled is the doctrine that a
chec( is onl a s"'stit"te for mone and not mone, the deliver
of s"ch an instr"ment does not, ' itself operate as pament.A+B
.his is especiall tr"e in the case of a postdated chec(.
.h"s, the iss"ance ' the private respondent of the postdated
chec( was not effective pament. &t did not compl with his
o'ligation "nder the arrangement with Miss Loren4o. 5etitioner
corporation was therefore F"stified in s"spending his credit card.
1inall, we find no legal and fact"al 'asis for private
respondent7s assertion that in canceling the credit card of the
private respondent, petitioner a'"sed its right "nder the terms
and conditions of the contract.
51
.o find the e@istence of an a'"se of right "nder !rticle *+ the
following elements m"st 'e present9 <*= .here is a legal right or
d"tC <2= which is e@ercised in 'ad faithC <8= for the sole intent
of preF"dicing or inF"ring another.A*0B
.ime and again this 3o"rt has held that good faith is pres"med
and the '"rden of proving 'ad faith is on the part alleging it.
A**B .his private respondent failed to do. &n fact, the action of
the petitioner 'elies the e@istence of 'ad faith. !s earl as 2-
2cto'er *+-+, petitioner co"ld have s"spended private
respondent7s card o"tright. &nstead, petitioner allowed private
respondent to "se his card for several wee(s. 5etitioner had
even notified private respondent of the impending s"spension of
his credit card and made special accommodations for him for
settling his o"tstanding acco"nt. !s s"ch, petitioner cannot 'e
said to have capricio"sl and ar'itraril canceled the private
respondent7s credit card.
>e do not disp"te the findings of the lower co"rt that private
respondent s"ffered damages as a res"lt of the cancellation of
his credit card. :owever, there is a material distinction 'etween
damages and inF"r. &nF"r is the illegal invasion of a legal
rightC damage is the loss, h"rt, or harm which res"lts from the
inF"rC and damages are the recompense or compensation
awarded for the damage s"ffered. .h"s, there can 'e damage
witho"t inF"r in those instances in which the loss or harm was
not the res"lt of a violation of a legal d"t. &n s"ch cases, the
conseq"ences m"st 'e 'orne ' the inF"red person alone, the
law affords no remed for damages res"lting from an act which
does not amo"nt to a legal inF"r or wrong. .hese sit"ations
are often called damnum a+sque injuria.A*2B
&n other words, in order that a plaintiff ma maintain an action
for the inF"ries of which he complains, he m"st esta'lish that
s"ch inF"ries res"lted from a 'reach of d"t which the defendant
owed to the plaintiff ? a conc"rrence of inF"r to the plaintiff and
legal responsi'ilit ' the person ca"sing it. .he "nderling
'asis for the award of tort damages is the premise that an
individ"al was inF"red in contemplation of law. .h"s, there m"st
first 'e a 'reach of some d"t and the imposition of lia'ilit for
that 'reach 'efore damages ma 'e awardedCA*8B and the
'reach of s"ch d"t sho"ld 'e the pro@imate ca"se of the inF"r.
>e therefore disagree with the r"ling of the respondent co"rt
that the dishonor of the credit card of the private respondent '
3afM !driatico is attri'"ta'le to petitioner for its willf"l or gross
neglect to inform the private respondent of the s"spension of his
credit card, the "nfort"nate conseq"ence of which 'ro"ght social
h"miliation and em'arrassment to the private respondent.A*,B
&t was petitioner7s fail"re to settle his o'ligation which ca"sed
the s"spension of his credit card and s"'seq"ent dishonor at
3afM !driatico. :e can not now pass the 'lame to the petitioner
for not notifing him of the s"spension of his card. !s q"oted
earlier, the application contained the stip"lation that the
petitioner co"ld a"tomaticall s"spend a card whose 'illing has
not 'een paid for more than thirt das. Nowhere is it stated in
the terms and conditions of the application that there is a need
of notice 'efore s"spension ma 'e effected as private
respondent claims.A*5B
.his notwithstanding, on Novem'er 2-, *+-+, the da of the
s"spension of private respondent7s card, petitioner sent a letter
' ordinar mail notifing private respondent that his card had
'een temporaril s"spended. Hnder the 0"les on Evidence,
there is a disp"ta'le pres"mption that letters d"l directed and
mailed were received on the reg"lar co"rse of mail.A*;B !side
from the private respondent7s 'are denial, he failed to present
evidence to re'"t the pres"mption that he received said notice.
&n fact "pon cross e@amination, private respondent admitted
that he did received the letter notifing him of the cancellation9
Q Now o" were saing that there was a first letter sent to
o" ' the defendantN
! 6o"r letter, sir.
Q >as that the first letter that o" receivedN
! 6es, sir.
Q &s it that there was a comm"nication first 'etween o" and
the defendantN
! .here was none, sir. & received a cancellation notice '"t
that was after Novem'er 27.A*7B
!s it was private respondent7s own negligence which was the
pro@imate ca"se of his em'arrassing and h"miliating
e@perience, we find the award of damages ' the respondent
co"rt clearl "nF"stified. >e ta(e note of the fact that private
respondent has not et paid his o"tstanding acco"nt with
petitioner.
9' &9E4 76 *5E 67RE%79'%, the decision of the 3o"rt of
!ppeals ordering petitioner to pa private respondent
5*00,000.00 as moral damages, 550,000.00 as e@emplar
damages and 520,000.00 as attorne7s fees, is %E. !%&DE.
5rivate respondent is D&0E3.ED to pa his o"tstanding
o'ligation with the petitioner in the amo"nt of 5*,,,8+.,*.
%2 20DE0ED.
Narvasa, 3.D., <3hairman=, and 0omero, D., conc"r.
5"risima, D., no part, 'eing signator to 3! decision.
REM9%97 R7DR9%=E<, E* A;., plainti!!s$appellees,
.s.
*5E MA'9;A RA9;R7AD C7MPA'8, de!endant$appellant.
$rense & 9era for appellant.
&omingo .mperial for appellees.

:*REE*, J.:
.his action was instit"ted Fointl ' 0emigio 0odrig"e4a
and three others in the 3o"rt of 1irst &nstance of the 5rovince of
!l'a to recover a s"m of mone of the Manila 0ailroad
3ompan as damages res"lting from a fire (indled ' spar(s
from a locomotive engine "nder the circ"mstances set o"t
'elow. Hpon hearing the ca"se "pon the complaint, answer and
an agreed statement of facts, the trial F"dge rendered F"dgment
against the defendant compan in favor of the plaintiffs and
awarded to them the following s"ms respectivel as damages, to
wit, <*= to 0emigio 0odrig"e4a, 58,000C <2= to Domingo
/on4aga, 5,00C <8= to 3ristina L"na, 5800C and <,= to 5erfecta
Losantas, 5*50C all with lawf"l interest from March 2*, *+*+.
1rom this F"dgment the defendant appealed.
.he facts as appearing from the agreed statement, in
relation with the complaint, are to the effect that the defendant
0ailroad 3ompan operates a line thro"gh the district of Daraga
in the m"nicipalit of !l'aC that on Dan"ar 2+, *+*-, as one of
its trains passed over said line, a great q"antit of spar(s were
emitted from the smo(estac( of the locomotive, and fire was
there' comm"nicated to fo"r ho"ses near' 'elonging to the
fo"r plaintiffs respectivel, and the same were entirel
cons"med. !ll of these ho"ses were of light constr"ction with
the e@ception of the ho"se of 0emigio 0odrig"e4a, which was of
52
strong materials, tho"gh the roof was covered with nipa and
cogon. .he fire occ"rred immediatel after the passage of the
train, and a strong wind was 'lowing at the time. &t does not
appear either in the complaint or in the agreed statement whose
ho"se ca"ght fire first, tho"gh it is stated in the appellant7s 'rief
that the fire was first comm"nicated to the ho"se of 0emigio
0odrig"e4a, from whence it spread to the others.
&n the fo"rth paragraph of the complaint G which is
admitted to 'e tr"e G it is alleged that the defendant 0ailroad
3ompan was conspic"o"sl negligent in relation to the origin of
said fire, in the following respects, namel, first, in failing to
e@ercise proper s"pervision over the emploees in charge of the
locomotiveC secondl, in allowing the locomotive which emitted
these spar(s to 'e operated witho"t having the smo(estac(
protected ' some device for arresting spar(sC thirdl, in "sing
in its locomotive "pon this occasion $ataan coal, a f"el of (nown
inferior q"alit which, "pon com'"stion, prod"ces spar(s in
great q"antit.
.he sole gro"nd "pon which the defense is rested is that
the ho"se of 0emigio 0odrig"e4a stood partl within the limits of
the land owned ' the defendant compan, tho"gh e@actl how
far awa from the compan7s trac( does not appear. &t f"rther
appears that, after the railroad trac( was laid, the compan
notified 0odrig"e4a to get his ho"se off the land of the compan
and to remove it from its e@posed position. 0odrig"e4a did not
compl with this s"ggestion, tho"gh he promised to p"t an iron
roof on his ho"se, which he never did. &nstead, he changed the
materials of the main roof to nipa, leaving the (itchen and
media"aguas covered with cogon. Hpon this fact it is contended
for the defense that there was contri'"tor negligence on the
part of 0emigio 0odrig"e4a in having his ho"se partl on the
premises of the 0ailroad 3ompan, and that for this reason the
compan is not lia'le. .his position is in o"r opinion "ntena'le
for the reasons which we shall proceed to state.
&n the first place, it will 'e noted that the fact s"ggested
as constit"ting a defense to this action co"ld not in an view of
the case operate as a 'ar to recover ' the three plaintiffs
other than 0emigio 0odrig"e4a, even ass"ming that the fire was
first comm"nicated to his ho"seC for said three plaintiffs are in
nowise implicated in the act which s"pposedl constit"tes the
defense. &n this connection it will 'e o'served that the right of
action of each of these plaintiffs is totall distinct from that of
his co?plaintiff, so m"ch so that each might have s"ed
separatel, and the defendant if it had seen fit to do so, might in
this case have dem"rred s"ccessf"ll to the complaint for
misFoinder of parties plaintiff. .he fact that the several rights of
action of the different plaintiffs arose sim"ltaneo"sl o"t of one
act of the defendant is not s"fficient of itself to req"ire, or even
permit, the Foinder of s"ch parties as coplaintiffs in a single
action <80 3c., **,= if o'Fection had 'een made thereto.
Domingo /on4aga, 3ristina L"na, and 5erfecta Losantas are
therefore entitled to recover "pon the admitted fact that this fire
originated in the negligent acts of the defendantC and the
circ"mstance that the fire ma have 'een comm"nicated to their
ho"ses thro"gh the ho"se of 0emegio 0odrig"e4a, instead of
having 'een directl comm"nicated from the locomotive, is
immaterial. <%ee 8- !m. Dec., ;,, 77C
*
** 0. 3. L., +;-?+7*C
Vansas 3it, etc. 0ailroad 3o. 's. $la(er, ;, L. 0. !., -*
5ennslvania 0ailroad 3o. 's. :ope, -0 5a. %t., 878C 2* !m.
0ep. *00.=
>ith respect to the case of 0emegio 0odrig"e4a it is to 'e
inferred that his ho"se stood "pon this gro"nd 'efore the
0ailroad 3ompan laid its line over this co"rseC and at an rate
there is no proof that this plaintiff had "nlawf"ll intr"ded "pon
the railroad7s propert in the act of '"ilding his ho"se. >hat
reall occ"rred "ndo"'tedl is that the compan, "pon ma(ing
this e@tension, had acq"ired the land onl, leaving the owner of
the ho"se free to remove it. :ence he cannot 'e considered to
have 'een a trespasser in the 'eginning. 0ather, he was there at
the s"fferance of the defendant compan, and so long as his
ho"se remained in this e@posed position, he "ndo"'tedl
ass"med the ris( of an loss that might have res"lted from fires
occasioned ' the defendant7s locomotives if operated and
managed with ordinar care. $"t he cannot 'e held to have
ass"med the ris( of an damage that might res"lt from the
"nlawf"l negligence acts of the defendant. No'od is 'o"nd to
anticipate and defend himself against the possi'le negligence of
another. 0ather he has a right to ass"me that the other will "se
the care of the ordinar pr"dent man. <5hiladelphia and 0eading
0ailroad 3o. 's. :endric(son, -0 5a. %t., *-2C 2* !m. 0ep., +7.=
&n the sit"ation now "nder consideration the pro@imate
and onl ca"se of the damage that occ"rred was the negligent
act of the defendant in ca"sing this fire. .he circ"mstance that
0emigio 0odrig"e4a7s ho"se was partl on the propert of the
defendant compan and therefore in dangero"s pro@imit to
passing locomotives was an antecedent condition that ma in
fact have made the disaster possi'le, '"t that circ"mstance
cannot 'e imp"ted to him as contri'"tor negligence destr"ctive
of his right of action, 'eca"se, first, that condition was not
created ' himselfC secondl, 'eca"se his ho"se remained on
this gro"nd ' the toleration, and therefore with the consent of
the 0ailroad 3ompanC and thirdl, 'eca"se even s"pposing the
ho"se to 'e improperl there, this fact wo"ld not F"stif the
defendant in negligentl destroing it. </rand .r"n( 0ailwa of
3anada 's. 0ichardson, +* H. %., ,5,C 28 L. ed., 85;C Norfol(
etc. 0. 3o. 's. 5errow, *0* Ea., 8,5, 850.=la(phil.net
.he circ"mstance that the defendant compan, "pon
planting its line near 0emigio 0odrig"e4a7s ho"se, had req"ested
or directed him to remove it, did not convert his occ"panc into
a trespass, or impose "pon him an additional responsi'ilit
over and a'ove what the law itself imposes in s"ch sit"ation. &n
this connection it m"st 'e remem'ered that the compan co"ld
at an time have removed said ho"se in the e@ercise of the
power of eminent domain, '"t it elected not to do so.
Q"estions similar to that now 'efore "s have 'een "nder
the consideration of !merican co"rts man times, and their
decisions are fo"nd to 'e "niforml favora'le to recover where
the propert destroed has 'een placed in whole or in part on
the right of wa of the railroad compan with its e@press or
implied consent. <L. 0. Martin .im'er 3o. 's. /reat Northern
0ailwa 3o., *28 Minn., ,28C !nn. 3as., *+*5!, p. ,+;, noteC
$"rro"ghs 's. :o"satonic 0.0. 3o., *5 3onn., *2,C 8- !m. Dec.,
;,C 7,C %o"thern 0. 3o. 's. 5atterson, *05 Ea. ;C - !nn. 3as.,
,,.= !nd the case for the plaintiff is apparentl stronger where
the compan constr"cts its line in pro@imit to a ho"se alread
'"ilt and fails to condemn it and remove it from its right of wa.
1rom what has 'een said it is apparent that the F"dgment
appealed from is in all respect in conformit with the law, and
the same is accordingl affirmed, with costs. %o ordered.
#ohnson, Araullo, A'anceBa and 9illamor, ##., concur.
%.R. 'o. ;$23301 Jul -1, 138(
A'*7'97 RAM7' 7'%:9AE7, petitioner,
vs.
9'*ERMED9A*E APPE;;A*E C7=R* and *5E PE7P;E 76
*5E P59;9PP9'E:, respondents.
CR=<, J.:
53
5rosec"ted for rec(less impr"dence res"lting in m"ltiple phsical
inF"ries and damage to propert, the petitioner was convicted '
the trial co"rt
\
of onl simple negligence res"lting in serio"s
phsical inF"ries and damage to propert. :e was sentenced to
two months of arresto maor and to pa a total indemnit of
5*,8,*8*.0, for medical e@penses, "nearned salaries and as
moral damages.
*
2n appeal, the conviction was affirmed '"t the
respondent co"rt
\\
red"ced the moral damages ' 5-,,000.00,
th"s lowering the total indemnit to 5;*,*8*,0,.
2
%till not
satisfied, the petitioner has come to this 3o"rt for a complete
reversal of the F"dgment 'elow.
.his case arose from a collision 'etween the car 'eing driven '
the petitioner and the Feep of 0o'ert :a on Decem'er 80, *+-*,
at a'o"t , o7cloc( in the afternoon. at Mac!rth"r :ighwa, in
Moncada, .arlac. .he petitioner had a companion, Leon Mig"el
:eras, who was seated 'eside him. 0o'ert :a was at the wheel
of his vehicle, which had seven other passengers. &t appears
that the petitioner was so"th?'o"nd, toward Manila, and the
Feep was coming from the opposite directionC that a 5hilippine
0a''it '"s ahead of the Feep swerved into the petitioner7s lane
to overta(e and 'pass a triccleC and that as a res"lt of this
s"dden move, the petitioner, to avoid a head?on collision,
immediatel veered his car to the sho"lder of the highwa. .he
car went o"t of control when it hit the soft sho"lder, moved 'ac(
diagonall across the cemented highwa, then collided with :a7s
Feep, damaging it and ca"sing m"ltiple inF"ries to its
passengers. .he 5hilippine 0a''it '"s sped awa.
8
!fter considering the arg"ments of the parties in the petition
itself, the comment thereon of the p"'lic respondent and the
repl thereto, we gave d"e co"rse to this petition and req"ired
the parties to file sim"ltaneo"s memoranda. .he petitioner
complied in d"e time '"t the %olicitor /eneral, to avoid
repetitio"sness, as he p"t it, merel adopted his s(etch
comment as the memorand"m for the respondent.
,
>hile this 3o"rt is ordinaril not a trier of facts, it has the
a"thorit to review and reverse the fact"al findings of the lower
co"rts if it finds that the do not conform to the evidence of
record. >e so find in this case, for reasons to 'e disc"ssed
presentl.
.he trial co"rt held, and the respondent co"rt affirmed, that Lthe
Feep was still a'o"t *50 meters awa from the 5hilippine 0a''it
'"s when the acc"sed drove his car toward the road sh "lder to 
avoid the collision with the oncoming '"s. &n other words, there
was s"fficient time for !ntonio 0amon 2ngsia(o to avail of a
feasi'le time to avert hitting the Feep.L
5
.he F"dge sho"ld have
'een more caref"l in reaching this concl"sion for it is not
fo"nded on the facts as esta'lished. .he evidence of record is
that the distance was not *50 meters '"t *50 feet, which ma(es
q"ite a difference, indeed. .he correct distance, incidentall, was
esta'lished ' no less than the trial co"rt itself which, in its
e@amination of 0o'ert :a, the principal prosec"tion witness,
elicited from him the said information in the following e@change9
32H0.9
Q9 :ow far was the 5hilippine 0a''it '"s ahead of o"
'efore the car swerved to o"r laneN
>&.NE%%
!9 !ppro@imatel a'o"t *50 feet ahead of me, 6o"r
:onor.
;
.he 3o"rt considers this discrepanc important 'eca"se the
finding of negligence ' the trial co"rt is 'ased on whether or
not the acc"sed had eno"gh opport"nit to avoid the collision.
!nd that opport"nit depended on the distance 'etween the two
vehicles. &f the trial F"dge had caref"ll considered the evidence
and discovered that the distance was *50 feet and not meters, it
is do"'tf"l that he wo"ld have concl"ded as he did that the
acc"sed was negligent. .he distance of *50 feet is less than
one?third of *50 meters, which means that the s"fficient time
imagined ' the trial F"dge wo"ld have 'een correspondingl G
and significantl G red"ced ' two?thirds of the act"al period.
.he time as shortened co"ld not have, if we appl the trial
F"dge7s own calc"lations, prevented the petitioner from avoiding
the collision.
!nother indication of carelessness, this time on the part of the
respondent co"rt, is its o'servation, in reFecting the petitioner7s
version of the collision, that Lthe police s(etch of the collision
scene fails to reveal an s(idmar(s of the appellant7s carL
7
on
the highwa. >hat is rather odd a'o"t this finding is that the
trial co"rt, and the respondent co"rt later, never considered the
fact that the s(etch was made fi'e das after the collision, as
clearl emphasi4ed ' the petitioner in his 'rief. !pparentl, it
did not occ"r to the co"rts 'elow G and this is also somewhat
p"44ling G that all s(idmar(s wo"ld have disappeared ' that
time on the '"s highwa.
.here was also apparent disregard of the record when the
respondent co"rt o'served that the petitioner had not presented
his companion to testif on his 'ehalf, concl"ding that Ls"ch
fail"re to present :eras raises the pres"mption that his
testimon, had it 'een presented, wo"ld have 'een adverse to
the appellant7s ca"se <2rfanel v. 5eople, 80 %30! -25=.L
-
.his is
another careless concl"sion. .he premise is incorrect, and so the
concl"sion m"st also 'e reFected. &n fact, the petitioner did
present :eras, and :eras did testif in s"pport of the petitioner,
s"'stantiall corro'orating the petitioner7s acco"nt of the
collision. ! reading of the transcript of the stenographic notes in
the hearing of the case on D"l 27, *+-8, will readil disclose
this.
+
.he 3o"rt is also perple@ed ' the following portion of the
appealed decision9
&f it was tr"e that appellant lost control of his vehicle as
earl as when his car hit the sho"lder of the road, it
was e@tremel st"pid of him to move his car 'ac( to
the highwa while his car was still o"t of control. .his is
especiall tr"e in the face of his own admission that he
saw the 0a''it '"s for the first time when it was stin
a'o"t 200 meters awa overta(ing a vehicle <Feep of
0o'ert :a= which was immediatel 'ehind a triccle <p.
2, .+id.=. !ss"ming that appellant indeed lost control of
his car as he hit the sho"lder, he sho"ld have applied
f"ll not a little press"re "pon his 'ra(es. :e sho"ld
have stopped his vehicle instead of driving it 'ac( to
the highwa and ris(ing collision with oncoming
vehicles.
*0
!s the car was Lstill o"t of control,L wh is it ass"med that the
petitioner wo"ld nonetheless 'e a'le, altho"gh this wo"ld 'e
Le@tremel st"pid,L to move it 'ac( to the highwaN &t is reall
mstifing that the respondent co"rt wo"ld still e@pect the
petitioner to control the car which, as it sas so itself, was then
Lo"t of control.L L!ss"ming the appellant indeed lost control of
his car as he hit the sho"lder,L the decision adds, Lhe sho"ld
have stopped his vehicle instead of driving it 'ac( to the
54
highwa and ris(ing collision with oncoming vehicles.L .his is
hardl logical. .he co"rt cannot ass"me that the petitioner lost
control of his vehicle and on that ass"mption fa"lt him for not
correctl controlling it. .hat wo"ld 'e impossi'le, to sa the
least. >hen one loses control of his car, he cannot direct it the
wa he wants, or move it in the direction he chooses, or
accelerate or stop it, for the simple reason that it is precisel o"t
of control. ! car o"t of control is simpl o"t of control, period.
!s for the Llittle press"reL the petitioner sas he applied on the
'ra(es, the p"rpose, according to him, was to prevent his car
from t"rning t"rtle as a res"lt of a s"dden stop that wo"ld have
'een ca"sed ' his Famming on the 'ra(es.
.he real c"lprit in this "nfort"nate incident, as the 3o"rt sees it,
co"ld 'e the driver of the 5hilippine 0a''it '"s whose
rec(lessness was the ca"se of the collision 'etween the
petitioner7s car and 0o'ert :a7s Feep. >e notice that the trial
co"rt made the meaningf"l o'servation that Lthe 5hilippine
0a''it '"s ma 'e fa"lted,L '"t added rather helplessl, that Lit
is not here charged.L
**
>e hope it did not mean ' this that
someone else had to 'e made lia'le, to vindicate the victims7
rights.
&t seems to "s that a simple investigation wo"ld have "ncovered
the &dentit and wherea'o"ts of the 0a''it '"s driver, with a
view to his prosec"tion for his involvement in the collision. >h
this was not done reflects on the sense of d"t of the law?
enforcement officers who investigated this matter and on the
reso"rcef"lness of the petitioner and his co"nsel whose ca"se
co"ld have improved with the indictment of the said driver.
!t an rate, it is the finding of the 3o"rt, in view of the
misappreciation of the evidence of record ' the respondent
co"rt and the trial co"rt, that the g"ilt of the petitioner has not
'een proved 'eond reasona'le do"'t. 3onseq"entl, he sho"ld
not have 'een held g"ilt of even simple negligence and instead
is entitled to 'e completel a'solved of criminal responsi'ilit.
.he civil lia'ilit is, however, a different q"estion.
>hile the q"ant"m of proof necessar for conviction has not
'een esta'lished, there is, in o"r view, a preponderance of
evidence to hold the petitioner lia'le in damages for the inF"ries
s"stained ' the victims of this accident. !ltho"gh it is reall
do"'tf"l that he was criminall negligent, we find there is
eno"gh evidence to s"stain the concl"sion that a little more
ca"tion and discretion on his part in reacting to the threat of a
head?on collision with the oncoming '"s, co"ld have avoided the
"nfort"nate accident. 1or this shortcoming, we hold him lia'le
for the hospitali4ation e@penses and "nearned salaries of the
victims as itemi4ed ' the trial co"rt and affirmed ' the
respondent co"rt. >e a'solve him, however, from the pament
of moral damages and so red"ce his total civil lia'ilit to
5,;,*8*.0,.
>e appl here the doctrine anno"nced in the recent case of
%eople '. -igon,
*2
where the acc"sed was acq"itted of the crime
of homicide for lac( of clear and convincing proof that he had
criminall ca"sed a cigarette vendor to fall to his death from the
Feep where he was hanging onto. Nevertheless, from the totalit
of the facts presented, we declared there was a preponderance
of evidence to hold the acc"sed lia'le in damages for the tragic
mishap that 'efell the victim. >e ma(e a similar finding in this
case and hold the petitioner civill answera'le for his q"asi?
delict.
>:E0E120E, the petitioner is !3QH&..ED and his conviction is
0EEE0%ED, '"t he is held lia'le in the total s"m of 5,;,*8*.0,
for damages as a'ove specified. No costs.
%2 20DE0ED.
Teehanee, C.#., 0ar'asa, %aras and :anca!co, ##., concur.
%.R. 'o. ;$231- 'o.e+Aer 21, 131-
*5E R7MA' CA*57;9C ?9:57P 76 JAR7, plaintiff?appellee,
vs.
%RE%7R97 DE ;A PEKA, ad+inistrator o! the estate o!
6ather A0ustin de la PeLa, defendant?appellant.
#. -ope) 9ito, for appellant.
Arro!o and 1orrilleno, for appellee.

M7RE;A'D, J.:
.his is an appeal ' the defendant from a F"dgment of
the 3o"rt of 1irst &nstance of &loilo, awarding to the plaintiff the
s"m of 5;,;,*, with interest at the legal rate from the 'eginning
of the action.
&t is esta'lished in this case that the plaintiff is the
tr"stee of a charita'le 'eq"est made for the constr"ction of a
leper hospital and that father !g"stin de la 5eTa was the d"l
a"thori4ed representative of the plaintiff to receive the legac.
.he defendant is the administrator of the estate of 1ather De la
5eTa.
&n the ear *-+- the 'oo(s 1ather De la 5eTa, as tr"stee,
showed that he had on hand as s"ch tr"stee the s"m of 5;,;,*,
collected ' him for the charita'le p"rposes aforesaid. &n the
same ear he deposited in his personal acco"nt 5*+,000 in the
:ong(ong and %hanghai $an( at &loilo. %hortl thereafter and
d"ring the war of the revol"tion, 1ather De la 5eTa was arrested
' the militar a"thorities as a political prisoner, and while th"s
detained made an order on said 'an( in favor of the Hnited
%tates !rm officer "nder whose charge he then was for the
s"m th"s deposited in said 'an(. .he arrest of 1ather De la 5eTa
and the confiscation of the f"nds in the 'an( were the res"lt of
the claim of the militar a"thorities that he was an ins"rgent
and that the f"nds th"s deposited had 'een collected ' him for
revol"tionar p"rposes. .he mone was ta(en from the 'an( '
the militar a"thorities ' virt"e of s"ch order, was confiscated
and t"rned over to the /overnment.
>hile there is considera'le disp"te in the case over the
q"estion whether the 5;,;,* of tr"st f"nds was incl"ded in the
5*+,000 deposited as aforesaid, nevertheless, a caref"l
e@amination of the case leads "s to the concl"sion that said
tr"st f"nds were a part of the f"nds deposited and which were
removed and confiscated ' the militar a"thorities of the
Hnited %tates.
.hat 'ranch of the law (nown in England and !merica as
the law of tr"sts had no e@act co"nterpart in the 0oman law and
has none "nder the %panish law. &n this F"risdiction, therefore,
1ather De la 5eTa7s lia'ilit is determined ' those portions of
the 3ivil 3ode which relate to o'ligations. <$oo( ,, .itle *.=
!ltho"gh the 3ivil 3ode states that La person o'liged to
give something is also 'o"nd to preserve it with the diligence
pertaining to a good father of a familL <art. *0+,=, it also
provides, following the principle of the 0oman law, major casus
est, cui humana infirmitas resistere non potest, that Lno one
shall 'e lia'le for events which co"ld not 'e foreseen, or which
having 'een foreseen were inevita'le, with the e@ception of the
cases e@pressl mentioned in the law or those in which the
o'ligation so declares.L <!rt. **05.=
$ placing the mone in the 'an( and mi@ing it with his
55
personal f"nds De la 5eTa did not there' ass"me an o'ligation
different from that "nder which he wo"ld have lain if s"ch
deposit had not 'een made, nor did he there' ma(e himself
lia'le to repa the mone at all ha4ards. &f the had 'een forci'l
ta(en from his poc(et or from his ho"se ' the militar forces of
one of the com'atants d"ring a state of war, it is clear that
"nder the provisions of the 3ivil 3ode he wo"ld have 'een
e@empt from responsi'ilit. .he fact that he placed the tr"st
f"nd in the 'an( in his personal acco"nt does not add to his
responsi'ilit. %"ch deposit did not ma(e him a de'tor who m"st
respond at all ha4ards.
>e do not enter into a disc"ssion for the p"rpose of
determining whether he acted more or less negligentl '
depositing the mone in the 'an( than he wo"ld if he had left it
in his homeC or whether he was more or less negligent '
depositing the mone in his personal acco"nt than he wo"ld
have 'een if he had deposited it in a separate acco"nt as
tr"stee. >e regard s"ch disc"ssion as s"'stantiall fr"itless,
inasm"ch as the precise q"estion is not one of negligence. .here
was no law prohi'iting him from depositing it as he did and
there was no law which changed his responsi'ilit 'e reason of
the deposit. >hile it ma 'e tr"e that one who is "nder
o'ligation to do or give a thing is in d"t 'o"nd, when he sees
events approaching the res"lts of which will 'e dangero"s to his
tr"st, to ta(e all reasona'le means and meas"res to escape or, if
"navoida'le, to temper the effects of those events, we do not
feel constrained to hold that, in choosing 'etween two means
eq"all legal, he is c"lpa'l negligent in selecting one whereas
he wo"ld not have 'een if he had selected the other.
.he co"rt, therefore, finds and declares that the mone
which is the s"'Fect matter of this action was deposited '
1ather De la 5eTa in the :ong(ong and %hanghai $an(ing
3orporation of &loiloC that said mone was forci'l ta(en from
the 'an( ' the armed forces of the Hnited %tates d"ring the
war of the ins"rrectionC and that said 1ather De la 5eTa was not
responsi'le for its loss.
.he F"dgment is therefore reversed, and it is decreed that
the plaintiff shall ta(e nothing ' his complaint.
Arellano, C.#., Torres and Carson, ##., concur.
%.R. 'o. 31023 6eAruar (, 1331
'7RE9: D9:*R9?=*7R:, 9'C., petitioner,
vs.
*5E C7=R* 76 APPEA;: M A;?ER*7 'EPA;E:,
respondents.
#ose &. %alma for petitioner.
%u+lic Attorne!Ds $ffice for pri'ate respondent.

%R9K7$AH=9'7, J.Ip
%"'Fect of this petition for review is the decision of the 3o"rt of
!ppeals <%eventeenth Division= in 3!?/.0. No. 0+*,+, affirming
with modification the F"dgment of the 0egional .rial 3o"rt, %i@th
<;th= D"dicial 0egion, $ranch LE&. :imamalan, Negros
2ccidental, in 3ivil 3ase No. *272, which was private respondent
!l'erto Nepales7 action for specific performance of a contract of
sale with damages against petitioner Nor(is Distri'"tors, &nc.
.he facts 'orne o"t ' the record are as follows9
5etitioner Nor(is Distri'"tors, &nc. <Nor(is for 'revit=, is the
distri'"tor of 6amaha motorccles in Negros 2ccidental with
office in $acolod 3it with !velino La'aFo as its $ranch Manager.
2n %eptem'er 20, *+7+, private respondent !l'erto Nepales
'o"ght from the Nor(is?$acolod 'ranch a 'rand new 6amaha
>onder'i(e motorccle Model 6L2DU with Engine No.
L2?82+,0*V 1rame No. NL2?082+,0*, 3olor Maroon, then
displaed in the Nor(is showroom. .he price of 57,500.00 was
paa'le ' means of a Letter of /"arant from the Development
$an( of the 5hilippines <D$5=, Va'an(alan $ranch, which Nor(is7
$ranch Manager La'aFo agreed to accept. :ence, credit was
e@tended to Nepales for the price of the motorccle paa'le '
D$5 "pon release of his motorccle loan. !s sec"rit for the
loan, Nepales wo"ld e@ec"te a chattel mortgage on the
motorccle in favor of D$5. $ranch Manager La'aFo iss"ed
Nor(is %ales &nvoice No. 0*20 <E@h.*= showing that the contract
of sale of the motorccle had 'een perfected. Nepales signed the
sales invoice to signif his conformit with the terms of the sale.
&n the meantime, however, the motorccle remained in Nor(is7
possession.
2n Novem'er ;, *+7+, the motorccle was registered in the
Land .ransportation 3ommission in the name of !l'erto Nepales.
! registration certificate <E@h. 2= in his name was iss"ed ' the
Land .ransportation 3ommission on Novem'er ;, *+7+ <E@h. 2?
'=. .he registration fees were paid ' him, evidenced ' an
official receipt, E@hi'it 8.
2n Dan"ar 22, *+-0, the motorccle was delivered to a certain
D"lian Nepales who was allegedl the agent of !l'erto Nepales
'"t the latter denies it <p. *5, t.s.n., !"g"st 2, *+-,=. .he
record shows that !l'erto and D"lian Nepales presented the "nit
to D$57s !ppraiser?&nvestigator Ernesto !rriesta at the D$5
offices in Va'an(alan, Negros 2ccidental $ranch <p. *2, Rollo=.
.he motorccle met an accident on 1e'r"ar 8, *+-0 at
$inal'agan, Negros 2ccidental. !n investigation cond"cted '
the D$5 revealed that the "nit was 'eing driven ' a certain
#acarias 5a'a at the time of the accident <p. 88, Rollo=. .he
"nit was a total wrec( <p. 8;, t.s.n., !"g"st 2,*+-,C p. *8,
Rollo=, was ret"rned, and stored inside Nor(is7 wareho"se.
2n March 20, *+-0, D$5 released the proceeds of private
respondent7s motorccle loan to Nor(is in the total s"m of
57,500. !s the price of the motorccle later increased to 57,-2-
in March, *+-0, Nepales paid the difference of 582- <p. *8,
Rollo= and demanded the deliver of the motorccle. >hen
Nor(is co"ld not deliver, he filed an action for specific
performance with damages against Nor(is in the 0egional .rial
3o"rt of :imamalan, Negros 2ccidental, %i@th <;th= D"dicial
0egion, $ranch LE&, where it was doc(eted as 3ivil 3ase No.
*272. :e alleged that Nor(is failed to deliver the motorccle
which he p"rchased, there' ca"sing him damages.
Nor(is answered that the motorccle had alread 'een delivered
to private respondent 'efore the accident, hence, the ris( of loss
or damage had to 'e 'orne ' him as owner of the "nit.
!fter trial on the merits, the lower co"rt rendered a decision
dated !"g"st 27, *+-5 r"ling in favor of private respondent <p.
2-, Rollo.= th"s9
>:E0E120E, F"dgment is rendered in favor of
the plaintiff and against the defendants. .he
defendants are ordered to pa solidarit to the
plaintiff the present val"e of the motorccle
which was totall destroed, pl"s interest
eq"ivalent to what the Va'an(alan %"'?$ranch
of the Development $an( of the 5hilippines will
have to charge the plaintiff on fits acco"nt,
pl"s 550.00 per da from 1e'r"ar 8, *+-0
"ntil f"ll pament of the said present val"e of
the motorccle, pl"s 5*,000.00 as e@emplar
56
damages, and costs of the litigation. &n lie" of
paing the present val"e of the motorccle, the
defendants can deliver to the plaintiff a 'rand?
new motorccle of the same 'rand, (ind, and
q"alit as the one which was totall destroed
in their possession last 1e'r"ar 8, *+-0. <pp.
2-?2+, Rollo.=
2n appeal, the 3o"rt of appeals affirmed the appealed F"dgment
on !"g"st 2*, *+-+, '"t deleted the award of damages Lin the
amo"nt of 1ift <550.00= 5esos a da from 1e'r"ar 8, *+-0
"ntil pament of the present val"e of the damaged vehicleL
<p85, Rollo=. .he 3o"rt of !ppeals denied Nor(is7 motion for
reconsideration. :ence, this 5etition for 0eview.
.he principal iss"e in this case is who sho"ld 'ear the loss of the
motorccle. .he answer to this q"estion wo"ld depend on
whether there had alread 'een a transfer of ownership of the
motorccle to private respondent at the time it was destroed.
Nor(is7 theor is that9
. . . !fter the contract of sale has 'een
perfected <!rt. *,75= and even 'efore deliver,
that is, even 'efore the ownership is
transferred to the vendee, the ris( of loss is
shifted from the vendor to the vendee. Hnder
!rt. *2;2, the o'ligation of the vendor to
deliver a determinate thing 'ecomes
e@ting"ished if the thing is lost ' fort"ito"s
event <!rt. **7,=, that is, witho"t the fa"lt or
fra"d of the vendor and 'efore he has inc"rred
in dela <!rt. ** ;5, par. 8=. &f the thing sold is
generic, the loss or destr"ction does not
e@ting"ish the o'ligation <!rt. *2;8=. ! thing is
determinate when it is partic"larl designated
or phsicall segregated from all others of the
same class <!rt. *,;0=. .h"s, the vendor
'ecomes released from his o'ligation to deliver
the determinate thing sold while the vendee7s
o'ligation to pa the price s"'sists. &f the
vendee had paid the price in advance the
vendor ma retain the same. .he legal effect,
therefore, is that the vendee ass"mes the ris(
of loss ' fort"ito"s event <!rt. *2;2= after the
perfection of the contract to the time of
deliver. <3ivil 3ode of the 5hilippines,
!m'rosio 5adilla, Eol. 5,*+-7 Ed., p. -7.=
Nor(is concedes that there was no Lact"alL deliver of the
vehicle. :owever, it insists that there was constr"ctive deliver
of the "nit "pon9 <*= the iss"ance of the %ales &nvoice No. 0*20
<E@h. *= in the name of the private respondent and the affi@ing
of his signat"re thereonC <2= the registration of the vehicle on
Novem'er ;, *+7+ with the Land .ransportation 3ommission in
private respondent7s name <E@h. 2=C and <8= the iss"ance of
official receipt <E@h. 8= for pament of registration fees <p. 88,
Rollo=.
.hat arg"ment is not well ta(en. !s pointed o"t ' the private
respondent, the iss"ance of a sales invoice does not prove
transfer of ownership of the thing sold to the '"er. !n invoice is
nothing more than a detailed statement of the nat"re, q"antit
and cost of the thing sold and has 'een considered not a 'ill of
sale <!m. D"r. 2nd Ed., Eol. ;7, p. 87-=.
&n all forms of deliver, it is necessar that the act of deliver
whether constr"ctive or act"al, 'e co"pled with the intention of
delivering the thing. .he act, witho"t the intention, is ins"fficient
<De Leon, 3omments and 3ases on %ales, *+7- Ed., citing
Manresa, p. +,=.
>hen the motorccle was registered ' Nor(is in the name of
private respondent, Nor(is did not intend et to transfer the title
or ownership to Nepales, '"t onl to facilitate the e@ec"tion of a
chattel mortgage in favor of the D$5 for the release of the
'"er7s motorccle loan. .he Letter of /"arantee <E@h. 5= iss"ed
' the D$5, reveals that the e@ec"tion in its favor of a chattel
mortgage over the p"rchased vehicle is a pre?req"isite for the
approval of the '"er7s loan. &f Nor(is wo"ld not accede to that
arrangement, D$5 wo"ld not approve private respondent7s loan
application and, conseq"entl, there wo"ld 'e no sale.
&n other words, the critical factor in the different modes of
effecting deliver, which gives legal effect to the act, is the
act"al intention of the vendor to deliver, and its acceptance '
the vendee. >itho"t that intention, there is no tradition <!'"an
vs. /arcia, *, %30! 75+=.
&n the case of Addison 's. ;elix and .ioco <8- 5hil. ,0,, ,0-=,
this 3o"rt held9
.he 3ode imposes "pon the vendor the
o'ligation to deli'er the thing sold. .he thing is
considered to 'e delivered when it is Lplaced in
the hands and possession of the vendee.L <3ivil
3ode, !rt. *,;2=. &t is tr"e that the same
article declares that the e@ec"tion of a p"'lic
instr"ment is eq"ivalent to the deliver of the
thing which is the o'Fect of the contract, '"t,
in order that this sm'olic deliver ma
prod"ce the effect of tradition, it is necessar
that the vendor shall have had s"ch control
over the thing sold that, at the moment of the
sale, its material deliver could have 'een
made. &t is not eno"gh to confer "pon the
p"rchaser the o(nership and the right of
possession. The thing sold must +e placed in
his control. >hen there is no impediment
whatever to prevent the thing sold passing into
the tenanc of the p"rchaser ' the sole will of
the vendor, sm'olic deliver thro"gh the
e@ec"tion of a p"'lic instr"ment is s"fficient.
$"t if not(ithstanding the execution of the
instrument, the purchaser cannot ha'e the
enjo!ment and material tenanc! of the thing
and mae use of it himself or through another
in his name, +ecause such tenanc! and
enjo!ment are opposed +! the interposition of
another (ill, then fiction !ields to realit!"the
deli'er! has riot +een effects .<Emphasis
s"pplied.=
.he 3o"rt of !ppeals correctl r"led that the p"rpose of the
e@ec"tion of the sales invoice dated %eptem'er 20, *+7+ <E@h.
$= and the registration of the vehicle in the name of plaintiff?
appellee <private respondent= with the Land 0egistration
3ommission <E@hi'it 3= was not to transfer to Nepales the
ownership and dominion over the motorccle, '"t onl to
compl with the req"irements of the Development $an( of the
5hilippines for processing private respondent7s motorccle loan.
2n March 20, *+-0, 'efore private respondent7s loan was
released and 'efore he even paid Nor(is, the motorccle had
alread fig"red in an accident while driven ' one #acarias
5a'a. 5a'a was not shown ' Nor(is to 'e a representative or
relative of private respondent. .he latter7s s"pposed relative,
who allegedl too( possession of the vehicle from Nor(is did not
e@plain how 5a'a got hold of the vehicle on 1e'r"ar 8, *+-0.
57
Nor(is7 claim that D"lian Nepales was acting as !l'erto7s agent
when he allegedl too( deliver of the motorccle <p. 20,
!ppellants7 $rief=, is controverted ' the latter. !l'erto denied
having a"thori4ed D"lian Nepales to get the motorccle from
Nor(is Distri'"tors or to enter into an transaction with Nor(is
relative to said motorccle. <p. 5, t.s.n., 1e'r"ar ;, *+-5=. .his
circ"mstances more than ampl re'"t the disp"ta'le
pres"mption of deliver "pon which Nor(is anchors its defense
to Nepales7 action <pp. 88?8,, Rollo=.
!rticle *,+; of the 3ivil 3ode which provides that Lin the
a'sence of an e@press ass"mption of ris( ' the '"er, the
things sold remain at seller7s ris( "ntil the ownership thereof is
transferred to the '"er,L is applica'le to this case, for there was
neither an act"al nor constr"ctive deliver of the thing sold,
hence, the ris( of loss sho"ld 'e 'orne ' the seller, Nor(is,
which was still the owner and possessor of the motorccle when
it was wrec(ed. .his is in accordance with the well?(nown
doctrine of res perit domino.
>:E0E120E, finding no reversi'le error in the decision of the
3o"rt of !ppeals in 3!?/.0. No. 0+*,+, we den the petition for
review and here' affirm the appealed decision, with costs
against the petitioner.
%2 20DE0ED.
0ar'asa, Cru), :anca!co and Medialdea, ##., concur.
%.R. 'o. ;$102))
:A'*9A%7 CR=<AD7, plainti!!$appellant,
.s.
E:*E6A'9A ?=:*7: and MA'=E; E:CA;ER, de!endants$
appellees.
;elix ;errer for appellant.
Augusto :on)ale) for appellees.
*orres, #.I
.his appeal, ' 'ill of e@ceptions, was ta(en from the F"dgment
of D"ne *7, *+*,, in which the trial F"dge a'solved defendants
from the complaint and plaintiff from the cross?complaint,
witho"t e@press finding as to costs. 3o"nsel for plaintiff
appealed from this F"dgment and moved for a new trial. .his
motion was denied, e@ception was ta(en ' appellant, and, on
the filing of the proper 'ill of e@ceptions, the same was
approved, certified, and transmitted to the cler( of this co"rt,
together with a transcript of the evidence introd"ced at the trial.
3o"nsel for the plaintiff %antiago 3r"4ado filed a written
complaint on 2cto'er -, *+*0, amended on %eptem'er 25,
*+*8, in which he alleged that plaintiff was the owner of certain
r"ral propert sit"ated in the 'arrio of Dolores, formerl %an
&sidro, of the m"nicipalit of $acolor, 5ampanga, containing an
area of ;5 'alitas and 'o"nded as set forth in the complaintC
that Estafania $"stos, d"ring her lifetime, and now the
administrator of her estate, together with the other defendant,
Man"el Escaler, had, since the ear *+0; "p to the present,
'een detaining the said parcel of land, and had ref"sed to
deliver the possession thereof to plaintiff and to recogni4e his
ownership of the same, notwithstanding the repeated demands
made "pon themC that ' s"ch detention, the plaintiff had
s"ffered losses and damages to the amo"nt of 58,500. :e
therefore as(ed for F"dgment declaring plaintiff to 'e the owner
of the said parcel of land and ordering defendants to ret"rn it to
plaintiff and to pa the latter 58,500 for losses and damages,
and the costs.
.he dem"rrer filed ' the defendant $"stos having 'een
overr"led, in her answer she made a general denial of each and
all of the allegations of the complaint, and of each and all of the
paragraphs thereof, and, as a special defense, alleged that the
title to the said land, prod"ced ' the plaintiff, was not a lawf"l
one, for the reason that onl a sim"lated sale of the land was
made ' the 'etween herself and the deceased !gapito
/eronimo 3r"4ado, plaintiff)s father, and that for more than
thirt ears preceding the present time she had 'een the sole,
e@cl"sive, and lawf"l owner of the said parcel of land in
q"estionC that she had 'een holding it q"ietl, peacea'l,
p"'licl and in good faithC that it formed an integral part of
another larger parcel of land, 'oth parcels aggregating a total
area of *00 'alitas, + loanes, and ,* sq"are 'ra4asC that in
%eptem'er, *-+*, with plaintiff)s (nowledge, the defendant
$"stos sold and conveed all the said propert to the other
defendant Man"el Escaler who then acq"ired the possession and
ownership of the said parcel of land, and had retained s"ch
ownership and possession "p to the present timeC that at no
time and on no acco"nt whatever had plaintiff or an other
person e@cept defendants acq"ired possession of the said parcel
of land or an part thereof, nor an right or title therein. %he
therefore praed to 'e a'solved from the complaint, with the
costs against plaintiff.
.he other defendant, Man"el Escaler, in an amended answer to
the aforementioned complaint, denied each and all of the
allegations therein contained and each and all of its cla"ses,
and, as a special defense, alleged that plaintiff)s title to the said
land was illegal as onl a sim"lated sale was made ' and
'etween !gapito /eronimo 3r"4ado, plaintiff)s predecessor in
interest, and $ernardino Di4onC that defendants had 'een in
possession of the said parcel of land for more than thirt earsC
that the defendant Escaler in good faith p"rchased the land in
q"estion from Estefania $"stos, widow of Di4on, witho"t ever
having had an notice of an defect in the vendor)s titleC that
plaintiff had (nowledge of the contract of sale of the land in
q"estion et did nothing to oppose its p"rchase ' the
defendant Escaler, wherefore the latter, in acq"iring the
propert, did so "nder the 'elief that the plaintiff %antiago
3r"4ado had no right or interest therein. :e therefore praed
that the complaint 'e dismissed, with the costs against plaintiff,
and that an inF"nction iss"e to restrain the latter from
interfering with the defendant Escaler in the enFoment of his
propert and rights and from performing an act preF"dicial to
his interests.
2n the case coming to trial, 'oth parties add"ced evidence,
among which was incl"ded the deposition of &nocencio 0osete.
3o"nsel for defendants, in a cross?complaint set forth9 that as
shown ' the evidence, the defendant Escaler acq"ired in good
faith from Estefania $"stos the land in q"estion at a time when
there was no record whatever in the propert registr to show
that this land 'elonged to a third person or an other than the
vendorC that, on entering into possession of the propert,
Escaler spent 5,,000 in?improvements and in the repair of a
long di(e to prevent the erosion of the land ' the freq"ent
overflows of the adFoining est"arC that of this s"m 52,000 was
paid ' Escaler and the remaining 52,000 ' Estafania $"stos,
in her capacit as lessee of the landC and that in case the
F"dgment of the co"rt sho"ld 'e adverse to defendants, these
latter, as owners in good faith, were entitled to 'e indemnified
' plaintiff for the said e@penses. :e therefore as(ed that
plaintiff 'e ordered to reim'"rse half of the said 5,,000 to each
of the defendants in case F"dgment sho"ld 'e rendered
favora'le to plaintiff.
.he latter)s co"nsel, in answer to the said cross?complaint,
specificall denied each and all of the allegations thereof and, in
58
special defense, reprod"ced plaintiff)s amended complaint in all
its parts and alleged that the facts set forth in the cross?
complaint did not constit"te a ca"se of action. :e therefore
praed that plaintiff 'e a'solved from the cross?complaint and
that F"dgment 'e rendered against defendants, in conformit
with the praer of his complaint.
!fter the evidence was all in, co"nsel for the defendant Escaler
moved that the deposition of the witness &nocencio Espanol
0osete 'e admitted into the record, and in s"pport of his motion
stated that with the a"thori4ation of the co"rt the said
deposition had 'een ta(en on Novem'er 2*, *+*8, in the
m"nicipalit of !raat in the presence of plaintiff)s attorneC that
the said declaration of the deponent was d"l forwarded to the
cler( of the co"rt, and there attached to the record, '"t thro"gh
an "nintentional oversight of defendant)s attorne, it was not
presented in evidence at the trialC that this deposition was ver
important for the defendants) defenseC and that the deponent
was and contin"ed to 'e "na'le to appear 'efore the co"rt on
acco"nt of a threatened attac( of 'rain fever which might
develop d"ring the Fo"rne from !raat to %an 1ernando.
5laintiff)s co"nsel as(ed that the foregoing motion 'e overr"led
and that the deposition of the witness 0osete 'e stric(en from
the record, 'eca"se defendants) motion was made o"t of time
and was contrar to the r"les of proced"re, and there was no
reason for altering the order of proced"re, as req"ested '
defendants, for, when the period for the reception of the
evidence of 'oth parties is closed, an alteration in the order of
proced"re s"ch as as(ed ' defendants wo"ld 'e improper and
illegal, co"nsel citing the decision of this co"rt in the case of
/arcia vs. 0ees.* :e alleged, moreover, that the said
deposition necessaril affected the main iss"e in controvers
and that to allow the motion wo"ld 'e in contravention of the
provisions of section 8;, of the 3ode of 3ivil 5roced"re. :e
therefore as(ed that the said motion 'e overr"led. .he co"rt,
however, ordered that the deposition of the witness &nocencio
0osete 'e admitted in evidence, and that plaintiff)s e@ception 'e
noted. &n view of the foregoing, the F"dgment aforementioned
was rendered.
.he q"estions herein s"'mitted for the decision of this co"rt
are9
*. &s it or is it not tr"e that the deed of sale, E@hi'it !, <p. ,0 of
the record= of ;5 'alitas of land sit"ated in the m"nicipalit of
$acolor, 5ampanga, e@ec"ted ' Estefania $"stos, with the
assistance of her h"s'and $ernardino Di4on, in favor of !gapito
/eronimo 3r"4ado, for the s"m of 52,200, was sim"lated, not
with intent to defra"d an third person, '"t for the sole p"rpose
of ma(ing it appear that the vendee, 3r"4ado, then a candidate
for the position of proc"rador on the date of the said deed,
%eptem'er 7,*-75, possessed real estate to the val"e of 52,200
with which to g"arantee the faithf"l discharge of the d"ties of
the office of proc"radorN
2. &t is or is it not tr"e that, notwithstanding s"ch apparent
alienation of the ;5 'alitas of land, the s"pposed vendee
contin"ed in possession thereof, witho"t the s"pposed p"rchaser
having ta(en possession of the propert "ntil %eptem'er *0,
*-+*, when its owner $"stos sold to Escaler, not onl the said
;5 'alitas of land, '"t also all the remainder of a large tract of
agric"lt"ral land of which the portion appearing as sold to
!gapito /. 3r"4ado formed and forms a part, and that Escaler
was then and, "ntil the date of plaintiff)s claim, contin"ed to 'e
in peacea'le, "ninterr"pted possession of the said whole tract of
land, incl"ding the aforementioned portion of ;5 'alitasN
8. :as the right of ownership prescri'ed which Man"el Escaler is
and has 'een enFoing in the land which Estefania $"stos had
sold to him and which incl"des the parcel of ;5 'alitas claimed
' plaintiff, %antiago 3r"4ado, or has the right of an real or
personal action he might e@ercise ' reason of the sale to
3r"4ado prescri'ed on acco"nt of the lapse of the respective
periods fi@ed ' law, 'etween the 7th of %eptem'er, *-75, the
date of said sale, and the -th of 2cto'er, *+*0, that of the filing
of the complaintN
.o F"dge from the evidence add"ced in this case, there is ample
gro"nd for holding that the said deed of sale of a parcel of ;5
'alitas of land was sim"lated, not to defra"d an creditor or
other person interested in the land nor for the p"rpose of
el"ding an lawf"l o'ligation on the part of its owner, Estafania
$"stos, '"t for the sole p"rpose of doing a favor, of rendering a
special service to !gapito /eronimo 3r"4ado, father of the
plaintiff %antiago 3r"4ado.
D"ring his lifetime !gapito /. 3r"4ado aspired to hold the office
of proc"rador in the 3o"rt of 1irst &nstance of 5ampanga, '"t
notwithstanding that he possessed the req"ired a'ilit for the
discharge of the d"ties of that position, he was "na'le to give
the req"ired 'ond, an indispensa'le condition for his
appointment, as he was possessed of no means or real propert
wherewith to g"arantee the proper discharge of his d"ties in the
manner prescri'ed ' the laws then in force.
&n the certified cop of the record of the case tried in the
%ecretaria de /o'ierno of the a'olished 0eal !"diencia de
Manila, iss"ed ' the !ssistant E@ec"tive %ecretar and chief of
the division of archives, there appears on page *7- a decree '
the presidencia of this latter tri'"nal, iss"ed ' virt"e of the
resol"tion passed ' the sala de go'ierno on Novem'er 2,,
*-75, where' it was ordered that !gapito /eronimo 3r"4ado
sho"ld 'e noticed that within the period of 80 das he m"st
show proof of having f"rnished a 'ond of 5700 in cash or of
52,*00 in real propert as sec"rit for the position of proc"rador
to which he had 'een appointed, with the "nderstanding that
sho"ld 'e fail to f"rnish s"ch 'ond he wo"ld not 'e iss"ed the
certificate entitling him to practice the profession of proc"rador.
!fter compling with the req"irements of the said co"rt and
e@ec"ting the mortgage deed of the land p"rchased ' the
proc"rador elect 3r"4ado from Estefania $"stos, on March *-,
*-7;, the mortgage was recorded in the old mortgage registr
then (ept in the office of the !"ntamiento of Manila d"ring the
former sovereignt, and thereafter !gapito /. 3r"4ado received
his appointment and commenced to discharge the d"ties of his
position.
.he a'ove?related facts concl"sivel prove that Estefania $"stos
e@ec"ted the deed of sale E@hi'it ! in favor of the deceased
3r"4ado in order to ena'le the latter, ' showing that he was a
propert owner, to hold the office of proc"rador. .his position he
held for man ears, than(s to the li'eralit of the pretended
vendor, who, notwithstanding the statements contained in the
deed of sale, does not appear to have 'een paid anthing as a
res"lt of the sham sale, a sale which was affected, not in
preF"dice or fra"d of an person, nor those who were entitled to
hold 3r"4ado lia'le for the proper discharge of the d"ties of his
office, 'eca"se, had the need arisen, an lia'ilit of his co"ld
have 'een covered ' the val"e of the land, the sale of which
was fictitio"sl set forth in that deed as lawf"ll 'elonging to
3r"4ado, and then Estefania $"stos wo"ld have had no right
either to o'Fect to or escape the conseq"ences of that
alienation, altho"gh sim"lated.
.he sim"lation of the said sale was effected ' ma(ing a
pretended contract which 'ore the appearance of tr"th, when
59
reall and tr"l there was no contract, 'eca"se the contracting
parties did not in fact intend to e@ec"te one, '"t onl to
form"late a sale in s"ch a manner that, for the partic"lar
p"rposes so"ght ' $"stos and 3r"4ado, it wo"ld appear to
have 'een cele'rated solel that 3r"4ado might hold his office of
proc"rador on the strength of the sec"rit afforded ' the val"e
of the land feignedl sold.
.he record does not show when the proc"rador 3r"4ado died,
'"t it is "nq"estiona'le that he was still living d"ring the last
months of *--2, F"dging from the certificate which he himself
iss"ed to Nor'erto Decena <E@hi'it 8=. :e m"st have died
sometime 'etween the ears *--2 and *-+0, to F"dge from the
contents of the letters plaintiff addressed to Natalio Di4on, one
of the children of Estefania $"stos, on D"l 7, *-+*, and D"l ,,
*-+;, and from the fact that in the said ear *-+0 !gapito /.
3r"4ado was no longer a practicing proc"rador in the 3o"rt of
1irst &nstance of 5ampanga..
&t is tr"e that even after the death of the aforesaid proc"rador,
an lia'ilit he might have inc"rred in connection with the
e@ercise of his office co"ld have 'een, "pon presentation of the
proper claim, collected o"t of the val"e of the land apparentl
sold ' Estafania $"stos and pledged as sec"rit for the proper
discharge of the d"ties of his office. 2n 2cto'er -, *+*0, when
his son %antiago 3r"4ado filed his complaint, alread more than
twent ears had elapsed since *--+, if plaintiff)s father died in
*--+ and not 'etween *--8 and *--+C therefore, an right of
action to foreclose the mortgage, or an personal action with
regard to the val"e of the enc"m'ered land, as the res"lt of an
lia'ilit inc"rred in the performance of his d"ties as proc"rador,
has more than prescri'ed. <!rt. *+;,, 3ivil 3ode, and secs. 8-,
8+ and ,8, !ct. No. *+0.=.
2n the termination of the sovereignt of %pain over this
!rchipelago, the %panish co"rts here esta'lished went o"t of
e@istence on Dan"ar 8*, *-++, the 5ampanga co"rt indeed
'eing a'olished a'o"t the middle of *-+7 as a res"lt of the
revol"tion against the former sovereignt. .he personnel of
those co"rts also ceased to render service as s"ch. &t ma
therefore 'e affirmed that, if the said lien on the land in
q"estion has not terminated ' its no longer having an o'Fect,
it is at least "ndenia'le that prescription has alread r"n with
respect to an action that might have 'een 'ro"ght against the
pledged land to recover for an lia'ilit which might have 'een
inc"rred ' the proc"rador 3r"4ado d"ring his lifetime in
connection with his office, so that this real estate ma now 'e
considered as free from that hpothecar enc"m'rance.
!t the present time we have onl to e@plain what rights !gapito
/. 3r"4ado transmitted at his death to his son, the herein
plaintiff, ' virt"e of the deed of sale of the land in litigation,
e@ec"ted ' its owner Estefania $"stos.
&t is "nq"estiona'le that the contract of sale of the ;5 'alitas of
land was perfect and 'inding "pon 'oth contracting parties,
since the 'oth appear in that instr"ment to have agreed "pon
the thing sold, to wit, the ;5 'alitas of land, and "pon the price,
52,200C '"t it is also "ndenia'le that the said contract was not
cons"mmated, inasm"ch as, notwithstanding that the deed of
sale E@hi'it ! was accomplished and this doc"ment was (ept '
the pretended p"rchaser, it is positivel certain that the latter
did not pa the p"rchase price of 52,200, and never too(
possession of the land apparentl sold in the said deed. !ll that
this vendee afterwards did was to pledge the land R on March
*,, *-7;, that is, si@ months and some das after the 7th of
%eptem'er, *-75, the date when he p"rchased it R as sec"rit
for the faithf"l discharge of the d"ties of his office of proc"rador
of the 3o"rt of 1irst &nstance of 5ampanga.
.he plaintiff, %antiago 3r"4ado, a son of the vendee, claiming
that the said land was 'eing detained ' the vendor, or ' the
administrator of the latter)s estate or her death after the
commencement of these proceedings, and ' the other
defendant Man"el Escaler, praed the co"rt to declare him to 'e
the owner thereof, to order the defendants to ret"rn it to him
and to pa him for losses and damages, and the costs.
.he action 'ro"ght ' the plaintiff is evidentl one for recover
of possession, fo"nded on the right transmitted to him ' his
father at his death, R a right arising from the said sim"lated
deed of sale of the land in q"estion. .his action is of co"rse
improper, not onl 'eca"se the sale was sim"lated, '"t also
'eca"se it was not cons"mmated. .he price of the land was not
paid nor did the vendee ta(e possession of the propert from
the 7th of %eptem'er, *-75, when the said sale was feigned,
"ntil the time of his deathC nor did an of his s"ccessors, nor the
plaintiff himself "ntil the date of his claim, enter into possession
of the land.
&t is indeed tr"e that it is not necessar that the thing sold or its
price sho"ld have 'een delivered in order that the contract of
p"rchase and sale 'e deemed perfect on acco"nt of its 'eing
consens"al, and from it reciprocal o'ligations arise m"t"all to
compel the parties to effect its f"lfillmentC '"t there is no
transmission of ownership "ntil the thing, as in the case at 'ar,
the land, has 'een delivered, and the moment s"ch deliver is
made the contract of p"rchase and sale is regarded as
cons"mmated. !rticle *,50 of the 3ivil 3ode, relied "pon in this
connection ' the appellant, refers solel to the perfection of the
contract and not to its cons"mmation.
.he p"rchaser is also a creditor with respect to the prod"cts of
the thing sold, and article *0+5 of the 3ivil 3ode prescri'es as
follows9
! creditor has a right to the fr"its of a thing from the time the
o'ligation to deliver it arises. :owever, he shall not acq"ire a
propert right thereto "ntil it has 'een delivered to him.
.he provisions of this article are in agreement with that of the
second paragraph of article ;0+ of the same 3ode, which is of
the following tenor9
2wnership is acq"ired ' retention.
2wnership and other propert rights are req"ired and
transmitted ' law, ' gift, ' testate or intestate s"ccession,
and, in conseq"ence of certain contracts, ' tradition.
.he can also 'e acq"ired ' prescription.
.he provisions of the said article *0+5 are also in accord with
those of article *,;2 which reads9
! thing sold shall 'e considered as delivered, when it is placed in
the hands and possession of the vendee.
>hen the sale sho"ld 'e made ' means of a p"'lic instr"ment,
the e@ec"tion thereof shall 'e eq"ivalent to the deliver of the
thing which is the o'Fect of the contract, if in said instr"ment
the contrar does not appear or ma 'e clearl inferred.
&t is tr"e that the deed of sale E@hi'it ! remained in possession
of the vendee 3r"4ado, '"t the sale is not to 'e considered as
cons"mmated ' this 'eca"se the said vendee never entered
into possession of the land and neither did his son the plaintiff.
.he latter, moreover, was "na'le to prove that at an time as
owner of the land he collected the fr"its harvested thereon, or
that an other person c"ltivated the said land in the name and
representation of his deceased father or of the plaintiff himself.
60
.he fiction created ' means of the e@ec"tion and deliver of a
p"'lic instr"ment prod"ces no effect if the person acq"iring it
never ta(es possession of the thing sold or acq"ired, as
happened in the case at 'ar.
&f, as prescri'ed ' the preinserted article *0+5, the creditor,
and in the present case the vendee, does not acq"ire a propert
right in the land p"rchased "ntil the propert has 'een delivered
to him or he has ta(en possession of it, it is "nq"estiona'le
that, as neither the plaintiff nor his predecessor in interest too(
possession of the land in litigation, neither of them acq"ired an
propert right therein and, conseq"entl, co"ld not and cannot
now 'ring an action for recover of possession which arises o"t
of a propert right in a thing which 'elongs to them and not a
mere right prod"ctive of a personal o'ligation. .he plaintiff
%antiago 3r"4ado co"ld onl, in a proper case, e@ercise the
personal right of action flowing from the right possessed ' his
father to compel the vendor to f"lfill the contract made in a
p"'lic instr"ment to deliver the land sold or to give him
possession of it, in conseq"ence of the said contract, tho"gh
sim"lated and e@ec"ted for the sole p"rpose that the deceased
3r"4ado in defa"lt of 5700 in cash might appear to own real
estate with which to ins"re the proper performance of his d"ties
as proc"rador, an office he then desired to hold.
.he s"preme co"rt of %pain in a decision of cassation of D"ne *,
*++0, esta'lished the following doctrine9
.hat articles *25- and *,50 of the 3ivil 3ode and the decisions
of cassation of D"ne 80, *-5,, !pril *8 and Decem'er *8, *-;*,
D"ne 80, *-;,, and !pril *+ and Decem'er *5, *-;5, do not
warrant the concl"sion that whoever p"rchases personal or real
propert ma e@ercise with respect thereto all rights of action
inherent in its ownership, witho"t it having, in some wa or
another, 'een placed at his disposal. 2n the contrar, the
distinction 'etween the perfecting and the cons"mmation of a
contract mar(s the diversit of relations of the contracting
parties among themselves and of the owner with respect to
what constit"tes this propert.
.his principle is in harmon with those set "p ' the same high
tri'"nal in its decision of Dan"ar *+, *-+-, and March -, *+0*.
&n this last decision, also rendered on an appeal in cassation,
the doctrine en"nciated in the e@cerpt copied here 'elow was
esta'lished9
.hat the contract of p"rchase and sale, as consens"al, is
perfected ' consent as to the price and the thing and is
cons"mmated ' the reciprocal deliver of the one and the
other, the f"ll ownership of the thing sold 'eing conveed to the
vendee, from which moment the rights of action derived from
this right ma 'e e@ercised.
&t is, then, of the "tmost importance to e@amine whether in the
said sale the p"rchase price was paid and whether the vendee
too( possession of the land s"pposed to have 'een sold.
.he record discloses that 3r"4ado d"ring his lifetime was, 'efore
he 'ecame a proc"rador, an official escri'iente or cler( charged
with the d"t of co"rsing records and proceedings in the 3o"rt
of 5ampangaC that his salar was hardl s"fficient to maintain
him and his familC that on acco"nt of the ins"fficienc of his
monthl stipend, he was freq"entl o'liged to 'orrow mone
from his friends, notwithstanding that he with his famil lodged
in the ho"se of $ernardino Di4on, the h"s'and of the vendor
$"stos, sit"ated in the m"nicipalit of $acolor, with whom
3r"4ado maintained intimate relations of friendship, and on this
acco"nt the said co"ple were content to live in a co"ntr ho"se
the owned on one of their rice fields. %"ch was the testimon
of several witnesses who lived in that m"nicipalit, and who
(new and had considera'le dealings with the plaintiff)s father for
man ears. &t was the opinion of these witnesses that the
deceased !gapito /. 3r"4ado was a poor man, for the reason
that his monthl salar scarcel provided for the needs of
himself and his famil, and the therefore 'elieved that he co"ld
not have f"rnished the s"m of 52,200 to p"rchase the land in
q"estion, and, f"rthermore, if the plaintiff)s father had
possessed this s"m, he wo"ld have made the deposit of the s"m
of 5700, the amo"nt of sec"rit req"ired ' the 5residencia of
the former 0eal !"diencia de Manila for his appointment as
proc"rador, since, having the means, he wo"ld have preferred to
deposit this smaller s"m rather than to have "sed 52,200 in
acq"iring a piece of land from which he wo"ld derive no 'enefit
whatever, as in fact he never did, as he m"st have (nown that in
spite of the sim"lated sale of the propert its owner wo"ld
contin"e in its possession and wo"ld c"ltivate it, as she did do
"ntil her death. &t is, therefore, "nq"estiona'le that the price of
the sale was not paid, an omission which wo"ld indicate that it
was in effect sim"lated.
!side from the fact that the spo"ses Estafania $"stos and
$ernardino Di4on had no need to sell the said ;5 'alitas of land,
or of fencing or separating this parcel from the large tract of
land that 'elonged to them and of which it formed a part, for
the reason that the were rich and at that time were not in need
of mone to c"ltivate their e@tensive landholdings, it is also to
'e noted that the portion of land sold was worth ver m"ch
more than the 52,200 which, in the said instr"ment, p"rported
to 'e its price.
&n addition to the foregoing, the proceedings in the case at 'ar
f"rnish ample proof that !gapito /eronimo 3r"4ado d"ring his
lifetime stated to vario"s persons that he s"cceeded in giving
'ond for his appointment as proc"rador ' means of the said
instr"ment of sim"lated sale, e@ec"ted in his favor ' the
spo"ses Di4on and $"stos, as he did not have the mone to
ma(e the deposit req"ired for his appointment. %o close were
the relations that then e@isted 'etween the 3r"4ado famil and
that of Di4on and $"stos, that later on the plaintiff married a
da"ghter of these latterC hence, plaintiff, in the 'eginning of his
letters E@hi'its - and + addressed to Natalio Di4on, a son of the
vendor Estefania $"stos, calls his correspondent his Idear and
esteemed 'rother?in?law.J &t is therefore not stranger that these
spo"ses sho"ld have wished to help plaintiff)s predecessor in
interest ' assisting him to o'tain the office of proc"rador, even
to the e@tent of ma(ing a feigned sale.
:owever, ears afterwards, prompted ' an int"ition of possi'le
f"t"re diffic"lties, Di4on and his wife $"stos went to the office of
!gapito /. 3r"4ado and req"ired him to cancel the said deed of
sale, in order to avoid an laws"it after their death. 3r"4ado
promised to loo( for mone wherewith to s"'stit"te the
mortgage 'ond. .his demand had to 'e repeated several times,
'eca"se 3r"4ado did not cancel the deed as he promised.
1"rthermore, it is shown that the instr"ment E@hi'it ! is merel
a second cop o'tained ' the plaintiff from the chief of division
of archives, witho"t prior s"mmons or notification of the vendor
Estefania $"stos, who was still living, in conformit with the
provisions contained in article *- of the Notarial Law of 1e'r"ar
*5, *--+, and witho"t the plaintiff)s having e@plained what
'ecame of the first cop. $esides, the cler( and notar who
certified that instr"ment did not attest therein that in his
presence the vendee 3r"4ado paid over the s"m of 52,200, the
price of the land sold, and as the vendor denied having received
this s"m, the o'ligation devolved "pon plaintiff to prove that his
deceased father had paid the price stated in that instr"ment. $
61
this not having done so, his omission constit"tes additional proof
that the sale of the land, the recover of possession of which
plaintiff now see(s, was reall sim"lated.
.he s"preme co"rt of %pain, in a decision dated 1e'r"ar 20,
*-++, rendered on an appeal in cassation, laid down the
doctrine that, in accordance with the provisions of article ,0 of
the Mortgage Law, in the alienation of real propert it is
"nderstood that no price has 'een paid if the notar does not
attest its deliver or the contracting parties do not prove that it
was previo"sl paid.
.he co"rts are allowed f"ll latit"de to accept the pres"mption
that the p"rchase price has not 'een paid when the notar
'efore whom the instr"ment was e@ec"ted does not attest the
deliver of the mone, and when, s"ch deliver 'eing denied '
one of the contracting parties, the other does not add"ce proof
of its pament, especiall when s"ch pres"mption is
corro'orated ' other circ"mstantial evidence which, all
together, "ndo"'tedl prove that the sale was feigned and
sim"lated for certain p"rposes so"ght to 'e attained ' the
parties, tho"gh, as in the case at 'ar, the sim"lation was not
effected in fra"d of creditors.
$esides the fail"re to pa the p"rchase price, the record
discloses another ver important fact, to wit, that neither the
vendee nor his heirs, among these latter, the plaintiff, had at
an time ta(en possession of the land which in the said
instr"ment E@hi'it ! appeared to have 'een sold, for, ' the
testimon of seven competent witnesses e@amined at the trial it
is decisivel and concl"sivel proven that the alleged vendor,
Estefania $"stos, and her h"s'and while he was living,
notwithstanding the said alienation, contin"ed to possess the
said land s"pposedl sold to plaintiff)s father, and c"ltivated it,
as she had done long 'efore the sale of %eptem'er, *-75, and
contin"ed to do so "p to the date of the complaint filed '
%antiago 3r"4adoC in the first period, "ntil %eptem'er *0, *-+*,
as the owner of the land, and from this date, when the whole of
the large tract of land of which the said portion apparentl sold
forms a part was sold to the other defendant Man"el Escaler, the
original owner Estefania $"stos contin"ed in the material
possession of the land, '"t now as the lessee of the new owner,
"ntil *+0-, when she was s"'stit"ted ' Marcelo 0odrig"e4 as
the new lessee of the propert. .he plaintiff at no time after his
father)s death occ"pied the land in litigation, notwithstanding his
allegation that he has 'een collecting rentals from Estefania
$"stos, his mother?in?law, ' reason of his having leased the
land to her.
.he plaintiff endeavored to prove that d"ring the ears *--2
and *--8 he personall too( charge of and tilled the disp"ted
land on shares thro"gh his tenants named 1lorentino de los
0ees, Lino 3ortes, Macario de los 0ees and 0egino de los
0ees, all of whom corro'orated plaintiff)s testimon in this
regard. :owever, si@ of the defendants) witnesses positivel
stated that the never were aware that the said tenants had
wor(ed on the land in q"estion d"ring either the said two ears
or in an other, for these latter were wor(ing on the adFacent
lands 'elonging to other owners. 5a'lo !ngeles, one of the
defendants) witnesses, testified that 0egino and 1lorentino de
los 0ees were his tenants on shares and were emploed on his
land adFoining that in q"estion. :e was positivel certain that
the never wor(ed on the disp"ted land d"ring or a'o"t the
ears aforementioned, 'eca"se the cara'aos "sed ' his said
two tenants 'elonged to him and he never wo"ld have permitted
them to "se these animals in wor(ing land that did not 'elong to
him. :e added that 0egino)s children, Macario and $asilio, were
at that time so o"ng, 'eing a'o"t eight ears of age, that the
were not et a'le to wor( in the fields.
.he plaintiff m"st have 'een well convinced that he had no right
whatever in the land s"pposedl p"rchased ' his father. .he
latter never demanded its possession from its owner Estefania
$"stos and never tho"ght of declaring the propert as 'elonging
to him, for the p"rposes of the land ta@, from the time this ta@
was esta'lished in this co"ntr, notwithstanding that the
plaintiff, (nowing his o'ligation, filed a sworn declaration relative
to a lot he owned in the m"nicipalit of $acolor. .his proced"re
of plaintiff)s proves that he did not 'elieve himself to 'e the
owner of the land he claims and which its present owner Man"el
Escaler has constantl declared for the p"rpose of assessment.
Moreover, a'o"t the middle of the ear *-+*, the plaintiff
%antiago 3r"4ado 'egged his 'rother?in?law Natalio Di4on to tell
the latter)s mother, plaintiff)s mother?in?law, that 3r"4ado
desired the lease fo"r 'alitas of the land in q"estion, and some
das afterwards, possi'l 'eca"se he received no repl from his
said 'rother?in?law, he addressed a letter to Di4on <E@hi'it +,
page *52 of the record, translated on page *5,= in which he
repeated his req"est and as(ed for a replC '"t notwithstanding
that his 'rother?in?law Di4on told him that he co"ld not dispose
of an part of the said land for the reason that his mother
Estefania $"stos was negotiating for the sale of all the land she
possessed in the sitio of %icat to Man"el Escaler, plaintiff went to
Di4on)s ho"se on an occasion when 5a"lino de la 3r"4 was there.
3r"4 was a representative of Escaler and had 'een charged to
inform himself of the sit"ation, condition and q"alit of the land
which $"stos was a'o"t to sell to his principal and was at the
said ho"se for the p"rpose of 'eing shown the land offered for
sale. 2n this occasion plaintiff learned that negotiations were
'eing made for the sale of all the land owned ' Estefania
$"stos of which the ;5 'alitas in litigation formed a part.
5laintiff did not then or afterwards ma(e an statement or
o'Fection whatever in defense of his rights and interest, if he
reall 'elieved that he was entitled to the land shown in the
instr"ment E@hi'it ! to have 'een p"rchased ' his father.
5laintiff made no protest whatsoever, 'eca"se he well (new that
the said sale was sim"lated and that his father had acq"ired no
right whatever in the propertC he was therefore an@io"s to
lease fo"r 'alitas of the same land, a p"rpose in which he was
"ns"ccessf"l 'eca"se a deal was then alread going forward for
the sale of the said land to its present owner, Man"el Escaler,
who in fact did '"t it on %eptem'er *0, *-+*. &f plaintiff were
convinced that he was the owner of the land, as he rashl
asserted that he was in his complaint for recover of possession,
it is not "nderstood wh a'o"t the middle of the ear *-+* he
wished to lease, not all the ;5 'alitas, '"t onl fo"r of them, as
stated in his said letter, E@hi'it +.
1rom that time the new owner Man"el Escaler too( possession
of all the land sold ' Estefania $"stos, incl"ding the ;5 'alitas
in litigation, and contin"ed in its possession as the owner
thereof "ntil 2cto'er -, *+*0, when plaintiff filed his claim.
.h"s, more than the ten ears req"ired ' law for ordinar
prescription had alread elapsed, as Escaler p"rchased the land
and was holding it in good faith "nder a lawf"l title and was not
dist"r'ed in his contin"o"s and peacea'le possession, one that
was adverse to the whole world. &t is therefore "nq"estiona'le
that he has a'sol"tel acq"ired ' prescription the ownership of
the disp"ted land, and the action 'ro"ght ' plaintiff, fo"nded
solel on a sim"lated sale e@ec"ted ' the original owner of the
land, not to the preF"dice, '"t to the 'enefit, of the pretended
vendee, cannot prevail against Escaler)s rights.
.he registration o'tained ' the plaintiff in the propert registr
of the second cop of the said instr"ment E@hi'it !, a'o"t two
62
months 'efore filing his action for recover, to wit, on !"g"st
28, *+*0, has not improved the deed of sale nor made it more
effective, nor co"ld it affect the rights held ' the original owner
and the present proprietor of the land in q"estion, inasm"ch as
their predecessor in interest, ' defa"lt of pament of the price
of the sale and on acco"nt of his never having ta(en possession
of the land sold, was not the owner thereof, nor did he acq"ire
an propert right whatever therein. 3onseq"entl at his death
he co"ld not have transmitted to the plaintiff as his s"ccessor
an greater right than a personal right to e@act the f"lfillment of
a contract, and as plaintiff was not the owner of the land, he
co"ld not validl register it.
!rticle *,78 of the 3ivil 3ode prescri'es9
&f the same thing sho"ld have 'een sold to different vendees,
the ownership shall 'e transferred to the person who ma have
first ta(en possession thereof in good faith, if it sho"ld 'e
personal propert.
%ho"ld it 'e real propert, it shall 'elong to the person acq"iring
it who first recorded it in the registr.
%ho"ld there 'e no entr, the propert shall 'elong to the
person who first too( possession of it in good faith, and, in the
a'sence thereof, to the person who presents the oldest title,
provided there is good faith.
2n the sale of the land to the defendant Escaler, neither he nor
the plaintiff had had it entered in the propert registr, '"t the
said new owner, Escaler, too( possession of the land on the date
of its acq"isition, %eptem'er *0,*-+*, and has retained
possession thereof "p to the present time. %o that when plaintiff
registered the land he was not in possession thereof and no
longer had an right whatever therein, 'eca"se it alread
'elonged to the defendant Escaler, its lawf"l owner.
:owever, even tho"gh it were proper for plaintiff to 'ring the
real action for recover derived, tho"gh we do not admit that it
co"ld 'e, from the sim"lated sale 'efore mentioned, 'oth this
action as well as the personal action R the onl one availa'le in
a proper case, as 'efore demonstrated, p"rs"ant to the
provisions of article *0+5 of the 3ivil 3ode R have 'oth certainl
prescri'ed, for the reason that the periods fi@ed ' law for filing
s"ch actions have m"ch more than elapsed.
!rticle *+8+ of the 3ivil 3ode sas9
5rescription, which 'egan to r"n 'efore the p"'lication of this
code, shall 'e governed ' the prior lawsC '"t if, after this code
'ecame operative, all the time req"ired in the same for
prescription has elapsed, it shall 'e effect"al, even if according
to said prior laws a longer period of time ma 'e req"ired.
5ersonal actions prescri'e after ten earsC and the same with
the writ of e@ec"tion therein iss"ed, after twent earsC while
real actions prescri'e after thirt ears9 according to Law 5, .itle
-, $oo( * of the Novisima 0ecopilacion, and Law 2*, .itle 2+,
5artida 8, which were those in force on the date of the e@ec"tion
of the deed of sale, E@hi'it !.
1rom %eptem'er 7, *-75, to 2cto'er -, *+*0, when the
complaint was filed, thirt?five ears have elapsed. .herefore,
not onl in accordance with the laws aforecited, '"t also
p"rs"ant to the provisions of articles *+;8 and *+;, of the 3ivil
3ode, the periods fi@ed for the prescription of the personal
action which co"ld, in a proper case, have 'een e@ercised, as
well as for the real action for recover of possession 'ro"ght '
the plaintiff witho"t right so to do, have more than prescri'ed.
1or all the foregoing reasons, where' the errors assigned to the
F"dgment appealed from have 'een d"l ref"ted, the said
F"dgment sho"ld 'e, as it is here', affirmed, with the costs
against the appellant. %o ordered.
!rellano, 3. D., Dohnson, 3arson, Moreland, .rent, and !ra"llo,
DD., conc"r.
%.R. 'o. ;$21201 Dece+Aer 1(, 1322
'9E;:7' M C7MPA'8, 9'C., plaintiff?appellant,
vs.
;EPA'*7 C7':7;9DA*ED M9'9'% C7MPA'8, defendant?
appellee.
?. 1. =uasha and Associates for plaintiff"appellant.
%once Enrile, ,iguion"Re!na, Montecillo and 4elo for defendant"
appellee.
<A;D9&AR, J.:
2n 1e'r"ar ;, *+5-, plaintiff 'ro"ght this action against
defendant 'efore the 3o"rt of 1irst &nstance of Manila to recover
certain s"ms of mone representing damages allegedl s"ffered
' the former in view of the ref"sal of the latter to compl with
the terms of a management contract entered into 'etween them
on Dan"ar 80, *+87, incl"ding attorne7s fees and costs.
Defendant in its answer denied the material allegations of the
complaint and set "p certain special defenses, among them,
prescription and laches, as 'ars against the instit"tion of the
present action.
!fter trial, d"ring which the parties presented testimonial and
n"mero"s doc"mentar evidence, the co"rt a quo rendered a
decision dismissing the complaint with costs. .he co"rt stated
that it did not find s"fficient evidence to esta'lish defendant7s
co"nterclaim and so it li(ewise dismissed the same.
.he present appeal was ta(en to this 3o"rt directl ' the
plaintiff in view of the amo"nt involved in the case.
.he facts of this case, as stated in the decision appealed from,
are here"nder q"oted for p"rposes of this decision9
&t appears that the s"it involves an operating
agreement e@ec"ted 'efore >orld >ar && 'etween the
plaintiff and the defendant where' the former
operated and managed the mining properties owned '
the latter for a management fee of 52,500.00 a month
and a *0O participation in the net profits res"lting from
the operation of the mining properties. 1or 'revit and
convenience, hereafter the plaintiff shall 'e referred to
as N&EL%2N and the defendant, LE5!N.2.
.he antecedents of the case are9 .he contract in
q"estion <E@hi'it ]37= was made ' the parties on
Dan"ar 80, *+87 for a period of five <5= ears. &n the
latter part of *+,*, the parties agreed to renew the
contract for another period of five <5= ears, '"t in the
meantime, the 5acific >ar 'ro(e o"t in Decem'er,
*+,*.
&n Dan"ar, *+,2 operation of the mining properties was
disr"pted on acco"nt of the war. &n 1e'r"ar of *+,2,
the mill, power plant, s"pplies on hand, eq"ipment,
concentrates on hand and mines, were destroed "pon
orders of the Hnited %tates !rm, to prevent their
"tili4ation ' the invading Dapanese !rm. .he
Dapanese forces thereafter occ"pied the mining
properties, operated the mines d"ring the contin"ance
of the war, and who were o"sted from the mining
properties onl in !"g"st of *+,5.
63
!fter the mining properties were li'erated from the
Dapanese forces, LE5!N.2 too( possession thereof and
em'ar(ed in re'"ilding and reconstr"cting the mines
and millC setting "p new organi4ationC clearing the mill
siteC repairing the minesC erecting staff q"arters and
'odegas and repairing e@isting str"ct"resC installing
new machiner and eq"ipmentC repairing roads and
maintaining the sameC salvaging eq"ipment and storing
the same within the 'odegasC doing police wor(
necessar to ta(e care of the materials and eq"ipment
recoveredC repairing and renewing the water sstemC
and remem'ering <E@hi'its LDL and LEL=. .he
reha'ilitation and reconstr"ction of the mine and mill
was not completed "ntil *+,- <E@hi'it L1L=. 2n D"ne 2;,
*+,- the mines res"med operation "nder the e@cl"sive
management of LE5!N.2 <E@hi'it L1?lL=.
%hortl after the mines were li'erated from the
Dapanese invaders in *+,5, a disagreement arose
'etween N&EL%2N and LE5!N.2 over the stat"s of the
operating contract in q"estion which as renewed
e@pired in *+,7. Hnder the terms thereof, the
management contract shall remain in s"spense in case
fort"ito"s event or force majeure, s"ch as war or civil
commotion, adversel affects the wor( of mining and
milling.
L&n the event of in"ndations, floodings of mine,
tphoon, earthq"a(e or an other force
maFe"re, war, ins"rrection, civil commotion,
organi4ed stri(e, riot, inF"r to the machiner
or other event or ca"se reasona'l 'eond the
control of N&EL%2N and which adversel
affects the wor( of mining and millingC
N&EL%2N shall report s"ch fact to LE5!N.2
and witho"t lia'ilit or 'reach of the terms of
this !greement, the same shall remain in
s"spense, wholl or partiall d"ring the terms
of s"ch ina'ilit.L <3la"se && of E@hi'it L3L=.
N&EL%2N held the view that, on acco"nt of the war, the
contract was s"spended d"ring the warC hence the life
of the contract sho"ld 'e considered e@tended for s"ch
time of the period of s"spension. 2n the other hand,
LE5!N.2 contended that the contract sho"ld e@pire in
*+,7 as originall agreed "pon 'eca"se the period of
s"spension accorded ' virt"e of the war did not
operate to e@tend f"rther the life of the contract.
No "nderstanding appeared from the record to have
'een 'ad ' the parties to resolve the disagreement. &n
the meantime, LE5!N.2 re'"ilt and reconstr"cted the
mines and was a'le to 'ring the propert into operation
onl in D"ne of *+,-, . . . .
!ppellant in its 'rief ma(es an alternative assignment of errors
depending on whether or not the management contract 'asis of
the action has 'een e@tended for a period eq"ivalent to the
period of s"spension. &f the agreement is s"spended o"r
attention sho"ld 'e foc"sed on the first set of errors claimed to
have 'een committed ' the co"rt a quoC '"t if the contrar is
tr"e, the disc"ssion will then 'e switched to the alternative set
that is claimed to have 'een committed. >e will first ta(e "p the
q"estion whether the management agreement has 'een
e@tended as a res"lt of the s"pervening war, and after this
q"estion shall have 'een determined in the sense s"stained '
appellant, then the disc"ssion of the defense of laches and
prescription will follow as a conseq"ence.
.he pertinent portion of the management contract <E@h. 3=
which refers to s"spension sho"ld an event constit"ting force
majeure happen appears in 3la"se && thereof which we q"ote
here"nder9
&n the event of in"ndations, floodings of the mine,
tphoon, earthq"a(e or an other force maFe"re, war,
ins"rrection, civil commotion, organi4ed stri(e, riot,
inF"r to the machiner or other event or ca"se
reasona'l 'eond the control of N&EL%2N and which
adversel affects the wor( of mining and millingC
N&EL%2N shall report s"ch fact to LE5!N.2 and witho"t
lia'ilit or 'reach of the terms of this !greement, the
same shall remain in s"spense, wholl or partiall
d"ring the terms of s"ch ina'ilit.
! caref"l scr"tin of the cla"se a'ove?q"oted will at once reveal
that in order that the management contract ma 'e deemed
s"spended two events m"st ta(e place which m"st 'e 'ro"ght in
a satisfactor manner to the attention of defendant within a
reasona'le time, to wit9 <*= the event constit"ting the force
majeure m"st 'e reasona'l 'eond the control of Nielson, and
<2= it m"st adversel affect the wor( of mining and milling the
compan is called "pon to "nderta(e. !s long as these two
condition e@ist the agreement is deem s"spended.
Does the evidence on record show that these two conditions had
e@isted which ma F"stif the concl"sion that the management
agreement had 'een s"spended in the sense entertained '
appellantN Let "s go to the evidence.
&t is a matter that this 3o"rt can ta(e F"dicial notice of that war
s"pervened in o"r co"ntr and that the mines in the 5hilippines
were either destroed or ta(en over ' the occ"pation forces
with a view to their operation. .he Lepanto mines were no
e@ception for not was the mine itself destroed '"t the mill,
power plant, s"pplies on hand, eq"ipment and the li(e that were
'eing "sed there were destroed as well. .h"s, the following is
what appears in the Lepanto 3ompan Mining 0eport dated
March *8, *+,; s"'mitted ' its 5resident 3. !. De>itt to the
defendant9
*
L&n 1e'r"ar of *+,2, o"r mill, power plant,
s"pplies on hand, eq"ipment, concentrates on hand, and mine,
were destroed "pon orders of the H.%. !rm to prevent their
"tili4ation ' the enem.L .he report also mentions the report
s"'mitted ' Mr. $lessing, an official of Nielson, that Lthe
original mill was destroed in *+,2L and Lthe original power
plant and all the installed eq"ipment were destroed in *+,2.L &t
is then "ndenia'le that 'eginning 1e'r"ar, *+,2 the operation
of the Lepanto mines stopped or 'ecame s"spended as a res"lt
of the destr"ction of the mill, power plant and other important
eq"ipment necessar for s"ch operation in view of a ca"se which
was clearl 'eond the control of Nielson and that as a
conseq"ence s"ch destr"ction adversel affected the wor( of
mining and milling which the latter was called "pon to "nderta(e
"nder the management contract. 3onseq"entl, ' virt"e of the
ver terms of said contract the same ma 'e deemed s"spended
from 1e'r"ar, *+,2 and as of that month the contract still had
;0 months to go.
2n the other hand, the record shows that the defendant
admitted that the occ"pation forces operated its mining
properties s"'Fect of the management contract,
2
and from the
ver report s"'mitted ' 5resident De>itt it appears that the
date of the li'eration of the mine was !"g"st *, *+,5 altho"gh
at the time there were still man 'oo' traps.
8
%imilarl, in a
report s"'mitted ' the defendant to its stoc(holders dated
!"g"st 25, *+,-, the following appears9 L6o"r Directors ta(e
64
pleas"re in reporting that D"ne 2;, *+,- mar(ed the official
ret"rn to operations of this 3ompan of its properties in
Man(aan, Mo"ntain 5rovince, 5hilippines.L
,
&t is, therefore, clear from the foregoing that the Lepanto mines
were li'erated on !"g"st *, *+,5, '"t 'eca"se of the period of
reha'ilitation and reconstr"ction that had to 'e made as a res"lt
of the destr"ction of the mill, power plant and other necessar
eq"ipment for its operation it cannot 'e said that the s"spension
of the contract ended on that date. :ence, the contract m"st
still 'e deemed s"spended d"ring the s"cceeding ears of
reconstr"ction and reha'ilitation, and this period can onl 'e
said to have ended on D"ne 2;, *+,- when, as reported ' the
defendant, the compan officiall res"med the mining
operations of the Lepanto. &t sho"ld here 'e stated that this
period of s"spension from 1e'r"ar, *+,2 to D"ne 2;, *+,- is
the one "rged ' plaintiff.
5
&t having 'een shown that the operation of the Lepanto mines
on the part of Nielson had 'een s"spended d"ring the period set
o"t a'ove within the p"rview of the management contract, the
ne@t q"estion that needs to 'e determined is the effect of s"ch
s"spension. %tated in another wa, the q"estion now to 'e
determined is whether s"ch s"spension had the effect of
e@tending the period of the management contract for the period
of said s"spension. .o el"cidate this matter, we again need to
resort to the evidence.
1or appellant Nielson two witnesses testified, declaring that the
s"spension had the effect of e@tending the period of the
contract, namel, /eorge .. %chole and Mar( Nestle. %chole
was a mining engineer since *+2+, an incorporator, general
manager and director of Nielson and 3ompanC and for some
time he was also the vice?president and director of the Lepanto
3ompan d"ring the pre?war das and, as s"ch, he was an
officer of 'oth appellant and appellee companies. !s vice?
president of Lepanto and general manager of Nielson, %chole
participated in the negotiation of the management contract to
the e@tent that he initialed the same 'oth as witness and as an
officer of 'oth corporations. .his witness testified in this case to
the effect that the standard force majeure cla"se em'odied in
the management contract was ta(en from similar mining
contracts regarding mining operations and the "nderstanding
regarding the nat"re and effect of said cla"se was that when
there is s"spension of the operation that s"spension meant the
e@tension of the contract. .h"s, to the q"estion, L$efore the
war, what was the "nderstanding of the people in the partic"lar
trend of '"siness with respect to the force majeure cla"seNL,
%chole answered9 L.hat was o"r "nderstanding that the
s"spension meant the e@tension of time lost.L
;
Mar( Nestle, the other witness, testified along similar line. :e
had 'een connected with Nielson since *+87 "ntil the time he
too( the witness stand and had 'een a director, manager, and
president of the same compan. >hen he was propo"nded the
q"estion9 LDo o" (now what was the c"stom or "sage at that
time in connection with force majeure cla"seNL, Nestle
answered, L&n the mining world the force majeure cla"se is
generall considered. >hen a calamit comes "p and stops the
wor( li(e in war, flood, in"ndation or fire, etc., the wor( is
s"spended for the d"ration of the calamit, and the period of the
contract is e@tended after the calamit is over to ena'le the
person to do the 'ig wor( or recover his mone which he has
invested, or accomplish what his o'ligation is to a third
person .L
7
!nd the a'ove testimonial evidence finds s"pport in the ver
min"tes of the special meeting of the $oard of Directors of the
Lepanto 3ompan iss"ed on March *0, *+,5 which was then
chairmaned ' !tt. 3. !. De>itt. >e read the following from
said report9
.he 3hairman also stated that the contract with Nielson
and 3ompan wo"ld soon e@pire if the o'ligations were
not s"spended, in which case we sho"ld have to pa
them the retaining fee of 52,500.00 a month. :e
'elieves however, that there is a provision in the
contract s"spending the effects thereof in cases li(e the
present, and that even if it were not there, the law
itself wo"ld s"spend the operations of the contract on
acco"nt of the war. !nhow, he stated, we shall have
no diffic"lt in solving satisfactoril an pro'lem we
ma have with Nielson and 3ompan.
-
.h"s, we can see from the a'ove that even in the opinion of Mr.
De>itt himself, who at the time was the chairman of the $oard
of Directors of the Lepanto 3ompan, the management contract
wo"ld then e@pire "nless the period therein rated is s"spended
'"t that, however, he e@pressed the 'elief that the period was
e@tended 'eca"se of the provision contained therein s"spending
the effects thereof sho"ld an of the case of force maFe"re
happen li(e in the present case, and that even if s"ch provision
did not e@ist the law wo"ld have the effect of s"spending it on
acco"nt of the war. &n s"'stance, !tt. De>itt e@pressed the
opinion that as a res"lt of the s"spension of the mining
operation 'eca"se of the effects of the war the period of the
contract had 'een e@tended.
3ontrar to what appellant7s evidence reflects insofar as the
interpretation of the force majeure cla"se is concerned,
however, appellee gives Hs an opposite interpretation invo(ing in
s"pport thereof not onl a letter !tt. De>itt sent to Nielson on
2cto'er 20, *+,5,
+
wherein he e@pressed for the first time an
opinion contrar to what he reported to the $oard of Directors of
Lepanto 3ompan as stated in the portion of the min"tes of its
$oard of Directors as q"oted a'ove, '"t also the r"ling laid
down ' o"r %"preme 3o"rt in some cases decided sometime
ago, to the effect that the war does not have the effect of
e@tending the term of a contract that the parties ma enter into
regarding a partic"lar transaction, citing in this connection the
cases of 9ictorias %lanters Association '. 9ictorias Milling
Compan!, 5* 2./. ,0*0C Rosario ,. 9da. de -acson, et al. '.
A+elardo :. &ia), -7 5hil. *50C and -o Ching ! ,o Aoung Chong
Co. '. Court of Appeals, et al., -* 5hil. ;0*.
.o 'olster "p its theor, appellee also contends that the
evidence regarding the alleged c"stom or "sage in mining
contract that appellant7s witnesses tried to introd"ce was
incompetent 'eca"se <a= said c"stom was not specificall
pleadedC <'= Lepanto made timel and repeated o'Fections to
the introd"ction of said evidenceC <c= Nielson failed to show the
essential elements of "sage which m"st 'e shown to e@ist
'efore an proof thereof can 'e given to affect the contractC and
<d= the testimon of its witnesses cannot prevail over the ver
terms of the management contract which, as a r"le, is s"pposed
to contain all the terms and conditions ' which the parties
intended to 'e 'o"nd.
&t is here necessar to anal4e the contradictor evidence which
the parties have presented regarding the interpretation of the
force majeure cla"se in the management contract.
!t the o"tset, it sho"ld 'e stated that, as a r"le, in the
constr"ction and interpretation of a doc"ment the intention of
the parties m"st 'e so"ght <0"le *80, %ection *0, 0"les of
65
3o"rt=. .his is the 'asic r"le in the interpretation of contracts
'eca"se all other r"les are '"t ancilliar to the ascertainment of
the meaning intended ' the parties. !nd once this intention has
'een ascertained it 'ecomes an integral part of the contract as
tho"gh it had 'een originall e@pressed therein in "neq"ivocal
terms <%horeline 2il 3orp. v. /", !pp. *-+, %o., 8,-, cited in
*7! 3.D.%., p. ,7=. :ow is this intention determinedN
2ne pattern is to ascertain the contemporaneo"s and
s"'seq"ent acts of the contracting parties in relation to the
transaction "nder consideration <!rticle *87*, 3ivil 3ode=. &n
this partic"lar case, it is worth of note what !tt. 3. !. De>itt
has stated in the special meeting of the $oard of Directors of
Lepanto in the portion of the min"tes alread q"oted a'ove
wherein, as alread stated, he e@pressed the opinion that the
life of the contract, if not e@tended, wo"ld last onl "ntil
Dan"ar, *+,7 and et he said that there is a provision in the
contract that the war had the effect of s"spending the
agreement and that the effect of that s"spension was that the
agreement wo"ld have to contin"e with the res"lt that Lepanto
wo"ld have to pa the monthl retaining fee of 52,500.00. !nd
this 'elief that the war s"spended the agreement and that the
s"spension meant its e@tension was so firm that he went to the
e@tent that even if there was no provision for s"spension in the
agreement the law itself wo"ld s"spend it.
&t is tr"e that Mr. De>itt later sent a letter to Nielson dated
2cto'er 20, *+,5 wherein apparentl he changed his mind
'eca"se there he stated that the contract was merel
s"spended, '"t not e@tended, ' reason of the war, contrar to
the opinion he e@pressed in the meeting of the $oard of
Directors alread adverted to, '"t 'etween the two opinions of
!tt. De>itt >e are inclined to give more weight and validit to
the former not onl 'eca"se s"ch was given ' him against his
own interest '"t also 'eca"se it was given 'efore the $oard of
Directors of Lepanto and in the presence, of some Nielson
officials
*0
who, on that occasion were nat"rall led to 'elieve
that that was the tr"e meaning of the s"spension cla"se, while
the second opinion was merel self?serving and was given as a
mere aftertho"ght.
!ppellee also claims that the iss"e of tr"e intent of the parties
was not 'ro"ght o"t in the complaint, '"t anent this matter
s"ffice it to state that in paragraph No. *+ of the complaint
appellant pleaded that the contract was e@tended.
**
.his is a
s"fficient allegation considering that the r"les on pleadings m"st
as a r"le 'e li'erall constr"ed.
&t is li(ewise noteworth that in this iss"e of the intention of the
parties regarding the meaning and "sage concerning the force
majeure cla"se, the testimon add"ced ' appellant is
"ncontradicted. &f s"ch were not tr"e, appellee sho"ld have at
least attempted to offer contradictor evidence. .his it did not
do. Not even Lepanto7s 5resident, Mr. E. E. Lednic( who too(
the witness stand, contradicted said evidence.
&n holding that the s"spension of the agreement meant the
e@tension of the same for a period eq"ivalent to the s"spension,
>e do not have the least intention of overr"ling the cases cited
' appellee. >e simpl want to sa that the r"ling laid down in
said cases does not appl here 'eca"se the material facts
involved therein are not the same as those o'taining in the
present. .he r"le of stare decisis cannot 'e invo(ed where there
is no analog 'etween the material facts of the decision relied
"pon and those of the instant case.
.h"s, in 9ictorias %lanters Association 's. 9ictorias Milling
Compan!, 5* 2./. ,0*0, there was no evidence at all regarding
the intention of the parties to e@tend the contract eq"ivalent to
the period of s"spension ca"sed ' the war. Neither was there
evidence that the parties "nderstood the s"spension to mean
e@tensionC nor was there evidence of "sage and c"stom in the
ind"str that the s"spension meant the e@tension of the
agreement. !ll these matters, however, o'tain in the instant
case.
!gain, in the case of Rosario ,. 9da. de -acson 's. A+elardo :.
&ia), -7 5hil. *50, the iss"e referred to the interpretation of a
pre?war contract of lease of s"gar cane lands and the lia'ilit of
the lessee to pa rent d"ring and immediatel following the
Dapanese occ"pation and where the defendant claimed the right
of an e@tension of the lease to ma(e "p for the time when no
cane was planted. .his 3o"rt, in holding that the ears which
the lessee co"ld not "se the land 'eca"se of the war co"ld not
'e disco"nted from the period agreed "pon, held that LNowhere
is there an insin"ation that the defendant?lessee was to have
possession of lands for seven ears e@cl"ding ears on which he
co"ld not harvest s"gar.L 3learl, this ratio decidendi is not
applica'le to the case at 'ar wherein there is evidence that the
parties "nderstood the Ls"spension cla"se ' force maFe"reL to
mean the e@tension of the period of agreement.
Lastl, in the case of -o Ching ! ,o Aoung Chong Co. 's. Court
of Appeals, et al., -* 5hil. ;0*, appellant leased a '"ilding from
appellee 'eginning %eptem'er *8, *+,0 for three ears,
renewa'le for two ears. .he lessee7s possession was
interr"pted in 1e'r"ar, *+,2 when he was o"sted ' the
Dapanese who t"rned the same over to /erman 2tto %ch"l4e,
the latter occ"ping the same "ntil Dan"ar, *+,5 "pon the
arrival of the li'eration forces. !ppellant contended that the
period d"ring which he did not enFo the leased premises
'eca"se of his dispossession ' the Dapanese had to 'e
ded"cted from the period of the lease, '"t this was overr"led '
this 3o"rt, reasoning that s"ch dispossession was merel a
simple Lpert"r'acion de merohecho de la c"al no responde el
arrendadorL "nder !rticle *5;0 of the old 3ivil 3ode !rt. *;;,=.
.his r"ling is also not applica'le in the instant case 'eca"se in
that case there was no evidence of the intention of the parties
that an s"spension of the lease ' force majeure wo"ld 'e
"nderstood to e@tend the period of the agreement.
.n resume, there is s"fficient F"stification for Hs to concl"de that
the cases cited ' appellee are inapplica'le 'eca"se the facts
therein involved do not r"n parallel to those o'taining in the
present case.
>e shall now consider appellee7s defense of laches. !ppellee is
correct in its contention that the defense of laches applies
independentl of prescription. Laches is different from the
stat"te of limitations. 5rescription is concerned with the fact of
dela, whereas laches is concerned with the effect of dela.
5rescription is a matter of timeC laches is principall a q"estion
of ineq"it of permitting a claim to 'e enforced, this ineq"it
'eing fo"nded on some change in the condition of the propert
or the relation of the parties. 5rescription is stat"torC laches is
not. Laches applies in eq"it, whereas prescription applies at
law. 5rescription is 'ased on fi@ed time, laches is not. <80 3.D.%.,
p. 522C ,ee also 5omero7s Eq"it D"rispr"dence, Eol. 2, 5th ed.,
p. *77=.
.he q"estion to determine is whether appellant Nielson is g"ilt
of laches within the meaning contemplated ' the a"thorities on
the matter. &n the leading case of /o 3hi /"n, et al. vs. /o 3ho,
et al., +; 5hil. ;22, this 3o"rt en"merated the essential
elements of laches as follows9
<*= cond"ct on the part of the defendant, or of one
66
"nder whom he claims, giving rise to the sit"ation of
which complaint is made and for which the complaint
see(s a remedC <2= dela in asserting the
complainant7s rights, the complainant having had
(nowledge or notice of the defendant7s cond"ct and
having 'een afforded an opport"nit to instit"te a s"itC
<8= lac( of (nowledge or notice on the part of the
defendant that the complainant wo"ld assert the right
on which he 'ases his s"itC and <,= inF"r or preF"dice
to the defendant in the event relief is accorded to the
complainant, or the s"it is not held 'arred.
!re these req"isites present in the case at 'arN
.he first element is conceded ' appellant Nielson when it
claimed that defendant ref"sed to pa its management fees, its
percentage of profits and ref"sed to allow it to res"me the
management operation.
!nent the second element, while it is tr"e that appellant Nielson
(new since *+,5 that appellee Lepanto has ref"sed to permit it
to res"me management and that since *+,- appellee has
res"med operation of the mines and it filed its complaint onl on
1e'r"ar ;, *+5-, there 'eing apparent dela in filing the
present action, >e find the dela F"stified and as s"ch cannot
constit"te laches. &t appears that appellant had not a'andoned
its right to operate the mines for even 'efore the termination of
the s"spension of the agreement as earl as Dan"ar 20,
*+,;
*2
and even 'efore March *0, *+,5, it alread claimed its
right to the e@tension of the contract,
*8
and it pressed its claim
for the 'alance of its share in the profits from the *+,*
operation
*,
' reason of which negotiations had ta(en place for
the settlement of the claim
*5
and it was onl on D"ne 25, *+57
that appellee finall denied the claim. .here is, therefore, onl a
period of less than one ear that had elapsed from the date of
the final denial of the claim to the date of the filing of the
complaint, which certainl cannot 'e considered as "nreasona'le
dela.
.he third element of laches is a'sent in this case. &t cannot 'e
said that appellee Lepanto did not (now that appellant wo"ld
assert its rights on which it 'ased s"it. .he evidence shows that
Nielson had 'een claiming for some time its rights "nder the
contract, as alread shown a'ove.
Neither is the fo"rth element present, for if there has 'een some
dela in 'ringing the case to co"rt it was mainl d"e to the
attempts at ar'itration and negotiation made ' 'oth parties. &f
Lepanto7s doc"ments were lost, it was not ca"sed ' the dela
of the filing of the s"it '"t 'eca"se of the war.
!nother reason wh appellant Nielson cannot 'e held g"ilt of
laches is that the dela in the filing of the complaint in the
present case was the inevita'le of the protracted negotiations
'etween the parties concerning the settlement of their
differences. &t appears that Nielson as(ed for ar'itration
*;
which was granted. ! committee consisting of Messrs. De>itt,
1arnell and $lessing was appointed to act on said differences '"t
Mr. De>itt alwas tried to evade the iss"e
*7
"ntil he was ta(en
ill and died. Mr. 1arnell offered to Nielson the s"m of 5*8,000.5-
' wa of compromise of all its claim arising from the
management contract
*-
'"t apparentl the offer was ref"sed.
Negotiations contin"ed with the e@change of letters 'etween the
parties '"t with no satisfactor res"lt.
*+
&t can 'e said that the
dela d"e to protracted negotiations was ca"sed ' 'oth parties.
Lepanto, therefore, cannot 'e permitted to ta(e advantage of
s"ch dela or to q"estion the propriet of the action ta(en '
Nielson. .he defense of laches is an eq"ita'le one and eq"it
sho"ld 'e applied with an even hand. ! person will not 'e
permitted to ta(e advantage of, or to q"estion the validit, or
propriet of, an act or omission of another which was
committed or omitted "pon his own req"est or was ca"sed '
his cond"ct <0. :. %tearns 3o. vs. Hnited %tates, 2+* H.%. 5,,
7- L. Ed. ;,7, 5, %. 3t., 825C Hnited %tates vs. :enr 5rentiss ^
3o., 2-- H.%. 78, 77 L. Ed., ;2;, 58 %. 3t., 2-8=.
:ad the action of Nielson prescri'edN .he co"rt a quo held that
the action of Nielson is alread 'arred ' the stat"te of
limitations, and that r"ling is now assailed ' the appellant in
this appeal. &n "rging that the co"rt a quo erred in reaching that
concl"sion the appellant has disc"ssed the iss"e with reference
to partic"lar claims.
.he first claim is with regard to the *0O share in profits of *+,*
operations. &nasm"ch as appellee Lepanto alleges that the
correct 'asis of the comp"tation of the sharing in the net profits
shall 'e as provided for in 3la"se E of the Management
3ontract, while appellant Nielson maintains that the 'asis sho"ld
'e what is contained in the min"tes of the special meeting of the
$oard of Directors of Lepanto on !"g"st 2*, *+,0, this q"estion
m"st first 'e el"cidated 'efore the main iss"e is disc"ssed.
.he facts relative to the matter of profit sharing follow9 &n the
management contract entered into 'etween the parties on
Dan"ar 80, *+87, which was renewed for another five ears, it
was stip"lated that Nielson wo"ld receive a compensation of
52,500.00 a month pl"s *0O of the net profits from the
operation of the properties for the preceding month. &n *+,0, a
disp"te arose regarding the comp"tation of the *0O share of
Nielson in the profits. .he $oard of Directors of Lepanto,
reali4ing that the mechanics of the contract was "nfair to
Nielson, a"thori4ed its 5resident to enter into an agreement with
Nielson modifing the pertinent provision of the contract
effective Dan"ar *, *+,0 in s"ch a wa that Nielson shall
receive <*= *0O of the dividends declared and paid, when and
as paid, d"ring the period of the contract and at the end of each
ear, <2= *0O of an depletion reserve that ma 'e set "p, and
<8= *0O of an amo"nt e@pended d"ring the ear o"t of s"rpl"s
earnings for capital acco"nt.
20
3o"nsel for the appellee
admitted d"ring the trial that the e@tract of the min"tes as
fo"nd in E@hi'it $ is a faithf"l cop from the original.
2*
Mr.
/eorge %chole testified that the foregoing modification was
agreed "pon.
22
Lepanto claims that this new 'asis of comp"tation sho"ld 'e
reFected <*= 'eca"se the contract was clear on the point of the
*0O share and it was so alleged ' Nielson in its complaint, and
<2= the min"tes of the special meeting held on !"g"st 2*, *+,0
was not signed.
&t appearing that the iss"e concerning the sharing of the profits
had 'een raised in appellant7s complaint and evidence on the
matter was introd"ced
28
the same can 'e ta(en into acco"nt
even if no amendment of the pleading to ma(e it conform to the
evidence has 'een made, for the same is a"thori4ed ' %ection
,, 0"le *7, of the old 0"les of 3o"rt <now %ection 5, 0"le *0, of
the new 0"les of 3o"rt=.
3oming now to the q"estion of prescription raised ' defendant
Lepanto, it is contended ' the latter that the period to 'e
considered for the prescription of the claim regarding
participation in the profits is onl fo"r ears, 'eca"se the
67
modification of the sharing em'odied in the management
contract is merel ver'al, no written doc"ment to that effect
having 'een presented. .his contention is "ntena'le. .he
modification appears in the min"tes of the special meeting of
the $oard of Directors of Lepanto held on !"g"st 2*, *+,0, it
having 'een made "pon the a"thorit of its 5resident, and in
said min"tes the terms of the modification had 'een specified.
.his is s"fficient to have the agreement considered, for the
p"rpose of appling the stat"te of limitations, as a written
contract even if the min"tes were not signed ' the parties <8
!.L.0., 2d, p. -8*=. &t has 'een held that a writing containing
the terms of a contract if adopted ' two persons ma
constit"te a contract in writing even if the same is not signed '
either of the parties <8 !.L.0., 2d, pp. -*2?-*8=. !nother
a"thorit sas that an "nsigned agreement the terms of which
are em'odied in a doc"ment "nconditionall accepted ' 'oth
parties is a written contract <3or'in on 3ontracts, Eol. *, p. -5=
.he modification, therefore, made in the management contract
relative to the participation in the profits ' appellant, as
contained in the min"tes of the special meeting of the $oard of
Directors of Lepanto held on !"g"st 2*, *+,0, sho"ld 'e
considered as a written contract insofar as the application of the
stat"tes of limitations is concerned. :ence, the action thereon
prescri'es within ten <*0= ears p"rs"ant to %ection ,8 of !ct
*+0.
3oming now to the facts, >e find that the right of Nielson to its
*0O participation in the *+,* operations accr"ed on Decem'er
2*, *+,* and the right to commence an action thereon 'egan on
Dan"ar *, *+,2 so that the action m"st 'e 'ro"ght within ten
<*0= ears from the latter date. &t is tr"e that the complaint was
filed onl on 1e'r"ar ;, *+5-, that is si@teen <*;= ears, one
<*= month and five <5= das after the right of action accr"ed, '"t
the action has not et prescri'ed for vario"s reasons which >e
will hereafter disc"ss.
.he first reason is the operation of the Moratori"m Law, for
appellant7s claim is "ndenia'l a claim for mone. %aid claim
accr"ed on Decem'er 8*, *+,*, and Lepanto is a war s"fferer.
:ence the claim was covered ' E@ec"tive 2rder No. 82 of
March *0, *+,5. &t is well settled that the operation of the
Moratori"m Law s"spends the r"nning of the stat"e of
limitations <5acific 3ommercial 3o. vs. !q"ino, /.0. No. L?
*027,, 1e'r"ar 27, *+57=.
.his 3o"rt has held that the Moratori"m Law had 'een enforced
for eight <-= ears, two <2= months and eight <-= das <.ioseco
vs. Da, et al., L?++,,, !pril 80, *+57C Lev :ermanos, &nc. vs.
5ere4, L?*,,-7, !pril 2+, *+;0=, and ded"cting this period from
the time that had elapsed since the accr"al of the right of action
to the date of the filing of the complaint, the e@tent of which is
si@teen <*;= ears, one <*= month and five <5= das, we wo"ld
have less than eight <-= ears to 'e co"nted for p"rposes of
prescription. :ence appellant7s action on its claim of *0O on the
*+,* profits had not et prescri'ed.
!nother reason that ma 'e ta(en into acco"nt in s"pport of the
no?'ar theor of appellant is the ar'itration cla"se em'odied in
the management contract which req"ires that an disagreement
as to an amo"nt of profits 'efore an action ma 'e ta(en to
co"rt shall 'e s"'Fect to ar'itration.
2,
.his agreement to
ar'itrate is valid and 'inding.
25
&t cannot 'e ignored '
Lepanto. :ence Nielson co"ld not 'ring an action on its
participation in the *+,* operations?profits "ntil the condition
relative to ar'itration had 'een first complied with.
2;
.he
evidence shows that an ar'itration committee was constit"ted
'"t it failed to accomplish its p"rpose on D"ne 25, *+57.
27
1rom this date to the filing of the complaint the req"ired period
for prescription has not et elapsed.
Nielson claims the following9 <*= *0O share in the dividends
declared in *+,*, e@cl"sive of interest, amo"nting to
5*7,500.00C <2= *0O in the depletion reserves for *+,*C and
<8= *0O in the profits for ears prior to *+,- amo"nting to
5*+,7;,.70.
>ith regard to the first claim, the Lepanto7s report for the
calendar ear of *+5,
2-
shows that it declared a *0O cash
dividend in Decem'er, *+,*, the amo"nt of which is
5*75,000.00. .he evidence in this connection <E@hi'its L and 2=
was admitted witho"t o'Fection ' co"nsel for Lepanto.
2+
Nielson claims *0O share in said amo"nt with interest thereon
at ;O per ann"m. .he doc"ment <E@hi'it L= was even
recogni4ed ' Lepanto7s 5resident E. L. Lednic(,
80
and this
claim is predicated on the provision of paragraph E of the
management contract as modified p"rs"ant to the proposal of
Lepanto at the special meeting of the $oard of Directors on
!"g"st 2*, *+,0 <E@h. $=, where' it was provided that Nielson
wo"ld 'e entitled to *0O of an dividends to 'e declared and
paid d"ring the period of the contract.
>ith regard to the second claim, Nielson admits that there is no
evidence regarding the amo"nt set aside ' Lepanto for
depletion reserve for *+,*
8*
and so the *0O participation
claimed thereon cannot 'e assessed.
!nent the third claim relative to the *0O participation of Nielson
on the s"m of 5*+7,;,7.0-, which appears in Lepanto7s ann"al
report for *+,-
82
and entered as profit for prior ears in the
statement of income and s"rpl"s, which amo"nt consisted
Lalmost in its entiret of proceeds of copper concentrates
shipped to the Hnited %tates d"ring *+,7,L this claim sho"ld to
denied 'eca"se the amo"nt is not Ldividend declared and paidL
within the p"rview of the management contract.
.he fifth assignment of error of appellant refers to the fail"re of
the lower co"rt to order Lepanto to pa its management fees for
Dan"ar, *+,2, and for the f"ll period of e@tension amo"nting to
5*50,000.00, or 52,500.00 a month for si@t <;0= months, G a
total of 5*52,500.00 G with interest thereon from the date of
F"dicial demand.
&t is tr"e that the claim of management fee for Dan"ar, *+,2
was not among the ca"ses of action in the complaint, '"t
inasm"ch as the contract was s"spended in 1e'r"ar, *+,2 and
the management fees as(ed for incl"ded that of Dan"ar, *+,2,
the fact that s"ch claim was not incl"ded in a specific manner in
the complaint is of no moment 'eca"se an appellate co"rt ma
treat the pleading as amended to conform to the evidence where
the facts show that the plaintiff is entitled to relief other than
what is as(ed for in the complaint <!lon4o vs. Eillamor, *; 5hil.
8*5=. .he evidence shows that the last pament made '
Lepanto for management fee was for Novem'er and Decem'er,
*+,*.
88
&f, as >e have declared, the management contract was
s"spended 'eginning 1e'r"ar *+,2, it follows that Nielson is
entitled to the management fee for Dan"ar, *+,2.
Let "s now come to the management fees claimed ' Nielson for
the period of extension. &n this respect, it has 'een shown that
the management contract was e@tended from D"ne 27, *+,- to
D"ne 2;, *+58, or for a period of si@t <;0= months. D"ring this
period Nielson had a right to contin"e in the management of the
68
mining properties of Lepanto and Lepanto was "nder o'ligation
to let Nielson do it and to pa the corresponding management
fees. !ppellant Nielson insisted in performing its part of the
contract '"t Lepanto prevented it from doing so. :ence, '
virt"e of !rticle **-; of the 3ivil 3ode, there was a constr"ctive
f"lfillment an the part of Nielson of its o'ligation to manage said
mining properties in accordance with the contract and Lepanto
had the reciprocal o'ligation to pa the corresponding
management fees and other 'enefits that wo"ld have accr"ed to
Nielson if Lepanto allowed it <Nielson= to contin"e in the
management of the mines d"ring the e@tended period of five <5=
ears.
>e find that the preponderance of evidence is to the effect that
Nielson had insisted in managing the mining properties soon
after li'eration. &n the report
8,
of Lepanto, s"'mitted to its
stoc(holders for the period from *+,* to March *8, *+,;, are
stated the activities of Nielson7s officials in relation to Nielson7s
insistence in contin"ing the management. .his report was
admitted in evidence witho"t o'Fection. >e find the following in
the report9
Mr. $lessing, in Ma, *+,5, accompanied 3lar( and %tanford to
%an 1ernando <La Hnion= to await the li'eration of the mines.
<Mr. $lessing was the .reas"rer and Metall"rgist of Nielson=.
$lessing with 3lar( and %tanford went to the propert on D"l *;
and fo"nd that while the mill site had 'een cleared of the enem
the latter was still holding the area aro"nd the staff ho"ses and
p"tting "p a strong defense. !s a res"lt, the ret"rned to %an
1ernando and later went 'ac( to the mines on D"l 2;. Mr.
$lessing made the report, dated !"g"st ;, recommending a
program of operation. Mr. Nielson himself spent a da in the
mine earl in Decem'er, *+,5 and reiterated the program which
Mr. $lessing had o"tlined. .wo or three wee(s 'efore the date of
the report, Mr. 3oldren of the Nielson organi4ation also visited
the mine and told 5resident 3. !. De>itt of Lepanto that he
tho"ght that the mine co"ld 'e p"t in condition for the deliver
of the ore within ten <*0= das. !nd according to Mar( Nestle, a
witness of appellant, Nielson had several men incl"ding
engineers to do the Fo' in the mines and to res"me the wor(.
.hese engineers were in fact sent to the mine site and
s"'mitted reports of what the had done.
85
2n the other hand, appellee claims that Nielson was not read
and a'le to res"me the wor( in the mines, reling mainl on the
testimon of Dr. D"an Na'ong, former secretar of 'oth Nielson
and Lepanto, given in the separate case of Nanc &rving 0omero
vs. Lepanto 3onsolidated Mining 3ompan <3ivil 3ase No. ;52,
31&, $ag"io=, to the effect that as far as he (new LNielson and
3ompan had not attempted to operate the Lepanto
3onsolidated Mining 3ompan 'eca"se Mr. Nielson was not here
in the 5hilippines after the last war. :e came 'ac( later,L and
that Nielson and 3ompan had no mone nor stoc(s with which
to start the operation. :e was as(ed ' co"nsel for the appellee
if he had testified that wa in 3ivil 3ase No. ;52 of the 3o"rt of
1irst &nstance of $ag"io, and he answered that he did not
confirm it f"ll. >hen this witness was as(ed ' the same
co"nsel whether he confirmed that testimon, he said that when
he testified in that case he was not f"ll aware of what
happened and that after he learned more a'o"t the officials of
the corporation it was onl then that he 'ecame aware that
Nielson had reall sent his men to the mines along with Mr.
$lessing and that he was aware of this fact personall. :e
f"rther said that Mr. Nielson was here in *+,5 and Lhe was going
o"t and contacting his people.L
8;
Lepanto admits, in its own 'rief, that Nielson had reall insisted
in ta(ing over the management and operation of the mines '"t
that it <Lepanto= "neq"ivocall ref"se to allow it. .he following is
what appears in the 'rief of the appellee9
&t was while defendant was in the midst of the
reha'ilitation wor( which was f"ll descri'ed earlier, still
reeling "nder the terri'le devastation and destr"ction
wro"ght ' war on its mine that Nielson insisted in
ta(ing over the management and operation of the
mine. Nielson th"s p"t Lepanto in a position where
defendant, "nder the circ"mstances, had to ref"se, as
in fact it did, Nielson7s insistence in ta(ing over the
management and operation 'eca"se, as was o'vio"s, it
was impossi'le, as a res"lt of the destr"ction of the
mine, for the plaintiff to manage and operate the same
and 'eca"se, as provided in the agreement, the
contract was s"spended ' reason of the war. .he
stand of Lepanto in disallowing Nielson to ass"me again
the management of the mine in *+,5 was "neq"ivocal
and cannot 'e misinterpreted, infra.
87
$ased on the foregoing facts and circ"mstances, and 2"r
concl"sion that the management contract was e@tended, >e
'elieve that Nielson is entitled to the management fees for the
period of e@tension. Nielson sho"ld 'e awarded on this claim
si@t times its monthl pa of 52,500.00, or a total of
5*50,000.00.
&n its si@th assignment of error Nielson contends that the lower
co"rt erred in not ordering Lepanto to pa it <Nielson= the *0O
share in the profits of operation reali4ed d"ring the period of five
<5= ears from the res"mption of its post?war operations of the
Man(aan mines, in the total s"m of 52,,08,058.20 with
interest thereon at the rate of ;O per ann"m from 1e'r"ar ;,
*+5- "ntil f"ll pament.
8-
.he a'ove claim of Nielson refers to fo"r categories, namel9 <*=
cash dividendsC <2= stoc( dividendsC <8= depletion reservesC and
<,= amo"nt e@pended on capital investment.
!nent the first categor, Lepanto7s report for the calendar ear
*+5,
8+
contains a record of the cash dividends it paid "p to the
date of said report, and the post?war dividends paid ' it
corresponding to the ears incl"ded in the period of e@tension of
the management contract are as follows9
52%.?>!0
- *0
O
Novem'er *+,+ 5 200,000.00
+ *0
O
D"l *+50 800,000.00
*0 *0
O
2cto'er *+50 500,000.00
** 20
O
Decem'er *+50 *,000,000.00
*2 20 March *+5* *,000,000.00
69
O
*8 20
O
D"ne *+5* *,000,000.00
*, 20
O
%eptem'er *+5* *,000,000.00
*5 ,0
O
Decem'er *+5* 2,000,000.00
*; 20
O
March *+52 *,000,000.00
*7 20
O
Ma *+52 *,000,000.00
*- 20
O
D"l *+52 *,000,000.00
*+ 20
O
%eptem'er *+52 *,000,000.00
20 20
O
Decem'er *+52 *,000,000.00
2* 20
O
March *+58 *,000,000.00
22 20
O
D"ne *+58 *,000,000.00
.2.!L 5*,,000,000.00
!ccording to the terms of the management contract as modified,
appellant is entitled to *0O of the 5*,,000,000.00 cash
dividends that had 'een distri'"ted, as stated in the a'ove?
mentioned report, or the s"m of 5*,,00,000.00.
>ith regard to the second categor, the stoc( dividends declared
' Lepanto d"ring the period of e@tension of the contract are9
2n Novem'er 2-, *+,+, the stoc( dividend declared was 50O of
the o"tstanding a"thori4ed capital of 52,000,000.00 of the
compan, or stoc( dividends worth 5*,000,000.00C and on
!"g"st 22, *+50, the stoc( dividends declared was ;;?2P8O of
the standing a"thori4ed capital of 58,000,000.00 of the
compan, or stoc( dividends worth 52,000,000.00.
,0
!ppellant7s claim that it sho"ld 'e given *0O of the cash val"e
of said stoc( dividends with interest thereon at ;O from
1e'r"ar ;, *+5- cannot 'e granted for that wo"ld not 'e in
accordance with the management contract which entitles Nielson
to *0O of an dividends declared paid, (hen and as paid.
Nielson, therefore, is entitled to *0O of the stoc( dividends and
to the fr"its that ma have accr"ed to said stoc( dividends
p"rs"ant to !rticle **;, of the 3ivil 3ode. :ence to Nielson is
d"e shares of stoc( worth 5*00,000.00, as per stoc( dividends
declared on Novem'er 2-, *+,+ and all the fr"its accr"ing to
said shares after said dateC and also shares of stoc( worth
5200,000.00 as per stoc( dividends declared on !"g"st 20,
*+50 and all fr"its accr"ing thereto after said date.
!nent the third categor, the depletion reserve appearing in the
statement of income and s"rpl"s s"'mitted ' Lepanto
corresponding to the ears covered ' the period of e@tension of
the contract, ma 'e itemi4ed as follows9
&n *+,-, as per E@h. 1, p. 8; and E@h. Q, p. 5, the
depletion reserve set "p was 5**,;02.-0.
&n *+,+, as per E@h. /, p. ,+ and E@h. Q, p. 5, the
depletion reserve set "p was 588,55;.07.
&n *+50, as per E@h. :, p. 87, E@h. Q, p. ; and E@h. &,
p. 87, the depletion reserve set "p was 5-,,+;8.80.
&n *+5*, as per E@h. &, p. ,5, E@h. Q, p. ;, and E@h. D,
p. ,5, the depletion reserve set "p was 5*2+,0-+.--.
&n *+52, as per E@h. D, p. ,5, E@h. Q, p. ; and E@h. V p.
,*, the depletion reserve was 5*,7,*,*.5,.
&n *+58, as per E@h. V, p. ,*, and E@h. Q, p. ;, the
depletion reserve set "p as 5277,,+8.25.
0egarding the depletion reserve set "p in *+,- it sho"ld 'e
noted that the amo"nt given was for the whole ear. &nasm"ch
as the contract was e@tended onl for the last half of the ear
*+,-, said amo"nt of 5**,;02.-0 sho"ld 'e divided ' two, and
so Nielson is onl entitled to *0O of the half amo"nting to
55,-0*.,0.
Li(ewise, the amo"nt of depletion reserve for the ear *+58 was
for the whole ear and since the contract was e@tended onl
"ntil the first half of the ear, said amo"nt of 5277,,+8.25
sho"ld 'e divided ' two, and so Nielson is onl entitled to *0O
of the half amo"nting to 5*8-,7,;.;2. %"mming "p the entire
depletion reserves, from the middle of *+,- to the middle of
*+58, we wo"ld have a total of 558+,2+-.-*, of which Nielson is
entitled to *0O, or to the s"m of 558,+2-.--.
1inall, with regard to the fo"rth categor, there is no fig"re in
the record representing the val"e of the fi@ed assets as of the
'eginning of the period of e@tension on D"ne 27, *+,-. &t is
possi'le, however, to arrive at the amo"nt needed ' adding to
the val"e of the fi@ed assets as of Decem'er 8*, *+,7 one?half
of the amo"nt spent for capital acco"nt in the ear *+,-. !s of
Decem'er 8*, *+,7, the val"e of the fi@ed assets was
5*,0;*,-7-.--
,*
and as of Decem'er 8*, *+,-, the val"e of
the fi@ed assets was 58,270,,0-.07.
,2
:ence, the increase in
the val"e of the fi@ed assets for the ear *+,- was
52,20-,52+.*+, one?half of which is 5*,*0,,2;,.5+, which
amo"nt represents the e@penses for capital acco"nt for the first
half of the ear *+,-. &f to this amo"nt we add the fi@ed assets
as of Decem'er 8*, *+,7 amo"nting to 5*,0;*,-7-.--, we
wo"ld have a total of 52,*;;,*,8.,7 which represents the fi@ed
assets at the 'eginning of the second half of the ear *+,-.
.here is also no fig"re representing the val"e of the fi@ed assets
when the contract, as extended, ended on D"ne 2;, *+58C '"t
this ma 'e comp"ted ' getting one?half of the e@penses for
capital acco"nt made in *+58 and adding the same to the val"e
70
of the fi@ed assets as of Decem'er 8*, *+58 is 5+,755,-,0.,*
,8
which the val"e of the fi@ed assets as of Decem'er 8*, *+52
is 5-,,;8,7,*.-2, the difference 'eing 5*,2+2,0+-.;+. 2ne?half
of this amo"nt is 5;,;,0,+.8, which wo"ld represent the
e@penses for capital acco"nt "p to D"ne, *+58. .his amo"nt
added to the val"e of the fi@ed assets as of Decem'er 8*, *+52
wo"ld give a total of 5+,*0+,7+*.*; which wo"ld 'e the val"e of
fi@ed assets at the end of D"ne, *+58.
.he increase, therefore, of the val"e of the fi@ed assets of
Lepanto from D"ne, *+,- to D"ne, *+58 is 5;,+,8,;,7.;+, which
amo"nt represents the difference 'etween the val"e of the fi@ed
assets of Lepanto in the ear *+,- and in the ear *+58, as
stated a'ove. 2n this amo"nt Nielson is entitled to a share of
*0O or to the amo"nt of 5;+,,8;,.7;.
3onsidering that most of the claims of appellant have 'een
entertained, as pointed o"t in this decision, >e 'elieve that
appellant is entitled to 'e awarded attorne7s fees, especiall
when, according to the "ndisp"ted testimon of Mr. Mar( Nestle,
Nielson o'liged himself to pa attorne7s fees in connection with
the instit"tion of the present case. &n this respect, >e 'elieve,
considering the intricate nat"re of the case, an award of fift
tho"sand <550,000.00= pesos for attorne7s fees wo"ld 'e
reasona'le.
&N E&E> 21 .:E 120E/2&N/ 32N%&DE0!.&2N%, >e here'
reverse the decision of the co"rt a quo and enter in lie" thereof
another, ordering the appellee Lepanto to pa appellant Nielson
the different amo"nts as specified herein'elow9
<*= *0O share of cash dividends of Decem'er, *+,* in the
amo"nt of 5*7,500.00, with legal interest thereon from the date
of the filing of the complaintC
<2= management fee for Dan"ar, *+,2 in the amo"nt of
52,500.00, with legal interest thereon from the date of the filing
of the complaintC
<8= management fees for the si@t?month period of e@tension of
the management contract, amo"nting to 5*50,000.00, with legal
interest from the date of the filing of the complaintC
<,= *0O share in the cash dividends d"ring the period of
e@tension of the management contract, amo"nting to
5*,,00,000.00, with legal interest thereon from the date of the
filing of the complaintC
<5= *0O of the depletion reserve set "p d"ring the period of
e@tension, amo"nting to 558,+2-.--, with legal interest thereon
from the date of the filing of the complaintC
<;= *0O of the e@penses for capital acco"nt d"ring the period of
e@tension, amo"nting to 5;+,,8;,.7;, with legal interest
thereon from the date of the filing of the complaintC
<7= to iss"e and deliver to Nielson and 3o., &nc. shares of stoc(
of Lepanto 3onsolidated Mining 3o. at par val"e eq"ivalent to
the total of Nielson7s l0O share in the stoc( dividends declared
on Novem'er 2-, *+,+ and !"g"st 22, *+50, together with all
cash and stoc( dividends, if an, as ma have 'een declared and
iss"ed s"'seq"ent to Novem'er 2-, *+,+ and !"g"st 22, *+50,
as fr"its that accr"ed to said sharesC
&f s"fficient shares of stoc( of Lepanto7s are not availa'le to
satisf this F"dgment, defendant?appellee shall pa plaintiff?
appellant an amo"nt in cash eq"ivalent to the mar(et val"e of
said shares at the time of defa"lt <*2 3.D.%., p. *80=, that is, all
shares of the stoc( that sho"ld have 'een delivered to Nielson
'efore the filing of the complaint m"st 'e paid at their mar(et
val"e as of the date of the filing of the complaintC and all shares,
if an, that sho"ld have 'een delivered after the filing of the
complaint at the mar(et val"e of the shares at the time Lepanto
disposed of all its availa'le shares, for it is onl then that
Lepanto placed itself in condition of not 'eing a'le to perform its
o'ligation <!rticle **;0, 3ivil 3ode=C
<-= the s"m of 550,000.00 as attorne7s feesC and
<+= the costs. &t is so ordered.
Concepcion, C.#., Regala, Maalintal, 4eng)on, #.%., ,anche)
and Castro, ##., conc"r.
Re!es, #.4.-. and 4arrera, ##., too( no pa
EH=A*7R9A; REA;*8 DE&E;7PME'*, 9nc., petitioner, vs.
MA86A9R *5EA*ER, 9nc., respondent.
D E 3 & % & 2 N
5!N/!N&$!N, #.9
/eneral propositions do not decide specific cases. 0ather, laws
are interpreted in the conte@t of the pec"liar fact"al sit"ation of
each proceeding. Each case has its own flesh and 'lood and
cannot 'e r"led "pon on the 'asis of isolated clinical classroom
principles.
>hile we agree with the general proposition that a contract of
sale is valid "ntil rescinded, it is eq"all tr"e that ownership of
the thing sold is not acq"ired ' mere agreement, '"t '
tradition or deliver. .he pec"liar facts of the present
controvers as fo"nd ' this 3o"rt in an earlier relevant Decision
show that deliver was not act"all effectedC in fact, it was
prevented ' a legall effective impediment. Not having 'een
the owner, petitioner cannot 'e entitled to the civil fr"its of
ownership li(e rentals of the thing sold. 1"rthermore,
petitioner)s 'ad faith, as again demonstrated ' the specific
fact"al milie" of said Decision, 'ars the grant of s"ch 'enefits.
2therwise, 'ad faith wo"ld 'e rewarded instead of p"nished.
.he 3ase
1iled 'efore this 3o"rt is a 5etition for 0eviewA*B "nder 0"le ,5
of the 0"les of 3o"rt, challenging the March **, *++- 2rderA2B
of the 0egional .rial 3o"rt of Manila <0.3=, $ranch -, in 3ivil
3ase No. +7?-5*,*. .he dispositive portion of the assailed
2rder reads as follows9
I>:E0E120E, the motion to dismiss filed ' defendant Mafair
is here' /0!N.ED, and the complaint filed ' plaintiff
Eq"atorial is here' D&%M&%%ED.JA8B
!lso q"estioned is the Ma 2+, *++- 0.3 2rderA,B dening
petitioner)s Motion for 0econsideration.
.he 1acts
.he main fact"al antecedents of the present 5etition are matters
of record, 'eca"se it arose o"t of an earlier case decided ' this
3o"rt on Novem'er 2*, *++;, entitled Equatorial Realt!
&e'elopment, .nc. '. Ma!fair Theater, .nc.A5B <henceforth
referred to as the Imother caseJ=, doc(eted as /0 No. *0;0;8.
3armelo ^ $a"ermann, &nc. <I3armeloJ= "sed to own a parcel of
land, together with two 2?store '"ildings constr"cted thereon,
located at 3laro M. 0ecto !ven"e, Manila, and covered ' .3.
No. *-52+ iss"ed in its name ' the 0egister of Deeds of Manila.
2n D"ne *, *+;7, 3armelo entered into a 3ontract of Lease with
Mafair .heater &nc. <IMafairJ= for a period of 20 ears. .he
lease covered a portion of the second floor and me44anine of a
two?store '"ilding with a'o"t *,;*0 sq"are meters of floor
71
area, which respondent "sed as a movie ho"se (nown as Ma@im
.heater.
.wo ears later, on March 8*, *+;+, Mafair entered into a
second 3ontract of Lease with 3armelo for the lease of another
portion of the latter)s propert ?? namel, a part of the second
floor of the two?store '"ilding, with a floor area of a'o"t *,0;,
sq"are metersC and two store spaces on the gro"nd floor and
the me44anine, with a com'ined floor area of a'o"t 800 sq"are
meters. &n that space, Mafair p"t "p another movie ho"se
(nown as Miramar .heater. .he 3ontract of Lease was li(ewise
for a period of 20 ears.
$oth leases contained a provision granting Mafair a right of first
ref"sal to p"rchase the s"'Fect properties. :owever, on D"l 80,
*+7- ? within the 20?ear?lease term ?? the s"'Fect properties
were sold ' 3armelo to Eq"atorial 0ealt Development, &nc.
<IEq"atorialJ= for the total s"m of 5**,800,000, witho"t their
first 'eing offered to Mafair.
!s a res"lt of the sale of the s"'Fect properties to Eq"atorial,
Mafair filed a 3omplaint 'efore the 0egional .rial 3o"rt of
Manila <$ranch 7= for <a= the ann"lment of the Deed of !'sol"te
%ale 'etween 3armelo and Eq"atorial, <'= specific performance,
and <c= damages. !fter trial on the merits, the lower co"rt
rendered a Decision in favor of 3armelo and Eq"atorial. .his
case, entitled IMafair .heater, &nc. v. 3armelo and $a"ermann,
&nc., et al.,J was doc(eted as 3ivil 3ase No. **-0*+.
2n appeal <doc(eted as 3!?/0 3E No. 82+*-=, the 3o"rt of
!ppeals <3!= completel reversed and set aside the F"dgment of
the lower co"rt.
.he controvers reached this 3o"rt via /0 No. *0;0;8. &n this
mother case, it denied the 5etition for 0eview in this wise9
I>:E0E120E, the petition for review of the decision of the 3o"rt
of !ppeals, dated D"ne 28, *++2, in 3!?/.0. 3E No. 82+*-, is
:E0E$6 DEN&ED. .he Deed of !'sol"te %ale 'etween
petitioners Eq"atorial 0ealt Development, &nc. and 3armelo ^
$a"ermann, &nc. is here' deemed rescindedC 3armelo ^
$a"ermann is ordered to ret"rn to petitioner Eq"atorial 0ealt
Development the p"rchase price. .he latter is directed to
e@ec"te the deeds and doc"ments necessar to ret"rn
ownership to 3armelo ^ $a"ermann of the disp"ted lots.
3armelo ^ $a"ermann is ordered to allow Mafair .heater, &nc.
to '" the aforesaid lots for 5**,800,000.00.JA;B
.he foregoing Decision of this 3o"rt 'ecame final and e@ec"tor
on March *7, *++7. 2n !pril 25, *++7, Mafair filed a Motion
for E@ec"tion, which the trial co"rt granted.
:owever, 3armelo co"ld no longer 'e located. .h"s, following
the order of e@ec"tion of the trial co"rt, Mafair deposited with
the cler( of co"rt a quo its pament to 3armelo in the s"m of
5**,800,000 less 5-,7,000 as withholding ta@. .he lower co"rt
iss"ed a Deed of 0econveance in favor of 3armelo and a Deed
of %ale in favor of Mafair. 2n the 'asis of these doc"ments, the
0egistr of Deeds of Manila cancelled Eq"atorial)s titles and
iss"ed new 3ertificates of .itleA7B in the name of Mafair.
0"ling on Eq"atorial)s 5etition for Certiorari and 5rohi'ition
contesting the foregoing manner of e@ec"tion, the 3! in its
0esol"tion of Novem'er 20, *++-, e@plained that Mafair had no
right to ded"ct the 5-,7,000 as withholding ta@. %ince 3armelo
co"ld no longer 'e located, the appellate co"rt ordered Mafair
to deposit the said s"m with the 2ffice of the 3ler( of 3o"rt,
Manila, to complete the f"ll amo"nt of 5**,800,000 to 'e t"rned
over to Eq"atorial.
Eq"atorial q"estioned the legalit of the a'ove 3! r"ling 'efore
this 3o"rt in /0 No. *8;22* entitled IEq"atorial 0ealt
Development, &nc. v. Mafair .heater, &nc.J &n a Decision
prom"lgated on Ma *2, 2000,A-B this 3o"rt directed the trial
co"rt to follow strictl the Decision in /0 No. *0;0;8, the
mother case. &t e@plained its r"ling in these words9
I>e agree that 3armelo and $a"ermann is o'liged to ret"rn the
entire amo"nt of eleven million three h"ndred tho"sand pesos
<5**,800,000.00= to Eq"atorial. 2n the other hand, Mafair
ma not ded"ct from the p"rchase price the amo"nt of eight
h"ndred fort?seven tho"sand pesos <5-,7,000.00= as
withholding ta@. .he d"t to withhold ta@es d"e, if an, is
imposed on the seller, 3armelo and $a"ermann, &nc.JA+B
Meanwhile, on %eptem'er *-, *++7 ?? 'arel five months after
Mafair had s"'mitted its Motion for E@ec"tion 'efore the 0.3 of
Manila, $ranch 7 ?? Eq"atorial filed with the 0egional .rial 3o"rt
of Manila, $ranch -, an action for the collection of a s"m of
mone against Mafair, claiming pament of rentals or
reasona'le compensation for the defendant)s "se of the s"'Fect
premises after its lease contracts had e@pired. .his action was
the progenitor of the present case.
&n its 3omplaint, Eq"atorial alleged among other things that the
Lease 3ontract covering the premises occ"pied ' Ma@im
.heater e@pired on Ma 8*, *+-7, while the Lease 3ontract
covering the premises occ"pied ' Miramar .heater lapsed on
March 8*, *+-+.A*0B 0epresenting itself as the owner of the
s"'Fect premises ' reason of the 3ontract of %ale on D"l 80,
*+7-, it claimed rentals arising from Mafair)s occ"pation
thereof.
0"ling of the 0.3 Manila, $ranch -
!s earlier stated, the trial co"rt dismissed the 3omplaint via the
herein assailed 2rder and denied the Motion for 0econsideration
filed ' Eq"atorial.A**B
.he lower co"rt de'"n(ed the claim of petitioner for "npaid 'ac(
rentals, holding that the rescission of the Deed of !'sol"te %ale
in the mother case did not confer on Eq"atorial an vested or
resid"al proprietar rights, even in e@pectanc.
&n granting the Motion to Dismiss, the co"rt a quo held that the
critical iss"e was whether Eq"atorial was the owner of the
s"'Fect propert and co"ld th"s enFo the fr"its or rentals
therefrom. &t declared the rescinded Deed of !'sol"te %ale as
Ivoid at its inception as tho"gh it did not happen.J
.he trial co"rt ratiocinated as follows9
I.he meaning of rescind in the aforeq"oted decision is to set
aside. &n the case of 7ca+po .. Court o! Appeals, /.0. No.
+7,,2, D"ne 80, *++,, the %"preme 3o"rt held that, _to rescind
is to declare a contract void in its inception and to p"t an end as
tho"gh it never were. &t is not merel to terminate it and
release parties from f"rther o'ligations to each other '"t to
a'rogate it from the 'eginning and restore parties to relative
positions which the wo"ld have occ"pied had no contract ever
'een made.)
I0elative to the foregoing definition, the Deed of !'sol"te %ale
'etween Eq"atorial and 3armelo dated D"l 8*, *+7- is .oid at
its inception as tho"gh it did not happen.
I.he arg"ment of Eq"atorial that this complaint for 'ac(rentals
as _reasona'le compensation for "se of the s"'Fect propert
a!ter eBpiration o! the lease contracts pres"mes that the
Deed of !'sol"te %ale dated D"l 80, *+7- from whence the
fo"ntain of Eq"atorial)s alleged propert rights flows is still valid
and e@isting.
72
@@@
@@@ @@@
I.he s"'Fect Deed of !'sol"te %ale having 'een rescinded '
the %"preme 3o"rt, Eq"atorial is not the owner and does not
have an right to demand 'ac(rentals from the s"'Fect propert.
@ @ @.JA*2B
.he trial co"rt added9 I.he %"preme 3o"rt in the E/uatorial
case, /.0. No. *0;0;8, has categoricall stated that the Deed of
!'sol"te %ale dated D"l 8*, *+7- has 'een rescinded s"'Fecting
the present complaint to res Dudicata.JA*8B
:ence, the present reco"rse.A*,B
&ss"es
5etitioner s"'mits, for the consideration of this 3o"rt, the
following iss"es9A*5B
I!.
.he 'asis of the dismissal of the 3omplaint ' the 0egional .rial
3o"rt not onl disregards 'asic concepts and principles in the
law on contracts and in civil law, especiall those on rescission
and its corresponding legal effects, '"t also ignores the
dispositive portion of the Decision of the %"preme 3o"rt in /.0.
No. *0;0;8 entitled _Eq"atorial 0ealt Development, &nc. ^
3armelo ^ $a"ermann, &nc. vs. Mafair .heater, &nc.)
I$.
.he 0egional .rial 3o"rt erred in holding that the Deed of
!'sol"te %ale in favor of petitioner ' 3armelo ^ $a"ermann,
&nc., dated D"l 8*, *+7-, over the premises "sed and occ"pied
' respondent, having 'een _deemed rescinded) ' the %"preme
3o"rt in /.0. No. *0;0;8, is _void at its inception as tho"gh it
did not happen.)
I3.
.he 0egional .rial 3o"rt li(ewise erred in holding that the
aforesaid Deed of !'sol"te %ale, dated D"l 8*, *+7-, having
'een _deemed rescinded) ' the %"preme 3o"rt in /.0. No.
*0;0;8, petitioner _is not the owner and does not have an right
to demand 'ac(rentals from the s"'Fect propert,) and that the
rescission of the Deed of !'sol"te %ale ' the %"preme 3o"rt
does not confer to petitioner _an vested right nor an resid"al
proprietar rights even in e@pectanc.)
ID.
.he iss"e "pon which the 0egional .rial 3o"rt dismissed the civil
case, as stated in its 2rder of March **, *++-, was not raised '
respondent in its Motion to Dismiss.
IE.
.he sole gro"nd "pon which the 0egional .rial 3o"rt dismissed
3ivil 3ase No. +7?-5*,* is not one of the gro"nds of a Motion to
Dismiss "nder %ec. * of 0"le *; of the *++7 0"les of 3ivil
5roced"re.J
$asicall, the iss"es can 'e s"mmari4ed into two9 <*= the
s"'stantive iss"e of whether Eq"atorial is entitled to 'ac(
rentalsC and <2= the proced"ral iss"e of whether the co"rt a
quoEs dismissal of 3ivil 3ase No. +7?-5*,* was 'ased on one of
the gro"nds raised ' respondent in its Motion to Dismiss and
covered ' 0"le *; of the 0"les of 3o"rt.
.his 3o"rt)s 0"ling
.he 5etition is not meritorio"s.
1irst &ss"e9
$(nership of ,u+ject %roperties
>e hold that "nder the pec"liar facts and circ"mstances of the
case at 'ar, as fo"nd ' this 3o"rt en 'anc in its Decision
prom"lgated in *++; in the mother case, no right of ownership
was transferred from 3armelo to Eq"atorial in view of a patent
fail"re to deliver the propert to the '"er.
Rental " a Ci'il ;ruit of $(nership
.o 'etter "nderstand the pec"liarit of the instant case, let "s
'egin with some 'asic parameters. 0ent is a civil fr"itA*;B that
'elongs to the owner of the propert prod"cing itA*7B ' right of
accession.A*-B 3onseq"entl and ordinaril, the rentals that fell
d"e from the time of the perfection of the sale to petitioner "ntil
its rescission ' final F"dgment sho"ld 'elong to the owner of
the propert d"ring that period.
$ a contract of sale, Ione of the contracting parties o'ligates
himself to transfer ownership of and to deliver a determinate
thing and the other to pa therefor a price certain in mone or
its eq"ivalent.JA*+B
2wnership of the thing sold is a real right,A20B which the +u!er
acquires onl! upon deli'er! of the thing to him Iin an of the
was specified in articles *,+7 to *50*, or in an other manner
signifing an agreement that the possession is transferred from
the vendor to the vendee.JA2*B .his right is transferred, not '
contract alone, '"t ' tradition or deliver.A22B 0on nudis pactis
sed traditione dominia rerum transferantur. !nd there is said to
'e deliver if and when the thing sold Iis placed in the control
and possession of the vendee.JA28B .h"s, it has 'een held that
while the e@ec"tion of a p"'lic instr"ment of sale is recogni4ed
' law as eq"ivalent to the deliver of the thing sold,A2,B such
constructi'e or s!m+olic deli'er!, +eing merel! presumpti'e, is
deemed negated +! the failure of the 'endee to tae actual
possession of the land sold.A25B
Deliver has 'een descri'ed as a composite act, a thing in which
'oth parties m"st Foin and the minds of 'oth parties conc"r. &t
is an act ' which one part parts with the title to and the
possession of the propert, and the other acq"ires the right to
and the possession of the same. &n its nat"ral sense, deli'er!
means something in addition to the deliver of propert or titleC
it means transfer of possession.A2;B &n the Law on %ales,
deliver ma 'e either act"al or constr"ctive, '"t 'oth forms of
deliver contemplate Ithe a'sol"te giving "p of the control and
c"stod of the propert on the part of the vendor, and the
ass"mption of the same ' the vendee.JA27B
%ossession 0e'er Acquired +! %etitioner
Let "s now appl the foregoing disc"ssion to the present iss"e.
1rom the pec"liar facts of this case, it is clear that petitioner
never too( actual control and possession of the propert sold, in
view of respondent)s timel o'Fection to the sale and the
contin"ed act"al possession of the propert. .he o'Fection too(
the form of a co"rt action imp"gning the sale which, as we
(now, was rescinded ' a F"dgment rendered ' this 3o"rt in
the mother case. &t has 'een held that the e@ec"tion of a
contract of sale as a form of constr"ctive deliver is a legal
fiction. &t holds tr"e onl when there is no impediment that ma
prevent the passing of the propert from the hands of the
vendor into those of the vendee.A2-B >hen there is s"ch
impediment, Ifiction ields to realit ? the deliver has not 'een
effected.JA2+B
:ence, respondent)s opposition to the transfer of the propert
' wa of sale to Eq"atorial was a legall s"fficient impediment
73
that effectivel prevented the passing of the propert into the
latter)s hands.
.his was the same impediment contemplated in 9da. de
,armiento '. -esaca,A80B in which the 3o"rt held as follows9
I.he q"estion that now arises is9 &s there an stip"lation in the
sale in q"estion from which we can infer that the vendor did not
intend to deliver o"tright the possession of the lands to the
vendeeN >e find none. 2n the contrar, it can 'e clearl seen
therein that the vendor intended to place the vendee in act"al
possession of the lands immediatel as can 'e inferred from the
stip"lation that the vendee _ta(es act"al possession thereof @ @ @
with f"ll rights to dispose, enFo and ma(e "se thereof in s"ch
manner and form as wo"ld 'e most advantageo"s to herself.)
.he possession referred to in the contract evidentl refers to
act"al possession and not merel sm'olical infera'le from the
mere e@ec"tion of the doc"ment.
I:as the vendor complied with this e@press commitmentN she
did not. !s provided in !rticle *,;2, the thing sold shall 'e
deemed delivered when the vendee is placed in the control and
possession thereof, which sit"ation does not here o'tain 'eca"se
from the e@ec"tion of the sale "p to the present the vendee was
never a'le to ta(e possession of the lands d"e to the insistent
ref"sal of Martin Deloso to s"rrender them claiming ownership
thereof. !nd altho"gh it is post"lated in the same article that
the e@ec"tion of a p"'lic doc"ment is eq"ivalent to deliver, this
legal fiction onl holds tr"e when there is no impediment that
ma prevent the passing of the propert from the hands of the
vendor into those of the vendee. @ @ @.JA8*B
.he e@ec"tion of a p"'lic instr"ment gives rise, therefore, onl
to a prima facie pres"mption of deliver. %"ch pres"mption is
destroed when the instr"ment itself e@presses or implies that
deliver was not intendedC or when +! other means it is sho(n
that such deli'er! (as not effected, +ecause a third person (as
actuall! in possession of the thing. &n the latter case, the sale
cannot 'e considered cons"mmated.
:owever, the point ma 'e raised that "nder !rticle **;, of the
3ivil 3ode, Eq"atorial as '"er acq"ired a right to the fr"its of
the thing sold from the time the o'ligation to deliver the
propert to petitioner arose.A82B .hat time arose "pon the
perfection of the 3ontract of %ale on D"l 80, *+7-, from which
moment the laws provide that the parties to a sale ma
reciprocall demand performance.A88B Does this mean that
despite the F"dgment rescinding the sale, the right to the
fr"itsA8,B 'elonged to, and remained enforcea'le ', Eq"atorialN
!rticle *8-5 of the 3ivil 3ode answers this q"estion in the
negative, 'eca"se IArBescission creates the o'ligation to ret"rn
the things which were the o'Fect of the contract, together with
their fr"its, and the price with its interestC @ @ @.7 0ot onl! the
land and +uilding sold, +ut also the rental pa!ments paid, if an!,
had to +e returned +! the +u!er.
!nother point. .he Decision in the mother case stated that
IEq"atorial @ @ @ has received rentsJ from Mafair Id"ring all the
ears that this controvers has 'een litigated.J .he %eparate
2pinion of D"stice .eodoro 5adilla in the mother case also said
that Eq"atorial was Ideriving rental incomeJ from the disp"ted
propert. Even herein ponenteEs %eparate 3onc"rring 2pinion in
the mother case recogni4ed these rentals. .he q"estion now is9
Do all these statements concede act"al deliverN
.he answer is INo.J .he fact that Mafair paid rentals to
Eq"atorial d"ring the litigation sho"ld not 'e interpreted to
mean either act"al deliver or ipso facto recognition of
Eq"atorial)s title.
.he 3! 0ecords of the mother caseA85B show that Eq"atorial ?
as alleged '"er of the disp"ted properties and as alleged
s"ccessor?in?interest of 3armelo)s rights as lessor ? s"'mitted
two eFectment s"its against Mafair. 1iled in the Metropolitan
.rial 3o"rt of Manila, the first was doc(eted as 3ivil 3ase No.
*2*570 on D"l +, *+-7C and the second, as 3ivil 3ase No.
*8*+,, on Ma 2-, *++0. Mafair event"all won them 'oth.
:owever, to 'e a'le to maintain phsical possession of the
premises while awaiting the o"tcome of the mother case, it had
no choice '"t to pa the rentals.
.he rental paments made ' Mafair sho"ld not 'e constr"ed
as a recognition of Eq"atorial as the new owner. .he were
made merel to avoid imminent eviction. &t is in this conte@t
that one sho"ld "nderstand the aforeq"oted fact"al statements
in the ponencia in the mother case, as well as the %eparate
2pinion of Mr. D"stice 5adilla and the %eparate 3onc"rring
2pinion of the herein ponente.
!t 'ottom, it ma 'e conceded that, theoreticall, a rescissi'le
contract is valid "ntil rescinded. :owever, this general principle
is not decisive to the iss"e of whether Eq"atorial ever acq"ired
the right to collect rentals. >hat is decisive is the civil law r"le
that ownership is acq"ired, not ' mere agreement, '"t '
tradition or deliver. Hnder the fact"al environment of this
controvers as fo"nd ' this 3o"rt in the mother case,
Eq"atorial was never p"t in act"al and effective control or
possession of the propert 'eca"se of Mafair)s timel o'Fection.
!s pointed o"t ' D"stice :olmes, general propositions do not
decide specific cases. 0ather, Ilaws are interpreted in the
conte@t of the pec"liar fact"al sit"ation of each case. Each case
has its own flesh and 'lood and cannot 'e decided on the 'asis
of isolated clinical classroom principles.JA8;B
&n short, the sale to Eq"atorial ma have 'een valid from
inception, '"t it was F"diciall rescinded 'efore it co"ld 'e
cons"mmated. 5etitioner never acq"ired ownership, not
'eca"se the sale was void, as erroneo"sl claimed ' the trial
co"rt, '"t 'eca"se the sale was not cons"mmated ' a legall!
effecti'e deliver of the propert sold.
4enefits %recluded +! %etitioners 4ad ;aith
1"rthermore, ass"ming for the sa(e of arg"ment that there was
valid deliver, petitioner is not entitled to an! 'enefits from the
IrescindedJ Deed of !'sol"te %ale 'eca"se of its 'ad faith. .his
'eing the law of the mother case decided in *++;, it ma no
longer 'e changed 'eca"se it has long 'ecome final and
e@ec"tor. 5etitioner)s 'ad faith is set forth in the following
pertinent portions of the mother case9
I1irst and foremost is that the petitioners acted in +ad faith to
render 5aragraph - _in"tile.)
@@@
@@@ @@@
I%ince Eq"atorial is a +u!er in +ad faith, this finding renders the
sale to it of the propert in q"estion rescissi'le. >e agree with
respondent !ppellate 3o"rt that the records 'ear o"t the fact
that Eq"atorial was aware of the lease contracts 'eca"se its
lawers had, prior to the sale, st"died the said contracts. !s
s"ch, Eq"atorial cannot tena'l claim to 'e a p"rchaser in good
faith, and, therefore, rescission lies.
@@@
@@@ @@@
I!s also earlier emphasi4ed, the contract of sale 'etween
Eq"atorial and 3armelo is characteri4ed ' +ad faith, since it
74
was (nowingl entered into in violation of the rights of and to
the preF"dice of Mafair. &n fact, as correctl o'served ' the
3o"rt of !ppeals, Eq"atorial admitted that its lawers had
st"died the contract of lease prior to the sale. Eq"atorial)s
(nowledge of the stip"lations therein sho"ld have ca"tioned it to
loo( f"rther into the agreement to determine if it involved
stip"lations that wo"ld preF"dice its own interests.
@@@
@@@ @@@
I2n the part of Eq"atorial, it cannot +e a +u!er in good faith
'eca"se it 'o"ght the propert with notice and f"ll (nowledge
that Mafair had a right to or interest in the propert s"perior to
its own. 3armelo and Eq"atorial too( "nconscientio"s
advantage of Mafair.JA87B <&talics s"pplied=
.h"s, petitioner was and still is entitled solel! to the ret"rn of
the p"rchase price it paid to 3armeloC no more, no less. .his
3o"rt has firml r"led in the mother case that neither of them is
entitled to an consideration of eq"it, as 'oth Itoo(
"nconscientio"s advantage of Mafair.JA8-B
.n the mother case, this Court categoricall! denied the pa!ment
of interest, a fruit of o(nership. 4! the same toen, rentals,
another fruit of o(nership, cannot +e granted (ithout mocing
this Courts en +anc &ecision, (hich has long +ecome final.
5etitioner)s claim of reasona'le compensation for respondent)s
"se and occ"pation of the s"'Fect propert from the time the
lease e@pired cannot 'e co"ntenanced. &f it s"ffered an loss,
petitioner m"st 'ear it in silence, since it had wro"ght that loss
"pon itself. $ther(ise, +ad faith (ould +e re(arded instead of
punished.
>e "phold the trial co"rt)s disposition, not for the reason it
gave, '"t for <a= the patent fail"re to deliver the propert and
<'= petitioner)s 'ad faith, as a'ove disc"ssed.
%econd &ss"e9
:round in Motion to &ismiss
5roced"rall, petitioner claims that the trial co"rt deviated from
the accepted and "s"al co"rse of F"dicial proceedings when it
dismissed 3ivil 3ase No. +7?-5*,* on a gro"nd not raised in
respondent)s Motion to Dismiss. >orse, it allegedl 'ased its
dismissal on a gro"nd not provided for in a motion to dismiss as
en"nciated in the 0"les of 3o"rt.
>e are not convinced. ! review of respondent)s Motion to
Dismiss 3ivil 3ase No. +7?-5*,* shows that there were two
gro"nds invo(ed, as follows9
I<!=
5laintiff is g"ilt of for"m?shopping.
I<$=
5laintiff)s ca"se of action, if an, is 'arred ' prior
F"dgment.JA8+B
.he co"rt a quo r"led, inter alia, that the ca"se of action of
petitioner <plaintiff in the case 'elow= had 'een 'arred ' a
prior F"dgment of this 3o"rt in /0 No. *0;0;8, the mother case.
!ltho"gh it erred in its interpretation of the said Decision when it
arg"ed that the rescinded Deed of !'sol"te %ale was Ivoid,J we
hold, nonetheless, that petitioner)s ca"se of action is indeed
'arred ' a prior F"dgment of this 3o"rt. !s alread disc"ssed,
o"r Decision in /0 No. *0;0;8 shows that petitioner is not
entitled to 'ac( rentals, 'eca"se it never 'ecame the owner of
the disp"ted properties d"e to a fail"re of deliver. !nd even
ass"ming arguendo that there was a valid deliver, petitioner)s
'ad faith negates its entitlement to the civil fr"its of ownership,
li(e interest and rentals.
Hnder the doctrine of res judicata or 'ar ' prior F"dgment, a
matter that has 'een adF"dicated ' a co"rt of competent
F"risdiction m"st 'e deemed to have 'een finall and
concl"sivel settled if it arises in an s"'seq"ent litigation
'etween the same parties and for the same ca"se.A,0B .h"s,
IAaB final F"dgment on the merits rendered ' a co"rt of
competent F"risdiction is concl"sive as to the rights of the
parties and their privies and constit"tes an a'sol"te 'ar to
s"'seq"ent actions involving the same claim, demand, or ca"se
of action.JA,*B Res judicata is 'ased on the gro"nd that Ithe
part to 'e affected, or some other with whom he is in privit,
has litigated the same matter in a former action in a co"rt of
competent F"risdiction, and sho"ld not 'e permitted to litigate it
again.JA,2B
&t frees the parties from "ndergoing all over again the rigors of
"nnecessar s"its and repetitive trials. !t the same time, it
prevents the clogging of co"rt doc(ets. Eq"all important, it
sta'ili4es rights and promotes the r"le of law.
>e find no need to repeat the foregoing disq"isitions on the first
iss"e to show satisfaction of the elements of res judicata.
%"ffice it to sa that, clearl, o"r r"ling in the mother case 'ars
petitioner from claiming 'ac( rentals from respondent. !ltho"gh
the co"rt a quo erred when it declared Ivoid from inceptionJ the
Deed of !'sol"te %ale 'etween 3armelo and petitioner, o"r
foregoing disc"ssion s"pports the grant of the Motion to Dismiss
on the gro"nd that o"r prior F"dgment in /0 No. *0;0;8 has
alread resolved the iss"e of 'ac( rentals.
2n the 'asis of the evidence presented d"ring the hearing of
Mafair)s Motion to Dismiss, the trial co"rt fo"nd that the iss"e
of ownership of the s"'Fect propert has 'een decided ' this
3o"rt in favor of Mafair. >e q"ote the 0.39
I.he %"preme 3o"rt in the E/uatorial case, /.0. No. *0;0;8
has categoricall stated that the Deed of !'sol"te %ale dated
D"l 8*, *+7- has 'een rescinded s"'Fecting the present
complaint to res Dudicata.JA,8B <Emphasis in the original=
:ence, the trial co"rt decided the Motion to Dismiss on the 'asis
of res judicata, even if it erred in interpreting the meaning of
IrescindedJ as eq"ivalent to Ivoid.J &n short, it r"led on the
gro"nd raisedC namel, 'ar ' prior F"dgment. $ granting the
Motion, it disposed correctl!, even if its legal reason for
n"llifing the sale was wrong. .he correct reasons are given in
this Decision.
45ERE67RE, the 5etition is here' &E0.E&. 3osts against
petitioner.
%2 20DE0ED.
%.R. 'o. ;$2220) 6eAruar -, 1321
%=ADA;=PE %7'<A;E< and ;=9: %7ME<, plaintiffs?
appellants,
vs.
E.J. 5A?ERER, defendant?appellee.
;eria and -a $ for appellants.
%aredes, 4uencamino and Aulo for appellee.
7:*RA'D, J.:
.his action is 'ro"ght to recover the s"m of 58,,2;0 alleged to
'e d"e the plaintiffs from the defendant "pon a written
agreement for the sale of a tract of land sit"ated in the 5rovince
75
of N"eva EciFa. .he plaintiffs also as( for damages in the s"m of
5*0,000 for the alleged fail"re of the defendant to compl with
his part of the agreement.
.he defendant in his answer admits that of the p"rchase price
stated in the agreement a 'alance of 58*,000 remains "npaid,
'"t ' wa of special defense, cross?complaint and co"nter?
claim alleges that at the time of entering into the contract the
plaintiffs thro"gh false representations lead him to 'elieve that
the were in possession of the land and that the title to the
greater portion thereof was not in disp"teC that on see(ing to
o'tain possession he fo"nd that practicall the entire area of the
land was occ"pied ' adverse claimants and the title thereto
disp"tedC that he conseq"entl has 'een "na'le to o'tain
possession of the landC and that the plaintiffs have made no
efforts to prosec"te the proceedings for the registration of the
land. :e therefore as(s that the contract 'e rescindedC that the
plaintiffs 'e ordered to ret"rn to him the 580,000 alread paid
' him to them and to pa 525,000 as damages for 'reach of
the contract.
.he co"rt 'elow dismissed the plaintiffs7 complaint, declared the
contract rescinded and void and gave the defendant F"dgment
"pon his co"nterclaim for the s"m of 580,000, with interest from
the date "pon which the F"dgment 'ecomes final. .he case is
now 'efore this co"rt "pon appeal ' the plaintiffs from that
F"dgment.
.he contract in q"estion reads as follows9
/no( all men +! these presents9
.hat &, /"adal"pe /on4ale4 Morales de
/ome4, married with L"is /ome4, of age,
and resident of the m"nicipalit of
$a"tista, 5rovince of 5angasinan,
5hilippine &slands, do here' state9
*. .hat & am the a'sol"te and e@cl"sive
owner of a parcel of land sit"ated in the
'arrio of 5artida, m"nicipalit of /"im'a,
N"eva EciFa, descri'ed as follows9
$o"nded on the north ' the land of Don
Marcelino %antosC on the east, ' the
land of DoTa 3ristina /on4ale4C on the
so"th ' the $init"an 0iverC and on the
west, ' the land of DoTa 0amona
/on4ale4C containing an area of ,--
hectares appro@imatel.
2. .hat an application was filed for the
registration of the a'ove descri'ed land in
the registr of propert of N"eva EciFa,
which application is still pending in the
3o"rt of 1irst &nstance of N"eva EciFa.
8. .hat in consideration of the s"m of
5*25 per hectare & do here' agree and
'ind mself to sell and transfer ' wa of
real and a'sol"te sale the land a'ove
descri'ed to Mr. E.D. :a'ere, 'inding
mself to e@ec"te the deed of sale
immediatel after the decree of the co"rt
adF"dicating said land in m favor is
registered in the registr of propert of
the 5rovince of N"eva EciFa. .he condition
of this o'ligation to sell are as follows9
L*. .hat Mr. E.D. :a'erer has at
this moment paid me the s"m of
580,000 on acco"nt of the price
of the aforesaid land.
L2. .hat said Mr. E.D. :a'erer
agrees and 'inds himself to pa
within si@ months from the date
of the e@ec"tion of this
doc"ment the "npaid 'alance of
the p"rchase price.
L8. .hat said Mr. E.D. :a'erer
shall have the right to ta(e
possession of the aforesaid land
immediatel after the e@ec"tion
of this doc"ment together with
all the improvements now
e@isting on the same land, s"ch
as pala plantation and others.
L,. .hat said Mr. E.D. agrees and
'inds himself to pa the
e@penses to 'e inc"rred from
this date in the registration of
the aforesaid land "p to the filing
of the proper decree in the office
of the register of deeds of the
5rovince of N"eva EciFa.
L5. .hat in the event that the
co"rt sho"ld hold that & am not
the owner of all or an part of
the aforesaid land, & agree and
'ind mself to ret"rn witho"t
interest all s"ch amo"nts of
mone as & have received or ma
receive from Mr. E.D. :a'erer as
the p"rchase price of said land,
'"t, in the event that the co"rt
sho"ld adF"dicate a part of the
aforesaid land to me, then &
agree and 'ind mself to sell
said portion adF"dicated to me,
ret"rning all the amo"nts
received from Mr. E.D. :a'erer in
e@cess of the price of said
portion at the rate of 5*25 per
hectare.
L;. .he Mr. E.D. :a'erer does
here' waive an interest or
indemnit "pon the amo"nt that
& am to ret"rn to him and which
& have receive from Mr. E.D.
:a'erer as the p"rchase price of
the aforesaid land.L
&, E.D. :a'erer, married, of age, and
resident of the m"nicipalit of .alavera,
N"eva EciFa, do here' state that, having
76
(nown the contents of this doc"ment, &
accept the same with all the stip"lations
and conditions thereof.
&, L"is /ome4, married, of age, and
resident of the m"nicipalit of $a"tista,
5rovince of 5angasinan, do here' grant
m wife, DTa. /"adal"pe /on4ale4
Morales de /ome4, the d"e marital
license to e@ec"te this doc"ment and
ma(e effective the definite sale of the
land as a'ove stip"lated, she 'eing
empowered to e@ec"te the deed of sale
and other necessar doc"ments in order
that the f"ll ownership over the aforesaid
land ma 'e transferred to Mr. E.D.
:a'erer, as stip"lated in this doc"ment.
.n testimon! (hereof, we here"nto set
o"r hands at Manila, this 7th da of D"l,
*+20.
<%gd.= /H!D!LH5E /. DE /2ME#
E.D. :!$E0E0
LH&% /2ME#
%igned in the presence of the witnesses9
<%gd.= EM&/D&2 D2M&N/2
L./. !LE!0E#
<!c(nowledged 'efore notar.=
&t is conceded ' the plaintiffs that the defendant never
o'tained act"al or phsical possession of the land, '"t it is
arg"ed that "nder the contract q"oted the plaintiffs were "nder
no o'ligation to place him in possession. .his contention cannot
'e s"stained. 3a"se 8 of paragraph 8 of the contract gave the
defendant the right to ta(e possession of the land immediatel
"pon the e@ec"tion of the contract and necessaril created the
o'ligation on the part of the plaintiffs to ma(e good the right
th"s grantedC it was one of the essential conditions of the
agreement and the fail"re of the plaintiffs to compl with this
condition, witho"t fa"lt on the part of the defendant, is in itself
s"fficient gro"nd for the rescission, even in the a'sence of an
misrepresentation on their part. <3ivil 3ode, art. **2, C 5a'alan
's. Eele4, 22 5hil., 2+.=
&t is therefore "nnecessar to disc"ss the q"estion whether the
defendant was ind"ced to enter into the agreement thro"gh
misrepresentation made ' the plaintiff /ome4. >e ma sa,
however, that the evidence leaves no do"'t that some
misrepresentations were made and that '"t for s"ch
misrepresentations the defendant wo"ld not have 'een li(el to
enter into the agreement in the form it appeared. !s to the
contention that the plaintiff /on4ale4 cannot 'e charged with the
misrepresentations of /ome4, it is s"fficient to sa that the
latter in negotiating for the sale of the land acted as the agent
and representative of the other plaintiff, his wifeC having
accepted the 'enefit of the representations of her agent she
cannot, of co"rse, escape lia'ilit for them. <:as(ell 's.
%tar'ird, *52 Mass., **7C 28 !.%.0., -0+.=
.he contention of the appellants that the sm'olic deliver
effected ' the e@ec"tion and deliver of the agreement was a
s"fficient deliver of the possession of the land, is also witho"t
merit. .he possession referred to in the contract is evidentl
phsicalC if it were otherwise it wo"ld not have 'een necessar
to mention it in the contract. <,ee 3r"4ado 's. $"stos and
Escaler, 8, 5hil., *7.=
.he F"dgment appealed from is in accordance with the law, is
f"ll s"stained ' the evidence, and is therefore affirmed, with
the costs against the appellants. %o ordered.
#ohnson, ,treet, Malcolm, 9illamor, #ohns, and Romualde), ##.,
concur.
77

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